Selecting Real Estate Investment Markets with Greg Rand

Transcript:

Greg Rand  0:00  

always a danger to say do what you love, because that's such a cliched thing. But for the younger people out there that might be consuming this information. Sometimes cliches are cliches because they really are life sustaining truths.

Taylor  0:15  

The passive wealth strategies for busy professionals. I'm your host Taylor boat. Thank you for tuning in today. Today, our guest is Greg ran from renters warehouse, we're going to talk about the ROI the return on investment of owning America.

We're going to talk about how to select markets to invest in real estate. That's a complicated process, and Greg is an expert in it. And we're going to teach you how to start at a high level and then work your way down to picking individual neighborhoods and blocks and things that you can look for when you're making your investment decisions. This is a fantastic conversation. I hope you enjoy it. If you're enjoying the show, please leave us a rating or review on iTunes. Subscribe wherever you get your podcasts, and just enjoy the show. Thanks again. Greg, thanks for joining us today.

Greg Rand  1:06  

Thank you, Taylor. Happy to be here.

Taylor  1:08  

So you've got some we were talking before we started recording got some really interesting ideas about the ROI of owning America.

Greg Rand  1:16  

That's right. So

Taylor  1:18  

let's first define some terms. You've got some definitions here to walk through some of the important terms. Yep. As we get started.

Greg Rand  1:26  

Sure, absolutely. So ROI is a fun one, because ROI is sort of like you can define it any way you like, right. So what the ROI of American to us is, from an investment perspective, a combination of yields, also known as cash flow, also known as cap rate, right. NET yields being a number, we spent a lot of years working with Wall Street firms. So we've adopted the vernacular of the way the big Wall Street firms that penetrated single family rental. And so for them yield is obviously your your net cash flow divided by the amount of money you invested. So, you know, you buy a 200,000 da house, you get a $12,000 a year, net income from that house, you've got a 6% yield. That's the first component of ROI.

A lot of people who are buying buy to hold rental property stop there. And they say things like, Well, you know, appreciation is good. But appreciation is just a cherry on top right? It's just a bonus, you can count on it. I don't buy that. I think everybody that I know that wins in real estate. They thrive on the yield the cash flow, but they win on the price appreciation long term, right? So the combination of those two things gives you ROI. And our method of forecasting price appreciation. The reason why I think a lot of people don't try to is there isn't really a great way like okay, appreciation rate, what is it go ask 1000 realtors, what the appreciation rate in their town is? And they'd say, Yeah, right. Right. So there's, you know, what we've done is we have on a county by county basis, what has the appreciation of a single family home been over the last 20 years on average? Okay, it's a blunt instrument, this measurement, right? It's transparent. It's not adjusted for seasonality.

It's not adjusted for inflation, it's just a straight up, how has the average house or the median price has gone up or down on an annual basis for the last 20 years? whatever that number is the average appreciation rate for the last 20 years. We're using that to forecast the next 20 years. So economists will tell me Well, that's wrong, except for the fact that we've been right, this forecast has been really accurate over the last five years since we've been using it. And the reason is, is that when you take a 20 year history, you've got the whole housing, boom, housing bust in there accounted for, right, you've got Democrats, Republicans, war time, peace time, good times, bad times, you know, dogs and cats, everything under one, you basically it's a stress test, the last 20 years has been an interesting stress test of the housing market.

And however the market you're talking about whatever county in America, you're talking about how over performed over the last 20 years, what you'll see when you see the chart, and we reveal that chart on a website, as you see the way the market rode up during the housing boom, dealt with the housing correction. Sometimes it's like Phoenix, right. And then sometimes it's like, you know, Cincinnati, and it's a straight line. But it reveals a trend line that reveals that that occurrence, 10 years ago really was too steep incline, a correction decline, and then a finding its way back to kind of a trend line. So we use that we use that 20 year average. And so you look around the country.

And you find that the ROI of America is a nine and a half. Right. And it arrives there in different ways. Some places have a higher yield and a lower appreciation rate, some have a higher appreciation rate, and a lower yield, but kind of a face value house in this country, in most markets around the country and sub landing at around a nine and a half, without leverage without, you know, doing anything complicated to it. And so our goal is to try to find the 10 and a half and the 11th. So where do you find the places where you can get at least at nine and a half? Because for a lot of folks, by the way, not and if it's fine, right?

