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Real Estate Investing School Podcast
221. The 17 Rules of Real Estate Investing with Joe Jensen
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In this special year-end episode of The Real Estate Investing School Podcast, host Joe Jensen takes the mic solo to share invaluable insights and lessons from his personal real estate journey. With no guest, Joe dives deep into his "17 Rules of...
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Welcome to the Real Estate Investing School Podcast. I'm your host, Joe Jensen. Today is a special podcast. It's the last podcast of the year that I'll be recording. We've got a treat for you for the end of the year, but this will be the last one recording, so I want to do things a little different. We're not going to have a guest today and I just wanted to share some of my thoughts about real estate. Some insights, some rules, some guidelines, just some principles that have helped me as I've gone throughout my real estate journey. So for some of you, this will probably be really boring. For many of my students or anybody that's been listening for a while, it'll maybe be repetitive, but for some, they might find it really interesting. For me, these were some big game changers, things that I had to learn the hard way, and I'm glad I did. So. So I want to share them with you as a little Christmas present so that you could learn what I've learned. So I'm going to dive in to a bunch of different random things about what I think and feel about real estate investing. So we are going to dive in. Without any further ado, I am the only guest today. My name is Joe Jensen. I'm a real estate investor. So here we go. We're going to dive into it. So I wanted to start off with I have a list of 17 rules of real estate investing. So these are just kind of guidelines. They're not in any special order. And I don't know if they're like, set in stone forever, but these are some of my thoughts as I've gone through that. I'm like, ooh, if I understood this, I'd make better decisions now. You gotta keep in mind that with real estate investing, it's so personalized, right? Everybody has their own goals. They're trying to achieve their own time frames to achieve those goals in. And it can be very custom, which is so awesome about real estate. But it can also be a little tricky if you don't know what you want to get out of it. So you need to really take some time and think about what you want out of real estate. I always use the example that, you know, saying, oh, I want to do real estate. That's like saying, oh, I want to do sports. It's like, that's pretty broad. You want to do like, football or skydiving or badminton or rock climbing. Like, these are very wide range. There's team sports, there's solo sports, there's extreme sports. There's golf like it's. You need to know what your goal is so that you can train appropriately so you can prepare correctly. And that's going to be different depending on what kind of sport you want to do. So same thing with real estate. So for me and for a lot of you, I know that freedom is a big goal. Getting cash flow, passive or residual income to live off of so that you don't have to be working 9 to 5 so that you know, I've heard the term fire. What is it? Freedom? I don't even know. Something. Retired early. Financial independence. Retire early. Some people say instead of retired it's their work optional, right? So they have enough cash flow to live off of and then they choose to work, they don't have to. So work optional. Maybe you do want to just retire. So it depends on you. But anyway, that's a big part. That was a big thing for me. I wanted a way where I could not have to work anymore, that I could be freedom of location, that I could go anywhere and do what I want and I could spend the time raising my kids and traveling and, and not being tied to some job and having to answer anybody. That was a big goal of mine. So keep that in mind as I go through these rules because I'm sure that's going to influence the rules that I think of. So here we go. Rule number one. This is the most important rule. Okay? So you've probably heard me say this a million times, but the rule is collect as many cash flowing assets as possible. Okay? Your number one fiscal responsibility is to grow your asset portfolio. That's another way to say it. Your number one fiscal responsibility is to grow or increase your asset portfolio. Okay, now you can increase your asset portfolio through buying businesses, starting businesses. You could buy assets like gold and stocks and bonds and crypto, if that's really an asset. Not really, maybe anyway. But real estate is my asset of choice for a lot of reasons. We'll dive into some of those reasons. But if you grow your asset portfolio, that's how you grow your wealth and that's how you grow your freedom if you focus on just making money. I used to think my number one fiscal responsibility was to make a lot of money. I need to go make a lot of money. I need to make a lot of money. And I realized, no, I need to grow my asset portfolio because that's where I can have freedom. That's where I can actually have wealth that grows on its own. I'm not trading my time and effort for money. It's just growing on its own. When you first get into the entrepreneur world, at least when I did, I got into the sales world, and there's this big thing like, ooh, you don't want to trade hours for money, where it's