Transcript

00:01

Welcome to Episode Two of season six of the Growing Empire Show. Today I'm here with my special guest, Dave Rowan from Rowan Financial and his investment partner Jeremy Moyer. And they are going to share their wealth of knowledge regarding the evolution of a real estate investor, and everything that you need to know about buying investment properties. So stay tuned.

00:23

Welcome to growing empires hosted by real estate entrepreneur and trusted investment advisor Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.

00:42

Welcome Jeremy and Dave, to the growing Empire Show. I'm so glad that you both are here. Let's kick off this episode with you both sharing a little bit about the work that you're doing now and how Dave how you specifically got into the financial services industry. And for Jeremy, how you guys kind of started working together in your real estate investing endeavors.

01:03

Yeah, so thanks, Jen. And in terms of entering the financial services industry really started almost 25 years ago now. And it was basically doing, what I didn’t know it at the time, it was doing a retirement plan for my father and I saw the power of giving him a financial roadmap and how much worry that took off the table for him in terms of his retirement plan. And when he would actually do it, and then move to that next phase of his life Which he successfully did. And he continues to use that spreadsheet to this day. And so that led to studying for the CFP exam, passing that, running the business as a side hustle for about seven years, while still working a corporate job, and now doing it full time for about the last four years.

01:54

Awesome. And Jeremy, what about you? How did you get connected with Dave and how did you guys start investing together?

02:00

Sure. So you know, before Dave and I connected, I've been in real estate investing since I would say 2009. Learning about real estate, I guess a lot a lot like others through Rich Dad, Poor Dad and the cashflow quadrant and got me interested in real estate. Just made a lot of sense, you know. I looked into it further, and you know, fast forward I guess 10 years, you know, through a mutual friend, you know, linked both Dave and I up, then actually he was in insurance, Dave and him were talking financial industry world. And Dave was in real estate. So he's like, Hey, you should meet Dave, Jeremy, you know. So that's kind of how we got started, or at least connected, and then our vision and goals, you know, within real estate investing really aligned. And we kind of took that a little further and just, you know, Dave, has a lot of strengths where I don't, and vice versa. And I think, you know, over the years having partners, you know, you learn a lot. And I think partners are best together when they both can compliment each other. And we actually have a third partner who complements us even more in areas where both Dave and I are weak. So I think that's a it's a path for success, you know, and we really like where we're at. And you know, the vision for the future.

03:21

Yeah, I definitely agree with you. You know, if you're having partners, you definitely want to make sure that you complement each other well. So that's fantastic. So today, we're going to talk about some creative Investing Options and the evolution of the real estate investor. And I have asked Dave and Jeremy to join me to share their wealth of knowledge and secrets that they've picked up over the years. So let's just jump right in. Why don't we talk first about buying owner occupied multifamily, multi unit properties, with conventional mortgages?

03:51

Sure. I'll go first. You know, I think I listened to pod you know, the real estate podcast on bigger pockets. Quite often, when I first started, it was super helpful. Read everything you can read on real estate, you know. Learning is self education is huge, right? So house hacking, I believe is very beneficial. You can you know, with Jen just mentioned conventional mortgages, you can get really favorable borrowing terms. If you live in let's say a two unit or a three or four unit and rent out the rest. That's a great way to kind of tiptoe into real estate. I didn't do that. I just went out and bought a single family, had a horrible experience with my first tenant. And other investors told me that might likely would happen and most people quit and I'm like, No, I'm not gonna quit and just kept on going. But I think that house hacking approach definitely has a lot of pros more than cons to it. I don't know Dave, what's your?

04:53

Yeah, I I have a friend who actually is doing this in the area in Hellertown. And he's he actually loves it. He actually believes, not only is it a financial benefit, but if you're the right kind of person, it improves your quality of life. He always has two roommates in his house with him, you know. They share a kitchen, but have private bathrooms. And he likes hanging out with these guys. And you know, he's had some turnover over the years, but they do absolutely pay his mortgage. And actually, even beyond that, and he parlayed that into his first investment property in Philadelphia, that is quite successful and really wouldn't have had the free cash flow to do that second property without the experience of buying a multifamily and being owner occupied.