They say hell if I can, if I can do it, I think a house in Charlotte, and a good school district is pretty stable. If I can get a stable nine and a half. I'm happy as a clam. But then if we want to get them, you know, if they start getting a little spunky, and they want to try to find a 10 and a half and 11 we look for the pockets for you. We think it's going to be stronger.

Taylor  5:28  

Yeah, absolutely. I mean, so there's a lot to unpack there. And you mentioned about appreciation and yield AK cash flow and appreciation being considered by many the the cherry on the top of the ice cream and whatever you want to however you want to put it. I think part of that as a reaction to the wild appreciation, speculation that happened in the last run up before the recession were short, we're only buying for speculative appreciation. And that can't last. So maybe there's a bit of a reaction to that.

Greg Rand  6:05  

It's also I think, a reaction to people just not having a reliable index to measure by Sure. And the indexes, they get circulated in the media. You know, the Case Shiller index said that housing prices went down point o 9%. Are we headed for another plummet, right? There's a lot of fanning of flames of that people like to get people hyped up. And so since nobody's come out that I can tell with any kind of a responsible, transparent, common sense way of forecasting it. And conservative way of forecasting, like I don't want to know that the prices went up six and a half percent or 8%. Last year in Charlotte, I'm not using that number, right. But if you show me a three and a quarter over the last 20 years, I can live with using that number. You know, it's more conservative, and it accounts for that 8% last year, but it also accounts for the negative 8% that maybe we got in Charlotte back in 2010.

Taylor  6:57  

Okay, so another important factor here is, and I'm certainly no expert on statistics, but I know averages can be very troublesome when especially when it comes to your average returns over time and things like that, you know, that an average can really wash out, I'll just awful years and then also fantastic years. And personally, I'm trying to do what I can to avoid those awful years primarily I, you know, shooting for the fantastic killer years are fantastic, are great. But the awful years of the years where you lose everything.

And you know, we're doing what we can not to lose everything. So, you know, when you're looking in these markets, and you're, in a way, chasing your overall ROI and yield? How are you prioritizing various markets that you're looking to the future, but it's not always super accurate to us back data from 20 years to move to the future? Because industry's changed. My family's from the steel country in Pennsylvania? Well, sorry, the steel businesses gone, right. You know, you could use that if you're using that 20 year data back in the day, then you just got destroyed. Right. So it's great value, looking at some of those more like qualitative was still a little bit quantitative. But there's industry related factors to maybe take some of the noise out of the data?

Greg Rand  8:25  

Yeah, great question. So the first thing is, I think in terms of 25 years, and so if there's a bad year or two in the middle there, as long as my 25th year is on the upswing, or I make my way to recovering if somebody makes mistakes in Washington or in banking again or whatever. some third party comes along and tampers with our beloved housing market. Well, I'm going to ride it out.

Because everything I do, there is no leverage anything has on me that I have to sell at a certain point. So it's all substantial down payments, long term holds low rate debt and everything else. So is it this is an accumulation play for me. So that's the first answer is that I've got a very, very long term threshold, I'm not selling anything, probably ever. And so I'll write out a story with another one comes. But to your question, specifically about markets, my favorite thing in the world, being a person with an abundance of common sense and a complete lack of book learning, is watching people and understanding that the demand drivers that the value and economic stability and and future of a single family home is rooted in population growth. Right? It's the reason I love the instrument is that my company used to be called Old America, all right, before renters warehouse bought us, okay, that gives you an idea of what I think we're doing here.

When you're accumulating real estate in this country, you're actually literally buying pieces of it, right. And I like the single family home as the vehicle more than anything else. Because it's the root instrument through which you can own America, it's tied to population is tied to families, growth of population. So the economic trends, the winds that can blow on other commercial asset classes, like I don't know about buying retail these days, you know, a, because things like you know, Amazon, so people want to live indoors, they want to live here, they tend to want to keep coming here. So when you think about like, was it Pennsylvania, Ohio, you were talking about where you grew up?

In Pennsylvania, but it still applies to you know, much of Ohio, right, right. So the situations were watching, we call it people watching, okay, try to put silly names on important things people watching is all about, where are the people going? Okay, why are they going there? Is that going to continue? So if they're exiting, so for example, you have a manufacturing job base in the upper Midwest that eroded over time, and then an accelerated over the last 30 years, right. And so Western pa was in a tough spot. And so you could have read those tea leaves and said, All right, so the job base is eroding. Let me find a place where the job base is growing. You know, you look at Texas, you look at the Carolinas, you look at Tennessee, there are definite indicators that because of the cost of living because of the deals the government is willing to give the companies because of the quality of life because of the low tax situation, the attractive business situation. It's a glacial move, so you have time to read it, you don't have to sprint to the front of the line, you can watch the way these moves shift. And where the people are going, if it's for opportunity and employment. And the reason they're going there is not short term, they didn't discover gold, and the gold might run out there literally moving there.