like you're getting paid hourly. It's like you want to trade effort for money. Where you go out, you make a big sale, you make a lot of money. And it's not tied to an hourly wage. And that really like removes the lid in a lot of ways to what you could do as opposed to there's only so many hours in the day. But if you can influence people, you can get sales. And then if you have like recruits under you and you're managing teams, it can grow and grow and grow, like running your own little business almost. And that was a good step. That was a good mind shift. That was a paradigm shift for me at the time. For a lot of people, like, don't trade your hours, don't trade. And don't work for an hourly wage. Go work off commissions and get paid for your effort, not for your time. But even then, you got to put in the effort, right? And so the next step to that is don't even trade your efforts for money. Trade your money for money. Go buy things that are assets that'll bring in more money and it'll grow on their own with or without your time, with or without your effort. And that's kind of the next step beyond just not trading your dollarly wage. Right? So number one rule, your most important fiscal responsibility is to increase your asset portfolio. Number two, don't lose your assets. That's a really important rule. Don't lose your assets. I think there's some quote attributed to Warren Buffett where he's like, something about his number one rule is, is don't lose your money. And number two is, see number one, right? Like, like be smart. I'm not a fan of this idea of high risk award. I think that is a poor person mentality. I think that is, is, it's, it's risky. Okay? Now I don't think that's what it should be. I think it should be high vetting, high education, high effort, and then get the high reward. But you want to have an asymmetrical perspective on your investing. You don't want to risk a lot and to hope you get a lot, you want to risk very little with a capped bottom with unlimited potential. So you want it to be asymmetrical where it's not even if you're risking a hundred percent to make a hundred percent. That's way too risky. You want to risk 20% to make a thousand percent, right? So, so I don't believe in, in, in being too risky. You can be smart, you can take risks, calculated risk, but they can be educated and you can know what you're doing. And that's one thing I love about real estate. A lot of real estate, you don't even have to go through with it unless it all lines up. You can get a deal under contract, then you have time to go do due diligence and you can look at it and you can shop around and you can check with lenders. You can. So you can literally tie down tenants and lenders and get everything in line before you have to really pull the trigger. And if that doesn't work out, you can back out. It's amazing to be able to have something under contract so they have to sell it to you, but you don't have to buy it if you don't want to. So it really lets you be in a powerful position to make an educated, prepared, wise choice before you're locked into something. And that can help you not lose your assets, right? Cause you don't wanna go build this thing and then have it all crumble. So be smart. Don't lose your assets. If you can stay in the game, then you're gonna win. Number three, rule number three, okay? Don't sell your assets for money. Trade them for better assets. We don't sell assets for money. We trade them for better assets. So I used to have the rule be like, never sell your real estate, never sell your property. But there's times where it does make sense to, but not if you're just selling it because there's some equity in it. And it's like, ooh, I had a lot of people reaching out to me when everything was going up, you know, post Pandemic Life and the price of real estate, we're going high, high, high. People like, dude, my home's worth so much. Should I sell? Should I sell? And I'd be like, well, what are you going to do with the money? If you're just selling for money, you're probably going to regret selling because then the assets, gone. You have this money. If you don't know what you're going to do with it, it's probably going to get blown on less effective things. Because money finds a way to be spent. And even if it's just sitting in the bank, it's depreciating. It's not working hard. It's losing money, it's losing value as opposed to increasing in value like if it was still in the house. And so, so don't sell your assets for money, but you can trade them for better assets. You can sell it, take that capital and go buy something that's going to give you even better cash flow. Or it's a better property that'll have better appreciation and be worth more in the long run. You know, maybe you 1031 exchange it, maybe you actually fully sell it and go buy something else. You know, know there's lots of different ways where you could trade an asset for a better asset. And it's okay to do that, it's okay to let go of properties. But what you don't want to do is just sell it for no reason to make a few bucks, and then you have no nothing to show for it. Because again, what's the number one rule? Collect as many properties as possible. Increase your asset portfolio. And so for selling for money, that doesn't help us increase our asset portfolio. But for trading a single family for a duplex that cash flows twice as much, that's increasing your asset portfolio. That's trading one asset for a better asset