BiggerPockets Real Estate Podcast - 639:Passive Income (Without the Properties!) by Investing in REITs w/Matt Argersinger

Episode Date: July 24, 2022

REITs have long been a passive income generator for many who don’t want to deal with the trash, toilets, and tenants that come with rental property investing. No 2 AM phone calls, no listings, no showings, and no sales. With REITs (real estate investment trusts) you simply click a button, buy a share in the company, and wait for your passive income (dividends) to flow into your account. Seems pretty sweet right? Matt Argersinger from The Motley Fool agrees. Matt isn’t your typical stock investor. He’s owned multiple rental properties and has even house hacked and put in some serious sweat equity. He knows that leverage and forced appreciation are huge wealth builders in the realm of real estate, but still chooses to invest in REITs instead of rentals. Why? Matt is focused more on creating passive income—as in TRULY passive income—no tenant surprises or maintenance calls to make. Matt wants to research, invest, and let his net worth grow, all while still receiving real estate-generated cash flow. Maybe you’re skeptical. How can passive investing be so easy? If you’re brand new to REITs, Matt does a phenomenal job at explaining what they are, how they work, which types to buy, and what you can do to get started investing today. Regardless of your knowledge of the stock market, if you like income-producing real estate, this episode is for you. In This Episode We Cover: What are REITs (real estate investment trusts) and how they work Why buy REITs instead of rentals, plus the benefits of both Cheap REITs that are becoming undervalued as the stock market crashes  Mortgage vs. equity REITs and why higher cash flow could mean higher risk The dangers of day trading and how long investors should hold onto REITs The key metrics any investor needs to research before investing in a REIT And So Much More! Links from the Show BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast Get Your Ticket for BPCon 2022 Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area David's BiggerPockets Profile David's Instagram Henry's BiggerPockets Profile Henry's Instagram Hear David on “Motley Fool Money” Join the Real Estate Winners and Grow Your REIT Portfolio Invest in Real Estate Without Leaving Your Computer Passive Real Estate Investments vs REITs Data Center REITs Are On Fire—Should You Invest? Connect with Matt: Matt's Website   Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-639 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 639. Reets are one of the ultimate parts of the stock market where historical performance is a good indicator of future results, even though, of course, we were trained to believe that that could never be the case. But reits, real estate in general, is such a steady business. If you think about most reits, most commercial reeds, they've got leases that they've signed with tenants that run, you know, not your typical rental lease, which is six months a year or maybe two years, right? In the commercial world, leases run five years, seven years, ten years, even 15 years. What's up, everyone? This is David Green, your host of the Bigger Pockets Real Estate Podcast.

And joining me today is the man himself, Henry Washington, as we interview the Motley fools Matt Argersinger. We talk macroeconomics, we talk real estate investment trusts, we talk stock trading, and we talk how to make it all work together. Henry, first off, how are you? And second off, what were your favorite parts of today's show? I am doing very well. Thank you. for asking, sir. Yeah, man, this show was great. Some of my favorite parts of the show where I just liked hearing the perspective of somebody who mainly invests in the stock market, but does own some traditional real estate. And so you can ask those questions that

only somebody who does both would know, right? Like, what's your favorite strategy? Why one versus the other? What do you like about one versus the other? And so we have a little bit of a conversation about how he enjoys both of those investment vehicles. And we learn a lot about REITs. And what I really liked and what I really enjoyed was being able to hear how to start, not just understanding REITs, but how to start researching them for yourself and what key metrics to look for when you're researching them so that if this is something you want to get into, you have a starting point for understanding these things and how to research and understand what's the best one for you.

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Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring, Indeed is all you need. This is not a typical seeing green episode where we're not taking questions from different bigger podcast. members, we're actually diving deep into sort of a spin-off of what we typically get into. I think a reet is sort of like if a real estate investor and a stock investor had a baby, this is what you'd end up with.

And it's definitely a different alternative to invest in real estate, but without the time commitment, without the effort commitment, and sort of getting your feet wet, I think that there's a place in a lot of people's portfolios for this. And Henry, you shared a little bit about how you're sort of venturing into some other investment vehicles. and this is something you're considering. Is there anything you can share about how you're sort of venturing out of just traditional real estate investing into other stuff?

Yeah, absolutely. So for me, I am diversifying my investment portfolio. And my baby, my bread and butter is always going to be real estate. I'm always going to have most of my net worth tied up in real estate, like physical real estate in some form or fashion. But trying to do as much research as I can about other investment plans. platforms and investment vehicles. And so being able to just spend the last 45 minutes learning from, you know, you know, a professional right, around what real estate investment trusts are and then

how to research them and understand them has been super helpful. And so as the market is shifting and as we're producing income from the real estate, I'm just trying to find what are some of the best strategies in order to help get an even higher return on that investment. And I like the stock market for some of the same reasons that I like real estate. I mean, we talked a little bit about it. Dividends are phenomenal, right? We get into real estate. A lot of us got into real estate to create passive income.

Well, a dividend from a stock is truly passive. You don't have to do any work to get that paycheck every quarter or every year, depending on the payout schedule of that dividend. And so when you start buying some of these stocks that pay dividends and you get that truly passive income, it really feels good. You get kind of that same, some of those same warm fuzzies from real estate. And so I really enjoyed this conversation. And if you're worried about not getting a seeing green episode this week, don't worry.

In a few weeks, we'll be back with fresh seeing green episodes for you in the traditional style. We just wanted to make sure that we were able to bring Matt in and get some access to all the knowledge that he's got. This was a really fun interview. also very insightful. I learned quite a bit more than what I had known before we had it, and I think you could say the same, Henry.

Before we bring in Matt, today's quick tip is, check me out on the Motley Fool Money podcast. Just search for David Green Motley Fool, and you should be able to find an interview where Chris Hill interviews me. We talk macroeconomics, we talk real estate investing, and it's kind of cool because you get to hear someone who's not a real estate investor asking a bunch of questions that we hear all the time,

and you might just find out that you know more about real estate investing than you thought. when you get around other people who don't know it as well. So check that out and then let me know in the YouTube comments what you think about how I did. Henry, any last words before we bring in, Matt? Yeah, man. Just get ready for some great information.

Turn your brain on to the idea of the stock market. I know a lot of real estate truists are just like, yes, real estate. I get the best returns. There's so many other ways to make money. But try to go into this episode with an open mind and maybe you'll learn something that piques your interest and you start investing in something that in 10 years you'll look back and be glad you did. All right.