And the shifts are very, very, very long term and sustainable. That's the kind of trend you want to get out in front of. But then Western pa so interesting, and parts of Ohio, that manufacturing base, first of all, better Western pa the energy industry moved in. So there were signals a few years back, that, you know, Pittsburgh, which had been kind of hurt, you know, using the term lightly, had been harmed pretty dramatically. And by that erosion of manufacturing, all the sudden discovered that shale and the government was friendly towards it, where the government of New York has not been so Western New York not participating in the fracking trend. Western pa is the industry of fracking set up shop in western pa permanent installations. Right. So New York missed out on it. Because like, it's not like, okay, fine, we'll, we'll play it now if a new governor came in and said, Okay, we'll play ball with the shell fracking is too late.

Because hundred year decisions got made to install energy industry infrastructure in western PA. And the jobs have gone through the roof and pencil western Pennsylvania is on the mend now. And so there's a great example of where one trend one mega trend on the downside came about. And if you saw it coming, you might want to get it out of the way of it. But as soon as a new mega trends came in, there was a massive opportunity in Pennsylvania to triple down and accumulate during that downtime. And it would have had nothing to do with buying a distressed house. Right? I'm nothing I talked about just now was finding a deal. If the market went down overall, and the market came up overall, the timing of a deal like that is to recognize those shifting plates of Earth, and then start accumulating, in my opinion, the nicest houses you can in the best locations you can in the best condition you can, because you don't have to break your back dealing with repair risk, you can actually buy something in good condition because you're buying the deal. You see his time in place. Pittsburgh suburbs on the front end of an energy trend on the tail end of the manufacturing erosion trend. That makes sense.

Taylor  13:39  

Yeah, it does. My question then becomes, you know, it may be shifting away from Pennsylvania a little bit, but in a bit to stick along the energy industry lines. You know, a few years ago, we had a massive drop in the price of crude oil. And areas that had invested heavily or the economy had boomed in tar sands, specifically in Canada, and the Dakotas really got hammered. Their real estate just just got absolutely destroyed because the price of oil fell to I don't know what it remembers 30 bucks a barrel or something like that from $130 a barrel speaking super round numbers I don't remember specifically anymore. And that price still hasn't recovered. And, you know, a lot of those areas haven't gotten back to where they were because the economics of that industry. don't work anymore. Right at these, you know, low prices of oil and gas is still pretty cheap, honestly. So, diversification of industries, like where do you go there?

Greg Rand  14:46  

That's it. Exactly. So when you have the Dakotas, I'm sure they're beautiful. I say I'm sure because even though I've been everywhere, I haven't been there, okay. Because of because I'm not in that industry. There's only one industry driving to my knowledge driving that. And so if you have a market that has all of its eggs in one basket, you're vulnerable, right? a twist on that. That's really interesting. I think it's Houston. Right, Houston, during that same period of time, a lot of people called Houston down out like it's over in Houston, because the city is too overly dependent on the energy industry, and it's in trouble. The difference was, is that Houston had begun diversifying 10 years earlier. Houston's economy is not like the code is economy that is, you know, 75 or 80%, dependent on that industry.

It is actually a sliver of the economy. And Houston is actually the energy industry. And we recently did a study on Houston, because it's really funny. Every time. Oil prices and gas prices go down. The Houston Chronicle runs a headline saying it's over. Like it's all right. Yeah. And people buy into that. And then of course, there was a horrible hurricane. And guess what, it's over again, right? The housing markets never going to recover because of the hurricane. They have this way of wanting for some reason to predict nonsense like that. But here's what we discovered down there is that precisely because the price of gas and the price of oil have gone down? Exxon Mobil, the giant in the industry, consolidated a bunch of their facilities from around Houston from around the country. So there's this area west of Houston, you know, the energy sector, I think. It's called the energy miles, something like that. I forget the exact name. And certainly, within the pain of energy industry contraction.

