For some perspective on real estate, I talked with Kyle Garifo recently. He’s our head coach here, and he’s been with me from the beginning, so he’s seen a lot of changes in my business. As a successful real estate coach himself, Kyle practices what he preaches to his students. He knows when to adjust and adapt to the changing market.
Even though some things change in the market, some things always stay the same. Coach Kyle has some solid plays for real estate investors to make no matter where they’re at in their journey. We’ve both focused hard on raising private money because it completely changes the equation in real estate. We’ve also started buying and holding because cash flow is king. And finally, Coach Kyle talks about what his most outstanding students all had in common.
Cash Flow Lets You Step Outside Your Day Job
Even as property values and interest rates go up and down, the main concept of buy and hold doesn’t change. Buying a property isn’t an emotional decision. Instead, the main questions of real estate are the same no matter how hot or hyped the market is: Can you buy an asset? Can it appreciate in value? Can you pay down that principle? Can you hold on to that? Can you collect residual income?
No matter what profession you have, you need an ultimate plan. As much as you may love your job, and maybe you even feel like it’s your calling, investing in cash flowing real estate means you can step outside of that job some day. Relying on stocks means you're putting your money and your retirement entirely into someone else’s hands. How much control do you really have over your Apple stocks?
As long as that property you purchased is cash flowing, then you don’t need to worry about a housing bust or a recession. You’re not interested in selling that asset, so it doesn’t matter if its value goes up and down. The goal of that storage unit, assisted living facility, multi-family apartment, or whatever you’ve bought is the money it brings in every month.
In this way, real estate is like a bond. A bond could go up or down in value, but the coupon stays the same. The value of your real estate could fluctuate based on the market demand, but as long as it’s yielding positive cash flow, you can hang tight when things get rough. You’re still making money.
One of my favorite quotes is “You don’t wait to buy real estate. You buy real estate and wait.” I’ve done a lot of deals, but now I wish that I’d held onto every deal because cash flow is the focus of my real estate strategy now.
Raising Private Capital Frees You From Shifts in the Market
I feel like our focus here has shifted, and one of things I’m most proud of is our relationships with private lenders. And when I say private lenders, I don’t mean companies. We have built a network of mom and pop investors who have around $50,000 to $1 million each. They trust us with their money.
So when the next crash comes, this time around I’m not going to have to rely on corporate or institutional private money. I’m going to be ready to invest in the opportunities that rise up during a recession. As larger companies pull back, hesitant to buy real estate at steeply discounted prices, I can act on the opportunity I’ve been waiting for.
Kyle’s built his network of private investors up too in the last few years. When he makes money, they make money, and they’ve learned to trust him. But he makes sure that he shares the bad with the good. For him, this means that he lets them know honestly when a deal isn’t working out the way he’d pictured.
Sometimes it means meeting up with them for a little one-on-one question and answer session. Kyle once drove an hour and a half down to a dentist’s office to talk with him face-to-face, and give him some personal interaction. Asking someone to trust you with a half a million dollars can be a big deal, and Kyle says that people invest in people that they can sit down and talk to.
One of the keys to raising private capital is being a marketing machine. Stop thinking of yourself as a real estate investor. What you’re really doing is marketing yourself and putting yourself out there. You have a unique skill set, and your marketing tells everyone how you can help them out. That’s one of the reasons we have our podcast, our emails, and our blogs. We’re putting our conversations out there into the world so that people can get to know us.
The Number One Trait of Coach Kyle’s Strongest Students
As our head coach, Kyle has seen some really successful students over the years. The most common trait of all of his successful students is being a go-getter. He describes these students as people who know that this business is hard work, and that they’re going to hear a lot of nos, nope, not interested comments from people before they hear a yes. They hear, “No, I’m not going to sell to you at that price”, and “You must be out of your mind”.
Instead of getting discouraged from all the rejections, Coach Kyle’s best students don’t worry about getting their feelings hurt because they know it’s business and not personal. They keep calling and knocking on doors. They focus on growing, learning, adjusting, modifying themselves, and molding themselves into a better version of who they are.
Some of my best students are the ones who focused on the numbers and not their emotions. One of the rules successful investors stick with is buying at 65-70 cents on the dollar, or less. The investors who just don’t want to listen, or who fall in love with a house or get stuck paying too much, they always get burned. Then they come back to me six months later and admit that they should’ve focused on our system and used their heads and not their hearts to purchase properties.
Kyle and I have both learned a lot about the real estate business, and that’s why we’re passionate about teaching through coaching. We love what this business has done for our families and our lifestyles, and no matter where the market shifts, we’re prepared for success.
Be daring,Josh
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