05:51

Would you suggest that for maybe a beginner investor that doesn't have a lot of capital, maybe doesn't own a property now, you know, and they're just getting started? Would you suggest that as kind of like the entry into real estate investing?

06:06

I think there's a lot of benefits to it. It's I believe it's easier if you're single. I was married at the time when when I first got started in real estate so that was sort of out of the question. I think it's easier. But if you find yourself in that situation, especially with low on cash, and you want to get started in real estate, I think that's a great avenue. You know, you know, these people, as Dave said, you might even, you know, be friends with them. So from a property management standpoint, it might be easier, you know, you're technically self managing them. You're living with them. And just the rates and the borrowing that you can do on your loan just just makes cashflow. It makes sense. The numbers will work out, you know, usually work out very well.

06:54

Well, that's that said, you know, one of the things that you quickly start to realize, as you start investing in real estate, is you start looking at both halves of the equation. You look at, how am I going to do with this property? But also, will the bank finance this property? And, you know, Jeremy, I don't know, if you've if you know, specifics on owner occupied, I actually don't know the specifics. But obviously, if you're living there and have tenants in there as well, that’s looked at much more favorably than say, another first step that a lot of people take, and it's not out of the question to do it. But you just have to have more means, which is, you know, buying a vacation home, and renting that out and taking out a conventional mortgage. So it's much easier to qualify, if you're in that circumstance.

07:49

Yeah, absolutely. I know that, you know, when you're talking about owner occupied homes, obviously, they can be up to four families, right. Nothing larger than a four family would qualify. And, you know, depending on the setup, you know, you discussed one option where everybody kind of lives in the same, like, they're like roommates, essentially. But if they're individual apartments, you can even have some separation as well. So I guess some of the pros would be, you know, you're having everybody else pay your mortgage, right, pay your rent, so you're essentially living for free. Which should allow you to save up some cash to potentially invest again. We're going to talk a little bit later today about spreading your money. Different creative options to kind of spread your money out. So I think that's a good way for people to get started. But Jeremy, to your point, I can't imagine doing that with a wife and kids right around the place you can do.

08:34

Challenging.

08:41

I think that the other benefit, and you know, ultimately, on your real estate journey, at some point, you'll turn your properties over to a property manager. Once that becomes, you know, either a preference or a necessity, depending on whether you're still working another job. But in this instance, you know, if you are managing the building yourself, it's wonderful to have the feedback mechanism from tenants right under your roof, and learn how to deal with tenants, you know, that are literally on site. Rather than having to drive half an hour to see them or try to deal over the phone. You can have across the table conversations with people and learn what's important to them, and what's not. And again, that piece helps prepare you either to manage more tenants on your own later, or to interview property managers, and, you know, confirm that they have this perspective on tenants and how to properly manage them.

09:45

Yeah. I completely agree. You actually made a really great point, Dave, is that, you know, sometimes if you have never experienced being a tenant in your life, and you become a landlord, you're somewhat disconnected from the obvious reality right? It's like what the tenants go through what they experience, and how to be the best landlord that you can be and provide them with the best quality, right. So sometimes if you don't have that experience, it's a little hard to connect, you know, with with that experience.

10:08

And that equality, you know, absolutely translates to dollars and cents. It translates to better tenants who want to be in your building and lower vacancy rates in terms of people leaving because they're not satisfied so many, many good things about it.

10:24

I completely agree.

10:27

The episode will continue in just a moment.

10:30

The best investments with the highest potential for a solid return always start with the right real estate purchase. But it's not just about a flips potential margin or how fast you can ready a property for leasing. It's about creating a future of financial stability for yourself and for your family. One that supports the lifestyle that you want. If you're an active investor, and purchase, renovate and lease your own properties, and you love the process, the chase and the returns, you're in the right place listening to this show, especially this season, because we're talking about a deep dive into how to purchase the best property for you. However, if you're more of a passive investor, and one who wants to diversify your stock portfolio with real estate, but you don't want to get involved in the active management of those properties, you're also in the right place, as we serve both types of investors. To gauge where your real estate investment tolerance sits and what would be the best fit to grow your income with real estate, I invite you on a call with me. To book your call visit growingempires.com and click book a consult. That's g-r-o-w-i-n-g-e-m-p-i-r-e-s.com and I'll help you choose the best real estate model to help you achieve your real estate investment goals.

