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Gib Irons' Real Estate Secrets for Ambitious Investors · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big with Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: Welcome to the Go Big with Gibb podcast.
• 0:12
  Speaker 1: I'm your host, gibb Irons, and today I want to talk about how to build a successful real estate portfolio in 2024.
• 0:19
  Speaker 1: Every week, I have the opportunity to talk to real estate investors from all over the country and I absolutely love it.
• 0:26
  Speaker 1: Oftentimes, those conversations are the highlight of my week.
• 0:29
  Speaker 1: One of the things that I love about real estate is the sense of community.
• 0:33
  Speaker 1: My experience has been that most successful real estate investors are happy to tell you exactly how they did it.
• 0:40
  Speaker 1: For example, my real estate investing journey began during the Big Rock Blue Marlin Tournament, where we fished for several days in a row without even getting a bite.
• 0:49
  Speaker 1: Although the fishing was slow, I had the opportunity to talk to a real estate investor who had acquired over 200 properties in a relatively short period of time.
• 0:58
  Speaker 1: Our conversation was a demarcation point in my life, and when we arrived back at the dock, I was determined to dive headfirst into real estate investing.
• 1:08
  Speaker 1: That tournament was in June of 2019.
• 1:10
  Speaker 1: And two months later, I did just that.
• 1:13
  Speaker 1: Beginning in August 2019, I acquired 14 properties in 14 months.
• 1:18
  Speaker 1: By the end of 2020, I had 14 rental properties that we had purchased, renovated and brought to market rent.
• 1:25
  Speaker 1: During that time, we had properties appraised to capture the increased value and did a cash out refinance that put an additional $100,000 back in my pocket tax-free.
• 1:37
  Speaker 1: In April 2021, we acquired a commercial property that serves as the Moorhead City office for my law firm.
• 1:44
  Speaker 1: My real estate holding company owns the property and my law firm pays me rent each month to occupy the building.
• 1:51
  Speaker 1: In December 2021, I acquired a short-term rental property in Sevierville, tennessee, called Smoky Mountain Masterpiece Key Mountain Masterpiece.
• 2:05
  Speaker 1: We purchased that property for $1.85 million and secured a loan for 80% loan-to-value at 2.5%.
• 2:09
  Speaker 1: That property alone generates over $100,000 in profit each year and produces significantly more cash flow than all of the other properties combined.
• 2:18
  Speaker 1: In 2021, I was first introduced to the concept of a cost segregation study, where you hire an engineer to determine the depreciation schedule for various elements of the property and then you take accelerated or bonus depreciation.
• 2:33
  Speaker 1: We performed 16 cost segregation studies on our properties that year and it saved me approximately $250,000 in taxes.
• 2:43
  Speaker 1: In August 2022, I became interested in multifamily syndication.
• 2:48
  Speaker 1: A syndication is where a group of investors pull their money together to purchase a large commercial asset such as an apartment complex.
• 2:57
  Speaker 1: This concept was super attractive to me because it would allow me to invest alongside seasoned operators who were the best in the business, with the potential to achieve higher returns than you would experience in a traditional investment such as stocks, bonds or mutual funds.
• 3:15
  Speaker 1: Moreover, given the size of the assets, there was a lot more depreciation that could be captured in the first year, thereby significantly reducing my taxable income.
• 3:26
  Speaker 1: Since that time, I've passively invested in over 2,000 doors with five different operators.
• 3:32
  Speaker 1: These investments have saved me hundreds of thousands of dollars in taxes and have allowed me to grow my net worth rapidly each year, as I have significantly reduced or eliminated my biggest expense taxes.
• 3:46
  Speaker 1: For the aspiring real estate investor, I have five tips.
• 3:49
  Speaker 1: Number one get a mentor.
• 3:51
  Speaker 1: One of the best ways to expedite your personal growth is to get a mentor.
• 3:55
  Speaker 1: Mentors serve several different roles.
• 3:58
  Speaker 1: Most importantly, they can introduce you to people that you need to know in your industry.
• 4:03
  Speaker 1: Real estate is a relationship business, and a good mentor can help you cultivate relationships with the best real estate professionals in your market.
• 4:13
  Speaker 1: Number two build your dream team.
• 4:16
  Speaker 1: To build a successful real estate portfolio, you need to have access to the best real estate agents that can help you source deals, the best lenders that can help you secure financing, and the best property managers to ensure that you're able to execute on your business plan.
• 4:32
  Speaker 1: Number three learn underwriting.
• 4:35
  Speaker 1: At a minimum, you've got to have a basic understanding of how to underwrite a deal.
• 4:40
  Speaker 1: For most real estate investors, the goal is to find properties that cash flow from day one.
• 4:46
  Speaker 1: This task can be very difficult in market cycles where trading prices and the cost of debt are high.
• 4:52
  Speaker 1: As of the date of this recording, it is May 2024, and we have just experienced an unprecedented rise in interest rates that began in March of 2022 and ended in July of 2023.
• 5:06
  Speaker 1: Based on current market conditions, it can be very hard to find deals that pencil, but don't give up.
• 5:13
  Speaker 1: They're out there.
• 5:14
  Speaker 1: You just have to spend a little more time looking for them.
• 5:17
  Speaker 1: Number four choose a market.
• 5:19
  Speaker 1: You've probably heard the number one rule in real estate location, location, location.
• 5:25
  Speaker 1: This rule rings true regardless of asset class, whether you're dealing with single family, multifamily, short-term rental, long-term rental, etc.
• 5:35
  Speaker 1: Ideally, you want to pick a market that is experiencing rapid population and job growth.
• 5:41
  Speaker 1: Most beginners want to invest where they live, and I can certainly understand that it is nice to be able to visit your property regularly and lay eyes on it.
• 5:51
  Speaker 1: That said, the better move could be to invest in the best market that you can find and work with a property manager that can serve as your boots on the ground.
• 6:01
  Speaker 1: And our fifth and final tip is I really want you to think about how involved do you want to be in the property?
• 6:08
  Speaker 1: If you are actively managing your own real estate properties, that role is far from passive.
• 6:14
  Speaker 1: Dealing with tenants, toilets and termites is time consuming.
• 6:18
  Speaker 1: If you're not up to the task, consider passive investing with me at Irons Equity.
• 6:24
  Speaker 1: As a passive investor, you can partner with the best operators in the world and share in the profits.
• 6:30
  Speaker 1: Passive investing has several advantages.
• 6:33
  Speaker 1: For one, passive investing can oftentimes achieve a higher return than what you would achieve if you try to do it all by yourself.
• 6:42
  Speaker 1: On top of that, you have no responsibility for carrying out the business plan.
• 6:47
  Speaker 1: As a passive investor, you just sit back and relax and wait for your mailbox money.
• 6:52
  Speaker 1: If that is of interest to you and you want to learn more, go to my website at investwithgibcom and schedule a 30-minute consultation with me.
• 7:02
  Speaker 1: Gibb Irons, thank you for listening to this episode of Go Big with Gibb.
• 7:10
  Speaker 1: If you haven't already, go follow us on social media at Gibb Irons.
• 7:14
  Speaker 1: We'll see you next time.