and not necessarily more assets. Right. You could sell a duplex for a single family. That's a way better asset. So just that's why I say better. You know, it could be better in a lot of ways. Less headache, higher quality tenants. It's in a better location. It's something you would live in maybe someday, you know, or your kids could. So there's like intrinsic value to you. So there's lots of ways it could be better. But that's. Rule number three is we don't sell our assets for money. We trade them for better assets. Rule number four, use safe debt guidelines. Okay, so if, if you work with me, you know what the safe debt guidelines are. I don't know if I'm going to go into them all right now, but when I first got into real estate, I learned about how to leverage debt. That was really powerful. But I grew up being very nervous of debt. That was the devil you know. I knew about consumer debt and credit card debt. People buying things they can't afford and then they lose their home or whatever. You know, buying things that, that you have to pay for liabilities on debt is very dangerous. But buying assets on debt that are well educated, well planned, and the asset brings in enough income to cover itself, then use debt for that because then you can use more and more. So I did develop my safe debt guidelines, which I'll go through really quick then, so that you can know how to use debt safely. So number one is there's an equity margin, meaning you have some equity in the home. You know, anywhere from 20 to 50% is probably safe. Like you don't want to have 100% debt on an asset necessarily. There's times where you might. But if we're just talking about really being safe, you don't want to be too over leveraged. You know, 20% if the market shifts and you still have, you know, 20 equity in the property, even if the value goes down 20, you still, you know, could sell it for, for what you're in it. Some people pay the even safer. I feel like, you know, the wealthier are the, the let, the safer you can be. I know like Rob Dyrdek, when he buys his big apartment complexes, he likes 50 debt is the most he'll go on it. And I was like, man, that's pretty aggressive. Like I'll put 80% debt on a property, but, but it all depends on where you're at, right? When you're bootstrapping in the beginning, you might need to go a little riskier, but 20 to 50% debt, but I don't think there's any point in having things paid off 100%. It's better to have some debt on it and leverage it. In my opinion. If you have 50% debt, I think that's very, very safe and you'll be okay. So equity margin equity, you have 20 to 50% equity in it, you'll be okay. Number two on the safe debt guidelines is a cash flow margin. Okay, so what that is, is you could lower the rent 20 to 30% and you would still cash flow. It'd still be a self sustaining asset. It would still cover all of its expenses. If your cash flow margin is not 20 to 30%, it's very risky, you know, even though you might be getting a lot of cash flow, but if the margin is off, like let's say you have a really expensive asset that you know costs 50 or 100,000amonth to maintain. If you're only cash flowing, $1,000 on that, $1,000 a month is a nice cash flow, but not if it's $50,000 to maintain that thing. That margin's very, very tight because the slightest change in the market and you could be hemorrhaging thousands and thousands of dollars a month. So you want to look at Cash flow margin and, and then have the proper cash reserves. I say anywhere from three to eight months of cash reserves to be safe. It's okay to use debt, especially if you have cash reserves to see you through the hard times to weather the storm. You know, three months minimum. Three months of being able to pay for the mortgage, the taxes, the insurance, the hoa, the, the maintenance, everything that needs to be done in those three months, you should be able to have that in liquid cash. I keep mine in a high yield savings account so I can access at any time that you can make sure to keep your assets afloat. Now you can have as much as eight months. A lot of like DSCR loans, especially if they're like the Freddie Mac, Fannie Mae stuff. They want you to have eight months of reserves for all of your assets. That's a little high, but great. If you have it, do it. Anything excess of that I think is pointless. You know, if you're having 9, 10, 12 months reserves for every asset, take that extra money, go buy more assets. So three to eight months. I think I'm rolling around five and a half months. And I think the bigger portfolio, it kind of, it kind of balances things out. If you've only got one or two, one or two could be empty at the same time. If you got 40 or 50, they're probably not all going to be vacant at the same time. So you might not have to be too aggressive with it. So you can be a little lower. I think six is a good rule. I think I'll examine five, five or something right now, but three to eight. So those are my safe debt guidelines. So you can go leverage debt, you can use it to buy more and more real estate, but you can do it safely, don't do it carelessly. Again, we, we don't believe in high risk, high reward. We believe in mitigated risk, high education, asymmetrical investing with a very high upside to get the high reward. All right, number five, little projects can take as much time and effort as big projects. Sometimes we sell ourselves short. I've done like when I didn't have a lot of money, I just buy like little