Exxon Mobil built a 10,000 employee campus in an area called the woodlands, which is northwest of the city of Houston. Right? So I looked at Houston and said, Okay, so the energy industry is having trouble. But where's the gym anyway? Because I always believe there's going to be one if the economy is diverse enough in the market. And I found two things.

One, I found that that that, because of the contraction of the industry, Exxon Mobil wanted to save money. They save money by consolidating a bunch of offices into one big massive 10 as an employee, corporate campus, and guess what happened to the real estate values in the woodlands. Right, they went out up because of that demands, but it's funny how inherent in the bad story was a pearl, right? So you didn't want to buy over where they were extracting the jobs, that would have been a bad idea. But if you knew where they were going, and it's still happening, and they were more pockets, it was another story in Houston, where it was completely unrelated as an area called Valley Ranch that I learned about that for 100 years was a dry town, you couldn't buy a beer with your steak.

Right? They changed it. It's, it's really funny like this. They were trying to change it for a decade. But they were pounding their fists saying something probably like, we want our beers like we want to, we want to have alcohol in town. And everyone's saying, no, we're not doing that, then they came up with the restaurant initiative. That's different, right? The restaurant initiative, can't have a good restaurant, you're not going to have a foodie culture, if you can't sell wine, right and beer in with no way. So they spun it differently. the right combination of public and private attitudes kind of combined. And they approved it. And so now this this area that wouldn't, you know, this area had depressed real estate values, because it wasn't that attractive place to live, because there were no decent restaurants there. Something as simple as that the quality of life factor was out of whack. They changed that. And the real estate values have got up at double digit appreciation over the last couple of years purely because of the fact that you can now you know, get a glass of wine with your dinner.

Taylor  18:31  

So what degree of granularity to their market knowledge should most real estate investors have? And especially when you're picking a market to invest in mean, it's you have to start at a high level? And then you know, work your way down and get more detailed? When do you decide to go from that high level to more more of a detailed level when you start subscribing to the local newspaper and stuff like that? You know, how does that that process all work? Because we all have 24 hours in the day?

Greg Rand  19:04  

Yeah, great question. So you start off macro, as you said, right. And you started identifying. So for a lot of people, the reason why I talked about Houston is there are people who live in Houston. So Houston is the right place to invest by virtue of the fact that they live there. Right? So they want to look around the country they can, but there's definitely an advantage to being within the proximity of your investment portfolio. Because your ears to the ground. Anyway, you're raising your kids there, you live there, you know, something's going wrong, right?

You don't have to hear about a hurricane coming, you know what's coming. And so sometimes the market, the macro market that you choose kind of chooses you. But even so if that's not the case, if you look around the country, and you find, you know, I grew up in New York, you can't get a cash flow in New York on a single family home. So what am I going to do? I like the East Coast because I went on vacation down to Florida as a kid growing up. And so I have familiarity of the west coast of Florida. So you find a primary market where you live, you find a secondary market in your life, I mean, a secondary to you, where you went to college, where you have relatives someplace where you have a degree of familiarity, and that of course, you could go anyplace else you want starting macro talking about those larger employment population migration trends, then you get granular, as you said, and so there, I like doing things like setting a Google Alert. town of Belmont approves city of Charlotte approves. Okay, town of Morrisville approved, these are all towns around the Charlotte area where I now live, okay.

I pay pretty close attention. But one of the reasons why I know what's going on is that I get a Google Alert in the morning saying they approve the budget in Charlotte. They approved the expansion of the light rail system in Charlotte. Right, that's a great little tip is you just put the name of the geography or the name of the the municipal entity. You know, City of Detroit approves, when the city of Detroit approves another GM factory expansion, you want to know that morning that it got announced. Right. So wherever you going, you put your finger to the pulse, I would show up on the ground, I do a lot of 30,000 foot view analysis. And then I go in, okay, and put boots on the ground. We actually do a YouTube show called real estate road trip. We're actually go in with a camera crew and drive around and eyeball all the things that I want to confirm. And you'll learn a lot by just driving around and applying your common sense. But then you look for things like where I'm investing.

Right now. I just bought two houses. I'm gonna buy two more by the end of August. Is it a place where a light rail train station commuter rail train station just got approved? Nice. Yeah. Right. So people gonna be able to commute 30 minutes to downtown Charlotte to where the Bank of America tower is. And there's no traffic on those train tracks, right. So it's a winner. But the town is only starting to pop as a result of it because the people who usually buy a single family homes are going to live in it. And you don't care about what's going to happen in 2022 and a house you're buying today. So you're not willing to overpay for a house today because of a train station coming in? In 2022.

