The Professionalist Real Estate Investing Podcast
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The Professionalist Real Estate Investing Podcast
Rentals vs. Flips vs. Syndications: Finding Your Real Estate Strategy
Podcast Intro
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Welcome everybody to the Professor's Real Estate Investing Podcast. I'm with Mr Property Relief himself, mr Marcus Harvey. How are you doing, marcus?
Speaker 2:What's happening, Tony? Just another day, a beautiful Saturday.
Speaker 1:Oh, yes, sunny, no clouds, birds chirping. It's a great day today, indeed, yeah. So today's subjects, aka titles today, is rentals versus flips, versus syndications which strategy is right for you? So, out of these three, there's three ways to go about it with rentals, syndication and flips. So the question would be each strategy has its own pros and pitfalls and purpose. So today we're going to break it down on all three of these which one is going to be good for your goals, your time and your risk tolerance?
Speaker 1:So, we're going to start by the rentals. So rentals is, you know, buy and hold real estate, you own the property, you rent it out and you collect monthly cashflow while building long-term equity. So with this is when you come to rentals, it's a longevity game right there. That's the reason why you have rentals, because what that rental is going to do is going to pay your mortgage and then get that passive income, depending on how much passive income you want.
Speaker 2:Yeah, with the buy and hold real estate, that's always, you know, um the long game for an investor. Um, you know you want to be able to uh bring in steady cashflow from rentals. Um, you know, some people think they're a headache to deal with but, um, it's always been a true, tried and true uh strategy to to uh to do as far as long game um in real estate. So, yeah, buy and hold real estate for uh, for rentals, is a good, uh, good strategy yeah, and it's not dealing with just one home.
Speaker 1:It could be a duplex, triplex, fourplex yeah yeah, apartment building, yes, indeed, yeah. Uh, number two, flips, that's the buy low, renovate fast and sell high. This is the, this is the cash flow. Uh, this is like the cash cow game right here, yeah, but it's riskier and more hands-on. Yeah, you know a little bit about the flips. What would you say for people out there when it comes to the flips, like, uh, um, what hurdles you might have to cross with the?
Speaker 2:flips, yeah so. So flips are just, um you know, a little bit different um when it comes to doing flips, because you just are going into the unknown on trying to figure out um how to uh renovate and um uh, um redo a house, and um you know, redo a house and um you know, uh remodel a house. Um the flips, um it could, you know it's a gamble because you're really gambling, you know, on trying to make the property look better and you're trying to uh get a re good resale value out of it. Um, uh, dealing with contractors and dealing with time issues on flips, um, um, you know that can be a headache sometimes, but if you have the right, you know systems in place and processes in place, then flips depending on what you got going on, it could be a really good strategy to really make some good money.
Speaker 1:Yeah, exactly, and I was thinking too when you were saying that also, we know somebody who deals with helping out with buying, with buying basically, like you know, for it comes down to even like foreclosure homes and everything, yeah, and then they know they know from that part like hey, oh, we're going to have basically, what they're doing is they're flipping it. What they're doing is they're flipping it right, whatever needs help work, but they do go by the numbers and like it's going to be worthwhile for us to to have this, make this happen.
Speaker 2:Yeah, exactly, yep. Shout out to Ed.
Speaker 1:Oh, mr, mr Ed, that's. That's my guy. I don't, you know I he hates it when I call him my mentor, but he's taught me a lot since I've been in real estate for over five plus years. So it's that guy.
Speaker 2:Oh yeah, and yeah, he's the one. He's one of those guys that that does that. He turns and turns and burns properties, as they say, or he flips properties and stuff.
Speaker 1:So yeah, because he works with those investors and they go by. You know it went real estate investing all the like. You know Grant Cardone said it's about the numbers numbers.
Speaker 2:Does the numbers make sense? Yep, exactly, they have to make sense, because how are you going to know what the profit is? How are you going to know you know what you're making, what your return on investment is. You know, the numbers are a big part of it, like you know. You might love the strategy of fixing and flipping and maybe fixing up stuff and maybe doing a little bit of construction, but at the end of the day the numbers have to match, you know, so you can make a profit. It's a business, you know.
Speaker 1:Yes, and that's about that's. That's the understanding of, you know, the strategy on flips. Number three is the syndication. This is a group of investing, typically a large multifamily, of commercial deals. You, um, it's a pool of money that you all put together with other investors and a sponsor, and that's how you go about doing the, the syndication. I love syndication. That's where I eventually want to go at. It's a syndication because basically, with the syndicate, the syndication, it's like you said. You have a whole bunch of investors you put your money together for to buy the. You know the multiamily, large multifamily and commercial property the best for multifamily, because multifamily is going to be that one commercial property.
