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How to Make 52% on Your Money with Maureen McCann

I am excited to have back in the show Maureen McCann. We chatted about what’s happening in the economy and what we can anticipate in the future. It was not meant to be predictive but our view on how resilient the real estate market is and why we think people should continue to take action even now. I wanted to continue that conversation because that went long. I wanted to continue that conversation this time and talk about the numbers. If you were to start investing in real estate now, what are the different ways that you could make money so that you can build wealth? Maureen is the queen of helping people understand what real estate portfolio can do for you. She is exactly the right person to talk to us about this. Before we move on to that, Maureen, you had a few other articles you wanted to share that talk about the big view on the market. Could you share that stuff with us first?

This is one from The Wall Street Journal. This was published on June 1st, 2020. This is relevant information. The headline says, Wall Street Bets Virus Meltdown Gives Landlords a Chance to Grow. The largest home-leasing companies have strong occupancy, rent collection, and expect demand for suburban houses to rise. There’s one thing I want to point out in this article right here. There is a company called Invitation. It’s the country’s biggest single-family rental company and they have over 80,000 doors. Here’s something interesting. They’ve reported record occupancy of roughly 80,000 houses and better than normal on-time rent payments in May despite the pandemic leaving millions of Americans unemployed.

This is true for my company. I don’t have 80,000 doors. I have 1,200 doors and still growing. A good friend of mine owns a company that has 6,000 doors under management. It’s the same thing. The rent collection is high. When you’re looking for an investment and something that’s more safe and secure during a pandemic, you’ve got 80,000 doors that the majority of the rent has been collected. I said the same thing in the last segment. I know that my good friends in this industry have the same thing. I want to read one more important little bullet point out of this.

It says, “American Homes 4 Rent, the second largest with 53,000 houses said it isn’t much below its own pre-pandemic levels of rent collection or occupancy.” This is what I want you to pay attention to. When I read this, I want you to think about what this says to you. The company said, “A $225 million venture to build rental houses that it struck with JP Morgan Asset Management in February was enlarged from $225 million to $650 million.” JP Morgan Asset Management is putting a bigger bet on single-family rental properties. Think about that. If JP Morgan Asset Management group and their leadership team is thinking that, “Why are you not thinking the same way?”

This is an interesting point because I can hear everybody saying, “I’m not JP Morgan. I don’t have millions of dollars. I can’t spread my risk. I can’t do all those things.” Here’s an awesome thing about real estate in the United States. We are so luckier here than any other part of the world. As the layman and the little guy, we are supported in many ways to buy real estate. That’s why one of the things that Maureen is going to talk about now. Even the little guy can do the multibillion-dollar strategy. Think about that. Where else can you do that? You, the little guy, can do a multibillionaire strategy. That’s where they make the money and that’s where you can make the money. You just have to get started and get started with people that are going to help you get there.

It’s one property at a time. You said something that was cool. There are products that are out to support us. We are the only country that has a 30-year fixed rate. That means you can lock in to cheap money for a long period of time. There is a lender or banker that’s willing to give it to you. They’re smart. If you were a banker, you’d go, “I’m going to create a 30 or 40-year note because I’m going to collect the interest on that for that period of time.” That’s super brilliant. As the consumer of the product, we can say, “I want to utilize that. Thank you, Mr. Banker, for giving me the money. I’ll happily pay you the interest. As long as there’s no pre-payment penalty, I’m going to get that paid off as soon as I possibly can so I have more cashflow coming to me later.”

There’s a high level but let’s dig in to rate of return. It’s my favorite topic in the whole world. Leverage is my favorite topic and that’s part of it.

When I was talking to Moneeka about this, I was sharing with her some of the conversations that I have with my investors. These are highly educated professionals. Sometimes, you make the assumption that they know certain things like how you calculate the rate of return. I have learned through experience that if you walk people through how to calculate the rate of return, what the formula is, and then you plug it into the five ways that real estate pays you, the light bulb in their mind illuminates. They go, “No one’s ever showed this to me before.”

“Why am I not taking advantage of that?”

Moneeka was like, “Why don’t you come on? Let’s talk about rate of return and how you calculate it.” I get so much mileage out of that conversation with my investors on one-on-one. We’re going to do it here collectively. As you’re reading, you have to get a piece of paper and a pen or pencil, and you need to write this down. We are going to go through the five ways that real estate pays you. We’re going to plug in these numbers into this formula and it’s not hard. Once you get through it and you see how this works, then you’ll recognize why Moneeka and I are all about women in real estate and how real estate builds wealth. We want this for you. Get your pen and paper. The first thing I want you guys to do is title your blank piece of paper The Five Ways That Real Estate Pays Me. Say you because it’s going to pay you.

The first thing I want you to do is on the top of your paper write, ROR or Rate Of Return, ROR equals profit divided by equity. I’m going to give you a little backstory. My business partner, Clayton Mobley is a quantitative finance genius. He can run numbers in your head like Rain Man but he’s got a personality unlike Rain Man. For the young Millennials that never heard of Rain Man, he was a bright guy that couldn’t talk. He didn’t have a great personality on the outside. My partner is brilliant. He is so smart and younger than me. I love him for all of that and he taught me this because my background is Exercise Physiology. I picked my major because I wanted to avoid calculus. I looked at the syllabus to find out which course didn’t have calculus. That’s how I chose my major. I’m not kidding. That is exactly the truth.

Numbers are not my game but when you put dollar signs in front of the numbers, I get interested. That’s what he did for me. He showed me what the rate of return formula was. He’s like, “Maureen, rate of return is profit over equity.” I was still like, “I don’t know that means.” He’s like, “It’s easy. It’s what you make divided by what you’re having in the deal.” I’m like, “What I make divided by what I have in. Perfect. I got this. Done.” If some of you are still struggling with that, here’s what I did and what helped me. I took a Post-it Note and I wrote, ROR equals profit divided by equity. I put it on my PC so I saw it every single day until it was etched into my mind. You do the same thing if that’s what you need.

Here is what we’re going to do. This is where it gets fun because now this is where you can see the cash, earnings, and the money come through a single-family rental property. Let’s do it. The first way that real estate pays you is through appreciation. You own an asset. You hold onto it. You put a little bit of your money in. You borrow a lot of the bank’s money. The property year over year consistently increases in value. You may have some down periods but it comes back up. It’s one of those things that goes like this. Long-term buy and hold, the value of property for 10, 20, 30 years, you’re going to capture some capital appreciation. It’s just the way that it works. If you live in California, you know what I’m talking about.

In other markets, it’s more tempered and more moderate but it’s still money earning money for you. You’re earning that way. Across the United States, the average property increases in value 6%. Let’s take $100,000 property. I like simple math and easy numbers. The more complex it is, my mind goes, “More charades.” Let’s say, we buy a property for $100,000. Twelve months from now, it appreciated 6%. That means your property is now valued at $106,000. Moneeka, I’m going to ask you this question so you can answer it collectively for the audience. Is that $6,000 profit to you?

It’s $6,000 profit. It’s a lot higher percentage than that though.

That’s generally across the United States. I’ve got some zip codes in my markets in Birmingham and Huntsville that are appreciating 10% to 18%.

Let me say what I mean by this. You might be going into this. We’re talking about you put a little bit of your money in and you got a loan for the rest of it. We’re looking at $100,000 home. You probably put $20,000 in. The bank carried $80,000. The property went up $6,000. Did you make 6%? No. You made $6,000 on $20,000. You didn’t make $6,000 in $100,000. What is that percentage? Ladies, I’m going to calculate this for you quickly. You made $6,000 on $20,000 that you invested. That’s 6 divided by 20, you made 30% of your money that year.

That was the most beautiful conclusion and segue into how appreciation works. If the market generally appreciated 6% in that year, your property went from $100,000 to $106,000. That’s $6,000 profit. Remember the formula. Look back at your formula. Rate of return equals profit, $6,000 divided by your equity. I always say use leverage. Some people are debt-averse so I’m not going to convince the Dave Ramsey types for the consumer debt. Get yourself out of it, but there is good debt that produces cashflow. That’s the debt that Moneeka and I are talking about. Use bank money, leverage into as many hard assets as you can that will produce cashflow for you.

That’s money into your account every single month versus money out of your account every single month. There’s a difference between the asset and the liability. The first way that real estate pays you is through appreciation. If you made $6,000 in twelve months and you divide that by your $20,000 down payment, your rate of return, again profit divided by equity, computes to 30% rate of return on your money. Why is that number important? Here’s why. Let’s put things in perspective as we go through the other four ways that real estate pays you.

In order to create wealth, no matter what vehicle you put your money in, it could be cannabis, cacao, agriculture, oil and gas, gold and silver. The thing is you are looking for a rate of return that is higher than the rate of inflation. That is how you get your money to grow faster than inflation can devalue your dollar. Thirty percent rate of return on the appreciation piece of holding a single-family door. Let me do something interesting here. What if we only made 15%? Let’s say we go back to that same property that was $100,000. The capital appreciation over the next twelve months was only 3%.

How to Make Money: We are the only country that has a 30 year fixed rate. That means you can lock into cheap money for a long period of time.

