Rental Property Investing with Gregg Cohen

Come on one level, this is George G. And the time is right. welcome today’s guest strong and powerful. Greg Cohen. Greg, are you ready to do this?

Gregg Cohen 0:18
Game on brother?

george grombacher 0:19
Let’s Let’s go. Greg is the co founder of J web real estate capital they already Verdell vertically integrated real estate investment company dedicated to making rental property investing easy. Greg, tell us a little about your personal life more about your work and why you do what you do. Well,

Gregg Cohen 0:37
George, thanks so much for having me here. I’m super excited to be here with you and with your listeners. You know, my work here at JW B, like you mentioned is to make investing in rental properties easy for everyday people. You know, if you ask people on the streets, if most people think that investing in real estate, is a sound investment, a good investment? Most people would say yes, but if you ask those same people, do they actually own investment properties? Usually the answer is no. And usually, the reason is because some form of it’s hard, it’s hard, you have to have a team of people, whether that’s a real estate agent, contract or property manager, financing, title accounting, there’s a whole lot of people that you have to rally and hope they see they speak the same language, they share a common goal. And for most people that just that dream never gets realized. And they end up with either a poor experience or no experience in investing in real estate. I think that’s a real shame, because I think investing in rental properties, as we’ve seen, especially over the last two years has performed so well as an asset class in uncertain times, dealing with COVID, but in much more certain times it continues to perform. And I think it’s a shame that people aren’t able to take advantage of this asset class. So specifically, what JW B does is we acquired land many years in the future for our clients, we then build new construction homes on that land, we then sign a long term lease with a resident, you may call them a tenant, but we sign long term leases, because we want to increase consistency of cash flow. And then we do all the property management in house with our staff of over 80 people here in Jacksonville, Florida. And then we sell that asset to the investor, they continue to build up those assets in their portfolio in accordance with their passive income goals. And we get to help them change their lives, because passive income really can do that for folks.

george grombacher 2:25
When did you decide on that model? Or how did how long did that kind of take shape?

Unknown Speaker 2:31
I was hoping you’d ask that. Because if you’d asked me if I was going to be doing this 20 years ago, the answer, of course, would have been no. You know, I actually started to invest in 2006. Remember what real estate was like in 2006? George,

george grombacher 2:42
I live in Arizona. And it was a it was it was crazy.

Unknown Speaker 2:46
It was crazy, right? It was it was a time where anybody who was in real estate in 2006, generally was making money. And most people thought they were pretty good at it. Myself included, right in 2006. I was 23 years old. I had two business partners at that time, and we jumped into real estate like a lot of other folks. And we tried everything in real estate we tried wholesaling, we tried flipping high end homes, we tried flipping lower end homes, we tried seller financing, anything that you could think of, like many fledgling businesses, in the beginning, we tried everything. One of the things we did really well though, was we started to build up our own portfolio of rental properties. And so in the first year and a half, we had acquired about 40 doors between us and we were you know, 2324 years old, and really didn’t come from money or any real estate experience. So kind of had that going for us. And then of course, we know what happened 2000 and 789 1011, right. And the market, of course, crashed. And it forced us to really look at what was working in our business and also look at what wasn’t working. It was much easier to see what wasn’t working as we endured a lot of pain and a lot of places. But I just remember one day looking at looking at our books and looking at all the things that weren’t going well. And, you know, we started looking at rental properties. And that was the thing that we talked almost zero about. But it continued to work, it continued to work, the rent continued to come in. I didn’t really care about what the prices were at that time because I had no plans of selling. And these assets were the one thing that were working, and we were spending no time on it. While everything else was failing. It was being successful. And we’re like, oh my goodness, it was kind of an epiphany. We said, Hmm, you know, this is something that I think we should spend a little bit more time on. But at the same time we had other folks that were kind of interested in what we were doing again, we were young and we had built up that portfolio of rental properties. Many people were asking us what we were doing how we were doing that. And we said well hmm, we probably have some some interested parties here. And we said well, how do we how do we package what we learned how we created this rental property portfolio for Sales, how can we do this for others, and that really is what led us to creating this vertically integrated model and doing the entire process for investors in our investors come from 49 Different states, 13 different countries, they all invest with us here in Jacksonville only. And they would never call themselves real estate investors. I think that’s the beauty of it. It’s something that people can take advantage of, you don’t have to be a real estate mogul, you don’t have to be a real estate expert in your local market, you just have to find a great team that can do it for you.

george grombacher 5:27
Nice. Well, it’s certainly all make sense. Everything you laid out about just the layers of complexity to it. And that’s not necessarily unique to real estate, if you start thinking about how am I going to manage my own personal finances, there’s just there’s so much and one thing after another, and you laid it out perfectly about how challenging it is for just a regular person to go. And all of a sudden, now I’m a real estate investor, even though I think it’s a good idea. So what you’re describing certainly makes sense to me, particularly if I’m not trying to do this full time.

