Radical Wealth Plan – "Is Now a Good Time to Buy? (AMA)"
Host: Paul Morris
Episode Date: April 21, 2025
Episode Overview
In this special "Ask Me Anything" (AMA) episode, host Paul Morris—a prolific real estate investor and entrepreneur—addresses the most common questions listeners have about building wealth through real estate. Co-host Josh Spitzen joins for the first part of the episode, teeing up audience-sourced inquiries about buying vs. renting, timing the market, the 1% rule, investing with limited capital, property management decisions, and the merits of buy-and-hold vs. flipping strategies. Throughout, Paul demystifies real estate investment practices, draws from personal experience, and offers practical advice that’s accessible to newcomers and seasoned investors alike.
Key Discussion Points & Insights
1. Buy vs. Rent: Which Is Smarter?
[03:16–11:18]
- Paul’s Core Belief:
"I believe it's always better to buy than it is to rent. ... Renters are paying the owner's mortgage. ... When you own your own home, you're building equity for yourself." – Paul [03:29]
- Building Equity:
Buying a home lets you build your own wealth. Renters build equity for landlords instead. - Appreciation & Inflation Protection:
Over time, real estate appreciates and rents rise. A homeowner with a fixed-rate mortgage isn't subject to rent hikes. - Exceptions (Transience & Market Factors):
Paul acknowledges two legitimate reasons to rent:- If you’re transient and not planning to stay put.
- If the local market is unaffordable or overheated for buying.
"I felt like I was transient. ... Home ownership is never a risk in the long term, but it can be a risk in the short term." – Paul [06:27–06:36]
- Tax Benefits:
Homeownership provides significant tax advantages (e.g., deductible interest, depreciation) that renting does not offer. - House-Hacking Example:
Paul describes how, when he couldn’t afford Washington, D.C. housing, he bought and brought in roommates to offset expenses—a now popular strategy known as “house hacking.”"I put roommates in and that's what they now call house hacking." [09:29]
- Ultra-wealthy Exception:
At a certain wealth level, the flexibility of renting becomes a luxury rather than a necessity—compared to renting skis instead of owning for maximum flexibility."For a billionaire ... renting or leasing is almost a throwaway luxury." [10:37]
2. Is Now a Good Time to Buy?
[11:18–20:08]
- There Is No Universal "Right Time":
"There's not a best time to buy real estate. ... There's the particular deal." – Paul [13:29]
- Deal Analysis Trumps Timing:
The viability and quality of the individual property matter more than market timing. - Bad Advice Example:
Paul recounts an anecdote: A CPA told someone “now’s not a good time” without reviewing any specific deal. Paul confidently calls this bad advice—no blanket timing advice trumps deal details."I can tell you it's terrible advice. ... Did you look at the deal? Was no." [13:13]
- Personal Experience:
Paul shares his own experience buying a Santa Monica house at the peak (right before the crash), losing significant value in the short term, but ultimately transforming the property and selling well above his total investment years later."I bought the right house, which had a lot of value add. I added the value the right way. ... I sold it three years ago for $6.2 million." [15:56]
- Market Trends & Local Variations:
Co-host Josh notes that in Los Angeles, home price appreciation is extremely likely over any two-year period, barring catastrophic events."There's never been a point in time in the last 50 plus years in Los Angeles where prices have not appreciated within a two year period." – Josh [17:25]
- Cycles & Recovery:
Real estate downturns do happen (e.g., 6–7 years in LA during the ‘90s, 2007–2012 for the Great Recession), but long-term holding mitigates most losses.
3. The 1% Rule and Best Places to Invest
[20:14–23:18]
- Defining the 1% Rule:
Rental income should equal 1% of total purchase cost (e.g., $3,000/month rent for a $300,000 property). - Market Realities:
Hot markets (like LA) rarely meet the 1% rule—often closer to 0.5%–0.7%. Yet, Paul still uses the rule for easy math and as a general benchmark."In hot markets like Los Angeles, you ... cannot get 1% ... but I still use the 1% rule." [20:44]
- Chasing High Yield vs. High Appreciation:
Lower-yielding markets like LA historically offer higher appreciation, which more than compensates for lower cash flow."Over time, places like Los Angeles tend to appreciate a lot more." [21:26]
- Invest Where You Know:
Paul favors markets he understands (his early investments were in Pittsburgh). Understanding the local nuances is key.
4. Investing With Limited Capital
[23:18–26:21]
- Start Small, Be Creative:
"You shouldn't look at that amount of money ... as an impediment." – Paul [23:30]
- Strategies:
- Partner with others to pool resources.
- Seek out off-market or auction deals.