I'm willing to outbid you, though, because I'm willing to rent it for market value today knowing that both market value and market rents are going to pop in 2022 because the houses I'm buying are just about walkable to that train station location. So that's to answer your question start off macro. I like the southeast. I like North Carolina. I like Charlotte. Inside of Charlotte, I want to find the parts of Charlotte that are a little bit late to the game. Late developers late bloomers suburbs of Charlotte that are later bloomers, I can see the early bloomers and what happened to those suburbs, I found a late bloomer, then I found a late bloomer with a train station coming in for commuters, and I'm loading up in that spot.

Taylor  22:36  

Okay, so, I mean, there's a lot of work there. But it's, it's worth putting that work in for investors, you should definitely know the market that you're investing in and understand it very well. And I definitely appreciate, you know, all the work that you've done for your own investments. But here at passive wealth strategies for busy professionals, once we buy a piece of property as an investment, we don't want to be buying ourselves yet another job that we have to you know, be managing all the time, everything like that. So once you personally have selected a market or for your clients and whatnot, how do you move from that market selection this area want to invest into acquiring property? What kind of properties Do you target all that good stuff to make sure you have a reasonably passive investment, and it's going to take some time, no matter what you buy, it is going to take some time. But so you're not you know, going and fixing toilets and you know, dealing with your tenants all that. What do you recommend?

Greg Rand  23:36  

Yeah, I buy the nicest house that I possibly can in the best condition I can. And then I have a professional I mean, I work for the largest property management company in the country. So I believe in professional third party property management, and I hire my own company. So I hire a property manager to do the dirty work after the fact, right?

That's the reason why I shaved my own personal strategy around picking the winners from the standard point of where and when I invest. And then like the joke that I have that I always tell us, my hands are so soft, Taylor that when I hold a baby, okay, so I'm not dealing with any repairs, none zero, okay. And then like the two houses I just bought, the people that own them before me Got some economics off the table from me because they made him they fixed them up. One was a homeowner, one was an investor, they got the economics of making these things perfect for me, I paid market value I paid asking price, the morning to houses came on the market. Some investors will say What a moron but not your listeners, because your listeners are interested in passive income. And I need this to be passive also. So the research part that I talked about five minutes ago, that to me is a hobby, like I really enjoy that the last professional athlete that I could name for you is like Tom Brady. And before that, it's like Michael Jordan, if I don't have interests like

Taylor  24:51  

that, I don't know.

Greg Rand  24:52  

I don't follow things like that. I follow this, I enjoy doing this research, I enjoy picking the winners. I have fantasy portfolios, I don't have fantasy football teams, right. So that part is not a drain on my time of brainpower because I like it. The actual execution of buying nicest house, I can best place I can quality third party property manager doing the dirty work, and patients in my strategy that I know that nothing is going to happen in the next six months or a year or two years, it's going to like my world on fire. It's what's going to happen over the next 15 or 20

Taylor  25:23  

minutes. It's interesting, I think you make a very good point there. Because you know, we have this is passive wealth strategies. But no matter what you do, nothing's free. It's going to take some time. And you have to dedicate time to this in some way. You're going to have to be dedicated to it. You know, whether it's not watching a particular sport. I mean, personally, I don't care about sports myself, either. So I'm right there with you. But yeah, yeah, absolutely. You have to have some joy in this process, because it takes a lot of commitment to succeed.

Greg Rand  25:59  

Yeah, you know, when I went down, when I went to these two houses I just bought, they both came about at the same time. So I had appliances being installed. And when I went to one of them, I found that the cleaning crew didn't clean the cobwebs in the garage, right. So I brought a vacuum back with me. And I vacuum the garage, and I started sweating because it was hot out. My wife said, hey, look, you're sweating. Hey, look, you're working and sweating. I pulled the camera out, did an Instagram video of me sweating, go like, Okay, this one's done as fast if I did anything, for cobwebs, but I was drenched in sweat, I'm taking the camera. So I enjoyed for the moment pretending that I was a rough handed, you know, real estate entrepreneur, get my hands in the grip, but I'm really not that way. I'm bringing on hands off. Okay, so I like to be very engaged in the strategic execution, and planning and execution and then completely hands off after the property goes into service. And I pay a quality company to handle the details forming and they've done a good job of that. And so I just bake their costs into my financials. And it's, you know, I don't think twice about it.