Your house went from $100,000 to $103,000 in value. You would take your $3,000 divided by your $20,000 because your profit is 3%. Your down payment in your equity is $20,000. $3,000 divided by $20,000 comes up to 15%. Are you okay with 15% knowing the inflation? This could be a part that could be challenged or argued. I don’t believe what the government reports to me about the inflationary rate is. It’s on the lower end for their benefit so that they can extend out Social Security payments because it’s based off of the inflationary rate. In my opinion, it’s around 6%.

The best way to notice that is you go in to Whole Foods. How much can you fit in the basket now than you could ten years ago? We can see it in our lives that inflation is not 3%. You can’t fit 3% less. You’re fitting a lot less for the same dollars.

Whatever your rate of return is, it’s got to be 7% or higher or I’m not going to do the deal ever.

We talked about the accountant last time that I advised against. Your accountant is going to say, “You made 6% on your money. You can do that in the stock market that’s a lot more liquid or you can put in a bond or something else.” It’s a lot safer but you didn’t make 6%. This is why you want to take advice from people that understand real estate. You didn’t make 6%, you made 30%. This is also why I don’t buy everything fully with cash because your rate of return is significantly higher if you use leverage, but you want to be safe about it. Don’t leverage 100%. That’s the magic of leverage.

That was such a good point. As long as you, ladies, get the rate of return formula, trust me, by the time we get through the other four ways, it’s going to be etched in your mind just like it was etched into my mind when I studied this. You will then recognize how powerful a vehicle real estate is. You put a little bit of your money into a hard asset and twelve months later it increases in value. What did you do? You didn’t do anything. You just held onto it. It increases in value and it pays you that way. Think about the market increase of 10%, and your $100,000 property went to $110,000. They’ve got $10,000 in profit divided by $20,000. That’s a 50% rate of return on your money in twelve months.

What if you had ten properties and this was happening too. Think big. This is how you become a millionaire or a multimillionaire. It’s through real estate. We’ll summarize appreciation one more time and then we’re going to jump into the second one which is cashflow. Appreciation pays you if you made $6,000 in a year divided by your $20,000, you made a 30% rate of return on your money. Is anyone anywhere reading this blog who’s earning 30% return on their money? If you are, I would love to chat with you because then I want to get into what you know. I want my money working as hard for me too.

In a safe asset. Now, this is the other thing is we are holding a real asset that is not going to disappear because the market changes. It’s still land. It’s still property. It will still be there. Even if we have a bad year, it’s resilient and it will come back. We’re not talking about making 30% because you’re trading options in the same month. You’re doing short-term options. We’re not doing derivatives. We’re not doing flipping or whatever. We’re doing something that’s very safe and secure. It’s a hard asset that has proven over time to appreciate.

Ladies, that is way number one. It’s appreciation. Number two is cashflow. A lot of us investors were always very focused on the dollars that are coming back to us every single month based off of what we invested into that rental property. I’m going to go low ball here. I’ve been doing this for many years. I know that there are some properties that will cashflow $400, $300 or $250 a month. I’m going to go low on the cashflow and say that after all the expenses are paid, the monthly cashflow out of a rental property is $150. We’re going to take $150 and we’re going to multiply that by twelve months and that comes up to $1,800. Ladies, is that profit?

Yes and that’s after all expenses. After maintenance, management company, everything.

At the end of twelve months, you now have $1,800 in cash. That is profit to you. Now you take, what do you do? You plug it into the formula, rate of return equals profit which is $1,800 divided by your equity. What do you have in on the deal? It’s $20,000. That’s your down payment. When you take $1,800 and you divide it by $20,000, you get 9%. That’s only at $150. What if I gave you $250 a month? That’s something to think about. Let’s go back because repetition is what gets things in the mind. You earn 30% rate of return on appreciation in twelve months. Your cashflow produced $1,800 at the end of that twelve months. That produced a 9% rate of return. Thirty percent on appreciation, 9% on cashflow, that’s a 39% rate of return on your money and I still have three more to go. Are you interested in learning how it works?

The third way that real estate pays you is through the loan paydown. This is where leverage comes in. I’m glad that Moneeka is here with her mortgage background. She might add more than I know because I don’t have the mortgage background. She could contribute a lot more to this particular point. Let’s say, we buy a $100,000 house. We put 20% down or $20,000. We have a mortgage note for $80,000. At the end of twelve months from the first date of the loan, we don’t have an $80,000 balance anymore. We have a $79,000 balance because your mortgage payment has two parts. It has your principal and your interest. The interest is the only expense that’s paying the banker for lending us the money.

That’s how he or she makes money. Thank you for lending it to us. The principal payment or the principal part of the mortgage payment is putting money into your own account. At the end of twelve months, if your loan balance is from $80,000 to $79,000 that’s $1,000 of profit to you. What do you do? Plug it into the formula. Rate of return equals profit, $1,000, divided by your $20,000. Let’s do the math on that one. That comes out to 4%. Thirty percent from appreciation, 9% from cashflow, 4% for low paydown. Guess what happens every year with your loan? Moneeka, I know you know the answer to that. Are you paying down more each year or are you getting more to principal each year or less?

It’s more. This is why it’s so amazing to get a 30-year loan because in the very first year, the bank is going to take as much money as they can in interest and have less in the paydown. That’s why it’s called amortized. It’s not a thing that we can just calculate in our heads. We need an amortization calculator because they amortize it. The first year, they’re going to have a higher chunk that goes into interest and a lower chunk that goes into principal. As the years go on, that flips. It happens very slowly. It’s like an hourglass where there’s a crossover. At some point, you’re paying much more in principal than you are in interest. If you can get a 30-year loan now, let’s say 3% and 3.75%, you hold that in for a long time and then you get to see that turnaround where you’re paying down your principal much faster later on.

That means your rate of return is getting better year over year. Keep that in mind. Thirty percent on appreciation, 9% on cashflow, 4% on loan paydown. There are a lot of people that buy real estate for the tax advantages. One of them is called depreciation. How do you calculate depreciation? How does it relate to profitability to you? What a lot of people don’t understand is that the US Tax Code is not a penal code. It may feel like it, if you’re not contributing back to the US economy in a big way. Here’s what I mean by that. If you are a risk-taker like business builder or somebody that is employing lots and lots of people, 500 or more let’s say, the US government gives you certain tax breaks. The US government cannot do all things for all people all the time.

They need entrepreneurs, business owners, risk-takers to help them meet the needs of their population. If you grow agriculture locally, you get tax benefits. If you drill for domestic oil and gas, that’s a big risk. That’s a lot of money that you put to drill to try to find oil. If you find it, great. If you don’t find it then you can write that off as a loss on your tax schedule. If you house people and they pay you rent then the US government is going to allow you to depreciate that asset every year for the next 27.5 years. It means you get a tax break for the next 27.5 years on that door and any other door that you own. Don’t ask where they came up with 27.5 years. I have no idea. It so random.

I don’t know why but that’s the rule. How does depreciation put more money in your pocket? Let’s run through the formula. Let’s take that same $100,000 property that we purchased with leverage. Let’s say that you cannot depreciate land. Land does not lose its value. The structure has wear and tear. There are costs that we as investors and landlords have to pay to maintain that property. The US government says, “Thanks for housing our people. You’re going to get to depreciate your asset for the next 27.5 years and here’s how you calculate it.” Take the $100,000 property and you’ve got to subtract out the cost of the land. A good 10% is a good way to calculate that. You take $100,000 property, multiply it by 10%, now you’ve got a structure valued at $90,000.

The land is valued at $10,000. The structure is $90,000. What do you do? You take the $90,000 then you divide it by 27.5 years. If you have calculators, I’m going to do it with you. You take $90,000 divided by 27.5 and that comes up to $3,272. Is that your deduction though? No. Here’s why. The difference between me, you, Moneeka, and everyone else reading is that we all fall into different tax brackets. You have to take that value and then multiply it by your tax bracket. I’m going to say 35% because you guys all make killer money and you’re amazing fabulous women. The $3,272, I’m going to multiply that by tax bracket of 35%. That comes up to $1,145.

That means the US government says, “Moneeka, thank you so much for housing our citizens. I appreciate you giving them housing so you can depreciate your asset every year. This year you get to depreciate $1,145 in that asset which means you get to keep that money. We don’t want it. You keep it.” Is that profit to you because you don’t have to pay the government? Yes. The fourth way that real estate pays you. You can depreciate the asset and keep that money. What do we do when we have profit? We roll it into our rate of return formula. Rate of return equals profits, $1,145 divided by your equity, which is $20,000 and that comes up to 5.7%. I can round it up to 6%.

Let’s stop here and add up the numbers. We earned 30% on our money from appreciation. We earned 9% money from cashflow. We earned 4% from the loan paydown, and now we earned 6% from depreciation. That gives me 49% rate of return on your investment every year. The last way that real estate pays you is not easy for me to show in a calculation. It’s easier for me to explain it as a bigger picture. Have you guys heard of the term, buying real estate is a good hedge against inflation?

What the heck does that mean? Does anyone know what that means? How does it mean in a calculation? A good friend of mine who’s a lender has a calculator that shows this. It’s proprietary. He’s still working on it. It’s not quite complete but he showed me the prototype. I said to him, “Aaron, you have got to give that to me. This is exactly what I need to show in mathematical terms to explain how real estate is a good hedge against inflation.” In short, think of it this way. When we borrow money, we’re locked to a certain payment for the next 30 years.