mobile homes and things like that. And they can be just as big of a headache as a million dollar home. That's a beautiful thing, that's cash flowing great with a class tenants. So sometimes the little projects can be a way bigger headache than the big one. So maybe don't be afraid to go a little bigger, think a little bigger, tackle the bigger project because they Might take just as much effort, just as much time, you know, especially once you start looking at like the, the economics of scaling. You know, when you've got, let's say you have a 50 unit apartment complex, you know that is going to take less due diligence than 50 different individual places. It'll take more due diligence, more time and effort than a single family house to research it and make sure it's a good deal. But not as many as 50 single families. And then even once you're maintaining it. I've been dealing with this because I do have a lot of single families and it's like, oh, my insurance changed, oh my taxes changed, my escrow changed. Like this tenant, the tenants. Yeah, if you have 50 tenants, whether in single family or all in an apartment complex, you have 50 tenants. Right. But like you're going to have the same insurance on the building if you have a 50 unit. When I could have 50 buildings in 50 different states and they're all going to have different insurance providers when those change, which recently happened to me, it's just a lot of headache, a lot of paperwork. So it's like a lot of effort goes in to doing things smaller that you wouldn't have to do if it was a bigger project. So don't be afraid to think bigger. Rule number six, cash flow equals freedom. An equity increase and exits equal wealth. Okay, I say you don't really get rich off cash flow, you get free off of cash flow. But you get the real wealth. You get rich off of exits, building something and selling it off of the increase in equity appreciation over time that, oh, now it's gone up 1000-002000-00300,000. You make more off of exits and equity increase than you do off of your cash flow. Most people aren't making a million dollars a year off their cash flow because you don't necessarily need to. Once you have your freedom number, then you can use that time and that wealth to go leverage things and do short term stuff to, to make bigger money. But again, depends on your goals, right? Rule number seven, this is your number one fiscal responsibility. Don't get distracted. So it's like it's easy to start getting, you know, the grass is greener or shiny, what do they call it? Shiny object syndrome. Like, oh, what about this? What about this? What about this? But it's like don't get distracted. Remember why you're doing this. I remember when I was first doing it, I had to kept telling myself, yeah, that's a good deal. For somebody else. But right now I've got my blinders on. This is what I'm focusing on. I'm gonna hit my cash flow number. I know I could be doing other things, I could be out selling, I could be out grinding, I could be out building things and making all this money. But I'm trying to get free of the rat race and have an ass portfolio that is self sustaining that I can live off of and support my family. That was my goal and I had to keep my blinders on to achieve phase one. And then once that was done, I could open up and look at other options. But know what phase you're at and put the blinders on and don't get distracted. Okay, Rule number nine, don't underestimate the power of small decisions over time. Consistency is key, right? You got to do these little things. It's so easy. Like, oh, I'm going to buy a property. If you. Like I said, I tell people, if you just buy one property a year for 10 years, you'll be set for life. And that's so simple. But most people don't do it. You know, they want to buy 10 in the first year and then they get discouraged and they don't buy any for four years and then they buy one, then they take a three year hiatus and then they buy two. And it's like if you would literally just do the little bit, boom, one every year or one or two every year, no matter what, then you'll be set for life. And so those little powerful decisions of just being consistent, but it also goes down to the daily. It's like if you just look for a deal every day and put in an offer every week, amazing things will happen. But sometimes we just want the big thing to happen and then we don't consistently look at stuff. So don't underminate the power of small decision. Even it's just 30 minutes a day, it's going to be astronomically better than doing nothing for a week or two or a month and then like binging for an hour or two and trying to do something. So consistency, small little decisions. Rule number 10, everything takes more time, money and effort than expected. Okay, that doesn't just apply to real estate, but it does there as well. But just in life, everything will take more time, money and effort than expected. So if you can be prepared emotionally for that, when it happens, you're not going to be devastated. Hopefully you've budgeted for, you know, it to be more than it should. You run all the numbers, it should be X amount. But be aware it's probably going to be more somehow for things you don't see, right? It's going to take more effort. There's going to be headaches, there's going to be roadblocks. You're just going to deal with stupid things that you feel like you shouldn't have to deal with. But that's life. There's going to be unexpected things that