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Building Wealth Through Real Estate with Joe Fang · The Academy Presents podcast

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  Did you know that 90 % of the world's millionaires
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  invest in real estate? Well, I'm Angel with the
• 0:10
  Academy Presents Real Estate Investing Rocks,
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  and I'm here to help you if you want to go for
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  your piece of that pie. Are you new? Are you
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  new to this and you just don't know where to
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  start? It's okay. Are you someone that has invested,
• 0:27
  but you feel stuck, you feel like you've lost
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  momentum, you don't know where to really head
• 0:31
  from here? Are you a seasoned real estate investor
• 0:35
  who is doing great but maybe you just want to
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  hone a few skills here and there? This is the
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  place for you. The Academy Presents Real Estate
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  Investing Rocks podcast will connect you with
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  industry experts so that you can save time, avoid
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  costly mistakes, and begin living the life you've
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  dreamed of all through real estate investing.
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  You're already taking the first step. just by
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  joining us here today. Hey guys it's Angel and
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  you are here at the Spring Summit you're here
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  for the REI Rock Summit and we are hearing and
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  you over there with us. It's a lot of fun. But
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  days. You can absorb it all. or you can come
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  over there and join us on the live side and get
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  that piece as well. So I'm going to turn it over.
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  This is my friend, Joe Fang, and I'm going to
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  let him kind of tell us a little bit about his
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  background, and then we're going to get started.
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  So, Joe, it's over to you. Hi, Joe. Hi, everyone.
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  Thank you for having me on your show. My professional
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  background is actually in the traditional investment
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  management business, having spent over a decade
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  in the industry. I worked at a hedge fund in
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  New York City for five years. and then follow
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  that up with seven years with a large institutional
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  fund manager in Los Angeles. Today, I consider
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  myself a full -time real estate investor wearing
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  three different but related hats. So my wife
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  and I have, we directly own and manage a number
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  of single family, multi -family and short -term
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  rentals that we started accumulating in 2003.
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  Started out more as a hobby alongside with our
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  W2 jobs and other business ventures, but it eventually
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  became a full -time. We are also passive investors
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  in over 50 commercial real estate syndications
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  that started in 2017 and that spread out amongst
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  several operators in different asset types and
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  geographic locations. The investments range from
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  multifamily to self -storage mobile home parks,
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  retail, distressed debt, hard money, venture
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  capital, including crypto, AI, and Bitcoin mining.
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  We got a lot to talk about, Angel. Absolutely.
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  I also recently started working on the active
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  side of the multifamily syndication business
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  as a Director of Investor Relations. with an
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  operator who is a really good friend of mine
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  and I've invested with him in many of his deals
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  that produce great results. I love being in this
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  role. I think of it as my dream job. I love connecting
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  and having the opportunity to connect and meet
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  with all types of people and just learning and
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  sharing from each other and helping each other
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  building that long -term wealth. That's awesome.
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  I'm super excited. So I guess Man, where do we
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  even start? So we also started out in residential
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  and we have a residential portfolio that we're
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  not getting rid of anytime soon. I know there
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  are people out there that are like, oh my God,
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  dump your residential. You need to go all multifamily
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  and I'm never going to be that person because
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  I think residential is actually kind of a great
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  place to be because you make all the decisions.
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  So it is an amazing store of value. And if you
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  want to make any moves, you just move it around.
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  I mean, it's your equity. You can do a cash out
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  refi. You can do a B lock where you have like
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  a business line of credit. There are things you
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  can do. And so that's why I love my residential
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  portfolio. Never going to get rid of it probably.
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  It's got six single families in it, a quad, a
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  couple of duplexes. It's just, it's ours and
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  we don't have to ask people questions. If we
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  want to make a move, we make a move with it.
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  We get some equity out and we've got a good chunk
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  of change and we can invest in something else
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  if we want, but we don't have to give up that
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  cash flow. So that's why I like residential.
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  We did get into multifamily about five years
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  ago and we've also got some oil and gas. So that's
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  kind of a little bit different than some people
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  were JV into a couple of oil wells. So that's
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  kind of a neat aside a way that we diversified
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  also. So we got residential, we've got some commercial
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  multifamily and then some oil and gas and I actually
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  think we just got into maybe some industrial
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  flex. I don't actually know that part because
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  Jason once he got control of his 401k he kind
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  of just started investing it and I know some
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  of the stuff he's doing with it and some of the
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  stuff I don't know what he's doing with it so
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  yeah there's certainly lots of opportunities
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  out there and you know every type every asset
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  type has its pros and cons so I can certainly
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  share that sentiment yeah no absolutely so you
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  got into your residential what was really I mean,
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  so if you're like a financial person and you
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  saw the hedge funds, you saw all that going on,
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  what made you do real estate? I love that question.