Ten, five years from now or next year, everything goes up. The cost of living goes up. Your salary goes up if your boss likes you. You get your 1% or 2% raise. That’s what mine was when I was working in the corporate world. You’re earning more money as time goes by. The banker though is not asking us to pay back the loan in inflation-adjusted dollars. They’re asking us to pay the loan back in nominal dollars. They’re not asking you to pay the loan. The value of the loan doesn’t go up. You’re earning more and you’re paying back the loan in nominal dollars that we’re back here locked in time. It was a long time ago. That comes out to around 3%.

How to Make Money: If you walk people through how to calculate the rate of return and what the formula is, then you plug it into the five ways that real estate pays you, the light bulb in their mind illuminates.

That will go up over time too. As inflation raises, and you’re locked into a rate from many years back, then that percentage of return for you is going to go up.

If you were to tack on that last 3% with your hedge against inflation, I am now at a 52% rate of return on your money twelve months later after you purchased the asset. This is my opinion. Any rate of return that I can get above 7% is stellar for me. If inflation is at 6% and I’m earning anything above that, then I’m creating wealth. Any investment that earns below that 6%, you’re losing value. You’re not earning. You’re just trying to keep up. That’s what people talk about the rat race like, “I’m flipping in the rat race.” As you get married, you have kids, buy bigger homes, buy X, Y, and Z things, you’ve got more money going out.

You’re locked to a job to be able to pay for all these things and you’re stuck because you’re not having streams of income coming in from other places. You’re relying on that one income to pay for all of those things. This was just one property. What if you took this 52% rate of return on one property and you multiplied it by ten properties? You don’t have to buy all ten now. I talk with investors, it’s building a portfolio slowly over time. If you’re in Moneeka’s neighborhood, your property values, you probably have a lot of equity in your homes. That’s what exactly most of my California investors do. They will take lines of credit on their primary residence because let’s say you’ve got $1 million sitting in equity. That’s very reasonable from where Moneeka lives. You’ve got $1 million in equity in your property. That $1 million is sitting comfortably in your house. It’s not doing anything. Is it earning you any money? It’s not. It’s sitting there. It makes you feel good but it’s earning you $0.

It’s like taking $1 million and putting it in a savings account earning 1%. If inflation is at 6% and your money is earning 1% in a CD through the bank, are you creating wealth with that? No. You’ve got to get it earning. The biggest hurdle for a lot of people is they go, “I don’t want to touch that. It makes me feel better there. I want my house paid off.” I don’t want my house paid off ever. I want to be able to deduct the interest. I want to have a line of credit on my house I have access to anytime that I want to buy investment properties or anything that’s going to produce cashflow for a monthly basis. I’m looking for more streams of income so that you can escape the rat race. Moneeka and I are the same mindsets. This is how we have learned what real estate does for us and our families.

That’s why we’re so passionate about teaching you the five ways of what real estate pays you. Thirty percent appreciation, 9% cashflow, 4% loan paydown, 6% depreciation, 3% on a hedge against inflation, that’s not made up. That is real math. Math is money and money is fun. Learn the math, learn to make them money, and real estate is a phenomenal wealth builder. Through learning the rate of return formula and plugging those little numbers in as you go, then you recognize that you’re accelerating your wealth faster than the average 6% or 8% that the stock market yields without all of the whip stalling and the heart palpitations that you get. As you get older like I am, I don’t like all of those. I’m an aggressive investor. I don’t like all the whips off because I could be losing 30% of my money in an instant.

What if I had ten rental properties and they’re all appreciating 6% a year. That calculates to a 30% rate of return each year, that is a much faster, better secure wealth-building tool than something I don’t have any control over in the stock market. That’s where when you understand the math, ladies, and this is what I wanted to. I’m hoping that Moneeka and I were able to accomplish that goal on this episode. Write that formula down, rate of return equals profit divided by equity. We have a one-pager. We could attach it to this as a nice little summary to send it out to you guys so that you have it. I didn’t talk about you can write-off the interest. That’s not even something that I even talked about. There are many other ways. These are the five basic ways and once you get these five basic ways, there is no doubt in my mind, you will then see the value of investing your money in real estate.

If this sounds good to you, you need to have a deeper conversation with Maureen. She can run you through the numbers for your scenario. What we are going to do is in EXTRA, we’re going to build a portfolio. We’re going to start with we’ve got this much money, I want to build a portfolio and here is my goal. We’re going to do a pretend goal for me and we’re going to do that. She’s going to show me how to build a portfolio. Stay tuned for EXTRA for that. For your personal conversation, call Maureen or email Maureen. What is the email address they can reach you at?

It’s my first, initial and last name, [email protected]. I would love to chat with you. One of the things that I love doing is finding out what it is that investors want. Moneeka, the conversations that I had for years comes down to people who want to take care of their families. They want to live a financially worry-free life. They want to either supplement retirement and retire earlier. They want to pay for college for kids. I have some investors that have disabled children who once they become adults are still going to need care.

The parents know that when they transition off this planet, they want to have enough resources available to their child or children that they’re leaving behind that has special needs so that they’re well taken care of. I have some that invest for tax purposes, to reduce their tax liability, but it comes down to those things. It comes down to wanting to take care of their families and they want a steady stream of income. This is one beautiful way to make it happen. It builds that for whatever their purpose is. It’s cool to get to understand what their goals are.

Ladies, if you do connect with Maureen and I encourage you to do that, please let her know that you came from me so that she knows the conversation that you have been in on already. That’s going to be very relevant. You can ask more questions and get more details and all of that stuff. It helps her to give a little context on what your knowledge base is. Maureen, thank you for that. That was amazing. I can’t wait to build my multimillion-dollar portfolio. That’s going to be fun. We’re going to be doing that in EXTRA.

Ladies, if you are not subscribed to EXTRA, go subscribe. Its RealEstateInvestingForWomenEXTRA.com. The first seven days are free. You’re going to get Maureen’s EXTRA. There are about 50 other EXTRAs up there so you can totally binge, and then you can decide whether you want to subscribe for the future or not. If you already subscribed, stay tuned. We’ve got more yummy and juicy stuff for you. If you’re leaving us now, I appreciate that you joined us for this portion of the show. Thank you. I look forward to seeing you next time. Until then, remember, goals without action are just dreams. Get out there, take action, and create the life your heart deeply desires. I’ll see you soon.

Important Links

• Maureen McCann
• Wall Street Bets Virus Meltdown Gives Landlords a Chance to Grow – article
• Invitation
• [email protected]
• RealEstateInvestingForWomenEXTRA.com
• https://spartaninvest.com/investing4women

About Maureen McCann

Listen to the podcast here

Get Some Perspective on the Real Estate Market Now with Maureen McCann

Have you been interested in investing in real estate, but nothing you’ve looked at so far looks blissful? If so, I totally understand. That’s why I’d like to introduce you to Maureen McCann at Spartan Invest. At Spartan Invest, they strive to identify real estate assets which will offer viable investment options with exceptional rates of return. They do the work for you. They locate, purchase and rehab the property, then find and manage the tenants. You simply invest in a turnkey property and monitor your investments from the comfort of your own home. What could be more blissful than that? If you would like to find out more, go to www.SpartanInvest.com/Investing4Women or email Maureen directly at [email protected]. Let her know I sent you.

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I am excited to welcome back to our show my dear friend, Maureen McCann. She’s been on the show several times before. We were on a conversation on the phone talking about the realities of what’s going on in the real estate market and all the mixed messaging that’s out there. We decided we were going to chat with you guys on our perspective of what’s happening in the real estate and what we might be able to anticipate. For those of you who have not met Maureen, let me go ahead and read her bio so you have a little bit of background on her. Maureen is the Cofounder and Principal Owner of Spartan Invest and operates as a VP of Sales and Marketing for this boutique-type real estate investment company. Spartan Invest is a small real estate investment company that specializes in providing investors turnkey real estate from monthly passive residual income.

Maureen brings with her years of sales and marketing experience in the turnkey marketplace. Having served as an investment property coach for years, Maureen is skilled in helping clients build turnkey cashflow portfolios for her clients. Maureen has helped hundreds of investors build the type of rental portfolios necessary to receive short-term and long-term monthly passive income goals. Investing in turnkey real estate for long-term wealth generation is something Maureen understands intimately. Whether clients want to replace their income with passive income or clients are simply looking to supplement their retirement, Maureen can custom design the right portfolio with the right end goal in mind. Maureen, welcome back to this show.

Moneeka, it is good to be here. There is a lot to talk about in this episode.

When I’m out there, I’m listening to a lot of different podcasts to hear what everybody’s saying, and we’re getting exact opposite predictions, ideas and stats. There’s no way to know who’s going to be right. Predictions are predictions. Sometimes they’re based on stats, but you can see, we can get stats from all different places to support our predictions. I thought that it would be valuable for us to talk about our perspective. Ladies, the thing that I want you to know, and this is something that I stay aware of is someone is going to be right but we don’t know who it is.