Let's bring in Matt. Matt Argersinger, welcome to the Bigger Pockets Real Estate podcast. Hey, happy to be here. I am glad that you're here. So for those that aren't familiar with your company and yourself, would you mind giving us a little background on yourself? Sure. Wow, I'm almost embarrassed to say this,

but I joined the Motley Fool about 15 years ago, which makes me in full years like a dinosaur at the company. But, yeah, I've spent most of the most. the 15 years working on the investing side of the company on our various investing services and spend a lot of time with David Gardner on a lot of his services and spent some time with him on his podcast and things like that. But for the most part, I've been a stock market investor, a real estate investor, and that's kind of the, those are my areas of focus at the company and spent some time, you know, on our Motley Full Money podcast as well with Chris Hill on occasion and

love talking to him and talking about investment ideas. So that's the quick background. I live in Washington, D.C. with my wife and a three-year-old son who's growing way too fast. Yeah, I was just on the Motley Fool podcast being interviewed by Chris Hill. So if I don't know what show number it is, but if you guys Google, David Green, Motley Fool, you should be able to find that episode. We talked about macroeconomics. We talked about trends to look for. in real estate. He's very smart gentlemen. So I'm sure that you are too. Also, how old were you when you started at Motley Fool? You looked like you could not have worked there 15 years. Well, I was a few years out of school. So I'm maybe, well, I'll take that as a compliment.

You were that like Dugie Hauser. You look like you were 13 years old at a corporate job. No, I've just got this, you know, the Zoom or the camera sometimes enhances your image. I just put that to max. So it makes me look 10 years younger. That is, I came from a background in law enforcement. That was our career to solving every crime, as you just say, enhance, enhance, and then like the camera footage becomes better and better. So I would highly recommend anyone having any difficulty in life. The answer is just enhance. Enhance. All right, so how about your own investing portfolio? Can tell us a little bit about what it looks like and what you're interested in? Sure. Well, in addition to being a dinosaur at the Motley Fool, my portfolio tends to be a lot more,

I'd say conservative, maybe than the average Motley Fool analyst. So, in my portfolio, you'll find a lot of dividend paying companies. You'll find a lot of real estate investment trusts, reits. So I like the kind of companies that are profitable, you know, good asset quality, you know, predictable cash flows to the extent that they can pay out dividends and, you know, buyback shares. And so that's, you know, and not to say I don't have some of the, some companies like Amazon or alphabet or others that are kind of on the faster growth end of the thing. But that tends to be my focus. And so, you know, up to 20, 25 percent of my portfolio tends to be in REITs. It's just because I like that. I like the real estate sector. The historical

performance of REITs has been incredible. And you also, you know, you invest in an area of the market that not only delivers you great income, but also is much less volatile than the overall market. And so I tend to lean heavily into that. I like, I like to say I'm kind of like a, well, a relatively young guy running an old man's portfolio. Not bad at all. So for those that are listening that aren't familiar with what a REIT is, would you mind breaking that day? Sure. So, yeah, real estate investment trust. They've been around for a while. I think Congress commissioned them in the 1960s, early 1960s. And the way to think of them is kind of like a mutual fund of real estate. You know, you can, they trade in the

public markets. You can buy and sell them in your brokerage account. But generally what you're buying with a reet is a, you know, a company that owns and operates, you know, probably a dozen, a few dozen or maybe hundreds of properties. So you can invest, for example, in an apartment reet that owns apartment buildings. You can invest in an office reet. I wouldn't recommend that these days, but that owns lots of office buildings. You can invest in hotel reits, self-storage reits. If you think about real estate as an asset class, you can really invest in many of the different categories underneath that huge sector to include data centers and cell phone towers and various kind of alternative categories of real estate.

The brilliance of, I mentioned the historical returns, so if you go back to the early 70s, so roughly 50 years since the National Association of Reets has been tracking REITs, they've delivered about a 13% average annual return, which I think might surprise a lot of people. That's about a percentage point higher than the overall stock market. measured by the S&P 500 over that same time frame. So it might not seem like a lot, but 1% per year, over 50 odd years, can really add up in your portfolio. And so not only do you get an asset class that's relatively less risky with more predictable

cash flows, really asset-based that pays out generous dividends, you get really out performance on a total return basis. So I love the asset class a lot. I wish more investors would check out REITs. And so I've made them a pretty big part of my portfolio. How would you describe the difference between a REIT and maybe a syndication where people are pooling their money together to buy a single? Sure.

Well, yeah, they're actually similar in a lot of ways. But with a REIT, you know, it's, if you're looking at a publicly traded REIT, you know, again, you're looking at a fairly large enterprise company that's probably got dozens, again, if not hundreds of properties. With a syndicated pool or, you know, maybe what's popular called crowd. funded real estate these days. You know, you're looking at probably a single asset, private, you know, run by a sponsor or an operator that you're investing alongside with. And it's, that can be compelling too. Generally, those are only reserved for, most of those deals are

reserved for accredited investors. And so as a, you know, most investors in the market don't have access to those where they do have access to REITs, of course. But I like that asset class as well. It's kind of something that's taken off, I guess, over the last decade with the Jobs Act and the various acts that have come out of that. So it's become an interesting way for an investor to get exposure to single asset deals, which I like. So, you know, from a, you can use a crowdfunding platform, for example, to invest in an office building in Chicago or an apartment building in Los Angeles, even though you might be on the East Coast. and that wasn't really possible as a real estate investor just 15 years ago. You kind of had to have the right connections. You had to have a lot of money nowadays with crowdfunding and syndicated investments.

You can invest in those right away. So I think if you're a accredited investor and you have some means, you have to realize that the investment minimums on those can be high, like 25,000, 50,000, maybe even 100,000. So you've got to have some cash, but they can be certainly good deals. It's a great description there. I'm curious in your own personal situation. I know you have a couple rental properties, I believe, in the East Coast. Why move more of your capital towards publicly traded reeds as opposed to just getting more rental properties yourself?

Yeah, it's a great question. I think that comes down to, you know, how badly do you want to be a landlord and to deal with all the, you know, the issues that come along with that. So if I look back my own experience, you know, my wife and I, we bought our, we bought a row house in Washington, D.C., shortly after we got married. And one of the reasons we did that is because your typical row house in D.C. is actually a duplex. So it comes with what they're called English basement apartments. It's kind of unique to D.C. and some other cities. So you buy, you essentially live in the top or live in the bottom if you want, and you can rent out one of the units.

And so we couldn't afford to live in the Capitol Hill neighborhood of D.C. at the time. But we found a way to do it by essentially buying this property. sort of hacking it up, or the young people call it these days, your house hacking. We didn't know we were doing that at the time. We just, you know, bought a duplexer renting out the other side. And one day, it's kind of a funny story, but one day my wife happened to be reading this, an article in the New York Times, I think, this is going back to 2009. And there was an article about a company called Airbed and Breakfast, which of course now we know is Airbnb. But at the time, I think people called it Airbed and Breakfast. And she said, you know, wow, instead of doing a full-time

rental with our rental unit, we could try this Airbnb thing. And at the time, I think we were like one of three units in all of Capitol Hill, the Capitol neighborhood of D.C. that was doing Airbnb. And it was kind of crazy. Like, we listed it. And it was like, I think it was like 50 bucks a night. It was really, you know, cheap at the time. And we like booked 100 days in like a week. And we were like, this is unbelievable. It's mind blowing, right? And nowadays, if I look at Capitol Hill, though there's probably, I'm not going to joke probably 500 Airbnbs in the neighborhood of this house. Anyway, so that was our big first step into like, wow, you know, real estate's kind of a thing. This was a house we wanted to live in and just help pay our mortgage, but now it's like, well,

this is interesting to us. So we made two additional investments later on, bought two more properties, very similar with additional units, kind of did the same thing. And now we were our own landlords, we are our own property managers. And, you know, that that can be really tough, especially nowadays if I think of I have a kid and we live outside of D.C. So, you know, the two o'clock phone call about a toilet not working or the heat's gone off or the ACs gone off is like that has happened multiple times throughout our life. It is not a joke. And so if you're not a person who wants to deal with those kind of issues, reits or these private deals are fantastic. Just invest in the equity and don't deal with all the headaches.

You know, it's funny is, you know, you've got this stock portfolio and then a conservative real estate portfolio, as you call it. And I would say I'm the exact opposite. I have a healthy real estate portfolio and a very conservative stock portfolio. But it's super cool to be chit-chatting with you because as I was like doing my research to ramp up on like starting to get into investing in the stock market, investing in some reits when I first got started. I read a lot of Motley Fool articles, so this is like super cool, full sucker stuff for me. So tell me a little bit about, so with you being invested in REITs and in other performing assets in the stock market and having actual physical real estate, right? There's some other ancillary benefits to real estate. And like, do you recommend people kind of diversify like you have across both platforms because you get some of these other benefits from a tax person?

perspective or or you get you know leverage and and appreciation and that kind of a thing or you know do you just wish you were all in one and not the other like now that you've kind of seen both. Yeah, that's great, great question. I think as I've gotten older and your time gets sort of more divided, especially with family, there's, I'm probably in a situation now where I would have loved to have sold all our physical real estate properties at the height of this recent market. but didn't miss that badly, of course. So, but no, I, yeah, I love the question because there are certainly advantages and disadvantages of both.

And as you mentioned, like with the direct real estate ownership, when you actually own the properties yourselves, you've got the leverage working for you. So you've got, you know, assuming you put 20% down or whatever your equity is, you're generally getting five to one leverage. Can't get five to one leverage in the stock market, as we know. We'd love to. So you get that leverage, but then you also get, of course, yeah, the tax benefits, which means you can write off depreciation, which is a big expense.

You can write off your operating costs. And so the real awesome advantage of physical real estate is that generally they're kind of run at a loss, right? Anyone who owns real estate probably knows this. But you don't really make too much money. You make good cash flow, though. But in terms of taxes, you're almost breaking even in a lot of cases. Because when you add in your mortgage costs, your other operating costs, and then you add a

appreciation, which is not a cash expense, but it's a real expense. Generally, in terms of Uncle Sam, you're pretty much netting zero, even though you're netting hopefully some cash flow, actual cash flow. And then, yeah, like you said, you also can, if you're in a market, like I've been in D.C. for the last 10 years or other markets, my gosh, if you were investing in Austin, Texas the last 10 years, or name your awesome sunbelt market like Miami, you know, Tampa. Like, you know, you've seen real estate just appreciate double digits a year for years in this. incredible bull market we've had. So on a, you know, on a leverage position, you're growing the asset value as well. You're getting cash flow. So direct ownership is awesome if you're willing to

put up with the headaches. I just think, you know, as I do get a little older, I'm thinking myself, how nice would it be not to have to deal with tenants anymore, not have to file complicated taxes and literally just have equity in a bunch of, you know, different real estate assets securities and collect dividends and distributions and call it a day? So I'm involved. I like the fact that diversified, but I certainly, my thinking is definitely evolving as I get older. Yeah, man, that's, that's, you know, it's, it's always interesting when I, when I talk to people who are, who are, you know, more invested in the stock market versus real estate, I always like to, to try to learn as much as my, as I can about, like, why they're pouring their money more into

one than the other, because everybody's got that, like, fomo, like, what should I be, what should I be looking at coming forward? I had a thought on that, that I don't think it's shared enough in our space because I know there's some diehard real estate investors that are hearing this and they're going, yeah, that 13% return sounds okay, but I got 19%. I'm sticking with what I do. And it hit me like maybe everyone else has already thought about this, but it just hit me how few people are thinking this way that your ROI with traditional real estate investments, long term rental, short term rental as anything, is it includes more than just your money. Your ROI measures money. in versus money out. But with real estate investing, there is time, there is risk, there is elbow

grease, there is frustration, there is failure. Those of us that love it just assume, of course, like this is a part of the game, but there's other people that don't love this, that aren't in love with that. There's people that make very good money in a medical sales job, or they're a doctor, or they're a lawyer. They have a great opportunity to earn money, but it requires a lot of their focus. And they actually lose money when they invest in real estate because the return they're getting take so much other time that they're taking it away from a place they could make more money. And so it's something I realized that a lot of real estate investors don't understand why people invest in stocks or in reeds or in syndications. But it's because you're getting a pure

ROI. It's not your time also going into it, Matt. Is that sort of a part of your journey that you had a bit of an epiphany with that same concept? Yeah. It's a fantastic point. I mean, there's a lot of things that go into direct real estate ownership that you just don't measure. Like you said, I mean, you don't measure the time, even though you can try to, but you don't really, yeah, you don't measure the time, sometimes the stress, those little trips that you have to take to buy something really quick for the tenant or to fix something. And it's good and bad a lot of ways. The return on time is not great. And you're not really measuring the full return that you're getting out of your, you know, from the commitment you're putting into an actual real estate property. But then you're, you know, you also get, there's this, there's that cliche sweat. equity, which does come into play. I mean, I think of the fact that my, and gosh, YouTube has been a godsend over the last 15 years, but like, you know, doing things like replacing a kitchen, doing drywall work, learning how to paint fast. I mean, there's a lot of things you learn and avoid having to pay, you know, a contractor some really expensive amount of money or, you know,

especially these days trying to find a contractor. It's just a nightmare. So what's, what's, what's wonderful is real estate, you know, it's, it's, I feel like it's an entryway point, right? For people who don't have, like, I don't, I'm not an engineer. I'm not, I'm certainly not, I'm not a doctor. I'm not scientist. You know, I'm not a software coder. Gosh, I wish I'd done that. But so real estate was a way for me to enter an asset class, even as a person who didn't know anything. And you can get in there, you can buy properties, you can learn how to do things. And there's some pain involved. But, you know, it's just, it, it, it, it, it, it, it, it, you can make good money if you're willing to put in the hours and learn how to do things

effectively and be your own property manager. It's not for everyone. And trust me, I love the idea of just not having to deal with hassles and having a stock portfolio or private equity portfolio that just doesn't require any money time. I'm a complete passive investor. But it can be a wonderful way. I think if you're someone who just has a lot of maybe soft skills, but you want to you want to get into an investment where you can really lever up and get some nice exposure to real estate. And so let's kind of talk about a little bit of the elephant in the room, right? Like 2021, everybody was a genius in real estate and in the stock market, right? It was, you know, everybody was making money. It was a big party. And now things are a little different, right?

You know, you've got the stock markets down. Real estate is changing, definitely changing. The environment is changing. And so as someone who has, you know, money in both places, like, how are you maybe changing directions is the, or are you not changing directions and why am? Like, how are you preparing for this economic climate as it's, you know, fastly evolving around us? Yeah, great question. Definitely a different world than we were a year ago. I think it goes back to, I think what David asked about earlier, which was, you know, the comparing sort of the private syndications to reits. What's amazing about the, I think, the stock market is that prices and valuations get reflected pretty quickly. So a lot of the great reits that I follow, many that I own, have hardly

even beaten down 30, 40 percent to the point where some of their valuations look the best that they've looked at in seven, eight, nine years. And so I'm excited about that. What I'm seeing on the private side, though, is that you've got a lot of stubborn operators who aren't willing to kind of mark down the value of their real estate or they're not willing to, you know, underwrite lower exit values for their properties. And that kind of happens in private equity, right? It's like what's not exposed, it's not repriced every day, just like real estate, real estate isn't repriced every day, thank goodness. But we know the times are tough. We know interest rates have gone up. We know there's inflation fears. And so the value of those assets have certainly come down.

and you're already kind of seeing that in a lot of markets, right? What I love about REITs is that public REITs is that a lot of those valuations to fit down so much, though, and I'm seeing a ton of opportunity that I didn't see a year ago. You know, for example, you're, you know, I'm looking, one of my favorite reads I'm looking at is one called Alexandria Real Estate Equities, ticker A-R-E, and it's a, it's kind of leading life sciences reeds. You know, some of their biggest tenets are big drug developers, biotech companies, system. And a year ago, they were trading probably close to 30 times funds from operations, which is kind of the equivalent PE for REITs. So 30 times, right? Flash forward today,

they're like at 18 times FFO. And that makes me pretty excited. I feel like I'm getting a pretty good value in them. And that's very typical of a lot of REITs right now. So the dislocation has kind of happened in the public markets. And so if you're a public market investor, you can kind of take advantage of those. Not so much, I think, in the real estate side where in the direct real estate side, where mortgage rates have risen, borrowing costs are a lot higher. It's harder to get in or on the private side where I think valuations have not adjusted as much. So as you're considering investing into a rate, let's say someone hears this and they're like, yeah, I like that passive income. This wasn't mentioned, but I do think that it's worth considering that these are

professional real estate investors that are like analyzing these deals at a very high level that do it all the time that can put on their little nerd goggles and look at something that your mom and pop investor or your short-term rental investor, they just don't have angles to see. And if you're looking for a safer investment, obviously there's nothing guaranteed, but in many ways, a REIT could be a better option than just wandering out and trying it on your own. What are some things that you're looking for within an individual REIT? Yeah, great question. I think REITs are one of the ultimate parts of the stock market where historical performance is a good indicator. of future results, even though, of course, we were trained to believe that that could never be the case.

But REITs, real estate in general, is such a steady business. If you think about most REITs, most commercial reits, they've got leases that they've signed with tenants that run, you know, not your typical rental lease, which is six months a year or maybe two years, right? In the commercial world, leases run five years, seven years, ten years, even 15 years. So imagine, you know, you're a reet, you own property, and you've got a tenant there that's signed a lease for the next 10 years. years. And so you have amazing cash flow visibility into that. And also great thing is that, you know, those leases often come with price escalators, annual price escalators from 3%. Some are linked to CPI, so they're even inflation linked. So you have an asset that's incredibly

predictable in terms of cash flow. So one of the things I look at with REITs is, you know, how is this REIT performed historically? Has it delivered a nice total return to investors? The other thing you can look at is the management team behind the REIT. And unlike a lot of the other sectors of the economy, in REITs, it's not a typical to find a management team that's been there for 20, 25 years, or a CEO that's been with the company since he left college, you know, and it's still with the company. And if you have a management team in place that's delivered great returns to shareholders, they're still involved in the business because it's not a business that really gets disrupted

like your typical, you know, technology stock or software company. And so, you know, if you have a wreath with a great 10, 15, 20 year track record, it's highly likely it's probably going to have a pretty good track record going forward. And then with REITs, you know, one of the track for the things, of course, is the dividend. That's why a lot of, I think most investors think of REITs is because they pay nice dividends. But, you know, you need to take a look at the payout ratio and understand, you know, what kind of earnings power the REIT has, what are its funds from operations, which is sort of the cash flow of the REIT, and make sure that payout ratios, say, below 70% is a good kind of

threshold. And so, if you've got a REIT with a good track record, good management team, payout ratio is reasonable. Good chance. That's a good investment opportunity right there. Well, something you were talking about that I was thinking was a lot of the people that are doing really well, let's say the short-term rental space. Let's take Scottsdale, Arizona, or the Smoky Mountains in Tennessee, really popular areas. If you bought your place in 2019, 2020. You probably paid half of what those are now and your interest rate was half of what it is now. Those people are crushing it. They're doing amazing. If you're trying to get into that market today, it is incredibly difficult and you're not going to get the same return. And so with a re, part of what's

cool, it would be like buying into someone else's Scottsdale short-term rental at 2018 or 2019 numbers. Right. So a lot of those deals that they've bought over the years, you are now jumping into that incredible opportunity and the cash flows that they're receiving versus trying to get into the market that's more difficult now. Any thoughts on that? Yeah, I think that's a great, great point. I mean, so your question reminded me of the, there's a rea called Invitation H and the tickers, INVH. And they folk. Is that Blackstone's? Well, it's, it was originally, it was owned by Blackstone. It was kind of founded by Blackstone who spun out several years ago. And they, they specialize in the single family rentals. In a lot of,

hot markets. And, you know, their stock price is down, I want to say 25% from its high. And so, yeah, in a way, if I'm buying invitation homes today, I'm getting exposure to this massive single-family rental market at probably, yeah, like you said, 2017, 2018 prices. Where as an individual, if I go out and try to buy a house in one of those markets, yeah, good luck. It's a lot more expensive and hard to do. Can you talk a little bit about, I don't know if the right word is mindset, but let me kind of frame it up for you and then you'll kind of see where I'm going. So as a traditional real estate investor, when we're buying a property, right, we're looking to get it at a good price where we're going to get some cash flow and then hopefully we get some

appreciation. But the goal typically for most buy and hold investors is to get in and then we hold that thing for as long as possible, right? And reap the benefits for as long as possible. when we're talking about reits, how should somebody who may be traditionally looking at, you know, owning property who might be interested in now looking into some of these reits? Like, what's the mindset you should have as you go into trying to buy into a reet? You know, because there's, you know, with stocks, you can, you can try to buy low, sell high in a month, right? Or you can try to hold it for the long term. You can buy because you like the dividend payouts and you're buying for cash. flow, like what's kind of that mindset you should have when you're looking at a reet versus

traditional real estate? Yeah, it's hard to do. But if you can have the same mindset that you do with, you know, a traditional house or property, it's, it's, that's the way to go, right? I, you know, I look at my portfolio. I've, I've, I've, I've owned for like over 10 years. And that's because, hey, I, you know, I like the company. I like the assets. They pay me a nice dividend that's grown over time. Why would I sell, right? And it's, it's tempting to get, you know, go into to the stock market, especially for those who haven't, you know, I've been in the stock market to just go in, buy a bunch, watch your, maybe watch the reeds go up 10%. You're thinking, oh, I'm a genius. I'm going to sell right now, locking that profit, and I'm good to go.

The reason I like reeds, especially to have that sort of slower mindset is because, yeah, you are buying into something that's paying you a dividend. And by the way, if you can reinvest that dividend, you can kind of grow your stake in that reed over time, really tax efficiently, and even boost your dividends that way. So one of the really underappreciated things about REITs is that because they're forced, they're forced to pay out 90% of their pre-tax income as dividends. That way they don't have, they don't pay federal taxes. A lot of investors think that's a disadvantage because a REIT can't, you know, retain earnings.

It has to always issue new equity or issue debt because it needs to. I believe, isn't it like 90% of the earnings have to be reissued? Is that right? 90% pre-tax has to be paid out as dividends. What I love about that, though, is it forces REIT managers to be really conscious about the capital they have at the company and to not, you know, not to do anything silly with the, with shareholder capital. That's not the case for your typical company that is, you know, you might have a CEO at a software company or e-commerce company and they're getting cash, you know, they're making money and they're like, well, we're going to start all

these newfangled projects. We're going to go buy this other company. We're going to buy out a competitor. and oftentimes they end up wasting a lot of shareholder capital. Whereas with a REIT, I get the dividend income myself. I can make the best decision as an investor what to do with the capital. And on the other hand, the CEO of the REIT, the board of the REIT has to make the best decision as well because they're paying out, like I said, 90% of their pre-tax income. So in a way, it's like, reits are like the ultimate long-term hold investment. I think if you find a good one or two, buy hold, reinvest the dividends and you feel pretty good in a bunch of years. I love that man and I was I was I was wanting you to kind of reiterate that for people because like we have like especially new stock market investors like we get into this idea of like trading like the word trading and the stock market tend to be like this synonymous thing and that's absolutely not how you should look at it if you're going to invest in something that you're hoping produces a long term return especially now right like I've had to just delete delete the apps the broker apps off my phone like

I don't want to, I'm buying stocks for the long term, right? And so it's like you get into this roller coaster of emotions and it's best to just like have a strategy, whatever that strategy is, as long as it's an educated strategy. And then you've got to force yourself to stick to it. And I find it harder to force myself to stick to that strategy when it comes to investing in the stock market or investing in REITs than I do with my traditional real estate. And mostly because they've kind of gamified this investing with the apps on your phone and there's the bright colors and it's super cool. And so I've just, I've got to, I've got to just delete it, set it and forget it, and try not to pay attention to the news. Yeah, I mean, I think real estate investors should have

the best mindset because, yeah, you're used to holding assets that aren't repriced every day. You're not trading in and out of real estate. So, of course. What's your thoughts on that, Matt? That's something I, my thoughts are a lot of people get into day trading. they get sucked into making money through real estate because it feels good to the ego to be able to say, this stock went up, this share went up, I did good today. And it gives you that feeling of progress that you did well. But overall, to me, it's bad for your wealth building because you're not focused on being productive. You're looking at something your money already did. And then when it goes poorly, it impacts you emotionally and you feel like crap. And now you don't want to go work hard to get more money.

Are you of the mindset that it's better to find a way to make investing as boring? as possible and just let it do its thing? Or do you think that there's a place for the people that are micromanaging their individual portfolios? Yeah, I don't want to make investing in the stock markets sound boring. It can be fun. I mean, I think the most joy I have investing is, you know, just learning about a new company, learning about a new REIT, learning about a new industry. And, you know, if I like it getting some skin in the game, I think that's exciting. But yeah, where you should treat stock investing as watching paint dry. Generally, that's the approach you want to take with the stock market.

And dividends and reedend paying companies and REITs allow you to do that, I think, unlike a lot of other stocks. Because, you know, talking about the gamification of it, yeah, I might feel good if the stock I own is up 10%. But to me, it's almost better. It's like, I love when I get the quarterly dividend check. That's like my ego boost. I'm like, oh, yeah, this company just, you know, gave me some, wrote me a check. And by the way, sometimes, you know, when they raise the dividend, I'm like, oh, I just got a pay raise. This company just gave me a pay raise. And so it's fun to see that cascade and, you know, the quarterly cash you're getting from these stocks and reach to go up over time. It might seem like watching paint drive, but it can be incredibly lucrative. I think that's the key is when the check comes in, you can get your excitement from that, right? Like as a real estate investor, when the cash flow comes in, get excited. Don't check the price of the house on Zillow three times a day. Did it go up? Did it go? Oh, my dad. This is horrible.

My Zestimint is crashing. You know, I saw that. Why is Redfin 5% less than the Zestan? Yeah, and you're like emailing Redfin requests like a new appraisal on your house because it's not as high as Zillow's is or something. I noticed this with a lot of the crypto investors. Like there's some really sad stories of when it tanked recently. Suicides happening. Like people.

Horrific horribly sad stories that people put their. identity in their net worth through an asset class that is so volatile, they thought they were a real millionaire because these assets went up to a million. And then when they went down, they absolutely tanked. And I guess that's kind of what I'm getting at is if you let your rising asset price or your portfolio going up in value make you feel good, you are exposing yourself to the downside, where it can also make you feel bad. And if you can sort of detach from the outcome and just say, here's the fundamentals. I'm going to continue to invest based on the research that I did. Like I like what you said, do a lot of research on the paint color. And then once you put it on,

just let it dry. Just let it be. Watching paint dry can be fun. It looks different in different lights. You want to let it dry and see if it's color looks like what you got. That's your Arkansas show in there, brother. Oh, sorry, sorry, excuse me. We don't have a lot to do here. So you go down to the home people. Yeah, it's a much slower pace over there. I remember when I visited Arkansas, they were like really proud of the Bill Clinton Library, the fact that Derek Fisher was from there. And one other thing, what was it? It was Dillards. It has their headquarters there. And like everyone is very proud of those three things. Yes. We also have Walmart headquartered here. And so you all probably bought something from there recently. So you're welcome. No, I love, I love the point, David, just because

what a lot of investors don't appreciate, who are especially newer investors, is the downside hurts a lot more than the upside. Various psychologists have written things. I think Jason Swig has written about this in the past, but it's just, I think the losing money on a stock hurts like three times as much as the euphoria from winning, gaining 10% on the stock. And yeah, I mean, especially in crypto. I mean, my goodness, I'm not a crypto investor.

I've had fun staying poor the last few years, I guess, but it's an incredibly volatile space. And now, you know, a lot of these, these DFI projects and stuff, You're layering on leverage to what is already an extremely volatile asset. Yeah, that's just, you know, in my boring old real estate world, you just can't do that. But, man, it can be treacherous. So when it comes to looking for specific information about REITs, do you have some favorite resources? Is the Motley Fool a good place to go?

Is there other places that you recommend people look these up? Sure, yeah. If you go to, yeah, fool.com, there's a whole, you know, we kind of have real estate as a whole sector there. There's free articles every day coming out, you know, talking about various reits or real estate companies. I think one of the best things you can do, if you go to fool.com, I should do that first, I guess. But second, if you go to a lot of these companies' websites, I mean, just go to, let's use an example, realty income's website, ticker O, it's probably the most well-known reet out there. It's one of the largest ones.

You go to their website, there's a huge, there's great investor relations segment of their website. that has presentations that has transcripts from conference calls and earnings press releases. It has so much great information. And so you can really get to know a company just based on its investing relations side. I think that's get it right from the source. And there's always usually a section on the dividend history and how long they paid the dividend and what the current yield is and things like that. It's all useful stuff.

I don't know if this is a good opportunity for me to do this or not, but I will go ahead and do it. There's a service I run at the Motley Fool called Real Estate Winners. I don't love the name. So you guys can tell me what you think of the name. Let's call it Real Estate Winners. You know, when you're trying to start a service, you kind of have to do a trademark search

and figure out what names you can actually use. So that was one name we could use, so we took it. Anyway, so with real estate winners, it's mostly a REIT-based investing service. It's a subscription. And what we do is we come out with one or two new REIT ideas a month, along with a bunch of other content. And if you go to reets.fool.com right now,

you can get a nice 20 or 25% discount off. the annual subscription fee. So we of course are publishing research all the time on that service and new ideas as well. So that's a great. I have to get that plug in. So can you go go a layer deeper for us? And for those like, because I mean, I love even how simple it sounds like you want to know something about somebody go to their website. Like I get that. But for those of us who are just, there's just a lot of people who are intimidated by the stock market and then like doing this individual research because the information is not all in one consolidated place. So if I'm researching REITs and I'm going to these websites, what are like two to three key metrics I should

be looking for at these websites? Yeah, I think look at a, this is a little bit of an insider metric, but funds from operations, I've mentioned it a few times. It's commonly known as FFO. And that is the REITs, basically the key earnings metric for REITs, because like, we talked about with real estate, depreciation is a major expense. So when your average company reports earnings, you know, it's usually depreciation is in there, but most companies don't have a lot of depreciation because they're not asset heavy, not very capital intensive. But REIT's, of course, you know, own real estate. And real estate is an asset that you can depreciate over time. And so FFO, it takes earnings, it takes out the depreciation, adjusts for it, adjusts for some other

expenses. And that gives you kind of like good underlying way of looking at a REIT. Has the FFO, what is the FFO per share? What is the price to FFO per share? Has the FFO grown over time? And that kind of tells you how a REIT's earnings are doing. I think looking at the balance sheet is good too. I think something like, you know, like your debt to EBAA, for example, with REITs. something that's try to find a reet that's, say, trading for less than seven or eight times debt to Ibeda gives you a good indication that the balance sheet's probably fine and the reed's not going to run to any financial issues. And then the other one I mentioned, I think earlier, is the payout ratio. That's, you know, especially if you're a dividend-focused investor like I am, you want to make sure that the dividend is both sustainable and can be grown over time.

and if the dividend per share is, say, 70% of the FFO per share, generally that dividend is going to be fine. If it's above that number, if it's above 70%, you have to be a little worried that the dividend could either be cut or that it could have trouble growing that dividend over time. So I think those are three metrics, and they're very easy to find. Again, if you go to a REIT's investor relations website, usually the earnings release will have those metrics at the very top, and you can kind of figure it out. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy. All the benefits of owning real, tangible assets without the complexity and expense.

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Sign up for free at Avail.co slash bigger pockets. That's AVAI-L.com slash bigger pockets. What are some things you've seen in REIT where they've gone wrong, where it did not perform well or maybe people might have lost money? Well, yeah, one of the big traps that I think investors will get into is there's a whole class of reits called mortgage reits. And there are reits that aren't backed by real property or assets. There are simply reits that invest in securities, commercial back securities, mortgage securities, or they lend. They do a lot of lending to commercial real estate or residential mortgage borrowers. And what's attractive about those is the yields can be really high. So, for example, one reet that comes to rhyme right now is armor residential rea.

I think the ticker's ARR. But if you look at that, it has a 16 and a half percent yield on it right now. And as a novice investor, I'm thinking myself, whoa, like 16.5 percent dividend yield? Dude, sign me up, right? But then you look at the long-term total returns of that reet, and they're abysmal. And that's because essentially what's happened is the mortgage rate has not made as much income as it's paid out dividends. And so the value of the equity of the company is just steadily declined. And that's very typical. And so one of the things I wanted to mention on the show is just that if you're looking at reits, pay attention to equity reeds, not mortgage reits. Mortgage reits are a whole different class. They're much more difficult to analyze.

But if you look at equity reits, you know that the reet is backed by real estate. And it makes all of its income essentially from real estate operations like rents or other things. And so that's one kind of red flag to look for. Is the play on a mortgage reet that over time the amortization schedule starts to favor the company because the majority of the payments are interests in the beginning? Is that why they're set up that way? In a way, but a lot of those reeds don't, they're not run that way. Unfortunately, I like where you're going there. But no, a lot of these reits, unfortunately, they're kind of treating in and out of these securities all the time. They're buying and selling them. They're buying them and levering them up in a lot of cases,

which is why they can pay out those incredible yields. So I have yet to come across a mortgage reet that I can confidently say, yes, even some of the best ones in the industry, that would be like Starwood's got a mortgage reet. Blackstone's got a couple mortgage reits, I think. And, you know, I'm not going to bet against Starwood Property Trust or Blackstone. But again, even there, the reits have kind of underreformed over time versus your typical equity rate. So yeah, it's a really, it's a really different process. And I kind of just avoid the space altogether because why playing the playground? that's tough when I can play in a sandbox that has great opportunities. So yeah, man, as somebody who, again, owns property is invested in reeds, right? We talked a lot about how to research some of these reeds. And so if I'm a real estate investor now looking to get into reeds, should I focus on looking at reeds that are involved in asset classes that I know or should I just be looking for opportunity in a reet like a reet that's trading lower than it traditionally has now and jumping in, right?

Like how, you know, because there's, you know, there's like, you know, SPG who's like more commercial or there's, you know, there's reits that do with storage and there's reits that do with with single families like you talked about earlier. And so kind of give us some framework around that. Sure. I would, yeah, I would, I would be very simple. You know, I wouldn't try to go in and try to guess which reet is trading at a low valuation or which might be the best opportunity. I mean, one easy way to start, if you want just to dip your toe in, would be there's the Vanguard Real Estate ETF, the tickers VNQ. I want to say it's 95% REITs, and it has some other real estate

holdings. And that's a great, it's got a nice track record. It's delivered about a 9% return since inception over like 16 years. The only disadvantage with an ETF general, including VNQ, is that like a lot of their market cap weighted. So if you look at it, if you look at it, that you're buying into that, what you think is a very diversified ETA, but you're actually getting tons of exposure to data centers and cell phone tower reits, which are, they happen to be the largest reits. And so you're not getting a lot of diversification in other areas of the market, like you said, self-storage or office or apartments. And so my approach, when someone asked me, like, how do I, how do I start a reed portfolio? I would simply go out to the market, again, looking at

reits that have outperformed or delivered nice returns over time. And I, I would just get a basket in, you know, I'd buy an apartment reed, I'd buy a hospitality reet, I'd buy a self-storage reet, an industrial reet, which there are many now, and, yeah, buy a data center reet as well. So if you've got, you know, six or seven reits that you can invest in, it's a pretty good basket. And you can kind of feel confident that, you know, I'm not going to try it. I can't really time when a particular, you know, reet or a particular real estate sector is going to do well. But at least I get good exposure broadly to the sector.

One area that I'm a little concerned about, two areas probably, but one mainly is office used to be one of the biggest parts of the real estate sector, as you can imagine. And it's more than any other part of the market, I think, since COVID, it's the one with the biggest uncertainties, right? And there's just millions, 10, some millions of square feet of empty office space right now in a lot of places. And that's either got to be replaced or it's got to be sold at bargain prices. And so a lot of those office reeds are, it's going to be a struggle, I think, for a while.

So that might be one area of the reed market I would avoid. The other one might be traditional retail, even though I think a lot of those are trading at just really fire sale prices. So you might get, you know, some opportunity there. So with your position on the overall macroeconomic situation that the country's in, like I guess I was thinking when you were talking about mortgage-back reeds, I don't know this, but my intuition would tell me that there's so much capital that has. has been infused into the markets and these head funds like Blackstone have to find something to do

with it that they're like, hey, let's go buy a bunch of paper because we can get a higher return on it than what we can raise the money at. Rates were very low. There was tons of capital. I don't know this for sure. And there's probably a lot more complication than I'm aware of. But in general, you kind of make decisions that you wouldn't normally make when there's so much money and you have to invest it somewhere. Do you think that some of those asset classes are at risk if we see quantitative tightening take place or if we have a bit of a reset? And that's why you're more towards the equity-based rates. Yeah. No, it's a very good point. I think where the, as we get higher interest rates of quantitative trading, I think, of course, unfortunately, you're not going to see the

blackstones of the world go down, obviously, because they, you know, like you said, even today, they can borrow at rates that are obscene. What you're seeing, and what I'm already seeing is that you're seeing a struggle at the smaller operator level. So I look at a lot of private equity real estate companies that are small. They own several properties or they own maybe 500 apartment units, right? Very small. And they're the ones who are really taking it brunt, right?

Because they can't borrow at the ridiculously low rates that some of the big institutions can. In a lot of cases, they're getting high interest rate construction loans or high interest rate mezzan loans or bridge loans, trying to. you know, develop, do a single development in a city or town, or they're trying to recapitalize something. And you're going to see the stress there first, as always, with the smaller players. And you're seeing that. With the big, with the big REITs, the nice thing about REITs in general right now is REITs have some of the best balance sheets they've had in years. They kind of learn their lesson from the GFC, you know, 12, 13 years ago when REITs were a lot

more leveraged. So a lot of equity. Financial crisis. Correct. Yeah. Yeah, it's a great financial crisis. I shouldn't assume that people know what that acronym means. I was actually shooting from the hip there. I had no idea. You nailed it. You nailed it. Great.

So they learned a lot of lessons back then. And I think they entered this latest crisis with COVID and now this tightening cycle in much better shape. So I have little worry about some of the mostly larger REITs out there in the public space. The smaller private operators are the ones where there's probably going to be stress. That makes a lot of sense, actually. When it comes to investing strategies with, I mean, obviously, we've got a lot of lot of money in circulation, but we also have really high rates. We have a lot of inflation with regular household goods. Things are changing in a pretty quick pace. What's your thoughts on? Are you

leaning more towards defensive-minded strategies where you're trying to retain wealth you've built, or are there opportunities that you think where you can go be aggressive and increase your wealth? Yeah, great question. I tend to think steady eddy through most cycles, right? I mean, don't change your strategy too much based on what's happening in the macro economy. But yeah, I mean, I I would say, certainly compared to last year, I feel like there were probably more opportunities in the market today. So I am feeling a little more aggressive. So I am playing a little offense. I mean, I'm of the mind, and I don't know how you guys land, but I'm kind of on the mind that we probably in a situation where inflation is just about to peak. And you're already seeing a lot

of commodity prices roll over. You're seeing rents start to kind of flatten out. Housing prices are definitely probably going to come down. And so, we're probably at that sort of in terms of the inflation boogeyman, maybe that that nightmare is sort of coming to an end. Now, there's other risks of the economy. We could have a recession. Energy prices are still high. There's Ukraine, Russia. There's still supply chains. I mean, there's just a lot out there right now. But, you know, last fall, it was really difficult to find opportunities in the market. And even taking a five-year view, I felt pretty like my opportunity set was empty. My opportunity set's fairly good right now, especially if you're taking the three,

four, five year time horizon. So I'd say, yeah, I mean, I'm never the guy who jumps in and dives in and says, this is the bottom, man, we should be, you know, I'm buying stocks hand over fist, but certainly we're in the spaces I look at, dividend paying companies reeds. I'm seeing some pretty good opportunities. So with real estate, like physical real estate, one of the benefits that we enjoy is the ability to kind of leverage your assets to either reinvest and go and buy other assets. Like, are there ways to do that with REITs specifically or with stocks? Like, what are some other ancillary benefits other than just dividends that a REIT might provide you? Well, yeah, I mean, it's, you certainly can't get the leverage, of course, that you can.

And, you know, with direct real estate ownership. With REITs, the benefit is you're, I mean, A, you're getting a dividend that's not double taxed. So you're getting a dividend straight from the companies without them having paid federal income taxes on it. Now, the downside, of course, is that with REIT dividends, you're usually paying at your marginal tax rate. It's not the preferred capital gains rate. So REAPD dividends are generally not qualified, which is kind of something that a lot of people don't know. So that's a downside and a good side, though, because generally you're getting a higher dividend anyway, even though you're paying a little bit higher taxes. But no, I think with, you know, with, with, with, with, you have to remember with REITs, even though as an equity investor in REITs, you're not getting a lot of those leverage slash depreciation slash tax advantages bonus. The operators of the real estate are. So the companies you're investing in are getting those benefits and it's resulting in good cash flow and good earnings to you after all those benefits have factored in. So. And, you know, right. Well, and they're taking leverage on their side, right? I mean, they're,

oftentimes with REITs, just like we take mortgages in houses, they've got, you know, they've got loans outstanding on their properties, right? And so they are getting leverage returns. And what's fantastic about that is, you know, when a REIT signs a new lease or that lease goes up or that rent goes up 3%, you know, they're getting a leverage return on that and getting that to you. So real estate's great for turning small returns into great returns using leverage. And even with a REIT, you kind of get it indirectly. Yeah, man, I like that perspective. And, you know, I've always, well, I shouldn't say I've always, well, since I've been building a stock portfolio, REITs have always been interesting to me. I've owned a few. I've since sold out of them because I've changed my strategy. But what I do like is, so I recently had a question from someone who was considering buying a property that essentially was going to break even or even lose a little bit the cash flow, right?

But they were still willing to try to purchase this property in order to get in the game, right? And they were wondering, was that the right thing to do or the best strategy? And my thought there was, like, that's more somebody who probably has some cash on hand because you're going to be losing cash every month if you're not getting cash flow. And so, like, being able to leverage somebody else's investment in your asset is probably a better use of the money than going to. hand and buying something that's going to be losing. And we at that point, we're thinking about like,

yeah, well, you can leverage somebody who has a fund, right, that's in the asset class. But now talking to you, it's being able to put that into some sort of reet as well is probably not a bad idea. And so all that to say, like, if you're scared to get in the market, or if you can't time the market just right right now to buy something and you're considering buying something that's going to, and you're worried about it's going to lose money. This could be a great option for you to try to research and understand can you buy into a reet that maybe isn't trading as high as it could as it used to. And you're taking advantage of somebody else who is a professional investor and who has bought at the right time and you kind of get a piece of that. So I love that perspective. Yeah, I totally agree with

that. I mean, again, as long as you're investing capital you don't need right now and you know, you have a long enough time horizon. It's a great place to put capital. I certainly, yeah, I wouldn't be the one to rush out just to try to buy a property that was cashful of losing just because I want to get some, you know, I want to get one. It's FOMO or whatever you want to say. So I would say the REIT would win the option for the battle for me there. All right. Well, this has been fantastic. I'm having a really good time here. We're going to move on to the last segment of our show. Famous for. This is going to be modified one just for you, Matt. Henry and I will take turns firing questions off at you. Question number one, what is your favorite

stock or equity related book? I don't know if it's my absolute favorite, but since it's appropriate to the topic, there's a book called Investing and Reets. It's one of those watching paint your titles, but investing in Reets by Ralph Polack, who used to be a member of the Molly Fool, and he unfortunately, he's passed away several years ago, but it's kind of considered the primer on investing in Reets. And it's very easy to read. It's an awesome, you know, it can really educate you about the market. And I've read the book three times, actually. And I have a book that's, my version is just scribble with notes because it's just so many good insights that I always go back to. So investing in the REITs would be the book. So with this question for real estate investors,

typically ask, what's your favorite investment book? And everybody always says, you know, rich, dead, poor dad. So what's the rich dad poor dad of the stock market world? Is it Money Master the game? Like, what's that book? Oh, gosh. And be intelligent investor. I've never read it, so it could be. I think, you know, I'm sure you've gotten this one, but the Roger Lowenstein biography of Warren Buffett, I think it's called The Making of an American Capitalist. It's not so about the stock market. I mean, of course, it's about Warren Buffett, so it's about the stock market.

But that is probably one of my favorite stock market books. I do love Rich Dad, Poor Dad, though. I mean, just to go back to that one, I definitely read that one. And despite whatever Robert Kiyosaki has become today, I think he wrote one of the best books out there for real estate investors. That's a fact. All right. Sorry for the deviation. Question number two. What is your favorite focus stock podcast and or episode? Oh, gosh. Chris Hill would kill me if I didn't say Motleyful money, right? But okay, that's boring. I think the Patrick O'Shaughnessy

a colossus family of podcasts, especially his investing like the best podcast. I go to that pretty often. So I think that's probably my go-to. Awesome. So what hobby or skill set do you need to be in the stock market? I think ultimately you have to have two things. I think you have to be curious, curious about businesses, curious about finances. And then I think you need to be, have patience, which is hard. And I don't have it all the time, but I think if you're a patient person, that's absolutely the key. You have to have the right sort of emotional mindset to not care what happens in the stock market

every day or every month or even every year. It's just really just investing in great companies, holding them and being very patient. All right. In your opinion, what sets apart successful investors from those who give up, fail, or never get started? Yeah, I think my last answer to that, the other question might. Because I probably feel the same way. It's really, it comes down to emotional afforditude. than anything else. I think that's what, it's not who's smarter or I think, or who does better

research or who's more diligent. It really comes down to just your emotional fortitude. All right. So where can people find out more about you? All right. Well, you can, yeah, you can go to fool.com. I'm also, you know, a regular guest on our Motleyful Money podcast and radio show with Chris Hill. But, yeah, if you're interested in really taking a big step into real estate investing in the stock market, you can go to reets. full.com and that will give you access, a subscription access to the service I work on called real estate winners. And there's a, I think there's a discount there of 25% off the normal price. So if you're really interested, go to reach.fool.com. But like, fool.com is just a great

place to start, of course, with a bunch of free articles on real estate investing. So start there. Fantastic. Thank you very much for this, Matt. This has been insightful, even a little profound that I would say. And most importantly, fun. I can tell that you are a full-time podcaster for a job because you did a great job. We appreciate you being here. Oh, thanks, David. Thanks, Henry. Thank you very much. Great time. This is David Green for Henry, the fifth wonder of Arkansas, Washington. Signing up. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host

and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this

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