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  So when I started out my investment career, I
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  knew that I had a, I just felt like I needed
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  to be on New York City and you want to be surrounded
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  by people who are doing the things that you want
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  to be doing. And in fact, I kind of accidentally
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  caught the investment bug during college. I was
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  actually going to college to major in the life
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  sciences, like biology or maybe considering going
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  to medicine or research or genetics. Molecular
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  biology was such a hot topic back then. And it's
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  one of my favorite subjects, including organic
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  chemistry. But my junior year, I think I was
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  coming back from chem lab. And this was at a
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  time where my my dad actually allowed me to start
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  trading it in his brokerage account. And I think
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  the first stock that I bought was like Hewlett
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  Packard or something. And I just remember buying
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  it that morning and then coming back and calling
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  up the broker and finding out that it was up
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  $100. And I was so excited. Just walking back,
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  I didn't even do anything and just maybe picking
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  the right stock and... and it was like the easiest
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  hundred dollars we ever made. So I caught the
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  investing bug and just wanted to get out there
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  and work in the financial services industry.
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  While I was there, I started to notice over time
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  that there was so much building, right? I mean,
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  look at New York City, it's building after building,
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  it's endless building. And at some point I realized,
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  oh my gosh, you know, who owns all this stuff?
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  And there's so much wealth in these buildings.
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  And here I am, you know, working at a W -2 job
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  and I'm, you know, I'm looking at equities and
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  fixed income and there's all this just wealth
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  right in front of me. And so, I didn't really
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  know anything about Kiyosaki at the time or other
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  types of real estate investing. I think it was
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  just through intuition that somehow you want
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  real estate as part of your total portfolio.
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  Eventually, when I returned back to my hometown
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  and continued to work in the investment management
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  business, I wanted to have real estate. I think
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  it also helped that you know real estate in New
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  York was so expensive going back to California
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  I was like oh this is like half the price this
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  is like a third of the price and so um you know
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  it was just um sort of like oh it just it just
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  felt like it's something that you needed to have
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  that's insane to me going from a hard science
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  to to like financial financial stuff is so because
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  I went from I tried so many different things
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  and landed in business So I have a BBA and then
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  a MS in eco and like my husband's an engineer
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  and he actually has his, he has his PhD in chemical
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  engineering. So he went from like engineering
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  to now he's our underwriter. So there wasn't
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  like this huge spread from one thing to the next.
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  And then I think about what I've done and I'm
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  like, I have my degrees in economics, but I taught
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  K through 12 and then I teach college and now
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  I do this. And like, I've always known I was
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  a talker. Even when I was younger, I always got
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  the needs improvement and I got the talks too
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  much on the report card. So I should have known
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  that this was like my calling. But you don't
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  always know those things when you're in school.
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  And so to hear you say, you know, you're in chem
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  lab and I'm like chemistry and then you're like,
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  I think I'm going to invest in real estate because
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  you were doing stocks and you made some easy
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  money there. And I mean, it's paper. It's just
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  paper. But to see that to see it growing when
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  you've done very little to do anything and so
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  that's pretty cool and I can see that in real
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  estate too because there's not well especially
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  if you're in a high appreciation market you know
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  if you're in a high appreciation market you're
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  doing virtually nothing and your properties you're
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  increasing in value and you're going to be able
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  to realize that maybe not necessarily um while
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  you're owning it but when you sell it you're
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  going to realize some substantial gains So that
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  part's really nice. Our residential stuff isn't
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  necessarily in these markets that are appreciating
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  like crazy, but they're steady. And we really
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  enjoy that steadiness because we can increase
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  rents and it's not insane. Now, our biggest problem
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  is actually remembering to make sure we're putting
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  pressure on the property management company to
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  increase the rents because to us, unless the
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  mortgage is changing, there's not a bunch of
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  need for us to change the rent. So you really
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  have to stay on top of that if you're going to
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  be in residential. So guys, if you're out there
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  and you're in residential and you're using a
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  property manager, stay on top of your property
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  manager and make sure you're getting increases
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  to your rent every year, because that's something
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  you can do. It's something you should be doing.
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  And every time you have a turn on that unit,
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  you should be increasing rent again, because
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  if you don't, it's just lost revenue. And I am
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  preaching to myself as much as I am preaching
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  to you because I'm really bad at it too. So you,
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  me, everybody that's listening, make sure you're
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  staying on top of your property managers so that
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  you're keeping your rents current with where
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  they need to be. So that's on the residential
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  side. On your multifamily, on your commercial
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  side, you've usually got a property management
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  company that is really in tune with that. And
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  they're going to be, in my mind, much more proactive
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  about keeping those rents up because they know
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  that they need to be working on those to get
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  the revenues up and keep the expenses in check.