Unknown Speaker 6:02
I think that’s the real key here, there’s a million different ways to make money in real estate as with other investments, and you know, this approach isn’t right for everybody. But it’s for those folks that have a day job that they spend a lot of time with, or maybe their own business, whatever it is, they’re devoted, and they’re spending their time actively elsewhere. This can be an alternative to more traditional types of asset classes. This can be as easy as investing in mutual funds or different stocks, bonds, whatever it may be. You don’t have to write off real estate as being that easy, accessible asset class as many people do.

george grombacher 6:43
Are you from Jacksonville? Huntsville? Why Why? Why Jacksonville?

Unknown Speaker 6:47
Well, I grew up in Orlando, mainly also Pittsburgh to which Steelers just lost in the playoffs here yesterday. So I’m I’m smarting a little bit there. But no, I grew up in Orlando and went to the University of Florida, after University of Florida actually, I was dead set on working in corporate America. It’s funny to think about that. Now, as my life has turned out in my career, it’s turned out but but actually what brought me to Jax, I would like to say that, listen, 16 years ago, I analyzed all the real estate markets in the country. And I said, You know what, I’m going to move to Jacksonville, because I think that’s the best one, that would be a lie. I, I just think luck would have it, it landed me in Jacksonville, because my first corporate job, brought me here after college and spent a couple years there realized that that situation was not the right one for me. And looking back on it, I feel very, very blessed that I had a rather poor experience there. Because, you know, it led me defining a different different way a different path. I didn’t know it’d be following those late night infomercials where they tell you that you can go out there and flip houses. But you know, if I’m being honest, that’s really what it was. In the beginning, I grabbed a few buddies at 2324 years old. And we started out really kind of learning the fundamentals of real estate wanting to do it differently than then what was shown on all those late night infomercials. But at the end of the day, you know, it was really a fun time in my life. It was one of those times where I just decided to take a chance and do something that everybody else called me crazy for doing.

george grombacher 8:10
Yeah, no, it’s awesome. All the respect in the world for for taking the leap, and then obviously making it happen. So dots on on expanding markets, is Jacksonville going to be saturated ever? Or? You’re, you’re good where you are?

Unknown Speaker 8:26
I love that question. And my answer probably is going to surprise you and your listeners, you know, as far as expanding our answers, no. You know, and most folks most companies in our space, the answer is yes. But we’ve always taken a different approach, you know, whereas others feel the need to start to expand in search of inventory. We said, well, if we could think far enough ahead and align our resources far enough ahead, where we could focus on just one market, we believe that we could make more of an impact. We believe that we could reduce risk for our clients, we, we believe that we could overall enjoy building our business more because we wouldn’t have to go to other markets, which is really important for my business partners and I and and so that’s what we set out to do. So JW B actually acquires land many, many years in the future before we start to build on it. And that allows us to focus on one market and when we say vertically integrated, that means a lot more than just having property management in house which I think is a big differentiator I think it’s really important. You know, being vertically integrated means more than that. It allows us to take an active role and the economics and the political and social goings on here in Jacksonville world allows us to be on board so understand what’s going to be happening before others are aware and allows us to put our investors in a position to be successful. And you know, there’s a lot of things that you need to pay attention to when you invest in real estate. It’s not one of those buy today and sell tomorrow type of assets. The best way to invest is to hold on for a full market cycle, which is known to be between 10 to 20 years. And so if you’re going to be investing with a partner, that partner needs to be working on not just today’s problems and today’s opportunities, but what opportunities are going to present themselves over the next 10 to 20 years. And so we have, we’ve adopted this, this, this mentality, we want to go a mile deep, rather than a mile wide. And we’re really blessed with the help of our team here. And our connections here in Jacksonville and the resources that we have, that we’ve been able to do that now for 16 years. And that’s our plan going forward, too.

george grombacher 10:36
Awesome. That makes no sense in the world. rolling up the sleeves getting involved sitting on boards. Perfect. I love it. All right. So walk walk me through the process, I call you up and say, Greg, it’s George. Yeah, I had you on the show a couple weeks back, I’d like to talk about actually investing with you, what do we do?