- Create a syndicate—raising money from friends/family and offering preferred returns.
- House Hacking: Use low down-payment owner-occupant loans and rent out rooms/units.
"That's the way I did it. And certainly other people can do it as well." [25:11]
- REITs (Real Estate Investment Trusts):
Offer access to diversified properties but with diminished returns due to management costs and less control.- Paul prefers direct ownership, echoing, “Nobody looks after your own money the same way that you look after your own money.” [26:17]
5. FHA Loans & House Hacking
[26:21–29:24]
- FHA Product Overview:
With relaxed rules, buyers can now use low down payments (<5%) on up to 4-unit owner-occupied buildings."That's a great opportunity ... for a four unit or three unit building where you're going to own or occupy one of the units." – Paul [28:34]
- Advice for Young Investors:
Get into small multi-family, occupy one unit, rent the others.
6. Property Management: DIY or Hire?
[29:24–30:22]
- Personal Preference:
Paul admits he dislikes property management and outsources early and often.- New investors might start self-managing for a better understanding but should consider hiring pros as their portfolio grows.
- Vet property managers carefully, focusing on references from other investors.
"I would go with a professional manager." – Paul [30:08]
7. Buy-and-Hold vs. Flipping
[30:22–37:15]
- Buy-and-Hold Benefits:
- Wealth grows unevenly but persistently over time.
- Takes advantage of appreciation and tax benefits (long-term capital gains).
- Provides resilience in downturns as cash flow tends to persist even in recessions.
"So it's really holding real estate over time that increases my wealth." – Paul [35:05]
- Flipping Perspective:
Some successful investors focus exclusively on flipping, preferring to avoid tenants and liquidity issues. - Personal Stance:
Paul prefers deals that produce value immediately (through improvements, i.e. "value add") rather than relying solely on appreciation."I never buy on the future. It's got to make sense right here and right now ... That's one of the reasons why I've never lost money in a real estate deal" [32:30–33:00]
- Flipping Risk:
Largest financial losses tend to occur when flippers are caught mid-project by a downturn.
8. Real Estate vs. Stock Market for Wealth Building
[37:15–40:58]
- Paul’s Personal Allocation:
Currently, he is 100% out of the stock market, apart from funds in self-directed retirement accounts.- Transitioned funds into a self-directed IRA for real estate and alternative investments.
- Emphasizes the unique control and tangible value of real estate.
"I am entirely, at this point, entirely out of the stock market. ... I know the question was are you bullish in real estate, but are you in the stock market at all? And my answer ... is actually not in the stock market at all. And I'm not sorry about that." [39:05–40:09]
- Retirement Accounts Advice:
Believes everyone should have an IRA or 401(k). Even if you mostly invest in real estate, these vehicles offer significant tax advantages.
Notable Quotes & Memorable Moments
- "There's not a best time to buy real estate. ... There's the particular deal." – Paul [13:29]
- "Buying a house for you to live in is the best real estate investment because ... it's tax deductible." – Paul [07:22]
- "Home ownership is never a risk in the long term, but it can be a risk in the short term." – Paul [06:36]
- "Nobody looks after your own money the same way that you look after your own money." – Advice Paul shares [26:17]
- "So it's really holding real estate over time that increases my wealth. That's why I don't mind putting the time and energy getting into a deal because I know I'm going to hang on to that." – Paul [35:05]
- "I never buy on the future. It's got to make sense right here and right now." – Paul [32:30]
Segment Timestamps
| Topic | Start Time | Key Takeaways or Quotes | |------------------------------|---------------|------------------------------------------------| | Buy vs. Rent | 03:16 | Favoring ownership, exceptions, house hacking | | Is Now a Good Time? | 11:18 | No best time, focus on deals, personal example | | The 1% Rule | 20:14 | Yield vs. appreciation, investing in known mkts| | Investing With Limited Money | 23:18 | Partnerships, syndication, REITs, house hack | | FHA Loans/House Hacking | 26:21 | Use owner-occupant loans up to 4 units | | Property Management | 29:24 | DIY vs. hiring, prefer pros as you grow | | Buy & Hold vs. Flipping | 30:22 | Preference for hold/value-add, tax benefits | | Real Estate vs. Stocks | 37:15 | Paul’s allocation, self-directed IRA |
Summary for Listeners
This episode equips listeners with actionable, experience-driven guidance on the essentials of property investing—from mindset and market nuances to practical mechanics like partnering, financing, and management. Paul’s unwavering emphasis on due diligence, local knowledge, and long-term strategies demystifies how anyone—from newcomers to veterans—can start or scale their journey toward radical wealth through real estate.