Maureen and I are not here to make predictions. We’re here to give you a bird’s eye view of how we are looking at the market and what kinds of investing strategies we’re making. Whatever it’s worth, you can follow us or not. If you will take it as perspective and take pieces of it, that’s great. Understand that we’re not trying to be predictive and tell you what to do. We’re giving you our perspective. Is that fair?

That’s fair for me.

Maureen, we are in different markets as far as where we’re investing. You had some great information on some studying that you had done. Why don’t we start there? Why don’t you tell us what you’re seeing out there in the world?

On the ground level, it’s important to share what is happening in the real estate investment world in the market that I know that I do business within and live and breathe every day. That’s not going to be the same for every single market. However, a lot of the other turnkey operators that I spoke with, they have all said similar things. Even amongst a pandemic and the high unemployment numbers, you would then think that there is going to be an exorbitant amount of people that are not able to pay their rent. I do recognize that there is going to be a certain percentage of people, whether it’s their homeowners struggling to pay their mortgage because they got laid off or furloughed, or it’s renters that are not able to pay their rent because of the same reasons. Every market is different. There are some markets that the overall GDP of the area is predominated or predicated. It is dominated by a certain industry.

Las Vegas comes to mind so as Orlando, Florida. These are markets that have high travel tourism, hospitality-based economy. They’re the ones that are going to be more affected and more exposed to a pandemic like this. It’s not anything related to any precondition in the economy. It was simply you have to close your businesses down. Prior to that initiative of the shelter in place and all businesses stop, the economy was warring. The fundamentals are there and in my opinion, they’re still there. They didn’t go away. It would only close your doors until we figure out what’s going on here so we can blunt the curve and prevent the local hospitals from being overwhelmed.

You’ve got markets that are exposed to the effects of COVID and then you have others that are insulated. What you were talking about earlier is that there are all of these varying opinions and it makes sense because it’s probably locality-based. It’s probably what they see in their own backyard. This is where sharing what it is that I see in my backyard, what you see in your backyard might be different and can be contrasting, but it’s also market-based. It’s not overall. A lot of times, you hear something or you see a headline and you make a generalization. This is the human mind. You make the generalization that it’s the entire market. It’s not like that. Luckily, I can share that the markets that I’m in. These are not Birmingham and Huntsville, Alabama. People are not clamoring to get on planes to go vacation and sip martinis by the pool in one of these markets. That’s not what we do.

It is a more industrial base. It’s healthcare, manufacturing, trade utilities, banking, finance, technology, aerospace engineering. There was some good news that we had a rocket that went up into space. The Dragon made it up into the space. We’ve got two new astronauts up there doing some work at the space station. That was super big news. A lot of that effort and work came out of Huntsville because Huntsville is an aerospace engineering type of market. What’s relevant for the readers is, number one, turn off the news. That’s first and foremost. Please do yourself that favor because I’m going to admit. When this COVID thing first hit, I was absorbed and consumed in watching it. I noticed my entire brain circuitry was firing on all negatives. I was feeling down, blue, despair and heartache.

You have to remember that those news outlets are all about sensationalizing headlines to drive traffic, to get ratings, to monetize their stations. There’s nothing wrong with it. You have the choice to either tune in or tune out. When you tune out, you don’t realize that life is not as horrible or as dooming gloom as they want you to believe that it is because they want your attention. We have so much grasping for our attention that the most sensational headline is going to win. They know it because that’s how our minds go. It’s like when you see a headline, you go, “I want to know what happened right there,” and then you’re off track. You lose focus.

I’ve been telling people from the beginning is that there are things you need to know and understand that the news is another tool to help to keep you informed. The problem is that most people use it as a tool to get them depressed. They get them freak out. You are not using it as a tool that supports you. I’m telling everybody is to get relevant information from news sources that you trust. Give them ten minutes of your time, get your executive summary, move on with your life and live in the life that’s happening rather than the life that they’re talking about. There are many interesting stories or curiosities. Most of that is designed to create an emotional response. When you’re talking about negative things, the emotional response they’re going to get from you is a negative response. You need to manage that.

Real Estate Market Perspective: There are businesses that have had to pivot. The strategic savvy business owners and leaders recognize that.

This is one of our bliss practices, you manage what’s coming in. I’m telling everybody all the time to be aware, vigilant, but stay positive. You have control over that. I’m glad that you mentioned that, Maureen. It’s such a big key to staying on top of this. With the pandemic, your immune system is your best friend. If you are watching the news and make yourself depressed, upset, angry, and hyper reacting, your immune system drops and it makes you more susceptible. In a very selfish way, it’s important that you keep your eyes off the news that’s not supporting you. Use it as a tool that’s there for you to keep you safe.

For ten minutes, get your executive summary checkout, get back and check into your life because as soon as I implemented that practice. For me, life was normal. I was like, “Let’s keep going. Nothing was stopping me.” That’s how I’ve been operating ever since. The world has responded in kind. What’s important here in this interview is that there are businesses and people that are thriving through the pandemic. There are others that are suffering. There are businesses that have had to pivot the strategic savvy business owners and leaders. When they recognize that their doors have to be closed for a particular length of time, for a particular reason, some of them are sitting idle and they may not open back up. Others are pivoting and figuring out ways they can still provide value without having to interact. I can give you an example, my nail salon.

They couldn’t open their doors for business, but what they did do was they pivoted. They got creative and then they home-delivered your nail kit. The clippers, the nail files, the gel and stuff that you needed to do your nails. If you couldn’t do them yourself, go into the salon. They were like, “We’ll give you all the materials.” They’re going to charge you. They should because they’re a business owner trying to stay in business. This is a business that you supported and loved and kept going to whatever it is, donut shop, nail salon. Anything that you support locally, they’re trying to find a way to pivot to still serve you and provide value to you, support them.

Whether it’s a pandemic or the 2008 global financial crisis. I was not in real estate in 9/11, but you’ve got this major life and this writing this situation that’s going on. All of these major things are going on and it is true. There are businesses that are going to thrive and those that are going to suffer. The ones that suffer if they don’t pivot will go out of business. The ones that pivot will stay in business and find new ways of doing things. They are finding new ways to serve the community that they went into business or in the first place.

Talk to me a little bit about how that’s affecting your market. Are you seeing that a lot of the fear is that real estate prices are going down, people aren’t paying rent, landlords are suffering? This is what we’re hearing in the news, but what’s happening? I’ll give you my perspective, but I know that you manage many properties. I want to hear what you’ve got going on over there.

We do have 1,200 doors under management. With the biggest question that we were getting from everybody, including ourselves in mid-March 2020 when the shelter in place orders came in, we thought, “How many of our residents are negatively impacted financially by COVID?” You don’t know at that particular moment, but it’s going to show up through the percent of the rent collected. That’s when you know. Luckily for us, the shelter in place orders across the nation, we want it to be placed about mid-March. We had already had the majority of the rent collected on those 1,200 doors. We had seen that it didn’t affect us in March. I will give you a metric. Internally, at the end of 30 days, we look at the percent of rent that’s uncollected. There’s always a certain percentage and you want to keep it under 5%. That means if you got 95% of the rent for the month, you are doing great. The lates and stragglers always happen. That’s part of the business. They’ll eventually catch up, but there’s always a certain percentage of the rent that’s uncollected at the end of the month. In April 2020, it went to 7%. There is only a small uptick. We did an initiative where we sent out a survey to all of the residents.

We said, “Raise your hand if you’ve been negatively affected by COVID and you’ve lost your job. Let us know. We want to help.” Out of the 1,200 doors, we’ve got 224 responses. Only nine were able to support with documentation that they were laid off. Maybe there were some opportunists in there not blame them. That’s all right. Everyone’s got hustle, but you’ve got to supply the documentation. Out of the nine, they legitimately lost their jobs. We help them relocate and to find other jobs. We’ve redirected their attention to find other jobs. We sent out an incentive to say, “If you pay your rent on time in April, then we’ll deduct $75 off your rent.” We had 79% of the rent collected by the fourth day of the month that told us that the majority of our residents were still being paid. They were still employed. Our investors were protected. The asset was protected. The debt service would be covered for those investors that leverage their properties.

We knew at that point, we were in good shape. May, the same thing. We have a lot of the rent collected in the high 90%. This is market-based though. If we were in Vegas and I’m not there, but I’m making an assumption. Las Vegas is a place that is hospitality, travel, leisure-based predominantly. No one’s coming to see shows in Birmingham, Alabama or Huntsville, but they are in Vegas. Those are residents living there that the stimulus money is going to carry them for months, but they’ve got to get those doors open as soon as the people can resume work and get back to work.

We’re not going to have the same housing problem that we did in 2008. The fundamentals behind me saying that number one is we didn’t have the predatory lending or the subprime loans for people that didn’t qualify were able to get into homes that they can’t afford. The rates adjusted, the payments went up and then they couldn’t make the payments. That is not the situation here. Sixty percent of US homeowners have 58% equity in their properties. You don’t have that situation.

There’s a majority of homeowners that have equity in their homes. You can access the equity to cover any costs or any delay in employment that will cover you. My advice to readers is trying to get access to your equity now is probably challenging for you because you have to wait in line. Many of these lenders, especially in the single-family space, they’re still liquid. They still have capital. They’re still lending. I know the commercial space is a little different. I’d love to hear if you’ve got any insight on that or what you’ve been hearing. Most of that commercial side is private lending. You’ve got equity groups and things that are lending to buy these big buildings. That I’ve heard through the CEO of CoreVest that has been stalled a bit.

