Ekabo Home Financial Freedom Mastermind Podcast
A podcast for those who do not believe they were put on this earth to work 40 to 50 hours per week for 40 to 50 years, to hopefully retire at the age of 65.
Ekabo Home Financial Freedom Mastermind Podcast
123. Tax Hacks & Rental Secrets: Master Real Estate in a Changing Political Landscape!
🌟 Unlock the Secrets to Real Estate Success and Financial Freedom! 🌟
Are you ready to navigate the turbulent waters of the real estate market amidst shifting political landscapes and economic policies? 🤔 In this episode of the Financial Freedom Mastermind Group Podcast, host Niyi Adewole dives deep into the world of real estate investment, exploring essential strategies that can lead you to financial freedom! 💰
What You’ll Discover:
➣Home Warranties vs. Home Insurance: Understand the crucial differences and why home warranties are optional.
➣Seller Credits vs. Price Reductions: Learn how seller credits provide more flexibility in negotiations and could be your secret weapon!
➣Impact of Trump's Policies: Explore how corporate tax cuts, tariffs, and immigration policies may affect the real estate market and your investments.
➣Long-Term Investment Strategies: Discover why consistent property investment is vital for long-term financial security.
➣Rental Strategies: We’ll highlight the benefits of mid-term rentals over short-term rentals, revealing how to optimize profitability!
Join us for a compelling discussion that goes beyond conventional wisdom. We’ll share our experiences in home renovation, emphasizing the importance of prioritization and celebrating progress. 🛠️
As we wrap up, get ready for an exhilarating exploration of scaling your real estate investments! 🚀 Learn how to transition from managing small properties to handling larger rental portfolios, and understand the importance of building a trusted team and leveraging partnerships for financing.
Key Takeaways:
➣Actions speak louder than words in real estate.
➣Tariffs could significantly increase household expenses.
➣Immigration policies may impact housing supply and prices.
➣Creativity is essential in today's real estate market.
Don’t miss out on these actionable insights and creative approaches designed to help you thrive in today’s dynamic market. Hit that play button and start your journey to financial freedom NOW! 🔑✨
👉 Subscribe for more expert tips and strategies that will elevate your real estate game!
Chapters:
00:00 - Introduction to Financial Freedom Mastermind
00:52 - Understanding Home Warranties vs. Home Insurance
03:17 - Seller Credits vs. Price Reduction in Real Estate
04:43 - Long-Term Investment Strategies in Real Estate
06:10 - Impact of Trump's Policies on Real Estate
10:01 - Tariffs and Their Effects on Housing Costs
11:28 - Immigration Policies and Real Estate Market
12:20 - Open Discussion on Real Estate Strategies
13:42 - Exploring Short-Term vs. Mid-Term Rentals
19:21 - The Importance of Long-Term Thinking in Investments
🗓️ Tune in every Wednesday at 7 PM Eastern! Don’t miss out on our journey toward financial freedom through smart investments.
👉 Hit that subscribe button and turn on notifications so you never miss an update! Let’s unlock your potential together!
Our Links
➣ Financial Freedom Mastermind Facebook Group - https://www.facebook.com/groups/53083...
➣ Peer Space Host Referral Link https://www.peerspace.com/referrals/g...
➣ AirBNB Host Referral Link https://www.airbnb.com/r/niyia41
➣ Ekabo Home Network (IG, Youtube, Email) https://linktr.ee/ekabohome
Niyi Adewole is a licensed realtor in Georgia, brokered by EXP Realty. Feel free to reach out at Niyi.Adewole@exprealty.com if you would like to work with an investor friendly real estate agent.
Welcome to the Financial Freedom Mastermind Group Podcast. Here we're all about breaking free from the 40 to 50 year work grind and accelerating our journey towards financial freedom. Join us every Wednesday at 7 pm Eastern as we explore different types of investments that can fast track your path to financial independence. We serve as a hub for connecting with fellow members during our sessions so you can share successes, ask questions and keep the momentum going. Good evening everyone.
Speaker 2:This is Nigi Adewale, host of the Acaba Home Financial Freedom Mastermind Group, and I'm excited to be joining you here on this first Wednesday of November. There's a lot that happened yesterday and over the last week leading up to this new election, and so today, what we're going to be focused on is we're going to have an open session, we're going to talk about our quote, we're going to talk about the three questions that were asked the Acaba Home Team over the past week that we answered and go into detail, and then we want to look at the new president that's coming in, trump and their policies that they've proposed and how this can affect our real estate life. And so, first and foremost, the quote for today is people can debate what you say, but they cannot debate what they see actions over words, and this is something that I truly try to live by, and also in talking to many individuals that are parents, I think it's shared in common knowledge that your kids will literally do what you do and not exactly what you say, and so it's much better for you to start building in the habits that you want to emulate out in the world Instead of saying it's better for somebody else to say that you have the attributes that you're looking for, as opposed to you saying that out there. Much rather, start to build the habit in and allow your work to speak for itself when you look at three of the questions that we got this week. The first one was what is a home warranty and how does it differ from home insurance?