Speaker 1:A lot of stuff has changed in the commercial side, especially COVID, like everything. There's still people working home-based. There's a lot of companies that are frowning. They're like you know what you need to come back to work, but there's still those companies out there that want people to work from home and that's leaving a whole lot of business offices. I think we talked about this before. What do you think is going to happen with a lot of those businesses that are just uninhabited?
Speaker 2:So those commercial properties that the loans are coming due on, yes, yeah, that's going to be crazy market. That's going to be a crazy game right there, because I see a lot of investors cashing in on those, trying to buy a lot of those properties and then maybe even trying to convert some of those commercial. If they can, depending on zoning, convert some of those commercial buildings into some kind of residential living. You know what I mean. Try to convert office spaces, residential living or apartments or something like that. But even that's expensive to you know. Trying to convert from industrial or commercial into residential, that could be, that could be really expensive.
Speaker 1:So yeah, I was thinking the same thing too. I was like what these commercial, especially the offices? Yeah, If somebody you know somebody's right now trying to work on a blueprint on how to change those office spaces into residential spaces yeah, I know they were working that down in la.
Speaker 1:Yeah, with the big time in la trying to make more affordable housing yes, I know they're working on that really hard, but, uh, if it does work, which? And if, if it, if somebody gets a blueprint and it makes it happen like they're, they're sitting there, they're setting themselves up for success right there, cause a lot of people are going to go by that blueprint and be like yo, how did you go about doing that? Because there's going to be, there's right now, there's a lot of buildings that are uninhabited, occupied.
Speaker 2:Yeah, there's a lot of commercial stuff, um, let alone residential, but there's a lot of commercial stuff.
Speaker 1:That's just man, it's going to be a frenzy out here pretty soon with that commercial stuff Exactly Frenzy. The next one which makes the most money and we're going to talk about these again, the flips. You can make faster profits sometimes, you know, between 30, 50 K even six figures, but it depends on the timing and you know an execution.
Speaker 1:So it's always going to be, especially with the flips, how much profit are you going to make off of it? Right, and I know some people they navigate into flipping like they started in real estate in flipping and then that cut that, the collateral that they did get off that profit, profit, excuse me. They advance it into something else bigger. So, basically, you know, they eventually just graduate to different levels.
Speaker 2:Yeah, yeah. And then, on that note too, with the flips, you know you can make 30, 50,000, six figures, just depending on what price point you're flipping at. But like they always say, you got to make your money on the buy. When you're buying these properties, you got to factor in all costs in the buying process. You know you can't leave it up to fate or just be winging it.
Speaker 1:Yeah, we know about that winging it.
Speaker 2:Yeah, you can't be winging it on these numbers which you about to bring up.
Speaker 1:oh boy, that's all I can think of.
Speaker 2:Right, but anyway though. So yeah, you can't just wing it on the on these numbers, especially on fixing flips, because um stuff that you didn't know um was gonna pop up pops up on you. Um, you go, start tearing into walls, stuff starts popping up on you, so you just got to be ready for that. You, you can't, uh, um, you can't uh take these numbers lightly. You have to really be precise um when you're uh fixing and flipping, you know.
Speaker 1:Yeah, exactly Exactly the next one rentals. This is bring steady income and tax benefits. When you, when you scale it, you can replace your nine to five entirely. I do know this because I knew a person had a rental a long time ago and they had 45 rentals, so they didn't have to work a nine to five. All their rentals and all the income they were getting off of that, that steady income, just support their lifestyle.
Speaker 2:Yes, that's awesome, yes, that's awesome, yes, that's awesome, yes, that's awesome. And that's the point where you really want to be at, because even though, like, inflation always makes things more expensive, hey, just grab another rental. Yeah, bills go up and just grab another rental. You know Social Security, try to feed you, or any kind of other investment you may have going on. You know real estate is just, it's good like that where you can just say you know, inflation is killing us, bills are rising, we need a couple more rentals to keep our lifestyle going, or you know.
Speaker 1:Yes. Something else Something else has to happen. Well, it's like warren buffett says. You say, if you have only one income, you're, you're, you're one income away from being poor, yeah, just homeless.
Speaker 2:Or homeless, yeah, and just you know paycheck to paycheck living um, everyone's, I'm sure done it um at one point or another, unless you were just born into a rich family or something and had it passed to you. But for the most part, like you just have to just keep going and just keep. If you're going to do rentals and you're going to have rentals as your main income, maybe after retirement, maybe after retirement, and you see like inflation and the economy getting bad and you know things getting tighter, then it's always good to pick up another rental to be able to get some more cash flow.