There is free-flowing capital in the banks for them to lend to buy a single-family, but they are servicing those primary homeowners that want to buy a home first. If you want to refi, you’re in line. You’re second. In a situation like this, if you have equity in your home pre-pandemic, post-pandemic, any time, it’s important to have access to it. Get the line, have it available to you so that if you need it, you have it at your fingertips versus trying to go get it when everyone else is scrambling.

I want to get a little clarity around that because this is a question that a lot of people ask me. Is it getting an equity loan or an equity line? Let me clarify what those two things are. Both of those are the second loan that goes behind your first mortgage. Your first mortgage is probably how you buy your house. The second is going to go behind your first, which is why it’s called a second. If you do a loan or if you refinance and take a cash-out to get some of that equity, you start paying interest immediately on that lump sum of cash that’s given to you. If you do an equity line, it’s like getting a credit card that secured on your home, which means the rate’s going to be low. It’s going to be closer to 3%, 4% or 5%, but you don’t pay anything on it until you start utilizing that money.

I want to add this because this is the stuff that I’ve been saying daily with investors is that there is an opportunity in everything everywhere, all the time. It’s your perspective. You could use this opportunity to contract in fear and then do nothing. I think about the people back in 2008. If you have listened to the headlines, what’s contradictory is that headlines, news media outlets, it was like a global financial meltdown. Everything is closing. The global economy is collapsing. I remember hearing those words and yet my phone was ringing incessantly for people looking to invest in real estate. What they knew with those investors knew then and what I know now with 100% certainty is that real estate is not necessarily recession-proof like it’s bulletproof, but it has certainly shown that it is recession-resistant.

Even during recessions, it has increased in value. Three out of the last five recessions real estate has improved. It has increased in value. There is much literature now circulating that world economists, global economists, companies like JP Morgan, Wells Fargo are talking about how real estate is going to lead us out of this recession. There are two thoughts I have here. Number one, in 2008, we all realized that the US housing market drives the economy. It does because we all saw those little derivatives were packaged up and those mortgage-backed securities were set and sold around the world.

Real Estate Market Perspective: Real estate is not necessarily recession proof but it has certainly shown that it is recession resistant.

The whole world felt it when the US real estate market not collapse and everyone’s panicking. Does that not tell you how important the US real estate is to the world economy? Let’s fast forward. We have the lowest interest rates that we have ever seen in investment loans. Prior to 2008, these loans were 7%, 8% to 9%. We are talking about 30-year money is cheap. It is under 5%. You’re at 3.375 to 4.25. It fluctuates around every day, but you can lock into 30-year cheap money and get higher cashflow for the next 30 years because you locked into a low-interest rate. Your cashflow to a premium income generating property is dependent on the interest rate you lock-in and the rent that you receive.

If you can get higher rent and a low-interest rate, your cashflow is going to be high for 30 years. This pandemic will be here now. It’s probably going to be here a year from now. We have some vaccines, better testing, better ways of preventing this from spreading. It’s short-lived, whether that’s 1 or 2 years compared to the opportunity to invest in real estate that has been shown to be recession-resistant and to still increase in value even during strange times like these days. It’s not a sales pitch. It’s not me saying, “Buy a product.” It’s pointing out to you, the investor, the reader, the seeker of knowledge, how do you make sense in a world that is having contrasting views on all types of things? Moneeka and I are here to share what we see in our backyards because we are in real estate 24/7.

This is the other key important point too is that there are basic things that we all need as humans. We need food. Our grocery stores are crushing it as far as their shareholders are probably happy because sales are through the roof. They’re doing well because you realize that’s essential. Housing is essential. No matter what is happening 9/11, 2008 global financial meltdown, a pandemic, you still need a place to live and you will figure it out. You, personally, your renters, your tenants, your residents will figure it out too. They will figure out a way to pay because they need shelter. I would love to get your input on this too to see if you’ve got any input on the multiunit space.

I’ve listened to a few panel discussions where they’ve had single-family people on there with multifamily people and then build-to-rent people. When you have to live at home, work from home, study from home, space becomes a big commodity. If you’re living in a big box city or in a high-density city like New York, or you’re living in a high-density building like a multiunit, and everyone is home all at the same time, 24/7 for weeks, people are getting on each other’s nerves. It’s the truth. They want more space. They want to get out of those high-density places and live in more spacious accommodations. Hence, the reason we have been busy because you get stimulus money. These are people that are probably still working.

The first stimulus package was, if you make $75,000 or less, you’re going to get a check for $1,200 per adult, per household and you’re going to get $500 per child per household. If you have a family of 4, 2 adults, 2 kids, you’re looking at almost $4,000 coming to you and you’re still working. Does that give you enough money to move out of a box? It does. Hence, it’s the reason our leasing phones have been ringing. I have a 98.4% occupancy rate now. It’s the highest it’s ever been. That’s crazy during the middle of a pandemic. That’s real data. That’s not me. When something like this happens, you’re trying to figure out what is going on. It makes sense that if you’ve got people in high-density residences that are living on top of each other and you work, live, and study from home and you now need more space, you’re going to go find it. Especially if you’ve got stimulus money, or even people are still getting income tax returns, their checks. All of a sudden, you’ve got thousands of dollars. Now you can move. I’ve talked to other operators like me, who I’m friends with and the same thing’s happening for them too.

I live in a condominium complex myself. There are 45 units. We’re all on top of each other. I’m hearing this also. I completely support what you were saying, Maureen, is that the single-family home is like magic now. People are coveting that space. It has always been that way that the single-family home is a foundational thing in our society. It’s something that provides more of what we want in our homes than any other form of housing. It’s why that market is stable and reliable. Even in my own condo complex, we have a lot of retired people and we have a lot of young families. We’re all going up and down the elevators together.

The older people are scared because younger people are not wearing masks. They’re not at risk. They go into these elevators in these compact little spaces and they’re spreading their germs. The older people on the fourth floor or whatever have to take those elevators down because they can’t walk down the stairs. You’re seeing in real life how this plays out in a time like this. What happens is people say, “I don’t ever want to be at risk like that again. I want more room for my children. I don’t want to be around germs of younger people. I want to be safe in a place that feels more protected.” I do also see that the single-family market has continued to go up. From my perspective, if you look at housing prices, the days on market is longer because people are having trouble going in and seeing places.

It takes longer to shop, but prices are still either stable or a little bit up. If you look at high density, we are seeing that the prices are going a little bit down. They’re still not plummeting but you definitely see a gap between the single-family and the high density. This is the thing that I want everybody to take in from what Maureen and I are saying. Use your common sense. Let’s talk about common sense investing. There are lots of ways to make exciting money in real estate. The true blissful way is to take a look at what makes sense and invest in that way because that’s going to be less stressful. It’s like the stock market. If you invest in something that’s exciting and is going to gain 100% in three days, it also can lose that much. It’s the same in real estate. If you’re going for exciting investments, you might make a lot more money, but when things go bad, they go bad. The thing to do is take a look at what makes sense in your communities. I can tell you what makes sense in my community. Prices have stabilized. They’re still high. In lending, the conforming loans, what is it over there for you in Alabama? What’s conforming to you?

There’s the jumbo.

What is the basic conforming for Fannie and Freddie?

I’ll speak to the investors, like $150,000.

In California, basic standard-conforming is $510,000. We then have large conforming, which goes to $765,000. After that, it’s called jumbo and max jumbo. Those are the tiers of lending. Everybody is able to get a conforming loan because they’re backed by the government. They’re backed by Fannie and Freddie. They’re still lending. They’re still giving you great rates. They’re still not charging you a lot of points. Even for us, if we go into large conforming, rates skyrocket. The rate goes up by at least 1.5. The points go up by at least 2 to 3 points. Points are what you pay upfront to get that loan. It’s harder to get those larger loans, but conforming is backed by the government so it’s easier to get.

I’m shopping and every property that I’m looking at is $1 million. I can’t get the loan that I want. The best that I could probably do with what I want to pay is $510,000. What does that say to me? My market is not the market for me to be investing in. However, it is a good time to be investing in a market where the loans can be Fannie and Freddie backed, they’re conforming. I might look, for instance, at Maureen’s market or several other markets around the country that are giving you cashflow that you can still get loans on those properties in conforming pricing. Take a look around, things may not be exactly what they have always been, but there are still opportunities. I wouldn’t sit back and say, “Everything is horrible because of what you’re seeing in your backyard.” I can’t afford housing in my backyard now, but I probably will in a couple of years. What I want to do is I want to buy something. Look at what’s happening and make common-sense decisions. In the end, it’s these common-sense decisions that continue to rise because they are resilient. They make sense and people need those homes.