Speaker 2:A home warranty is completely different from home insurance. Home insurance is required typically if you're getting a mortgage on a property and this protects you if you're going to have, you know, a fire to the house or a storm that comes through and damages the house. Some people get flood insurance as well, which will protect you if your home floods. So that's insurance. It's usually required, especially if you're getting a home with a mortgage. Home warranty is something that is optional. Home warranty is something that is optional. It's just something that you can add on to the property and you can usually buy one year, two year and you can renew it to protect some of the mechanicals, and so typically I personally don't really get home warranties. I usually just save the money on the side and keep that as my capex fund, because I don't want to waste money on a home warranty, knowing it's a little bit of a hassle to call them and try to get stuff from them, and so a home warranty is good. If you're negotiating for a new house and that house has older systems, say, those systems are like 15, 20 years old but they're working. It's hard to get the seller to replace that system. Well, you can't ask for it for the seller to cover a home warranty that will then allow you to replace that system should it go out within that time frame of the warranty.
Speaker 2:The second question that we got was is it better to take seller credits or a price reduction? You are crazy if you take a price reduction over seller credits. Seller credits are the bread and butter to what I personally do in my investing and they allow you to be a lot more versatile in what you can do to make a deal work. For example, if you were to get a house for 400k, or be able to get a house for 450 with 50k toward closing, the 50k toward closing would allow you to bring less as a down payment because you can cover all your closing costs. It would allow you to potentially buy down the interest rate and make your payment less than if you bought the house at 400K and if, worst case scenario, not able to use it for any of those things, you can always convert it back to price and take it off the price as well. And so I personally coach my team and we always work with our different investors to try to secure deals where we're getting a significant amount of credits that allow us to get creative and make a good deal into a great deal.
Speaker 2:And then the last question for today is is now still a good time to buy real estate and to invest? And in my view, the answer is yes if you have a long-term view. There's a lot of people that get into real estate and I've come across them as well, whether it's clients or just people that I talk to on a daily basis that are getting into it, saying their long-term view, but they're really thinking short-term. They're like hey, I want to see appreciation in six months, one year, and then cash out on that. Unless you are a flipper or doing major value add, you have to have a longer term view. You should be thinking minimum five years when you're buying into an investment, because that gives you enough time and enough of a horizon to move up and to the right to where you're going to be able to cash out and make sense. Typically, if you're going to sell a house within the same year or within 12, 18 months of buying it, one of two things need to happen to make it make sense. Either one, it was a heavy value add property, or a flip, where you put a lot of dollars into it to renovate the home. Or two, you were in a crazy path of progress and everything just came together in the stars aligned, similar to what happened during the COVID and the pandemic. And so, to answer the question, yes, it's a good time to invest, but you need to be thinking long-term and you need to get creative right. Gone are the days where you can just look on the MLS and buy a property and have it cashflow as a long-term rental. You need to be thinking about midterm and short-term rental. You need to be thinking about hey, do I do rent by the room or what can I do to make my place stand out to where I can get the additional dollars, and also managing yourself as well to keep those dollars in-house.
Speaker 2:Now shifting gears to the talking point for today, and we're going to open it up as an open session to anybody that wants to join. Feel free to go ahead and throw any questions into the chat. Feel free to go ahead and join live, but we're going to be talking about three of the different policies that Trump has proposed in the past and how that could impact the real estate realm in a second. Okay, so jumping into it. The first one is the reduction in corporate tax. So Trump has proposed reducing the corporate tax from 21% to 15%, and there's some pros and cons that come with it. But again we're specifically looking at the real estate piece and how this could affect real estate.