Speaker 2:That way, you don't have to go back to work Right.
Speaker 1:That's the goal, that financial independence, exactly All right. The next one syndication. The next one syndication. So syndication it offers passive income with a bigger upgrade, especially when you're investing in multimillion dollar apartment buildings. You typically earn returns with you know with, via cash flow and equity splits, without being a landlord. So it comes down to we'll get further into it, especially with you know with when dealing with syndications or real estate itself. It breaks it down to two levels. Do you want to be a actor, active investor or a passive investor? Yes, that's what it comes down to. Yeah, because both of them. You're going to reap the benefits for it. Just what type of benefits you're going to reap benefit from both of them.
Speaker 2:You could do both.
Speaker 1:You could do one you could do the other.
Speaker 2:It's just the type of person you are, um, you know, especially like with. Well, I was going to say real quick, I was going to touch on, just like um, um, property management. Some people, like some owners, like to be involved all the way or, you know, they would like to manage it themselves and then they like to hire a management company just to do some things while they take care of other things?
Speaker 1:Yes, they delegate it.
Speaker 2:They delegate it. And then some people just like, hey, I don't want to do anything, but just collect my money, so you handle everything. You know, they hire a property management just to do every single thing, and that's it you know, yes.
Speaker 1:And then here's the real question, like we were talking about do you want to make a quick cash, steady income or long-term wealth? Say, uh, go ahead. Sorry, I was going to do it because it was at the time. The time commitment and involvement, because time is everything. Yeah, and then it's like I said, when it comes to real estate investing, it's it's always about time, like, like I said, do you want to make that quick cash? What do you want? What is your objective? Right? So, like, flipping is a, it's always about time, like I said do you want to make that quick cash?
Speaker 1:What do you want? What is your objective?
Speaker 2:Right so like flipping is a full time job. You're managing contractors, timelines, permits and surprises.
Speaker 1:Right, right and then you got rentals. That can be, that can be semi passive especially with a property manager, as you were speaking about, especially with the property manager, as you were speaking about, yes, sir. And then syndication. It's the most passive you write the check and the sponsor does the work. That sounds amazing. I think that's the reason why.
Speaker 2:I like syndication. Yeah, because it's just so. You're just so hands off, you know, you just have to write the check for me. Whoever is in control of the deal, Shout out Grant Cardone syndication. Oh, yes, you know, he's like one of them, kings that does it. There's other guys, I'm sure, that do it out there, but just GC does it he comes to mind because he's always syndicating deals and stuff like that.
Speaker 1:Yes, it is so. If you have a nine to five or raising a family, you might want to swing a hammer or deal with midnight plumbing calls. So syndication or long term rentals might be a faster, better fit for you.
Speaker 2:Yeah.
Speaker 1:Yeah, now the risk to watch out for flipping and, like you were saying, holding costs, market shifts, the rehab budgets, the underestimated rehab budget.
Speaker 2:That's like the, the number one. You either overestimate or you underestimate your rehab. And when you underestimate your rehab, oh man Is. That's why the numbers can be important, you know.
Speaker 1:Yes.
Speaker 2:Got to do it right.
Speaker 1:At rentals tenant issue vacancies, unexpected maintenance.
Speaker 2:Yeah, yeah, with rentals, yeah.
Speaker 1:Yeah, I mean, a person can have rentals and they'll be, you know, on vacation and Dubai, and they get a phone call talking about, yeah, the, you know, the plumbing, the plumbing, the toilet's not flushing, there's something clogged up in the lines. What do you do?
Speaker 2:Yeah, you got to make that call from Dubai and say Roto-Rooter.
Speaker 1:Yeah, exactly Right, I'm going to pay for this hefty fee, but yeah, I'll do it. Yeah, and then syndication. It says you know, once you're in, you can't pull your money out easily and you can't. And this is what I do know about syndication. They have a portfolio of everything that's going on. You will know everything that's going on with your money. Like I said, it's an investor pool, but the thing about it is they have an exit plan for how many years it's going to be. It comes to, uh, the, the, the funding. How much? How much is going to be broken down to for everybody to get their, their passive income?
Speaker 2:Yeah, yep, all that's gotta be uh accounted for. How much dividends are going to be dispersed uh, in this in the project? Uh, well, with the syndication deal they're gonna. Um, it's just, with the syndication deal they're going to. It's just, you know, it's so much, so many terms in the deal and so many rules you have to follow Because, like you say, you can't just easily, you can't just put your money in and then think, oh, I'm just going to, I don't, I think I'm having a bad time period right here.