Taylor  27:02  

Yeah, absolutely. I mean, it's that classic, saying, you know, the and then the book, The E myth, the entrepreneurship is not working in your business, it's working on your business, you don't be the guy vacuuming the cobwebs all the time, okay, occasionally, maybe you do this response, right. But you should be the guy setting up systems to you know, you can pay people to vacuum cobwebs, and you wouldn't have that system all handling itself, you want to be able to step back and let it run itself that is investing that is entrepreneurship that is being a business owner, and especially for those of us like me who you know, we have jobs, we have things that take up our day. I mean, you and I both got up early. And, you know, we're talking here, and that's, you know, it takes that extra commitment. And it takes setting up systems so that it can run in the background while you're busy doing other things and your income and all that good stuff.

Greg Rand  28:00  

It works well. I mean, that's the beauty of it is that you make a commitment to a house, you're not going to wake up at two in the morning and find out that something happened in some company, you own stock in and buy breakfast time, or, you know, by a half hour after the stock market opens, you've lost 50% 20% of the value of your investment. Real Estate doesn't go crazy like that. It's slow, and lumbering, and glacial in the way that it performs. And so I don't feel concerned about turning my back on it for some period of time. Because you know what's going to happen, I have a lease, I have a tenant, it's in a good place. For burns down, I have insurance. And so I don't have any kind of agitation or anxiety around any short term occurrences. Because even if we wind up having a problem at some point in the next 10 years, and we have another housing crisis, and my values go down, my yield is going to sustain me. And this is you know, I'm 50. And this is for 70. So I really to have plenty of time. Yeah, yeah, absolutely.

Taylor  28:55  

I just turned 30 last week, and I'm thinking that long term that 2025 years, like you've been talking about. So how it was the big three?

Greg Rand  29:05  

Oh, but did it hurt you did it like cause any kind of pain in your life? The zeros tend to mess people up. I don't know,

Taylor  29:10  

you know, other people. Maybe I'll get there. Maybe I'm in denial. But no, I feel great. I mean, I'm happy with what I'm doing. And real estate is very satisfying. Hosting as podcast is a lot of fun. Thanks a lot of work. But you have to be doing something with your time. And it's better than, you know, sitting around all evening and doing nothing. Like I said, I don't like sports Anyway, I'm not going to be the guy sitting around on a you know, Sunday night watching the football game because I don't care.

Greg Rand  29:36  

Yeah, Game of Thrones is over Game of Thrones is over. So

Taylor  29:40  

terrible anyway, so it was all it was a waste of time.

Greg Rand  29:43  

I don't know how to fly a dragon. But I could have done a better job at that beginning episode flying laterally. You know, I mean, if they should have called us to consult on the plot, but anyway. But you know, you being 30, me being 50, you can see a snapshot of 20 years between our ages, here's your mind, it doesn't change that much you get more experience, but you're still the same person. But what you'll be capable of doing. What I have a feeling you're going to do over the next 20 years, is you're going to be in a position when you're sitting here my age, with an abundance in your life financial abundance, because what's going to happen over the next 20 years in real estate is pretty much it's going to go up. Even if it goes down someplace in the middle, which I don't anticipate should have stuff happens. But you'll be a young man such as it is at 50 with a substantial position in American real estate, which means you'll be able to do anything you want in the next 20 years after that, because you won't have to work, you'll be able to do anything you want. You'll be able to fund any causes you care about, you'll be able to do anything your freedom level will be off the charts because of what you do in the next 20 years.

Taylor  30:45  

Absolutely. That opportunities out there for everybody. I mean, like you were, we talked about the front of the show. I mean, that yield aspect in your parlance cash flow, and the way I like to put it is we're buying for cash flow first. And then that appreciation is icing on the cake so to speak. And the way I like to think about it, but it's certainly part of a blend to return in the way that you've been talking about it part of your overall ROI. So definitely appreciate that. We're going to take a quick break for our sponsor.

Greg Rand  31:14  

So the first question, what is the best investment you ever made? That one is actually easy because my daughter is graduating high school next year, and I made an investment when she was an infant. And I had this idea that at the point where she was a baby, I had 18 years to mature the kid, I made an investment in a condo in Newburgh, New York.