happen. It's going to take longer. So many deals drag out, the lender messes something up and now you've got to add an extension and an extension. An extension. Anybody who's built a home knows they very rarely get finished on time. But so many deals, like, if you go in and you think everything's going to happen turnkey, as it should, you're going to be very frustrated. And frustration can kill your dreams. And so keep in mind that everything will take more time, money and effort than expected. Okay? Rule number 11, never stop doing the ABCs. Okay? A stands for acquiring. Okay, you need to be acquiring knowledge. Acquiring knowledge. That's what A stands for in the ABCs. Acquiring knowledge. Keep studying. Listen to the podcast, read the books, keep learning, okay? Watch the YouTube videos, take the courses, sign up for the coaching, whatever it is. If you stop learning, you stop being inspired. And it's a liquid playing field. Real estate's changing all the time, so if you're not staying up to par on it, you're going to miss a lot of stuff and you just won't know what you don't know and you'll get complacent. So always learn more. Knowledge breeds confidence. So acquiring knowledge, that's the A, B, brand new deals. Okay, don't just be learning, but you need to be getting brand new deals. New deals. You might have an awesome portfolio, you might be learning a lot, but don't just rest on your laurels. Brand new deals, Brand new deals. That's the B. You got to be finding new stuff consistently. Okay? A, acquiring knowledge. B, brand new deals. And C, current projects. You don't want to neglect your current projects. If you have a portfolio, take time to look at it. How could you maximize it? What needs to be done? Don't get so distracted on building and getting brand new deals that you forget about your current ones. Make sure you're doing a balance of all that. So if I were to say, hey, what should you do with your time? If you had an hour a day, I'd break it up. Spend 20 minutes studying, 20 minutes looking for new deals and Putting things Under contract in 20 minutes, maintaining your current portfolio, and that might increase, might be an hour for each of those at some point. It might be two hours for each of those at some point. Figure out where you're at. But if you do each of those things every day, then you'll be in good shape. Rule number 12, invest in deals where you are in control of the asset and the exit. That's a personal rule. Not everybody wants to do that. Some people want to just, you know, throw some money into a syndication, let someone else deal with it. There's not a bad, that's not a bad thing. Especially if you're a busy working professional, you've got more money than you do time or knowledge, that's fine. I help people do that. But for me, my rule is I want to be in control of the asset. I want to be in control, control of the exit. I don't want to just give up my money to somebody else and then hope it all works out again. There's different stages of life and there's different priorities. But I think for me, that was an important rule that I had to set at the beginning to know what I was doing and force me to learn and be in control of my world. Rule number 13, I apologize any of the lenders out there. Well, I'll change how I say, instead of saying lenders, I'll say the lending process. The lending process is painful, slow, and a huge headache. Okay? Now if you're doing like DSCR investment loans, they're actually not as bad. Those can be a lot simpler, you know, especially if the, the lender knows you and they've already vetted you out, they already know the property, it can be pretty simple. But if you're doing a full DOC loan where it's like a primary residence or an investment loan through Fannie, Freddie, any of the government agency stuff, they're going to need all the documents in the world and then they're going to need them again next month and then an updated version the next month and it drags on and it's such a pain and they don't tell you things until the last minute and then they ask for documents that don't exist that you have to make up from nowhere. And it's such a pain again, just know that the lending process is a pain, but it's worth it, right? If they're going to give you hundreds of thousands of dollars, you've probably done a lot worse for a couple hundred grand, right? So go through the process, make it more streamlined. Start getting organized. Keeping a file in a folder of all your, you know, your, your W2s and your taxes and all the, you know, anything you need for a lender. Start keeping a file and make your life a little easier. But it's still going to be a pain. And just know that it's going to be a pain. It's long, it's drawn out. I have a lot of people, when they first start into it, they're like, oh, this must be, I must be doing something wrong because this is so messy and confusing. And I'm like, no, that's just how it goes. And all the lenders have different rules. You'll talk to this lender and they'll do one thing and they'll talk to another lender and say, oh, we can't do that. I used to take lender's word for that. I'd ask them, hey, can I do this? And they're like, nope. It's like, oh man. I thought there was just a rule across the board, I can't do deal like that. But then as I learned I talked to another lender, they could do it. I was like, wait, what? Okay, why is that? And there's so many different ways to do it that you, you got to shop