You made me think of a client that I talked with. I won’t give his last name, but let’s keep him anonymous. He called me and he was super gung ho. He’s like, “Maureen, I’m ready to buy.” I was showing him some properties and then I got an email from him. He’s like, “I talked to my CPA, my financial advisor. They told me to sit back, to stop what I was doing and to wait and see.” I had to word it eloquently. I wanted to tell him that that was dumb advice from his CPA and his financial advisor. I get his perspective. The readers might be thinking, “She’s a salesperson. She’s trying to sell something because she needs a commission so that she can pay for her house or whatever.” It’s like, what was more important to me was to take some advice from someone that’s a billionaire like Warren Buffet, who said, “When others are fearful, be greedy. When others are greedy, be fearful.”

Real Estate Market Perspective: Recognize that there is still good and there is still opportunity. There is still ways to profit in real estate.

There are times where it’s going to flip flop. We are in a time of fear that is being perpetuated through news outlets and social media sites because it catches attention and headlines. When someone has a net worth in the billions of dollars, they have a mindset and experience that commands them to be able to say what it is they say. We, the layperson, who’s not the billionaire has to look at that and say, “Why is he saying that? Why does Warren Buffett say, “Be greedy when others are fearful?” It’s because of this. I was able to convince Vignette to move forward with the purchase and not listen to and ignore the advice of people that he’s paying to provide him a service. They were doing him a disservice because they were not giving him the correct information, in my opinion. They are telling him to sit on the sidelines, wait and see, for what? Until the interest rates rise and then you miss locking in the 30-year rate that you wait for the inventory dwindling? They let you get the leftovers of what other people pick through because they were the savvy investors that were jumping and that recognized the opportunity versus the ones that are going to go, “I’ll jump in after it’s late and the interest rates are higher. I’ve got to pick out what’s been picked over already.”

I was able to have a conversation with him. He used common sense. I wrote this email to him. I supported it with some documentation. There was a cover story on the Wall Street Journal about how real estate is going to lift us out of the recession. I sent that to him. There’s a blog called Keeping Current Matters. They talked about how real estate is positioned to bring us out of the recession. I sent him the information and I was eloquent in my, “Don’t listen to your CPA and your financial advisor. They’re not giving you good advice.” He thought about it and he came back two days later and said, “You’re right. I’m going to continue on with my investment strategy.”

I was like, “Good for you for not listening. Don’t be a sheeple. Don’t listen to what other people do and follow blindly. Use your thinking brain and not other people’s thinking brain to make decisions for you.” Does it feel like on a guttural level? The information I shared was through The Economist and through JP Morgan Chase and those types. They were talking about real estate and what it was going to do for us here and the economy. I shared it and I was like, “Make your own decision for yourself. Don’t listen to the sheeple.”

We all have a team of people that advise us on how to do the very best that we can in life and our CPA is very definitively one of those people. Think about what the CPA is an expert. They are an expert at crunching numbers and staying conservative. They are not real estate investors, most of them. Some of them are, mine is real estate investor and he is successful at it so you take his advice. If he’s an accountant and his first knee jerk reaction is to keep you safe, that’s awesome. He has a good intention, but he’s not educated to give you advice in real estate. You get advice in real estate from people that are successful in real estate. You want to make sure that they’re successful in real estate through good times and bad times. Not people that are flying high because they took a bunch of risks at a time when the market was going up like the last years. You want to make sure that you’re taking advice from people that understand how markets move, understand how resilient real estate is in the right markets.

If you do your homework, never take advice for someone who is not where you want to be. When you’re taking advice, make sure it’s someone whose shoes you want to walk in one day. When taking real estate advice, you take it from someone that can give you good advice based on their experience. Sometimes your CPA is that person. Sometimes they’re not. Sometimes it is your lawyer, your title company or your real estate agent. There are many people that you have access to the place where your smarts come in is choosing the people for who you’re going to take advice for what? In this particular case, a CPA wasn’t the best person to give him advice. You, Maureen, have been in this business. You’ve written a couple of cycles. You’ve seen what’s happening out there because you manage 1,200 doors. Your advice in that situation is much more relevant. It doesn’t mean that anybody is wrong or right. It means what’s more relevant and what’s going to benefit you more.

At that time, I thought if he or anyone says, “I’m going to sit on the sidelines and wait and see,” I recognize that they’re missing an opportunity to lock-in to low rates and high cashflow for years to come. I know it’s going to benefit him. I knew at that moment when I got that email from him, whether it was him or representative of others that are contracting and sitting on the sideline. I realized that it is about showing them the opportunity that exists and to push out all of the noise that scares them into inaction. Take the action because it is going to benefit you and your family for generations in a beneficial way. When you’re passionate about something and you know that what you do in real estate helps investors build the wealth and the legacy that they want. Sometimes, you’ve got to help them get the fear out of the way and get them to see and to think with their own mind. Not with the mind of the collective sensationalists in the news media rooms trying to buy for attention and to still recognize that there is still good and there is still opportunity. There are still ways to profit in real estate. We can say you and I have lived through a pandemic. You and I lived through the 2008 global financial meltdown. Real estate has been in both of those. Now, I can see it thrives real estate, the lending, the predatory lending, subprime loans, packaging up of the derivatives, and then those sold globally, that was a systemic problem. Not necessarily real estate-related but lending related.

In 2008, when the banks had to repossess all those properties, who came in and saved the day? It’s the real estate investor. What happened to them? I would love it to find a bunch of investors in 2008 that bought as many single-family rental properties as they could. In February of 2010, Warren Buffett said that the best strategy at that point was to buy as many single-family rental properties as you possibly could manage and buy them. My business exploded after that comment that he made and it’s still been going. He recognized them that single-family rental properties in 2008, you could get them for percent pennies on the dollar. The banks wanted to get rid of them. The banks were lending money cheaply to get them off the books because they had many of them. If you bought and invested in many single-families in 2008, I would love to see where they are in 2020, what their net worth is, with all of the assets that they were able to purchase at deep discounts. Everyone thinks we’re going to be at deep discounts now. No, it’s not the environment.

There will never be another 2008, 2009 type of environment. I’m glad because that was painful for a lot of people. Maureen, taking action is such a big topic. We’ve talked about what the market is going to do. What I would like to do is do a show for the next episode to talk about the rate of return, why it’s important and how to take action. I always say at the end of every show to take action, but people still don’t know how to do that. They don’t have enough information to keep them motivated, inspired, to do some of those things that are uncomfortable in the very beginning. Maureen, let’s have a conversation about creating a rate of return and wealth through real estate in the next episode. Does that sound fun?

I’m in. I got some good stuff for your readers there. They’ve got a tune in because when I break this down, there are five basic ways that real estate pays you. There are more than five, but I’m going to give you the five basic ways. When you know that and you understand those, more of you are going to want to invest in real estate because it is such a long-term filter. When it pays you multiple ways, I’m going to show the formula to you and how it works.

Remember, if you do your homework and you get in markets where there are still jobs and there’s some stability, you will see that real estate is resilient. That’s what I want to let everybody know. The economy could always prove me wrong, but in my opinion, there’s never a bad time to buy real estate. I want to close with a little bit of a story around that. I bought a property before the crash in January of 2001. The market plummeted. I also bought my dream $1 million home in 2008 September and within six months lost 50% of the value of my home.

That sucks, but the thing is that you don’t lose money until you sell. You can see it in my free report. I put it out there. I’m transparent. I’m not worth $10 million like if I had time the market perfectly and paid perfect attention as if anybody can do that anyway. I still have seen steady growth and resilience in my portfolio to where I have enough millions of dollars that I could retire. I made bad decisions. I should’ve known better. The point isn’t that don’t listen to me. I don’t know what I’m talking about. That’s not what I’m trying to say. What I’m trying to say is you don’t need to be perfect to make money in real estate. You do need to use your mind, get some good resources of people that you can listen to that are where you want to be, and start to take action. The markets are resilient and we will see that again. That’s what I want to leave you with. We’re going to move on to the next episode, which I’m excited about. Maureen, thank you for joining me for this portion of the show.

I always love being on your show and contributing to your readers. I love where your heart is. It’s all about contributing and helping people. Helping women in real estate become those mega mobile #BossLadies that make money in real estate because they need leadership and the how-to, and you provide that. That’s why I love coming to your show.

Thank you. I appreciate all the wisdom you offer the ladies. I feel like together we’re powerhouses and that’s fun. Ladies, be sure and tune in for the next episode. Until then, always remember goals without action are just dreams. Get out there. We’ll teach you how to take some action and create a life your heart deeply desires. I’ll see you soon.

—

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Get Out Of Your Own Way – Release the Imposter Syndrome with James Robilotta

I am excited to welcome to our show, James Robilotta. He is an author speaker, coach and entrepreneur. His book is titled Leading Imperfectly. He speaks internationally to willing and unwilling attendees about authenticity and vulnerability in leadership and life. His clients include Amex, GE and others. He’s also an experienced stand-up and improv comedian. James is also a personal coach. He loves helping people get out of their own way to live the lives they deserve and be the leaders they are capable of becoming. His clients undergo purposeful life-changing and self-affirming transformations. His clientele ranges from CEOs to college students. James, welcome to the show.

What’s up, Moneeka? How are you?

I’m good. How are you?

I’m chilling. I’m doing well. Thank you. I’m excited to be here.

I’m excited to have you here too. Could you tell us a little bit about who you are? Tell us a little bit about your story.