11:34

So you touched a little bit on vacation homes. So if we can't go down the route of owner occupied multifamily investing in somebody wants to purchase a vacation home. Do you have any suggestions on how they go about that? When you say vacation home? Are we talking about just like a secondary home that they would maybe use temporarily and then rent out like an Airbnb or something like that? Are you talking about just another location, another home that they're using for long term rentals.

12:05

So there's a number of different scenarios there. And you know, one to talk about is just, you know, you use it for two weeks. And then the rest of it, it must be available for rental. However, you know, the definition of using it for two weeks is using it for pleasure for two weeks. So if you're down there, and improving the property or doing things on the property, that doesn't count for that two weeks. I think that's an important distinction. I think another distinction is, you know, if you're investing locally, you're kind of stuck with the rules in terms of whether it's a landlord friendly state or municipality or not a landlord friendly state or municipality. I know of somebody, they're closing next month, and they were choosing, they live in New Jersey, and they were choosing between New Jersey and Georgia in terms of their locations. And one of the factors that tilted them toward Georgia was actually it's a much more landlord friendly state. Now, that's not as important with a vacation property. But they plan on doing other investing in that area once they move there. And so that was critical for them as well.

13:21

Yeah, I can imagine Yeah, I mean, because you know, everything's great until it's not right and then you have to get somebody out it's you know, you do need to know that you have someone on your side to really help you facilitate that. So tell me about you have any experience or do you know of anybody that has actually been very successful with buying vacation homes and doing like an Airbnb model.

13:43

I know I know an investor that he invests in notes you know, personal promissory notes out of his self directed IRA. He buys huge apartment buildings with his company. But he also does Airbnbs down in in Florida. He’s actually from the Philadelphia area, and he liked it so much that he sold everything here in Philly and Pennsylvania and lives down there in Florida, you know, zero income tax as well. No state income tax. So you know, he really loves and enjoys that, that type of life. But he also invest. That he does, not only does he also invest in other sectors or real estate.

14:24

Yeah, and that’s bringing up another point to me is the fact that he moved to Florida. So another factor in terms of where you're choosing a vacation home, and especially if you're doing it as an Airbnb is how long is the season. For those of you from this area who have been at the Jersey Shore in February, it's miserable. It's raw. It's overcast. That's all horrible place to be. And so really, it genuinely is that summer season. Versus again, just referring to the folks that I am, that I know who are settling in Georgia. It's an all year season there. I'm sure the same is true in Florida. You know, and that that kind of brings up another point in terms of how to do Airbnb. And that is to, you know, learn locally, what features are more important than others. And so for example, in Georgia, for a vacation home, it's much more important to have a pool on site. Because it gets so hot in the summertime. And they're not beachfront that if they're renting to a family doing doing the pool is critical. The other thing is they're doing kind of lighting in in the backyard that makes it look almost like like the Italian streets with all the lights suspended over over the street. And the realtor talked in terms of if you can make the property Instagrammable. So in other words, just creating individual shots.

16:11

Nice.

16:12

You know, I would have never thought of that right? Yeah, no, definitely not. And so if you can create these visual shots of people enjoying themselves at your property, and that they share and give you permission to share. Huge. Being pet tolerant in this particular market also increases rental value. So it's just figuring out those little things that take an already very profitable Airbnb model and maximizing it for the property.

16:46

Yeah, and you're you're bringing up some incredible points. Because it is so important to know what your tenants are looking for, right? To really cast the widest net and to have the most opportunity to lease up or, you know, vacation rental or anything like that you really need to know what people are looking for. So that's a that's a fantastic point because it's so relevant. Thank you for listening to part one of my segment with Dave Rowan and Jeremy Moyer. We will be back next week to continue our conversation. Until next time, take care.

17:17

For more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio, visit growingempires.com