around some time and pick their brains and don't take no for an answer and get creative. So lending process can be painful and a huge headache and slow, but it's worth it. Rule number 14, we're cruising right along here. There's always another deal. Don't be afraid to walk away. There's always another deal. Don't be afraid to walk away. Sometimes we get so single minded on something that we want it to work that we start manipulating the numbers. We start forcing a deal that's not really a deal. And we, we bending it and we, we want to see it. And we cover our eyes to some bad issues because we just, we just want to do another deal. It's been too long. We want to grow our portfolio. Rule number one, right? And so sometimes we just try to force something that's not a deal. And sometimes you just got to let it go. There'll always be another deal if they won't let you do the due diligence properly. And if you can't do an inspection, if they're pushing it down your throat, you know what? It's a good deal for someone else maybe, but I'm not going to do it. I'm going to follow my rules and follow my guidelines. I'M not going to be high pressured or rushed into something that is risky, right? We don't take huge risks. We vet our stuff out. We make calculated decisions so we don't lose. All right, rule number 15, we're almost done here, guys. Don't let sunk cost warp your evaluation of a deal. So if you've already had a lot of sunk costs, you put time and money and effort into a deal, it's tempting to stay in it, right? But if it's showing that the deal's no good, back out. Even if you paid hundreds of dollars for an inspection or an appraisal, or you have hard earnest money, or maybe you already own the asset and you've been holding it for so long and you're just in it so deep. If you can trade it for a better deal, just get out of it. Don't let that sunk cost of time and money warp your evaluation. Is the deal still a deal today? Regardless of how much time and effort you put into it, Is it a deal or not? And if it is cool, stick with it. If you can stick it out and you have a game plan and a trajectory like, oh, in three more years and it will go up in value like, it doesn't mean it's going to be profitable. Amazing. Every day you can have a timeline where it will be. But if you just know it's not a good deal anymore, it's falling apart and it's going to be bad news, then sometimes you got to cut your costs. Rule number 16, don't buy without an inspection. Just don't do it. Just don't buy without an inspection. I've heard too many horror stories. It's just, it's a couple hundred dollars. Just don't be too cool for school sometimes, Sometimes the beginner might do that just because they don't know. But I've seen really advanced people, we almost get, we get cocky. We're like, oh, I know how it works, it's fine. No, don't buy without an inspection, okay? Have a professional inspector go over, get in the nooks and crannies and see what they can find. Even they miss things. So that even that's not a for sure thing. But just don't buy without an inspection. That should be a rule. And that's why it is. Okay? Rule number 17, if long term lending is a vital part of your project, make sure you have that secured in advance, okay? So if you're trying to put long term debt, like you're going to borrow property where you Buy it with hard money or cash and then you rehab it and you rent it out and you go to refinance and put long term debt on it. Have you secured that debt already? Do you know what their seasoning terms are? How long are they going to make you own the asset before they lend on it? Do they like the asset? Do they lend on that type of property? I do a lot of cheaper properties that, you know, maybe even under 100,000. And a lot of lenders won't lend under 100,000. So like, you got to have your lender lined up. They got to know who you are. They need to look at the asset before you're too deep in if it's a vital part of the project like a refinance, especially if you have tons of money tied into it and you got to make sure you can get that money out. Okay? Make sure you have that, that financing secured in advance before, before you're locked in to the deal. So there could be a ton of other rules. Those are just some that I slowly put together as I was building my portfolio that stuck out to me. So anyway, there's. I could talk about so much more. We're already a half hour into this thing. I'm not gonna drag it on forever. I wanted to share some of those rules with you. Let's see here. I think there might be a couple other things I wanted to share before I let you go. I want to talk about why real estate investing is so powerful. Okay. Why is real estate investing so powerful? I'm going to give you 1, 2, 3, 4, 5 things. Number one, you can buy the asset under market value. You can buy a home for less than it's worth because someone doesn't want to do the work of selling it. Maybe it's a hoarder house and they don't want to clean it out, so they're just, yeah, just take the house. Maybe someone's in a hurry, there's a divorce or a death or another investment they need to get to. And they know they could get more money if they waited, but they just don't have the time or the patience or the means to wait. So you can buy things under value. You can't do that with stocks or crypto or whatnot. You know, whatever Apple stock is worth, that's what you're paying for it. That's what you're selling it for. Both real estate, it's