I’m a born and raised a New Yorker. I am a professional speaker. I travel around the country to talk about authenticity, vulnerability and the stories that we write. That’s what I get to do and I love what I get to do. Interestingly enough, I majored in Marine Biology in college and promptly put that to good use by getting a Master’s in Counseling. Apparently, I was putting too many jokes in my scientific papers. I worked in the field of higher education for a while, developing student leaders and professional leaders on college campuses.

I went to a conference one time and presented a session to share some ideas with my colleagues. Somebody came up to me afterwards and asked me how much I charge. I said, “With all due respect, who are you talking to?” That’s not what I was there for. I got my first paid speech because he bought me lunch and away we went from there. I’ve been on my own since. I started speaking in 2011. It was a side hustle for a few years and then became the main hustle, so we’re out here. That’s what I do now.

I met James at the New Media Summit. I went to this conference and met some amazing speakers. I’m bringing many of them to you. The reason that I was attracted to James was his power on the stage but also his personal power. How is this relevant in real estate? You can imagine that creating that power can help you to move forward in your business. I don’t know if you’ve heard this but when people are at a funeral, most of them would rather be in the casket than giving the eulogy. Public speaking is a scary thing. One of the things to become an effective and powerful speaker like James is to develop the ability to recognize your fear, step past it, and to be your best self no matter what. I feel like he brings that skill to his world and I wanted him to bring that to our world. That’s why I invited him on the show and we’ve got some good stuff to share. Talk to me first about recognizing patterns inside of yourself and how you think about yourself.

We as humans are pattern generators. Whether we recognize it or not, our brains are equipped to write patterns over and over again. Think about the patterns that you don’t even have to think about anymore. For example, if I told you that I want you to brush your teeth with your other hand, that would take you way longer and you’d probably drop the toothpaste in the sink. Fortunately, our brain has developed a pattern. We can brush our teeth even in the morning haze and fog. We don’t even have to worry about it. Our brain knows. If I told you to eat your cereal with your other hand and all of these things. We have all these patterns inside of us that we don’t recognize.

We also have patterns of thoughts. A lot of people, myself included, I should on myself a lot. I don’t know if any of you out there should on yourself, “I should do this. I should do that. I should listen to this webinar.” We get caught into it. We’re caught in these patterns of when we should on ourselves, it’s effectively shaming ourselves because we’re saying, “I’m not enough. I should do this.” What are the patterns of thought that you were in that you don’t recognize either or you just trained yourself? Those are the kinds of patterns that I love to explore with people because some of those patterns serve us, but many of them don’t serve us. That’s an interesting thing to explore.

One of the patterns that happen in real estate is we should on ourselves. It happens a lot with me and I’m sure it happens with a lot of the ladies. Also in that, “I should be doing this to improve my business.” Some of that stuff that we end up getting into the pattern of doing is, “I’m going to listen to another podcast. I’m going to get another course. I’m going to listen to another mentor.” We’re in the pattern of learning is action, which it is, but it’s not the action that’s going to move the needle.

Moving our patterns from “I should do this” because that’s not what I want people to do, but to naturally move into, “I know enough and it’s time to take action. This is what I want to do and this is what it looks like so that I can move the needle.” In other words, buy a property or get your financing. Do those things rather than talking, learning, and thinking about it. It’s so much easier to be in the pattern of learning. It’s so much more fun. The pattern of taking further action is another step and it’s sometimes hard to get there. What I would like to do is talk a little bit about fear and how that plays into wanting to take action but not doing it or not taking that next step.

You hit the nail on the head. It was beautifully said because many of your audience, myself included, were entrepreneurs. How long did we have the idea before we did something about it and before we believed that maybe we deserved it or that we earned it? Those kinds of weird things. It’s like, “I’ve taken enough courses. I’ve clicked on enough links.” There’s no magical point where all of a sudden someone hands you a pair of wings and you’re like, “Congratulations. You may now fly, entrepreneur.”

You are the person that kicks yourself in the butt that pushes you off the ledge to figure out if you can do it. Hopefully, you have people around you that love you and care about you. Maybe it also looks like saving that is a net for you to potentially fall and you never fall that far, but you’ve got to fall a little while because this is scary. I love it. There’s a lot of fear of falling and a fear of failing. That’s a big thing. One of the biggest fears that I notice people have said when it comes to going on a new business venture is they say, “Once I get blank, then I can blank.”

We are the people that build those roadblocks. We are the people that say, “This needs to happen before I can do this.” There are very few things that need to happen before you can achieve what you want to achieve. Chances are you put it there, not anyone else. Don’t get me wrong. If you want to be a doctor, I’m going to need you to get your MD first, but that’s not what we’re talking about. There are pieces of information that you need to know, but the barrier of entry is not as high as we make it out to be.

Imposter Syndrome: They say fake it till you make it but if all you ever do is fake it, you never really make it.

Let’s talk a little bit about that. If you’re want to be a doctor, you need to get your MD. There are millions of doctors out there in the world that got their MD, but there are at least 3, 4, 5 or 10 times that are investing in real estate. Many of those doctors are investing in real estate. This process of real estate is the most intuitive investing you can do on the planet. I say this all the time on my show, “We’ve been doing this since the beginning of the time and the end of time.” In the old days, it used to be the lords that had the land and the peasants that wanted it. We’ve always wanted land. We’ve always wanted a space where we have a footprint that’s our home. We’ve always needed places to live.

This is the single most intuitive, stable, and safe investment you can do. Yet, because of all the classes, the options, and the things you can read and listen to, we complicate it. We turn it into something that is not intuitive and that we need to know a ton about it. There are some things that we need and we can then move forward and learn along the way. That’s how most people do it. It is important to understand that there are pieces you need to learn, but there are huge teams of people out there that can help you. Nothing happens until you take action and you don’t need an MD on this. You don’t need to study for eight years and then go into an internship for this. This is an intuitive strategy that you can plug into your life as is.

Many of us say, “I’m not blank enough. I’m not business savvy enough. I don’t understand finances enough. I’m not a business person. I’m not a head person, I’m a heart person. I’m not this or that.” Whenever we start to do those things of, “I’m not blank enough,” those are the times where we take ourselves out of the game before we even let ourselves play it. We don’t even let ourselves show up at the stadium. A quick story for me, even just a small example. Despite being the charismatic, wonderful, and extroverted man that I am, when I first went to college, I didn’t interact with a lot of people. I was like, “Let me not sit down next to these random groups of people at the dining hall. Let me not sit next to these individuals in the coffee shop that I recognize from class.” I was like, “James, you’re not cool enough. You’re not funny enough. You’re not smart enough. You’re not hot enough. You’re not rich enough.” I missed community building where the places where the audience is telling themselves, “I’m not blank enough,” and they’re not even letting themselves get in the game.

It’s such a good point, “I’m not blank enough.” Ladies, think about that. What is your, “I’m not blank enough?” I will say that I’m not blank enough for me is I’m not smart enough. I went to UC Berkeley but my husband went to Stanford. His whole family thought that Stanford was way superior and let me know about it. My parents thought that Stanford was better. Somehow, this person that was a valedictorian and at the very top of my school with a 4.5 is not smart enough. It’s interesting because it was something that I put so much value on.

Part of what attracted me to my husband was that he was “smarter than me.” In other words, we expanded one another. Suddenly, it became a story for me that I’m not smart enough because I’m not as smart as him, which is not true. He’ll say it all the time but it became my story. I find that even now as I’m talking to many of my guests or I’m looking at other opportunities in the market, I still come up with I’m not smart enough. It is interesting because I’ve been in this business for many years. I know what I’m talking about and I still have that.

For ladies, what is your, “I’m not blank enough?” Let’s figure out how you can readjust that to support yourself more. Let’s also talk a little bit about the imposter syndrome because this is relevant and related. For me, I’m not smart enough but I’m showing up out there in the world as being smart and knowing my stuff. I feel there’s this dichotomy. I’m split because I don’t feel it but I’m acting it. It’s not fully true but that’s how things work for a lot of us. Could you talk a little more about that?

I love to talk about the idea of punching imposter syndrome in the face because it’s something that holds a lot of us back. We don’t even recognize it or name it as such. As an example to help people land the plane a little bit, I had an opportunity to speak to a bunch of doctoral wielding professors at a university. I do not have a doctorate. I’ve been to a doctor but that’s about as close as I’ve gotten. To your Stanford-Cal analogy, I have my Master’s but they have their doctorate. There was this thing when I walked in. I’m like, “I’m not smart enough to talk to these people. I should be the one in the audience and they should be lecturing to me. What are you even doing here? Why are you in this space?”

It’s interesting because we all know the phrase, “Fake it until you make it.” If all you ever do is fake it, you never really make it. There has to be a place in our lives where we recognize that you indeed have something to add. You have a value-add in every room that you walk into. The relationship that you were talking about, Moneeka, what you have added to your husband goes far beyond your already impressive Cal degree. Let’s not slap on Cal. It’s one of the top twenty schools in the world. What you bring to that relationship maybe isn’t measurable by the intelligence standards that we’ve been taught of like SAT scores and things like that. For imposter syndrome, getting over that involves realizing, “I’m bringing something to the room that I could add to these individuals.”