Speaker 1:I need that money back.
Speaker 2:I need that money back. No, you can't just get it out like that. So if you're going to do syndication, you might want to think about that Like you can't just easily pull your money out. You change your mind, you have an emergency. That money has to be in that deal. Stay in that deal, according to contract.
Speaker 1:Yes. And then the bottom line every strategy comes with risk. The key is knowing how to manage that risk and make decisions based on data, not emotion. Do not let your emotions be a part of it, especially with real estate Anything real estate. Do not put your emotions into it, because that could be the downfall.
Speaker 2:right there, right right If you're buying your, I guess, family house, personal house yeah, you're going to feel emotion.
Speaker 1:Yeah, your forever home.
Speaker 2:Yeah, your forever home. You're going to be happy, you're going to want what you want. You're going to feel a certain type of way, but with investing, never put your emotions and it's all about the business. It's all about the profit, and you know helping people along the way. Of course you know helping people along the way as much as you can, but at the end of the day it's a business and you got to treat it like that.
Speaker 1:And the next, which one is right for you? Because this is what comes down. Excuse me, this comes down to you as an individual. Ask yourself how much capital do I have? Yeah, do I want to be an active or passive investor? Right, and that's dealing with the income of it. And then, do I want control, or do I want freedom? You want the freedom to just put your capital in it and then make it work for you, right, yeah, yeah. So definitely that's a personal question that everyone needs to ask themselves as to which one is going to be best for them.
Speaker 1:How didn't go about this? What? So many ways to get the capital to go about it, but it's what's going to be best for you. So, and then you start with start what matches your lifestyle. I agree, if you just getting started, maybe house, you know. Maybe house hacking or small rental, yeah. If you're capital rich, put that time into. You know, syndication could be the spot for you, mm, hmm. But if you're ready to get your hands dirty and everything and learn fast, try to flip. You know you can try to flip homes.
Speaker 2:Right.
Speaker 1:Right, but then, if you want to make sure, just don't do this by yourself.
Speaker 2:Yep, definitely don't Going to need some people, some team.
Speaker 1:Yeah, you definitely need the team. Um, there is so many different ways and avenues right now. Um, to get ahold of people who are. You know, you got the, you got the bigger pockets. There's even some uh, uh, what's the investor? What's the one that you go on to? The investor lift? Oh yeah, investor lift.
Speaker 2:Shout out to Investor Lift. There's all kinds of properties on there. They've got videos you can learn. They'll teach you certain strategies and stuff like that. They're big on wholesaling. You know what I mean. Investor Lift is big on wholesaling, but you can find some fix and flip deals while wholesaling on Investor Lift.
Speaker 1:Yes, and then he says you know the final thoughts of coming with all this together about this. Real estate isn't one size fits all and there's basically the best investors. You know that I've known like they know that through time that they're going to reap the benefits of it If the cashflow, the tax benefits, they know exactly what they're in it for. So you have to ask yourself about what's getting the capital which one is going to be good at. Is the rentals, the flips or the syndication? What's going to be best for you and fit your lifestyle the best way it can possible for you? Yeah, exactly.
Speaker 1:He says. So, basically, don't wait for the best strategy. Start where you are, learn, adjust and grow into an investor that you meant to be, and it starts with you. When it comes down to it, it starts with you. Definitely number one. Your mind shift, your mind state yes.
Speaker 2:Mindset is important. You got to have the right mindset in this business If you want to get in and really take it really serious. You have to, like, have the right mindset. You've got to be disciplined, you've got to be knowing what the game is about. You've got to learn the game, learn the numbers. Like when I first started, I just wanted to just to perfect wholesaling and get the strategy down on OK, how was the wholesaling process works? And then I started just looking at different other strategies. Now I'm looking at new construction because you know I want to know how that process works and how development works. So, yeah, just you know, and I think, like there's so many strategies in real estate Sometimes it's hard to pick because, like, depending on where you're at, you know personally, like you say, if you already got money, you might want to just jump in this syndication and be a passive investor.
Speaker 2:But if you're really trying to get in and get some money and you're trying to get started and trying to invest in people going to want to wholesale first or, like you said, a house hack, you know, to get some some income coming in. So yeah, it just depends on get some some income coming in. Um. So yeah, it just depends on lifestyle and what you're interested in and, um, you know what makes the most money, too is important because, uh, what you can do in one strategy, um, um, and make a certain amount of money, you go to a different strategy and it makes way more money, Exactly.