But I figured if I have 18 years to mature the investment at the same time, the reason why it's the best investment, it wasn't the best ROI I ever had. But because I learned something were anchoring an investment, a specific property to a specific and important long term objective educating my daughter that I rode the whole housing boom and housing bus with breaking a sweat because I didn't care what it was worth in 2000 and 789. I cared what it was going to be worth in 2020. Now 2020 is coming. And I've got this condo, it's been cash flowing the whole time. It is her college fund. So I made a commitment when she was a baby. And now she's not a baby anymore.

And I never sweated her college funding because I had that little engine up there just chugging along, quietly chugging along building equity, and I was reinvesting the cash flow. And I actually wrote a book back in 2010, called crash boom during the middle of this housing crisis to remind everybody, crash boom, don't forget what we know about this market. And one of the chapters was having a kid buy a condo. And the concept was very much very simple. Like I, my hands are full, I had this baby was my first, our first one, I had no idea what I was doing. I couldn't afford to buy anything that required any hands on so I actually bought a condo, the dreaded condo, right? Because I wanted something brand new. I wanted something completely hands off. And I just wanted to plant a seed would grow while the kid grew. And the plan worked great. And so that was my favorite investment because it was my most important investment link to my daughter's education.

Taylor  33:09  

I love it. That's great. I mean, it has a purpose behind it. You know, personally, I own a condo, it's a personal residence, but it's also as an investment because it will cash flow. Once I move out, right? That's the whole point is, you know, acquiring these properties. And I like that you've also you had that acceptance that All right, this future is coming, it's going to be real. Eventually, she's gonna want to go to college, I need to get ready for I need to have that long term vision. I think that's why to go back to what we're talking about earlier, I think that's why turning 30 and it hasn't really freaked me out yet, at least because like, I'd rather turn 30 someday then never turned 30 because those are the two options.

Greg Rand  33:47  

There's a good mindset attitude. Yeah, like that.

Taylor  33:51  

Yeah. So you might as well have fun with it, and I'd rather turn 50 someday and never turn 50 So, you know, whatever. That's just how it works, love. Great. On the inside of that. What is the worst investment you ever made?

Greg Rand  34:05  

Okay, I bought a second home. This is also an easy one. I don't dwell on mistakes, but this one still knows me. I bought a second home at a place called Seabrook Island, South Carolina. Around the same time also, I was having a good run with this kid was born. So we got this this vacation place. Got this vacation place and it was the calculations. were right. Okay.

Seabrook Island is sitting right next to Cuba islands, Cuba islands is 40% more expensive is off the coast of Charleston. Okay. So great market. Charleston is a phenomenal city, the coastline are phenomenal vacation areas. And here was this sort of ugly stepsister island that was right next to the beautiful stepsister, right, so it was cheaper, for no good reason, except that it had these facilities, pool areas, golf courses that were all dinged up, biting flies flying around the pool area. And then they made a plan to fund a total renovation of all the facilities.

I said, Okay, I'm going to buy here now, because what's going to happen is that this island is going to catch up to that island doesn't have to surpass it. But once they fix wants to kill the biting flies, once they fix the golf courses, once they actually fix the beach club, when they do all this renovation, this place is going to be pristine, and it's going to close that gap rapidly. And so that was my calculation.

Here's what I missed. The island is governed by a board of directors that did not want anybody from the north ever finding out about this place. Okay, so they were a bunch of grumpy old Coots that wouldn't allow the listings to be on Zillow. And other websites, when they were for sale, they wouldn't allow they built a wedding facility. And then discouraged, weddings are being held there. They built a wedding facility, and they wouldn't allow any short term rentals for the people that came to the weddings.

So they actually put obstacles in the way after they funded this massive renovation, they actually put all their energy into keeping their best kept secret, a secret, and my property value was flat, even came down during a period of time when Charleston overall was going up at five to 6% a year, my property was going slightly down every year. So what I learned from that one, is show up at a planning board meeting, before you make an investment and start picking a town show up if you've got a planning board that is there because they like controlling other people's life, that just one of those types, right. And if they have too much power, maybe they'll pass rules later on, they're going to wind up getting in your way of doing your renovation, because all of a sudden, your house is a historic site, and you can't rip off the siding and put something new on. So pay attention to the attitudes of people that have power locally, because they could actually get in

Taylor  36:40  

your way. Yeah, mostly retirees with nothing else to do in a vacation market. And go be obstructionist. Yeah. Okay. Nice. And that kind of leads us into the last questions. My favorite one, what is the most important lesson you've learned in investing?