Those professors in my example are smarter than me. They’ve done way more research than me. They probably did better in school than me, but I’m better at engaging people than they are. I’m better at making people realize that sometimes it’s the story behind the facts that makes the fact more sticky, not just the research. It’s that relatability versus credibility argument. There’s a lot of power in relatability and that’s what I brought to the room. That’s what I’m talking about here. We need to punch imposter syndrome in the face because we’re not even letting ourselves get recognized with the beauty that we bring to the table.

I love the way that you say, “The beauty that we bring to the table.” We might have people where their “I’m not” is “I’m not financially savvy enough. I’m not a business person enough.” I understand that those pieces can be learned. Being successful in school is a skill and can be learned. Some of us have a predisposition with talents and stuff that make us better at some things than at others. Because we’re not one thing or we believe one thing, does not mean that that’s something that has to hold you back. It may not even be true. All of those smart people are probably not going to be as engaging on stage, which is why you’re the guy on stage.

One of the things that you said is, “I’m a heart person, not a head person.” In real estate, being a heart person is so valuable because nobody else is out there speaking or negotiating with tenants and landlords from the heart. It’s all about the dollars. It’s hard and clinical. It doesn’t have any feeling to it. If you’re a heart person and you bring that, you can learn that other piece or hire somebody else to do it. Instead of, “I’m not blank enough,” focus more on “I am this or that. That’s what I bring to the table.” How can I now make that the focus of how I’m going to move forward? I want to do my business in a way that highlights that rather than trying to start a business based on what I’m afraid I can’t do.

I completely agree with you and the way that you put it was beautiful. I have a Bachelor of Science in Marine Biology. I have a Master’s in Counseling but I’m an entrepreneur. I’m a businessman or a business human. I consider Shark Tank to be the closest thing to business I know anything about. That’s where I’m getting my “MBA.” Thanks, Mark Cuban, but I still like to tell people I’m in the business of relationships. That’s something that when you hear or think about business, you think about the hard things. You don’t think about the soft and the heart of it. The fact that we are exceptional at making people feel like you’re selling homes to people in real estate. Whether that home is in work like this is a place where you’re trying to build a community to foster the growth of a product and corporate real estate, or a physical home where someone is going to live and grow. What a thing to sell. Isn’t a relationship the best way to sell that?

I love one of these things that you say, “Move from accommodator to advocate.” Talk to me a little bit more about that. We’re already sort of, “How can I be an advocate for myself?” Much of the time, we are taught to accept ourselves but we’re not taught about how to be an advocate for ourselves. Could you talk to us about that from your own perspective?

I’d even add one step even before accommodator. We have a lot of apologizers out there. We apologize a lot for ourselves, then we become accommodators where we concede a lot, and then we become advocates for ourselves. Unfortunately, because of a lot of societal BS, women are taught to apologize for themselves and that is hot garbage. Where are the places where women can feel more confident to advocate for themselves because their voice is maybe more important at the table? It’s recognizing when you fall asleep at night, you know if you fall asleep proud or ashamed. We all fall asleep on that spectrum at various points.

Leading Imperfectly: The value of being authentic for leaders, professionals, and human beings

It’s not just because I checked all the boxes on my to-do list. It’s more of like, “I upheld my character. I upheld my value.” When we advocate for ourselves, we recognize that I am smart enough. I am trained enough. I am the right person to be in this space right now. That is a beautiful thing to know. It’s hard to get to but it’s important because when we don’t, instead we accommodate it to others. We let others walk all over us. There are all these contingencies and all these whatever. Having that confidence in, “I know my stuff and I know I’m doing the right thing here by you,” is also important in sales and we know that.

You said something I’ve never heard before, which is a woman saying, “My voice is more important at this table.” A lot of times what you hear in women’s circles and conversation is, “I’m important too. I have a right to speak too.” What about, “I am the smartest person in the room and they need to hear what I have to say?” How many times have we as women heard that? You said it, “I’m important. I am the person that should be speaking.” It’s not just, “I’m important too, but I am the most important.” Not to be egotistical about this, ladies. I’m not saying go out there and start being egotistical. I do think that so much of the time when we are the smartest person in the room, we still will not allow ourselves to be the smartest person in the room. We’re afraid of how it’s going to look.

There are gentle and beautiful ways that we can stand up and be the smartest person in the room without putting anybody else down because I know that’s important to us. It’s recognizing that you are and that’s great and that your voice is important. It’s not just it’s important too, but it is important as it is. It’s important for us to recognize who we are in a room and be honest about it to ourselves. We don’t benefit ourselves, our businesses or the people around us by shrinking back from our own mastery. It’s our mastery that’s going to help to improve the world through our businesses.

When we make ourselves a little bit smaller, we are accommodating to other’s insecurities. I know that this space is male-dominated. Correct me if I’m wrong, I haven’t done all my statistics. In a male-dominated space, male insecurities are not the things that you need to accommodate. In general, our insecurities are always things that we need to be aware of. Being aware is kindness. It allows us to come up with a new approach, but that approach does not have to be accommodating. That approach means we’ve got to try a slightly different size peg to get it in the right hole, but it doesn’t look like you are accommodating.

When I lived in France, it was important for me to say hello in French to get the conversation going. When you notice somebody’s insecurities, starting to speak their language, you’re still going to say what you need to say. Whether I’m speaking in French to the French or in English to the English or in Hindi to the Indians, no matter what language I’m speaking, I still have to say what I want to say. I’m speaking it in a language that they understand because they’re not fluent in English. This is the same thing. You don’t want to necessarily accommodate but you want to be respectful, kind, generous, compassionate and notice. Those are the sort of things but it’s important to not shrink back who you are.

You deserve to be in the space.

Take your space. You’ve got a footprint that was put here on this planet because it belongs here. Own your footprint.

To go back to your too example, “I’m important too. I’m smart too.” When I hear that, I picture a little brother yelling up at an older brother like, “Me too.” It puts levels in place when we do that, but instead, you are on the same level. There’s no too. There’s just is.

“Here I am” and not “Here I am too.” That’s exactly right. I love this conversation, James. I’m excited about what we’re going to be talking about in EXTRA. Ladies, James and I are going to be talking in EXTRA about busy versus productive, and decompression versus inaction, which are important distinctions in how we run our lives. It’s going to be valuable. We’re also going to talk about some of those fear patterns and how we can release them. That’s what’s coming up at EXTRA. I’m excited about it, but before we moved to EXTRA, let’s finish up this show first. Let’s start by telling my ladies how they can get in touch with you, James.

First of all, thank you so much for letting me be a part of your community. It is indeed an honor. I appreciate you for believing in me too. You can reach me @JamesTRobo on all social media platforms. JamesTRobo.com and [email protected] for my email. Let’s hang out. Your boy looking fresh on Instagram and dropping some meaningful nuggets. I would love to keep in touch with you.

I know that you’ve got a special gift for my ladies. Could you tell us about that?

I wrote a book called Leading Imperfectly and it is about authentic leadership. I would love to give you the first three chapters of that book. If you like it, you can pick it up elsewhere. If you don’t, it was free so who cares.

I assure you they will love it. Are you ready for our three rapid-fire questions?

Here we go.

James, tell us one super tip in getting started in real estate investing.

Get out of your own way. You are ready right now to do it and you have to believe it. The only thing in your way is you. It is not your knowledge, your background, your past or anything you’ve been through. You are the only thing in your own way so it’s time to keep moving.

Give us one strategy on being successful in real estate investing.

Imposter Syndrome: Get out of your own way. You are ready to do it.

Being successful involves building great relationships and where are the places that you are using those relationships to both learn more and give more in that place. That’s the biggest thing. Our network’s net worth is bigger than our net worth, and so those relationships are super important. I know that’s cliché and it’s cheesy but I love cheese.

What would you say is one daily practice that you do that contributes to your success?

Every day I dream and I live my life based on what I want to be said in my eulogy. The way that I have conversations with people and myself, I think about, how do I want to be remembered and how am I building towards that?

James, it’s been amazing everything that you’ve shared. Thank you so much for sharing that great stuff on this portion of the show.

Thanks for having me.

—

Ladies, thank you so much for joining James and me for this portion of the show. We’ve got more coming up in EXTRA. If you are subscribed, stay tuned. I’m excited about what we’re going to share. If you’re not subscribed to EXTRA but would like to be, go to RealEstateInvestingForWomenEXTRA.com. I’ve been doing EXTRA for years. I have to say that is my true gift to you. It’s a place where my amazing guests who do a great job on the first part of the show do an even better job later. This is where they shine. This is where they give you their deep and amazing nuggets that will change your life.

If you’re not subscribed, please come and check it out. You get the first seven days free. You can listen to a lot of them and decide if it’s even relevant or anything you want to pursue. If you do decide to subscribe, it’s $4.99 a month. It’s a complete steal for all of this information and for the way that it will improve your life and your business. Please check that out. For those of you that are leaving us, thank you so much for joining us for this portion of the show. I look forward to seeing you next time and until then, remember goals without action are just dreams. Get out there, take action, and create the life your heart deeply desires. I’ll see you next time.

Important Links

• Leading Imperfectly
• New Media Summit
• @JamesTRobo – Instagram
• JamesTRobo.com
• [email protected]
• RealEstateInvestingForWomenEXTRA.com