Unknown Speaker 10:56
Well, it all starts rather slow. To be quite honest. You know, the first thing for us is we want to understand more about you. And we want to understand if this is going to be a great fit for you. And vice versa, you know, we’re going to have a few conversations right off the bat, understanding what your goals are, we’re going to walk you through what it really feels like to be a client, the good, the bad, the ugly, because the reality is, if you own rental properties for 10 or 20 years, you have families that you don’t let know living in your homes, sometimes for four or five, six years stretches at a time, I tell you what, there’s going to be some frustrating moments, some things are gonna happen that are just gonna not be exactly what you expected. And so we tried to be very upfront. And during that process, so two to three phone calls right off the bat, really understanding the goals, trying to set very realistic expectations and making sure that this is going to be a great relationship. You know, assuming that goes well, at that point, we would prepare a curated list of investment properties that would meet your goals. And all these properties are already owned by JW. B. So it’s not like you’re actually out there just like sending in offers and getting rejected. The fun part is actually Property selection, because that’s where you really get to kind of take the fast lane to actually owning investment properties versus what others have to go through in today’s today’s market, you’re able to select your properties with the help of our account managers and start to build that portfolio. You know, from that process, depending on the type of asset that you purchase, whether that’s a new construction home, or renovated home, we’re going to work with you all the way through to the closing. We’re going to arrange all the financing, we’re going to arrange all the insurance, all those things are done and facilitated by our team to make this as easy as possible on you. And then at the closing table, you can most of our clients actually never come to a closing table. It’s all done remotely. And wherever they live in the country in the world. And at that point, the the property management team takes over here at JW B, of course, it’s seamless, you’d be handed warmly to the next person here on the staff. And we start to of course, do the day to day management of your asset. But at the same time, you know that that planning that building that understanding what your goals process in the beginning, continues all the way through the life of your relationship, we actually have a buying plan that is constructed for each one of our clients, we understand when the next time they should be adding their rental properties should be according to their goals. And then we’re working months and months in advance to make sure that lines up so we can get them to the finish line when they need to get there.

george grombacher 13:32
Nice. And okay. So let’s assume that just fictitiously and you can sort of tweak my, my, my my scenario here that I wanted to buy, start with one home and then buy one every three years for five years. Does that make sense? Is that crazy? How much money do I need? All that?

Unknown Speaker 13:53
Well, let’s go some of the easy answers first, right? How much money will I need? The average purchase price of our home is around $225,000 in Jacksonville, which is great because that’s below the national median. And that’s below the median home sales price here in Jacksonville as well. And most of our clients are going to use financing. Financing right now is an incredible opportunity we talk a lot about with clients. So if you’re going to be putting 20 or 25% down, expect to put out excuse me about $50,000 and a minimum for your downpayment of one investment property. And then of course, we’re going to build that plan for you. You know, it’s a great question. If you were going to buy one house every five years, you know, that might be the right plan for you. It may not be the right plan for you. You know, of course, we’re going to look at what your goals are. We’re going to look at what your resources are. But the thing that we’re going to really do is, you know, we we love when folks, you know come to this kind of asset class or come to J web and they say I want to accomplish this. I have this amount of money that I Want to put into it, that’s when we get to be financial engineers. And with this same amount of resources, that is the right amount for you to bring, we might be able to increase your return on investment by doing it slightly different than you thought, right? Instead of maybe buying those that house every five years, then this fictitious situation, we may look at interest rates. And we say, Well, George, if you’ve planned to buy three houses over 15 years, what if you bought three houses at a different time and increase your rates of return by 50%? because interest rates are lower today than they’re probably going to be in the future, or vice versa, right? We’re going to look at market conditions, we’re going to look at the conditions that are going on here in Jacksonville, we’re going to be those financial engineers for you to maximize your return on investment with a set amount of resources that you’re looking to contribute.

george grombacher 15:47
That makes sense. It all makes sense, Greg? Perfect. I like it. When you say realistic expectations, what are some of the most unrealistic expectations that people come to you with?