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  So I think it's a little more owner proactive
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  on the residential side as far as keeping those
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  rents current more so than it is in the commercial
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  space. But that's just what I've seen so far.
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  And I haven't been here forever. I've only been
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  here for a few years. So if you know something
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  different, by all means, let me know. because
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  I would love to hear everybody's opinions. So
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  you go from residential, you've got the bug,
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  and what was your first commercial property?
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  Yeah, good question. So we actually started out
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  buying a small multi -family nine -unit property
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  just about a mile outside of UCLA in West Los
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  Angeles. And I think at the time I was starting
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  to think that, hey, you know, instead of having
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  one unit, I think we had a decision between,
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  we had an option between either buying for the
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  same amount of equity or down payment, we could
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  either buy, you know, one property in our suburb
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  hometown. or we could have the down payment to
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  buy this nine unit property, commercial property
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  by the campus. And it just, again, it's one of
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  those, like, I didn't have a science or understanding
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  of economies of scale and the return nature of
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  just being able to multiply. But it just, again,
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  it felt like if you can get nine units, nine
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  doors instead of one, it just felt like it seems
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  like a better deal. And so we started with that.
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  And then over time, we started getting into the
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  single family stuff. And the interesting story
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  there for us is... So, you know, I was telling
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  you that I work at this large fund manager in
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  downtown Los Angeles, right? And I was living,
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  when I had just moved back from New York City,
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  I was living with my parents in a suburb, maybe
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  an hour away. But with the traffic, it's about
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  an hour and a half going to work every morning.
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  And, you know, at first it was okay, but it took
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  a toll. And I remember driving into downtown
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  Los Angeles, and this was about early 2000 -ish,
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  just to let people, maybe they might know what
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  the market was like for downtown Los Angeles,
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  but they had just opened the Staples Center,
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  you know, where the Lakers play and not much
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  development around there. In fact, downtown LA
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  was one of those places where, you know, people
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  came to work. and then they hurried home because
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  it was kind of sketchy at night. So driving to
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  work every day and just being in that traffic
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  for an hour and a half each way. I want to give
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  a plug to my lovely wife real quick. She's in
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  the restaurant business and folks are a little
• 15:53
  bit different than mine. I actually had to kindly
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  ask her to carpool with me just so I can save
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  you know half the time and she gladly did it
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  for six months and so you know and then she would
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  come and pick me up and just so we can save a
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  little bit of time and you know just you know
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  anyway I'm very grateful for that and the sacrifices
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  that she made but one day driving to work off
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  the side of the freeway it was this big sign
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  that said you could live here Yeah, okay. You
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  know, that sounds kind of interesting. And at
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  the time, it was this industrial building. I
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  think it was like a former UPS warehouse. It
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  was a loft. And so it was a loft building. And
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  I remember living in New York City and got invited
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  to some loft parties in SoHo. And, you know,
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  in case people don't know what these things are,
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  they're basically converted old they're converted
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  warehouses where we have these ginormous uh uh
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  height you know and and just all this open space
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  and artists really love them because you can
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  you can be very creative with the space and i
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  remember just stepping into one of those soho
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  you know lofts in new york city and i was just
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  like oh this is so amazing like how do i get
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  one of these and then i find out the price tag
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  was like five million dollars you know And then,
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  you know, that's, you know, and that's what I
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  was saying like, you know, New York City, New
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  York City real estate was so expensive that like,
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  you know, I just saw the wealth and then and
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  then the deal, you know, or the relative bargain
• 17:35
  compared to Los Angeles. But anyway, so looking
• 17:37
  at this loft and I was like, wow, you know, what
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  if, what if this this will be just as cool as
• 17:44
  as the Soho lofts that I had experienced. So
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  we ended up in going and buying one of those.
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  and then learn all the developments that were
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  coming in. We were in the path of progress. And
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  as we researched the area, we saw that downtown
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  LA was gentrifying. And anyway, make a long story
• 18:08
  short, two years later, the property increased,
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  it had doubled its value. And so talk about filling,
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  That's more than a hundred dollars. Right. So
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  talk about, you know, kind of having that intuition
• 18:24
  that there's something special about real estate.
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  And that was like our our first score. And it
• 18:30
  was just like, I can't believe it. Once again,
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  we bought this place, we lived here, got to enjoy.
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  All I wanted to do was cut the commute time.
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  I was able to walk to work. It was only a mile
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  away. And it was great just having that utility.
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  Right. And then the fact that, you know, we sold
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  it for double the price two years later. I mean,
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  that was when we really got into investing in
• 18:52
  real estate, and that's when we started adding
• 18:54
  more single family. We started buying up all
• 18:56
  the lofts in the different areas of the downtown
• 18:59
  LA neighborhoods.