Speaker 2:Cutting that corporate tax is going to give significant dollar savings to the top 10% within companies and the shareholders not the people that are on E-Trade buying stocks you know one or two a piece but to the people that own significant shares of companies, they're going to be able to benefit from the corporate tax rate cut. Now what this is also going to do is it's going to increase the deficit that we have within the US by $1.3 trillion over the next decade, and so our deficit currently sits at a little under $1.9 trillion, and so it's almost doubling it over the next decade to give these tax breaks to corporations. Now the goal for that is to have that start to trickle down to where they can increase wages and things of that nature. But what we've seen in previous years is companies have gotten smart with doing like buybacks and things of that nature of stocks to boost their price and give back value to shareholders, which doesn't necessarily hit the people that are working on the day-to-day, and so essentially, you would need to be in the top 10% of income earners, which is a high income earner, to truly benefit from some of these cuts that are proposed. It can't all change. This is just what was said leading up to the election. We have no idea what's going to happen in the future, but that's one of the pieces.
Speaker 2:And again, if you direct impact on a lot of our pockets right, it's a known fact that we get a lot of our materials and a lot of different things that are made outside of the US, and there's a reason for it, right? If you make things within the US, there's so many labor union laws and just you know, hey, you can only work Monday through Friday, or you can pay work Monday through Friday, or you can pay overtime for this and things of that nature that would increase the cost of these items to where it would almost not make sense to even try to sell it within the US if it was made within the US, unless it's a high dollar item. And so, with the tax or the tariff on these imported goods, there's analysts out there that are estimating that this will increase the spend for each household by $3,000 on average per year. Right, and so what we expect to happen when you put out these tariffs is these other countries are not going to just sit back and say, okay, you know, it's the US, it's all good and well. They're probably going to retaliate with tariffs themselves, and when you get into a tariff war, the only people that end up losing is the actual consumers, who have are expected to produce enough to cover the tax cuts and some, which is where Trump plans to get the money from to actually fulfill the other plan for reducing the corporate tax and giving breaks to those that are higher income owners.
Speaker 2:The last piece that we wanted to cover, and probably the most important, is the immigration and deportation policy. So what Trump's proposed is really beefing up on border security and trying as much as he can to put dollars toward limiting immigration and then deporting illegal aliens, and this is going to hit real estate pretty hard If he does what he said he was talking about. When you think about who actually is helping build all the homes that we need and the deficit that we have that we've been trying to make up over the past couple of years, a lot of that is immigrants that come to work in the US, right, and they're able to work and work for a bit less than all US who would work for it, and so that assists in helping keep the housing prices at least semi-reasonable, right. If you had the homes put together completely by people that are here, I mean, you don't got to look far. For examples, look at Toronto and look at Canada, our neighbors to the north. There's less immigration and immigrants coming into Canada than the US, and so when you look at the prices of their condos and homes, it's through the roof. It's New York prices everywhere and maybe higher, right. And so the unique thing about the US is we have been able to leverage this workforce and been able to get these homes built for a little bit less, which allows you to sell it for a bit less to make it more affordable, and so, from my own opinion.
Speaker 2:I believe that if he does start to really crack down on this piece, that we're going to see the housing prices continue to escalate and go from there.
Speaker 2:Now, the overall trend line that I'm seeing with these different policy is to boost economic growth right and continue to spur that piece along and to essentially not allow us to slip into any form of recession. What you're essentially doing with some of these things is pouring gasoline onto the fire, and the risk is that you could reinflate the market and have inflation that has been trending down, start to pick back up and trend up and start to price people out right, and so that's a true concern that we have to have over the next couple of years with some of these proposals. But that was my take on how it's going to affect a bit of what we do with the real estate investing world. Would love to hear your take. Please feel free to throw any questions in the chat, throw it into the comments on YouTube and or any opinions. Would love to hear it. And again, this is an open session, and so now, if there's any questions and or if you want to join live, feel free.
Speaker 3:Oh yeah, how you doing, feeling, great. How about you?
Speaker 2:How are you doing? Come on, hey, I'm super good. I'm super good, we take it one day at a time.
Speaker 3:Absolutely, man, this, this renovation, has taught me more about that. I think that a lot of the other projects that I've gone through one day at a time, what's the priority, it's the focus for today. So, absolutely, is it almost done or what? Man? Finally it's almost done and we're we're doing the finishing touches this week. I have some shower doors being installed tomorrow and that's kind of one of the last pieces. Cleaners came today. So, for the most part, it's it's. It's looking really good in terms of the cleaning and, man, just, uh, it's really it's a matter of, you know, getting the final finishing touches on there, but also, um, getting the furniture moved back in and you know things like that. But I think by next week, uh, the the unit should be back up and running.
Speaker 2:I'm hoping dude, I am pumped for you. I know it's been a long journey and I meant to ask last time but did you ever run the cost analysis on, okay, long-term renting it, even fully furnished, long-term renting it versus the short-term Like? Are you still leaning toward, hey, all short-term, or what are your?