Unknown Speaker 16:04
You know, I think the easy thing would be to say return on investment expectations. But and, and I’ll, I’ll touch on that in a little bit. But I think the most painful misalignment of expectations is really how active and passive somebody wants to be. This asset works perfectly with Jeb as your backbone as your team, it works perfectly as a passive investment. But you know, there’s something about real estate that people really get emotional. Even if they’re not experts in it, they want to be more active, right? Like, for example, for the client who invest with Jada Bubi, right, you’re not going to have the ability slash responsibility of choosing your resident. Right, Jeb is going to do that, because we do that 1500 times a year. And we’ve done that for 16 years, and we’re probably going to be better at it. And of course, it’s a lot of work. You know, so you wouldn’t have the final say, of who is going to go into your home, you wouldn’t have the final say, of how that home was renovated, or built, right? It’s according to a system a plan that, you know, we build about 600 homes a year. So it’s not like you’re going to have that say where you’re like, Well, I really like everything about this investment, Greg, but I really wish we would use this color shutter on the house versus this, you know, shutter. So, you know, and there’s a lot of decisions that, you know, for a client, they put a lot of their trust in us. And that’s really the way it’s built. We want somebody to do their due diligence on it in the beginning. But when they make the decision to invest, we want them to let us do what we do best. And so we spend a lot of time talking about active versus passive, what are you hoping to do in this investment? Versus what are you hoping somebody else to make the decision to do? And I think if there’s one misalignment in rental properties generally, and with the folks that we love to bring on as well, we, we just want to make sure that there’s absolute alignment, that this is a passive investment. You know, beyond that the return on investment, usually, the reason when you actually look at the five profit centers of power rental property investing pays you, you know, returns on investment, are quite substantial, especially compared to other asset classes. So, you know, there, I don’t see many clients if they fully understand how real estate pays you, thinking that the returns aren’t strong enough. It’s more about I think the the, you know, the way that this working relationship is built to last.

george grombacher 18:50
I love it. Thank you, Greg, people ready for that difference making tip? What do you have for them?

Unknown Speaker 18:55
Well, I think that there has never been a more pertinent and important time for, for those to understand smart debt. Right, we live in inflationary times right now. And the best way to fight inflation is actually didn’t know how to use smart debt. Because in smart debt, and let me define smart debt first, smart debt is taking out debt, that does three things. Number one, when you take the debt out, it has to pay for itself. In rental properties, the way you do this is you earn rental income, and that more than covers the cost of the debt. Number two, the debt has to be inexpensive. And again, going back to rental properties, the debt is so inexpensive right now you can get interest rates of maybe 4% and hold that asset hold that that debt for 30 years. So that would be an example of inexpensive and the number three it has to be debt on an asset that tends to go up in value over the long run. Again, you guys can tell I’m biased here but rental properties it If you look over for market cycles do go up in value over the long run in real estate. And so if you can do those three things, that’s smart debt, right? It’s got to pay for itself. It’s got to be inexpensive. It’s got to go up in value over the long run. Well, I think that that’s a really critical thing for folks to understand. I think that’s the best way to create generational wealth, is to understand how to use and master smart debt. And again, going back to the times that we live in right now, inflationary times, you know, when you take out that debt, no matter what inflation happens, and how much costs go up around you, that debt payment stays the same, every single month. And so in inflationary times, we all tend to take home more money. The problem is we can’t buy more stuff because the other costs go up. Well, that debt stays the same. So it actually gets easier and easier to pay. Pay debt down in the future. So that’s what I will leave the audience with. Let’s learn let’s master smart debt. And I think that you’ll create generational wealth for your families.

george grombacher 21:00
Well, I think that that is great stuff that definitely gets come up. Greg, thank you so much for coming on. Where can people learn more about you and how can they get in touch with Jade web real estate capital,

Unknown Speaker 21:11
George has been a pleasure. Thanks so much for having me. For those who are interested you can go to our website which is J WB makes it easy. COMM J WB makes it easy calm, you can start to see available inventory here in the Jacksonville, Florida market with J WB. And then we also host a show called The not your average investor show. So if you’d like to learn more about smart debt if you’d like to learn about this asset class, compared to other asset classes, you can find something not your average investor show, you can go to nyais.com and yais.com and register for free and join us

george grombacher 21:48
love it. If you enjoyed this as much as I did show Greg your appreciation and share today’s show with a friend who also appreciates good ideas go to J WB makes it easy.com and learn about what they’re working on and see the available inventory and all that good stuff and then check out the not your average investor show. And you can find them at and why a is calm. Thanks again, Greg. Thanks, Josh. And until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai