BiggerPockets Real Estate Podcast - The Expert Investor: Early Retirement is a Mistake, Rent INSTEAD of Buying!

Starting point is 00:00:04 Hey, everyone, it's Dave. Today, we're bringing you some stories and some lessons from literally an entire life lived in real estate. Jonathan Green started walking houses with his dad before he could even drive. Some of those visits might today be called trespassing, but they gave him a unique outlook on investing that almost all of us can learn from even 40 years later. Jonathan has been on the show a couple of times before, but it's been a few years. So I was really excited to ask him how he thinks newer investors should think about financial freedom, investing, home ownership in this new era where we have a market with 7% interest rates. This conversation had some topics that really might change your mindset about investing, like how syndications can be a starting point instead of an end goal. So I think you'll find it both enjoyable and very helpful.

Starting point is 00:00:56 Here's my conversation with investor Jonathan Green. Jonathan Green. Welcome back to the Bigger Pockets podcast. Thanks for being here. Dave Meyer. Thanks for having me for our first appearance together. I'm excited. Well, first of all, congrats on the 3P, right?

Starting point is 00:01:09 This is your third. It is hat trick officially. You've done it three times now on the podcast. But I'm excited for this because I feel like I've known you for a while, but I don't actually know a lot of your original real estate origin story. So I'm excited for this conversation. So maybe just tell us a little bit about how you got into this industry in the first place. Yeah.

Starting point is 00:01:31 Yeah, so I was a child of a father who was obsessed with real estate. He was an attorney, and my first career was as an attorney, so I followed in his footsteps that way, but I also followed in his footsteps the other way. When I say this, I'm not exaggerating. I probably walked a thousand homes before I was like 18, owned a bunch of homes because he was smart ahead of his time, put things in trust, so there were things that in trust. And he dragged me to homes from, I don't know, one, two, three years old on, going to foreclosures, going through the windows. But I think the most meaningful thing that he did is all the

Starting point is 00:02:06 rental properties that he owned. As I was growing up, he introduced me to all the tenants. So I understood landlording from a much different perspective than I think people do now. And I really appreciated the landlord-tenant relationship. And as I got older, I became the rent collector and developed some strategies for collecting rent. So I was kind of like learning so much about real estate without knowing I was doing that because that's just how he was. There was no internet. He talked about it in the car. This is just the type of stuff that we did. And he was way ahead of his time. I mean, I don't know if you ever like listen to like Carlton Sheets tapes or something. But he was just doing things that like we talk about now. And back then it was like, I don't know how he knew this stuff. Yeah. It's it's amazing because I was going to ask how he got into it. And you know, you interview a lot of people in your show. We hear all the time that things like Rich Dad poor dad teach you the concepts and the value of passive income, residual style income. Yeah. Was he just into that intuitively?

Starting point is 00:03:07 Like he sort of was a lawyer where you get paid hourly. And I'm sure at a certain point you're like, I don't want to be doing this every single day for the rest of my life. He was a wills and estates attorney. So he was therefore involved in real estate. And before that, he worked as an attorney for the IRS. So he kind of had this like tax idea about. about how good real estate could be. But the hardest thing for me is he passed away

Starting point is 00:03:32 when I was 33, which is 20 years ago. So like that's a question I didn't get to ask him. I learned a lot about real estate, but I never knew like, did he read a book? You know, why did he do it? But if I think about him, he was very focused on building generational wealth. I mean, I own lots and lots of properties as a child in trust.

Starting point is 00:03:54 And he would show me these trusts when I'm like 10, 11. He's like, read this. This is how you own this property. I'm like, I don't even like reading books. Why are you giving me this? But like, over time, I was like, I really started to understand that there was a method to his madness. And, you know, so I don't know how, but I know the why.

Starting point is 00:04:12 And the why was definitely provide for the future, which he has done. My sister and I are both benefiting from that still and passing that on to our kids. Well, that's a really cool story. One, because you got exposed to real estate at such an early age. It's also an example of, I think, of what so many people in our audience want to do. You know, so many people are motivated by the same idea of setting up generational wealth, take care of their kids and take care of their family and the way your dad was able to do it for you. When you were young, were you into it or were you sort of wondering why he was exposing you to all this?

Starting point is 00:04:48 Well, my parents got divorced when I was two, so I would only see him on the weekend. So every Friday, when I came out of school, he would be waiting for me. The guy, he was never late once. He never missed. He was always there. And we would drive from Brooklyn Heights to Westchester. So we'd have about an hour ride out. And all he would do would talk about money in real estate and intertwine that with reading dirty jokes out of a book.

Starting point is 00:05:11 So he knew enough to keep you entertained. Yeah. And that was what I didn't know what I was learning, but I wasn't uninterested because he would break it up. Like one of our tenants and yonkers was an electronic store. So at the time, this is pre-internet, like I had in television, you know, which now, if you saw it, you're like, this is the worst video game console ever, but it was amazing. So when we went to collect the rent on the way back every time, we would stop in and I would get a game. And that was kind of the thing that he understood. And then when we would get out, we would go, we would get a Sunday and like a turkey sandwich.

Starting point is 00:05:49 And then on the weekends, we would go to yard sales. And when we would be at yard sales, you know, I would be able to buy a basketball or a football or I'd be looking for baseball cards. So he was very smart about having alternative opportunities to present these, like, you know, learning, basically modules, but always make sure that I wasn't bored and I had something to do. He was always okay with like, hey, well, now we finish three yard sales or actually seven. Let's go to Caldor and get some toys. I'm like, yep, sounds great. Caldor, man, that's a blast of the past. Yeah, that is well out of business. But that's really cool about sort of trying to find a way to teach your kids something fun and interesting while they're young and impart these lessons.

Starting point is 00:06:31 Given this pretty unique exposure to real estate at such a young age, why did you become an attorney? Did you ever think you just go straight into real estate? Well, I mean, you have to remember, like, it's so different for people now because they have the internet and they can watch YouTube and they can understand, you know, seek financial freedom, which, you know, again, I think is a mistake too early. But I did what I thought I was supposed to do. My dad was a lawyer. I was involved in real estate and I just kind of went to law school. And I was a really good lawyer. You know, I 10 years, eight as a prosecutor and two as a criminal defense attorney. But then my dad passed away. And when he passed away, that's when I didn't need to do law anymore. He loved that I was also a lawyer because he

Starting point is 00:07:15 wasn't a trial attorney. So he would come watch me in trial, which is like it's really cool to even think that that happened. That would be so intimidating, but that is very cool. Yeah, yeah. It was basically my dad and all my friends, because I was like a trial animal. So it was kind of more like, it was kind of a show sometimes. But, you know, just the fact that he could do that after he passed away, I was like, I was still involved in real estate this whole time, you know, small scale flips here and there, flipping houses that I lived in, which is one of the things that I'm the best at, just buying good, living there, enjoying it, and then making money later. So then I kind of transitioned to more full-time entrepreneurship in a bunch of different areas.

Starting point is 00:07:54 Well, before we get into that, I'm curious, you sort of snuck in there that you think going for financial freedom too early is a bad idea. Can you explain that? Yeah. So I've kind of been on this trip lately. And again, you know, posting in bigger pockets and talking to people about it in the forums, you know, there's this thing out there where I'm seeing a lot of people in their early 20s just talking about retiring and quitting their nine to five. And I just think, well, the nine to five is awesome. Yeah. You know, I was fortunate.

Starting point is 00:08:23 My dad built up, you know, a lot of real estate for me. I still worked. I still work every day. I like working. I don't know what the lure of fire is because I don't want to retire early. I don't want to retire. Totally. I think it's about this, this mindset of, well, I got to get out of my nine to five.

Starting point is 00:08:39 And now I find like employers don't appreciate their employees. The employees don't appreciate their employers. And they don't understand that you're lendable because you're keeping your job. job. And if you try really hard at your job, you'll keep making more, which is what I did when I work for the government. Everyone was more like just getting the minimal pay raise. And I was like, no, I'm going for it all. And I did really well at the government, which is actually hard to do. But yeah, I think it worries me that people are looking to quit. You know, when the nine to five can really be like the absolute foundation that you carry with you until you build a long enough runway.

Starting point is 00:09:15 and then you still want one or two more years after that. I completely agree. I mean, I've done the same exact thing, even as I've built a bigger portfolio and have more passive income. I keep working one, because I don't really know what I would do. You know, I enjoy my job. You know, like I enjoy it. Yeah, me too.

Starting point is 00:09:32 And I think that it's the biggest benefit to your investing career is having a good, high income job. I chose throughout the first several years of my investing career to go. back to grad school. I could have spent that time flipping houses or wholesaling houses or something, but I thought, hey, I'm going to go increase my earning potential by getting an advanced degree, and then I'm going to use that money to invest in real estate. And that's obviously worked out well for me, but I think just like even grad school or not, it's just a good policy. Because last thing is, if you want to go into real estate full time at 25, like, unless you're coming

Starting point is 00:10:09 from an huge amount of wealth, you're going to have to put in more than a nine to five's worth of effort to replace your income in almost all circumstances. So you're not actually financially independent. You're just working in real estate instead of working whatever industry you were before. Yeah, I mean, well, think of it this way. This is an example I know I was talking about just the other day. It's like someone has a really nice, steady nine to five. Say they make a hundred grand. And if you make even 80 grand and you live in the Midwest, like you're doing well compared to what your housing costs are. So you have a nine to five. You don't work weekends. You can spend the whole weekend with your family. and then you want to trade that in to get, say, like, five rental properties.

Starting point is 00:10:48 Okay, great. Well, you're going to get calls at 24-7 and they're saying, oh, no, a higher property management. Well, cool. Then your cash flow is going to be a lot less. You know, so you're going to not be able to reach what you think is financial freedom as soon as you think. And in my opinion, what I've been talking about a lot is no one's chasing financial freedom because that's a scalable thing that's different.

Starting point is 00:11:07 What's financial free to you is not the same to me, not the same to someone else. It's certainly not the same for someone in Los Angeles as it. is for someone in Topeka. Yeah. You know, so they're chasing time freedom. But I've been on time freedom for now, you know, since my dad passed away when I left a government job. I've been in entrepreneur roles building my own businesses.

Starting point is 00:11:26 But I'm always working. And I like to work. But now I choose which things I want to work on and which things I want to grow and build. Most of them are inside real estate. But I'm also open to other businesses. And even me now, look, I'm 53 now. Sometimes I think like, yeah, I would take a regular job. want to go to an office every day, but steady paychecks sound great. It is great. It's smart.

Starting point is 00:11:50 Yeah. I completely agree with you. I think the moniker financial independence is like a too broad, and it doesn't really say anything to your point. My personal goal has been what I would call work optional. I've always wanted to just be like, if I want to take six months off, if I want to take a year off, I would love to have the real estate backstop that so that I could do that. Or if, as a As my career progresses, if I want to work in a job, like you're saying, that perhaps isn't the highest paying opportunity, you know, like that I could afford to do something that I'm passionate about rather than just something that is maximizing my income. Yeah.

Starting point is 00:12:29 I mean, I did that, too. I was in the art world for six years. You know, I had three galleries and then I was a curator at a museum. What? Really? Yeah. I like entrepreneurship. So, I mean, during that time, I was still doing real estate.

Starting point is 00:12:42 And a lot of the things that I did with art were based on real estate. Like I bought a building in Sarasota in an artist colony called Tolls Court. And I put a boutique and gallery in there. And that's how I started my art career. But it was based on real estate. So a lot of things that I do now when I'm looking for real estate, I'm looking for mixed-use buildings all the time. That's my jam. And everyone's like, why do you want that?

Starting point is 00:13:03 I'm like, well, because I'm going to use one of the retail spaces. You know, I'm going to create something that I want. Or like, my son is really into board games. So we talk about opening a board game. game shop where people can come and do board games. I want to do things that are cool and I've built up again, I'm 53. I'm not 26 saying, hey, I want to get out of it. I've been out of it, but I want to be in it all the time. Yeah. I like working. I like making money. I like helping people. So I don't really see the end of that, the RE retire early like you were saying before. I don't, what would I do?

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Starting point is 00:16:44 Let's jump back into this week's investor story. Wait, I want to get back to this art thing because I do not know this about you. So you started an art gallery and you were selling art. Was this, and it was related to real estate? Like, did this help your real estate investing career? Or what was it? In some ways, they weren't related. It was just kind of my first, you know, when I left being a prosecutor, I opened a criminal defense firm.

Starting point is 00:17:08 So that was really my first like entrepreneurship, but it was still based on being an attorney. So I did that for about two years. And then while I was finishing that up, I bought the building in Sarasota with my ex. And we just started this half boutique, half gallery. We thought it would be cool. And the art thing really took off. So I ended up with three art galleries in Sarasota. And then one became really contemporary. We were doing art fairs. I think I did 13 art fairs all over the world. And then I moved the gallery to the Lower East side of New York. and I start doing a buildout on a rented space on the Lower East Side on Clinton Street in 2007, late 2007.

Starting point is 00:17:46 So I'm renovating the gallery. My ex and I decided, hey, we were already divorced. We're going to move back to New York eventually. The kids are going to move. We're going to move separately. We'll both live there. And then the bottom drops out of the market. I have two houses for sale in Sarasota, and I'm in the middle of renovating a gallery on the Lower East side where I have a three-year lease.

Starting point is 00:18:07 So I'm like, what am I going to? to do. I've already invested too much. I can't get out of it. So I finish my renovation, but my houses in Sarasota didn't sell. So for the year that I had, my gallery was open for a year on the Lower East side. It was the worst time to be an art and I was buying excess art at that time. But I traveled back and forth to Sarasota every single week. I was in Sarasota three and a half days and then I would fly to New York open my gallery and it was only open in the days that I was there so I could take my kids to school on my three and a half days. And I did that for the whole year of 2008 to 2009.

Starting point is 00:18:42 How did that story end? Did you sell the gallery and the houses? Gallery, I got out of the lease. I had to pay to get out of the lease. I sold the houses both at losses, which was hard because, you know, the worst story I may have told it before. The house that was like the the house. It was like my favorite house that I've ever, you know, done, built a back house with

Starting point is 00:19:04 a three-car garage, built a pool. It was just awesome. And I put it up for sale. This is a good lesson, though, for flippers. I put it up for sale for $2.3 million thinking like, oh, this is the best house ever. This is before the market dropped. And I got an offer for 1.4 in the first week. And I was like, the most curses I've ever said in my life.

Starting point is 00:19:24 You know, because I was the owner that now as an agent I never want to work with. I was like, no, this is the best house. Of course, you know, I didn't take it. I was very offended. Then the bottom drops, you know, right after that. I ended up selling it for under a million. And that's just, you know, but people say, like, how do you recover from that? I had other real estate.

Starting point is 00:19:46 And it's just part of doing business in a downturn. You accept that you're going to take the two losses. So I took two losses, but eventually, you know, got everybody moved. And I'm still in the Northeast now back home. So, I mean, you've been through it all. Let's fast forward to today now because I'm curious how, like, what are you focusing on in this type of market? Well, it's been interesting. During the pandemic, my sister kind of didn't want to be in the real estate game anymore. So we sold off a bunch of our older properties in New York that were, you know, holdovers from my dads that we had been managing for years. So she's kind of out of our real estate business. We only own like one property together now, I think. And I started to repopulate. You know, I did what we call, you know, stockpiling the gun powder. And I have the opportunity out through my podcast to interview like, you know, a million people all the time. So, I started to reconfigure the way that I invest and I stopped thinking about flipping, even though I do well when I flip.

Starting point is 00:20:43 I never really flip more than two at a time. And usually it's just like a couple, two or three a year. And I started thinking about syndications and more turnkey passive opportunities because I'm getting older. And I also started to think more about what my dad did because I haven't done as good a job as him for my kids and start and think like, okay, which of my kids want to house hack, which, you know, want to own properties that are turnkey. and now start to involve them in the process of like, look, these are our holdings, this is what I'm looking at, these are the things that you're going to be in charge of. So I've been focused much more on syndications. You know, I read obviously, you've had, Brian's been on a lot.

Starting point is 00:21:20 He wrote the book, The Hands Off Investor. That book was my first guide into figuring out syndications. Same. And then I had a bunch of syndicators on my podcast, and I was like, wait, like, this is starting to make sense. And to me, it's really interesting because now I'm invested in, Chicago, DFW, and Madison, Wisconsin. But I would never get a single family there. Yeah, right.

Starting point is 00:21:43 But I'm in the market. You know, like, it's interesting. I don't go and say, oh, I have 52 doors in Chicago. I don't because I have a very small portion of that. But I'm in that market, and that's interesting to me. First of all, thank you for not counting things, your syndications you're invested in towards how much real estate you own. That drives me and say it.

Starting point is 00:22:00 But just want to explain for anyone who doesn't know what a syndication is. it's basically when investors pool their money together to buy a large asset, usually, at least on this podcast when we're talking about syndications, it's typically multifamily, but you could do it for self-storage, you could do it for office, retail, whatever. So why, Jonathan, you know, you have so much experience in real estate that you could, I believe, could feasibly pull off most strategies. Why do a syndication where you're not as active and you're pooling with other investors rather than just buying your own small multifamily and buying an eight unit in Madison, Wisconsin, if you like the market. I mean, I think it's like a who not how principle.

Starting point is 00:22:42 I'm getting smarter about giving away some of the time to people who are experts in the field. Like if you just, all three of my syndications now are all multifamily. I have zero interest in owning multifamily on my own. I don't enjoy being a landlord, even though I've been a landlord for 30 years. It's not what I want to do. I don't want to respond to calls. I don't want to manage the manager on property management. But I like that I have, you know, again, options in multifamily and options in these areas and that I'm hedging my bets based on data that other people spend all of their time working on. And by reading Brian's book, I also understood, okay, well, the operator is going to be important. So I'm betting on the operator and that's, you know, again, this is leveraging my time in a better way. There's always risk. You know, syndications obviously have risk. There's been a lot of bad press on them. But if you're betting on the operator, to me, that's a much,

Starting point is 00:23:32 better educated risk that I'm making with someone who only does that, then again, trying to flip with a team that I don't know in a market where I'd need to do enormous volume to earn the same return. I will say for everyone listening that syndications, I think it's a really interesting way for people to get into real estate. But it is a little bit more advanced. Brian Burke's book is great. We actually just launched a new podcast here, Bigger Pockets, called Passive Pockets,

Starting point is 00:24:00 all about this kind of investing. I will say that for most of these deals, you do need to be what's called an accredited investor, which means that I think the most recent definition is still that you need a net worth of a million dollars or you need $200,000 of income or $300,000 for a married couple. And the minimum investment for these deals is often $50,000 a year or higher. So this is definitely not a low money kind of strategy. This is why I think a lot of times you see people either who, like Jonathan and I were talking about earlier, have a good job and can qualify for this, do it. Or as you sort of progress through your real estate investing career and you've done some flipping, you've done some hands-on stuff and you want to start pulling back, getting more of that time freedom, you start looking into these types of syndications.

Starting point is 00:24:50 Yeah. I see like syndications and turnkey and things that are at least more passive. they're going to attract a lot more younger investors who are making money now because I think those people are going to stay renting. They're not going to be dunking their nest egg into a home because they can't afford it or else what they can rent is way nicer than the same payment for what they can buy. So the enjoyment versus, hey, I can invest in something that's a little bit more stable that I don't need to manage. I think it's going to be a different option. And I think the landscape's changing a little bit because of the affordability issues with how. housing in America. This is a great topic. Let's go here because this is something I've been just

Starting point is 00:25:29 thinking about quite a lot is that for so many Americans now, if you're renting is a better option. Like that's just the math. You know, you can look this up in a million different ways. And I'm not an agent, but Jonathan's an agent saying this. And it's just true. And if you do the math for a lot of people, it makes more sense, right? To rent and to invest the money you would use for a down payment into either a rental property or into like a syndication like that. Is that sort of what you mean? Absolutely. I just, I'm looking at the landscape. I look at what the rentals look like at a certain price point and then I look at what that same payment would get you. And in most markets, what you can rent is much nicer. Plus, if you're renting, say you're young and you're renting a condo,

Starting point is 00:26:16 you also get amenities. Like, do you want to be in a cool building when you're in your 20s that has a gym and co-working spaces, or do you want to, you know, try to use a closet as your office? I mean, these are things where it's like everyone's been told homeownership is the path to greatness. And I've always been a homeowner. I love it. But I don't think it's the same look now. Rates are high.

Starting point is 00:26:36 Prices are high. You know, everybody said, oh, well, if the rates go high, prices will go down. Nope. Didn't happen. I mean, not at all. Yeah. You know, and in a lot of markets, especially where I am, it's really, it's really crazy. So I just think that if you have the extra money and you know you're going to rent and you're looking on one hand, I'm going to do a burr or a flip, which burr is very hard to do right now.

Starting point is 00:26:59 Flips, I really am worried for people who try a first time flip just because everything can go wrong versus syndications and turnkey with vetted providers on each. I just think they're going to these things that are actually closer to passive than what people call passive. Like, we all know, you know, landlording's not passive. Even if you have a property manager, you have to manage them or you're losing money. So, you know, I think it's recreating what people think of these words and what they think of what we were talking about. What is financial independence? It's going to look different. Yeah, it's wild.

Starting point is 00:27:34 And I know that a lot of folks are waiting for affordability in the housing market to come back. And it's certainly possible. But I actually on the, our sister podcast on the market, I was speaking. the other day to an economist from Moody's. And he and his team did some research that said that to get back to 2019 levels of affordability. So just normal, affordability was pretty normal back then compared to historical average. We would need interest rates to go down to 2%. That has never happened. Like that had, even during the pandemic when the federal funds rate was zero, mortgage rates were still usually around 3% or a little bit higher. So the

Starting point is 00:28:15 probability of affordability getting back to pre-pandemic levels is very low. And if that were to happen, it would have to require some sort of economic catastrophe, right? And so it's not like all of a sudden people are going to be super eager to be buying real estate. So I think you're right. And it's kind of just this sort of existential question almost for real estate investing and for homeownership is like, what does that mean for American culture and, you know, our society? Because like we have always said that homeownership is sort of the path to wealth, and that might be changing. We've got to take a break for some ads, but stick around because later in the show, I'll ask Jonathan what advice he'd give to younger investors who still want to take a more

Starting point is 00:28:57 hands-on approach in today's market. 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. That's the power of the Fundrise Flagship Fund. Now, you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10. The portfolio features $4,700 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought after industrial facilities, thanks to the e-commerce

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Starting point is 00:32:25 We're back. Here's more of my conversation with Jonathan Green. For people who don't have the funds or don't qualify as an accredited investor, how would you start in this market? The way that I would do it if I was new and I had limited capital but a little and I wanted to flip, say, I would be going to real estate. state meetups until I met a flipper. I would ask if I could visit the site and if I really like what I said is like, can I invest just a little bit into your next flip? Whatever it is, 5% anything and

Starting point is 00:32:57 then get a ride along basically. I'm going to ride along because I've contributed to it and you're not in a 50-50 thing with your friend, you know, from high school because neither of you know how to do anything. So why do you want to do that? You just try to make a little bit of an increment or don't even do it with the money. Just ask if you can swing by. And that's where I see better partnerships coming, investing a little income in what somebody else is doing so you can kind of get the educational ride along. And I think that's a good strategy. But as we're saying before, when you're talking about syndications, patience is the issue. You know, nobody's patience, why they're looking for hacks for everything and they're on TikTok all day saying like, well, how can I figure this out?

Starting point is 00:33:34 It's TikTok. You know, that's not real. Some of the stuff is valid, but a lot's not. So I think if people can think and go back to the principles of real estate, buy real estate and wait, that's what you're supposed to do. It's great because contrary to syndications, which are illiquid, you know, your real estate portfolio is usually pretty liquid. It's one of the most liquid assets that you have. So if you have five units and then you want to sell one, you can sell one. You know, and so I just think that they're going to have to think differently the same way with renting. And if you become a choice renter and you appreciate the enjoyment of the rental and you get a benefit of that. And you said, like we were saying in the beginning, you keep that W2 job,

Starting point is 00:34:18 you get really good at the W2 job. So you're making much more than everyone. You're going to create a much bigger foundation where you may end up, you know, getting two or three different type of assets. Maybe you do get a small multi, you know, house hacking is still a great idea. I still love house hacking. You know, if I was younger, I would, I would house hack. I mean, I still, I even think of buying a three family now and having my kids live on both of the other levels. You know, they both flip out of the house now. That's great. But they, you know, conceivably might do that because they like the, you know, the real estate portion. So, you know, maybe old house hacking is going to come back. Yeah, yeah. Well, I want to ask you about your kids just in one minute. But I just back to

Starting point is 00:34:56 this idea of affordability. And like, we talked about this that people are impatient. And I think this goes back to the earlier conversation about financial independence and wanting to quit your job as quickly as possible. I'm curious, or at least something I've just been thinking about recently, is that for a while there in the 2010s, like, it was feasible to be able to do this, to like work for three to five years and maybe be able to quit your job and replace your income. But I just, like, that's not normal. At least when I look at the historical data about opportunities in real estate, this idea that you could buy things super cheap, you could do the perfect burr and get 100% of your equity back. People have anchored themselves and start

Starting point is 00:35:41 thinking that that's what we should expect. That was the anomaly. This time right now is actually kind of normal. It's low affordability, but these types of interest rates, these types of deals where you have to dig and search and work for them, that is the normal thing. And it's still, like, there's still good ways to invest in real estate. But I think we're sort of like going through this transition as an industry where it used to be, for a couple of years, it was abnormally easy. And now it's just reverting back to the normal level of difficulty that it's always been. I've always been an appreciation investor because I didn't have to be a cash investor, a cash flow investor. But I think people are going to have to really start looking harder and

Starting point is 00:36:22 knowing more because no one can tell you what the appreciation is going to be. It's not guaranteed. So you have to be better at understanding the markets that you're buying in so you can hedge your bets better. And I think growing up that I was always good at buying single family houses. So almost most of my best investments of all time have been houses that I lived in and people think, wow, that's not even an asset. No, your house is your biggest asset. I knew how to buy. I knew how to renovate. And sometimes I renovate early. Sometimes I renovate late. But I knew how to buy in neighborhoods that weren't there yet, but we're still nice and I wanted to live there. So people need to stop discounting their personal residence and thinking I'm not a real estate investor. If you own

Starting point is 00:37:01 own a house, you're a real estate investor, and you can't get into this, you know, my forever home. That's not real. I've moved like 500 times in my life. You know, that's how you make money is you trade up and move. And now it's really hard. It's why people are stuck because they don't want to move out of their 2.75 rate and go upgrade and there's no inventory. So I understand them. But look, at some point, it's not going to work. You're going to have to figure it out. I completely agree. I think people overlook the primary residence. There's so many advantages to thinking of your primary residence as an investment, from the financing to the tax benefits. Like, there's just so much that incentivizes you rather than going out and buying your perfectly manicured, recently flipped or recently built Dreamhouse.

Starting point is 00:37:47 If you want to do that, fine. But like, you're missing a financial opportunity, which is your decision. But if you want to turn your primary residence to an investment, you absolutely can. That's just how a lot of people do it. I was actually just talking to Henry Washington about this. And right before we got on, I was talking to James Dayn, or didn't he was telling me a story about how he did this with his primary residence. It's how almost all of the successful investors I know not necessarily got started, but sort of augmented their portfolio, especially early in their investing careers. That's what my dad did.

Starting point is 00:38:19 I grew up like the second that the house was the best, he's like, we're moving. And I'm like, what? And I was only there on weekends. You know, my stepbrothers and sister should have been more about it. would say, no, we're going to make this much because I did all this. And I'm like, oh, yeah. Okay. I understood that even at 10 years old because he didn't ever talk to me like a kid. He just, we're going to make, you know, whatever amount of money. Yeah, that makes sense. We should move. I'm not that. I never was tied emotionally to real estate because I moved so much. And I grew up living in apartments, you know, you're not really tied to real estate when you're in an apartment, whether you own it or rented. It's just an apartment in Brooklyn, you know, you're going to move.

Starting point is 00:38:56 Well, that actually brings me to my last question here, Jonathan. So, you know, you're You said that you had this really unique exposure to real estate as a kid. And it seems like it's created a really amazing foundation for you over your 30-year real estate career. Have you exposed your kids in the same way? Not the same way. And I think it's partly because technology provides so many other outlets. You know, as I was saying before, when I was riding in the car with my dad, I couldn't look at my phone or play a video game unless it was like that electronic football where it's just like a little dog. So I had to listen to him.

Starting point is 00:39:31 My kids from the time they were little, you know, we're looking at video games or, you know, things in the car. And everybody likes to put it on parents. Oh, well, you could have just, you know, forced them to talk. It's like, no, times were different, you know, and we grew up as parents differently than my dad did. So I've done a good job exposing them much more now that they're both adults. They're 21 and 23. And I think I really have a smart plan for where I want to go. But they weren't as exposed as I was, but they also weren't not exposed.

Starting point is 00:40:03 I did plenty of homes that we lived in. I explained why we were removing. They've understood rental properties that we bought. They understood short-term rentals because we've owned short-term rentals 20 years ago, and we used to go stay in them, and then I explain how it works. So like me, I think through osmosis, they probably know a lot more than they think they know. But now they're both very interested. And my plan is basically to have two family meetings a year,

Starting point is 00:40:29 where we go over all our assets and how much they're worth and what the distributions are, what they pay and why they're there, so that they can start to scale over time and understand that there's a lot of diversification in real estate, but I also want them to see what I have in stocks and why. So I don't think I've done as good a job on the trust end as my dad, but I think I'm doing it now. But I think technology corrupted a lot of things that, again, not my fault, not technology's fault. It's super useful for real estate, but it also gets in the way of a lot of one-to-one, which I still have a great relationship, fortunately, with both of my kids. But yeah, it's tough. It's a different time.

Starting point is 00:41:11 You know, growing up without the internet, we just went and got lists from the courthouse. My dad knew everyone, so we would just go. And he literally, if the door was locked, he pushed me through the window. And that's how we got in. And we were like, oh, my God, you were trespassing. I'm like, this is like the late 70s. it's fine. I still look at real estate through that lens, and I think that's what helps me be a better investor, a better coach, and just a better real estate advisor in this climate,

Starting point is 00:41:39 because I don't look at it just as numbers. That's meaningless to me. I'm like we've talked about, I'm an asset hunter. I look at the asset. I like to help people, but sometimes, you know, there's things you have to do. Well, Jonathan, thank you so much for being here. This was a lot of fun. Always a great conversation with you. If you wanted to check out Jonathan's podcast. We'll put a link below. Or you can always connect with him. He is one of the most prolific forum members, community members, at Bigger Pockets history. He has given away so much information for free in the Bigger Pockets community. Definitely go connect with him there. Jonathan, thanks again, man. Thanks, Dave. I always appreciate it.

Starting point is 00:42:17 Thank you all so much for listening, and we'll see you next time for the Bigger Pockets podcast. 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 Calicoke 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.

Starting point is 00:42:55 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. BiggerPockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.

BiggerPockets Real Estate Podcast - The Expert Investor: Early Retirement is a Mistake, Rent INSTEAD of Buying!

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