not like that. You can buy it under market value, which is a key part in a good deal, is Buying it, right? So that's one really powerful thing about real estate investing specifically is buying under market value. Number two is you can force equity. I can't do anything to make crypto go up. You know, maybe if you're Elon Musk, you can, but most of us can't. I can't do anything to make, you know, Apple stock go up or Nike stock go up. Right. But with real estate, I can, I can go in and I can, you know, refurnish the house. I can fix it up, I can add granite countertops. I could divide it out, do the landscape. You know, you can kind of flip it and rehab it to make it worth more. You can, you can turn into an Airbnb and make it a business, and then that can make it worth more. There's things you can do to force the equity, which is really, really cool in a way you can't do with most things. Maybe you change the zoning and now it's worth more. Right? So another, the third reason why real estate investing is so powerful is there's multiple exit options. It's not just buy it or sell it, right? You can hold it, you can short term rent it, you can long term rent it. You know, you could flip it. You could, you know, just do. So you could lease it out, do a lease option. You could do a wraparound where you buy it as a lease and then you sell it to someone as a lease and then have them buy it and you keep the difference. Like, there's so many different options with real estate. There's multiple exits you don't have to sell. I know people who are going to flip a property and the market shifted, so they ended up holding it as a rental property. That's awesome. You know, I bought a short term rental that I was stoked about is at this cool resort and it was like a hotel room, but the resort was not managing and keeping it filled. And so I ended up turning around and renting it out long term. That wasn't my plan, but I found someone that would rent it long term. And I was guaranteed money that was locked in and I didn't because they weren't keeping it filled on the short term. And the resort required that they run the short term rentals. So anyway, my point is I had to pivot and that's okay. You have the options. With real estate, which is super, super cool. Number four of why real estate investing is so powerful is leverage. We've talked about this before. Using debt to buy real estate, it can be so, so powerful when you can go use somebody else's money, the bank or whoever, to go buy something that will self sustain and pay itself off. That's incredible, right? Like you can, if you can own 10 times the amount of properties because you use debt as opposed to owning, you know, one or two properties, you get all the tax benefits, all the appreciation, all the benefits of real estate that you get on multiple properties, even if they're all covered in debt, right? So I'd rather have 10 properties that cash flow the same as one that's paid off or 10 with debt because one that's paid off even though I might cash flow the same, I'm only getting depreciation and appreciation on one and I'm not even getting, I can't even write off the payments, the interest payments because there's no, there's no debt on it. If I have 10 properties that all have debt on them, I, they're all 10 appreciating and going up in value, right? They're all 10 depreciating that I can write off of my taxes and I'm paying debt on them so I can write off all the interest on, on all that debt. And if they're cash flowing the same, I'm getting the same cash flow. So leveraging debt can be really powerful to grow your portfolio and own more assets. But, but follow the safe debt guidelines, right? All right. And then it's very safe. Okay. It's an actual asset that has intrinsic value. The company can't just fold tomorrow. Like I've seen stocks that just, company goes under, it's gone. You know, we've seen that with cryptocurrency, it's gone tomorrow, boom. You know, and, and real estate's just not going to do that. You know, if it, even if it house burns down or something, you, you probably have insurance on it, you'll be covered. Make sure you have insurance, make sure you are protected, make sure you have insurance to get litigate against litigation and being sued and like make sure you're protected because it is a real asset and it isn't probably going anywhere. And so you can be very safe. And again, we talk about how it's safe to buy beforehand because you can vet everything out before you're locked in. So it's a very, very safe asset compared to a lot of other ways you could invest your money, which is super, super cool. So I'll leave it on that note. That's why real estate is so powerful. Those are some rules to do it and and it's just an incredible thing. So, I mean, obviously, you guys know that. That's why you're here. It's changed my life. It's changing so many people's lives every day in the school and around the world, and it's super cool to be a part of it. Anyway, it's been an incredible year. I'm excited for you guys to go out and get ready for 2025 and tackle your goals. I love this time of year. Taking time to really think about everything that's happened and what you did right and what you did wrong, and then building for next year and being really introspective and. And. And making some amazing things happen. So, without further ado, this is Joe Jensen signing off for the Real Estate Investment School podcast cast, reminding you to go make it happen.