Greg Rand  36:58  

You know, I guess it's, I decided to put my career and my investment strategy, kind of side by side in parallel lanes. Okay. So the lesson that I learned about learning the craft, and embedding my profession in it at the same time, wound up being a really good call, because I've had now you know, over time, realizing that what I really loved, I mean, I love the people watching component, I didn't actually love the real estate component as much I've come to love the real estate component, but I loved the fact that I learned about myself in my 20s, that, hey, I had this ridiculous amount of common sense, okay. And again, I can't even read, you know, the instructions on a medicine bottle, because I don't have the attention span for that. But I can, I could do this all day, right, I can talk about my passion.

So the important lesson was, really pile on into the thing that I really like, I don't spend any energy or any time doing anything I don't want to do, which sounds selfish to some people, like maybe my wife, like, I don't do any I don't want to do, I'm at the point now, where I actually don't do anything, I don't want a nice night, because I've got myself embedded in things that I do love to do. And for the things that I actually don't feel like doing, like blowing the driveway off with the the leaf blower, that small price to pay, to be able to be surrounded where my job and my business and my life, and my hobbies and my investment strategy are all kind of pulled together all in the avenue that I enjoy, and I'm passionate about. And so, you know, that lesson of going all in on what you really love made a lot of sense to me.

Taylor  38:33  

Nice. That makes a lot of sense. And I think, you know, generally in life, you know, we get a lot more fulfillment that when we do things we enjoy doing and and I've heard that from many successful real estate entrepreneurs and investors that I you know, I don't even like real estate. I'm just here because it fits with a business system that I like to run. And real estate is just a facet of that, or it's just the way we apply this business. And I'm good at it. And I enjoy it. So and I'm making money, but I actually care about the real estate aspect of it. I hear that from a lot of successful investors.

Greg Rand  39:09  

Yeah, there's spiders and garages out there. I'm not a big fan of spiders. But you know, it sounds cliche is always a danger to say do what you love, because that's such a cliched thing. But for the younger people out there that might be consuming this information. Sometimes cliches are cliches because they really are life sustaining truths. And I have a really fun time, day by day. I mean, I got up this morning, excited about this, because the first thing I got to do this morning, and where is this early? Right? The first thing I got to do is talk about my passion with somebody who I just got to know, it's really fun to be able to spend your time like I don't feel like I have a job. And so again, cliched, but also totally true. So, you know, pay attention to it.

Taylor  39:48  

Yeah, absolutely. I mean, I'm right there with you. I mean, it's early for us. It's before the business day, so to speak has started. And, you know, once we're off the line here, I'm going to go about my day get to my WT, which I also enjoy. And you know, have fun doing that too and play full out. But it's a lucky position to be in, but it takes time and effort and trying things to find those things that you enjoy. For sure. Yeah. Great. Well, I really enjoyed the conversation. Where can folks learn more? Where can they get in touch with you? All that good stuff? Sure.

Greg Rand  40:25  

Yeah. So my email address is G Rand at renters warehouse. com. Our website is renters warehouse. com renters warehouse is the largest single family property management company in the country. They bought my company in January, my company was called own America, we were an online platform for researching and acquiring single family rental properties. And so now we've combined those companies. And we're coming out literally this month with version two point O of renters warehouse, which is a property management company upon which we built a real estate brokerage company upon which we're launching the greatest real estate investment portal ever made. You know, says I, and Soviet, so check us out renters warehouse. com or, you know, GS rands on Instagram, GS Rand on Facebook, YouTube, all that fun stuff.

Taylor  41:11  

Great. And for the listeners out there when we're recording this, by the time this goes live, the website will be out there live. So when you're listening to this, the website is live. So it's out there. So awesome. Thanks. Great. Well, thank you for joining us once again. Thanks, everybody for listening to passive wealth strategies for busy professionals. Thanks to my Facebook friends with live streaming this on Facebook, many of whom tuned in and that gave a shout out to Matt Faircloth there he commented on the video so he was watching as well. So that was a fun little, little thing here to sit and enjoy. If you're enjoying passive wealth strategies for busy professionals, please leave us a rating and review on iTunes. It's an enormous help helps other people find out about the show. If you know someone who could use a little bit more passive wealth and in their life, please share the show with them. That would be an enormous help to everyone as well bring them into our little tribe here that before me. Hope you have a great day a great rest of your week and we will talk

to you on the next one. Bye