Speaker 3:thoughts. I have been playing with that analysis, haven't done nothing like super detailed, super thorough, but I did do just some quick kind of back of the napkin math to see like where am I at. And I went into my hospitable metrics and I had learned that really from you right, where I didn't realize they were giving you so much data there, but went in kind of compiled that. And I definitely do think that, based on the performance of my listings, it is worthwhile for me to do, you know, a shorter term compared to long term. Now I I say shorter because I'm I'm not exactly sure that doing exactly short term will still be the move I want to go with going forward.
Speaker 3:So AJ really has me thinking a lot about midterm, right, and I think that like it's no secret that like the shorter the term, it's, it seems to be on your, on your lead, so like that you're staying at right. The shorter that term, the more you're paying for, you know, the space, and I feel like midterm really seems to be like that sweet spot in the middle of not giving up too much of the potential cash flow but also, you know, still bringing in a considerable amount that helps the building. You know, stay up and running. So so thinking about that more and really needing to dig more into that analysis to get really concrete with that. But right now I think that my approach is going to be to just go all in on midterm in the new year and see what that can bring, especially now that I have the washer and dryers.
Speaker 2:Come on now. I think that was the key on lot, and to that point like the one bedrooms and two bedrooms, kill it at midterm rentals. If you were to put just even this one, take professional photos, right, professional photos taken and you put it onto Furnished Finder for anywhere between, say, $1,700 and $2,000, you can get a lot of people looking for that, right, you can get a lot of people looking for that. And the you can get a lot of people looking for that. And the cool thing about midterm rental that I like is you got to look at eliminating the cleaning fee, right, because if you factor in all the cleanings that you have for all the short terms, if you got eight cleanings in a month, that's a lot of money going out, right, so you got to subtract that, whereas with the midterm, say, you give somebody a break, how much are you?
Speaker 3:paying for cleaning. Roughly Well, for my one bedrooms it's about 80 bucks 80,.
Speaker 2:Okay, so eight times 10 cleanings, we'll call it because it's easier math. Even if you were to give somebody a break and say, hey, I'm gonna give you $700 less for this midterm, you're still essentially netting more that extra 100, because you're not paying for the, for the cleaning. That makes any sense.
Speaker 3:That's interesting though, because I feel like for short term, we forward the cost of the cleaning At least we try to forward the full cost of that cleaning, and I do onto my guests. So in reality, I'm not actually. I don't actually feel that expense. It's more of just playing the middleman between the guests and the cleaner.
Speaker 2:you know it's true, it's true, and we do the same. We do the same. I just I look at it from an owner standpoint and even I think the mansion's a really good example, right. Well, maybe it's not because that's an outlier, but for that one. When you look at some of the cleaning bills, maybe it's not because that's an outlier, but for that one. When you look at some of the cleaning bills, sometimes that cleaning bill is like a couple thousand, like you know, four to eight grand. Right In a month we could have made a lot, but four to eight grand definitely cuts into the bottom line, whereas right now we got somebody renting it out for 30 grand a month. That makes a heck of a lot of sense.
Speaker 3:Like all right, that's pretty good, yeah absolutely, yeah, no, absolutely, and like that's really something I'm starting to focus on. More is just, you know, cutting the cost and making things just as as efficient and and make as much sense as possible. So, yeah, I also think too, what is helping me come to the decision of doing that is like okay, okay, I was in Chicago this past weekend. I was like beautiful place. I didn't realize how like cool of a city it was, but up there celebrating a friend, he got engaged and it's like me and Abby, we're just like exploring Chicago a little bit before, like the engagement party, and my phone rings and it's Google Voice and anytime it's Google Voice.
Speaker 3:I know I'm like this is probably a short-term middle call. It could maybe be a long-term tenant, but typically I don't get calls or have any issues with my long-term. So nine times out of 10, it's going to be someone from Airbnb, someone from Booking, might be a week before their stay. Oh, you know, I just want to know like I'm not. You know, just like buddy let's know the messages.
Speaker 2:Come on now and to your point, that's the, that's the piece. That's the piece that doesn't get talked about as much is just the time element, because if we were just looking at dollars, like, hey, how much can you make? Yeah, I mean, doing short-term rentals or even rent by the room is how you can make the most. But when you factor that plus the time element, that's when you start to lean into okay, long-term rentals make sense over time. Like the overall goal, at least in my mind, of all these short-term rentals is to be able to buy these dope houses in amazing neighborhoods and then hang on to it long enough to where a long-term rental makes sense, and then you move to a long-term rental and you're good. It's just back in the day you used to be able to like. In fact, my back in the day for investing is 2016, 2017. You could buy a deal and it made sense right then, and there as a long-term rental. Now, not necessarily you have to be creative to do these, to get into it. I think it's only begun to become more so with some of the proposed plans right With cutting corporate taxes, with the immigration policy, things of that nature I think it's only going to get more expensive and so, with that in mind, if you can just get into a property and make it make sense today, the longer you hang on to it, those long-term rents are going to go up.
Speaker 2:You mentioned what your neighbor's doing down the street to help you and it's all up from there and Desmond, your mic is cutting in and out. Can you hear me Shake my head? I can hear you now, yeah, and I got to say you're spot on, even the way that you described that. I've heard that saying a couple of times too. Right, and it's true. Like the deals that I bought back in 2016, 2017, how do I know, and everybody always says this I wouldn't have bought everything, because all of it just it doubled, it increased in value, the rents kept going up Back in 2020, 2021, I mean there was a frenzy right. There was deals to be had at 2% interest.
Speaker 2:The house that I lived in before right. We bought it at such a low interest that we're able to rent that house out for a significant amount. I think we rented it out for like five grand and we're cash flowing off of this Like this was a primary house that we bought for a heck of a lot, but it's like, okay, it just made sense. And so to your point. I try to just stick to at least buying one property a year at minimum right. Typically I'll find a way to do more than that. But just one property a year will set you up for life, because that first property that you bought is only going to get better and better and better. And having gone through the full cycle of this, where I've seen, okay, the ramp up and selling a bunch of those properties, I can see the benefits on the other side, not to mention the tax stuff. Like you are not even getting the tap fully into all the tax stuff, but it's accruing. It's accruing there for you and the time comes that you you do want to move into that man, you got a lot of benefits coming your way. You're going to be solid, you're going to be solid.
Speaker 2:My only question is is desmond willing to move off the block? I know you're on the block, but is he willing to turn the court into another? That's the question and through that point I would say I would say that you earned that right with the first two properties went full on. I want to get the investment and you earned it. And the hardest part to do would be if you went and said, hey, I just want to get a single family with a backyard where I can go have a pet and all this other stuff and then try to go to a multifamily, so you're doing it the right way. It's better to go from the multifamily to another multifamily and then now just start to ramp it up.
Speaker 2:The first multifamily and then now just start to ramp it up, like the first multifamily I was in was not nice man. I bought this thing for 190. It was a triplex. It was like you know, we had bend, bug issues, all this stuff, and I was living in one of the units, oh and so so it was. It was a learning experience. But from there it allowed me to get another one and another one.
Speaker 2:And then I bought a condo that was pretty cool up in Boston where a house hack with a roommate. And then when I moved down here, I'm like you know what I want to do? A luxury one, let me do a single with the in-law suite. And now I mean, you've seen one of the units of the house hack that we're in now. It's like, okay, let's do something bigger. And so you've already built the skills, you've earned the right now by stabilizing these two, you have to go ahead and and kind of make something a bit nicer or a bit more comfortable for you as well. It's good, yeah, hey, come on now.
Speaker 2:No, and and honestly, like, if you're managing eight units successfully, it's not out of the realm to go buy a 16 or 20 unit, or even like 25 um 50 would be a little bit tough without maybe bringing some chaos.
Speaker 2:But I'd say like 25 or so is pretty within the realm because you're already doing it right now and you've already started to build up a team to be able to handle different issues.
Speaker 2:Plus, you know you can tap into our network anytime right to kind of make that piece happen, and so it's definitely doable to your point and we'll cover this definitely another time and we can connect offline.
Speaker 2:The lending is completely different. And then the encouragement to use partnerships, like when I went for that 12 unit, I didn't necessarily have that full down payment at the time and so I partnered on that. I was like, hey, if you bring X amount, I can give you X percent of the deal and I'll do everything right and kind of make it happen from there, and it worked out. And so I think there's many ways to get into it, especially even now that you have these other properties, that you can incentivize somebody, because the way I did it is, I partnered on these but I also said, hey, I know I'm not giving you, it wasn't a 50-50 split, it was like a lot, but I'll give you a percentage of these as well, because you're helping me put a down payment on this one that's going to expand the portfolio, and we kind of went from there. Come on now, desmond, I appreciate you joining day after election and yeah, man, keep your head up with everything, and I look forward to seeing the finished photos of the unit when it's done.
Speaker 1:All right, fam, be safe. Join us every Wednesday at 7 pm Eastern as we explore different types of investments that can fast track.