Speaker 1:Yeah, and that was one of the reasons why I started the Professionalist Real Estate Investing Podcast. It's in the real estate investing sector, but there's so many different parts of it, so I'm trying to open people's minds up to different avenues, different directions that can help them as to choosing what's going to be best and beneficial for in their lifestyle, as to what's to the side for real estate investing.
Speaker 2:Yeah.
Speaker 1:Because there's there is some podcasts out there not knocking on any podcast that deals with the, you know the just syndication or multifamily and everything I listen. I listen to all of that Like I do. I've benefited so much to listen to all of it. You know information is power to listen to all of it. You know information is power. So shout out to all the Real Estate Investing podcast.
Speaker 2:I check out everybody, like just everybody. Just shout out to everybody. I could sit here and name drop all day but just shout out to everybody that's in Real Estate Investing, that's doing podcasts about it, that's sharing information, that's keeping up to date on new laws and just everything.
Speaker 1:Yeah, I do Exactly. And then we're done with that side right there of the three, right there, the rentals, the flip and the syndication. This part I want to just go to a little bit as to, especially with our economy, the new administration and what I've been seeing right now is there is a lot of and you know this because we talk about it every day there is a lot of pre-foreclosures going on right now. There's a lot of expired listings going on. So right now it is prime time for people to get in real estate investing because there is so much that is going on with the administration. I know that one of the main things that they're going to say that's going to come about is they're going to have the 100% bonus appreciation.
Speaker 2:Yeah, they're supposed to be coming soon.
Speaker 1:Yeah. So I know a lot are waiting on that. A lot of investors are waiting on that with the bonus depreciation. Another thing too, like with the pre-foreclosures, that's prime time for a person if they want to get into a deal. It's a prime time because me and you we've seen yeah, you've showed me somewhere. Time's hard out here.
Speaker 2:We ain't going to lie about it.
Speaker 1:It is hard, it's really hard. You told me the one where the person had their mortgage was under $400 a month.
Speaker 2:Yeah, I told you that the other day. Yeah, but they couldn't afford it.
Speaker 1:You know what, Everybody's life is completely different and they weren't able to. But now it's in pre-foreclosure If you want to get in real estate investing. They said this. They said, basically with the administration, I do with the administration that is in now, this is the best time to get in real estate investing.
Speaker 2:Yeah, If you don't get in the next four years, when Trump while Trump's you know he's a real estate guy If you don't get in right now it's going to be hard, because I mean it won't be hard but he will. He'll make it a lot easier in these next four years for business guy people, real estate developers, anybody that's involved with real estate. He's going to tailor to you know the laws and the rules for those guys to make it easier to for for building, for anything development, for for just real estate in general, for just real estate in general. So I'd advise anybody to try to get in, at least in these next four years. If you're trying to get rich, if you're trying to get wealthy, if you're trying to build generational wealth through real estate, I definitely try to do it right now. And even if you're not interested in real estate per se, just you know, get some properties, get some. You know, try to get in some kind of way, you know.
Speaker 1:Yeah, I've never, ever heard of anyone that said you know what real estate investing is horrible to get into? You'll never, ever hear that.
Speaker 2:Never You'll hear that there's up and down markets, up and down cycles. There's different cycles. Real estate's bad right now for for retail, or real estate's not good right now for for this reason. But investment wise, depending on what strategy you're using. Real estate is always good. It's always gonna be good. You just you can't go wrong with this.
Speaker 1:So yeah, I tell people I was like. Some people ask me. They're like is this a bad time to get in real estate and real estate investing? I'm like no, there's always. There's people buying all the time. As long as the numbers are good and numbers are right for you Right, it's always a great time, yeah.
Speaker 2:That's always a good time to invest. You just got to like. They say everything's negotiable, right.
Speaker 1:Yeah, everything's negotiable.
Speaker 2:Everything's negotiable, so you just got to negotiate your number, you know, and just make sure that you know you're buying right because you make your money on the buy. That's the rule.
Speaker 1:Yes, yes, all right, that's another episode of Professions Real Estate Investing Podcast, talking about the three strategies of flipping, rentals and syndication. So on that note, just everybody, have a blessed day. Thank you, mr Marcus Harvey. Property relief.
Speaker 2:Property relief. Property relief Hit me up if you got a house that needs to be relieved in any kind of way. Any situation, Buy as is. We close quick. 530-366-2116.
Speaker 1:All right, and on that note, everybody have a blessed day, peace, peace.