E194- Marco Santarelli from Norada Real Estate Investments

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Marco Santarelli is an investor, author and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property. Since 2004, they’ve helped thousands of real estate investors create wealth and passive income through real estate. He’s also the host of the top-rated Passive Real Estate Investing podcast.

Denis O’Brien [0:37]
Welcome to Episode 194 Norada Real Estate. Hey money clan, a very warm welcome to the Chain of Wealth podcast. I’m your host, Denis O’Brien.

Katie Welsh [0:49]
And I’m Katie Welsh.

Denis O’Brien [0:50]
So Katie, awesome conversation with Marco today and learning all about real estate.

Katie Welsh [0:56]
I feel like we are at that age where we want to start buying homes. And when I say we, I mean people our age are really starting to think about settling down and having a family and getting a dog. And I feel like you cannot learn enough about real estate before you buy your own home.

Denis O’Brien [1:16]
Yeah, Kate and also really appreciate Marks Marco’s usage of the word turnkey investments, you know, and I think when it comes to property, that’s critically important.

Katie Welsh [1:26]
It is super important. And it’s important to understand all the different terms that he was so kind to talk about with us.

Denis O’Brien [2:2]
Yeah, so right before we dive into today’s show, if you guys haven’t already, come on over and join our Facebook community, you can head on over to chainofwealth.com/group, and we’ll see you there. You ready to dive in?

Katie Welsh [1:46]
Yeah,

Denis O’Brien [1:46]
Fantastic. Let’s do it.

Voice Over [1:49]
Welcome to chain of wealth. Here’s your host, Denis inspiring you to begin your journey of financial freedom.

Denis O’Brien [2:2]
Marco is the host of passive real estate investing podcast and the founder of Norada Real Estate a premier real estate investment firm. His mission is to help people create financial freedom by taking the guesswork out of investing. His team is dedicated to researching top real estate growth markets, and structuring complete turnkey real estate investments to minimize risk and maximize profitability.

Katie Welsh [2:27]
Hey Marco.

Marco Santarelli [2:29]
Hey Katie, Denis, I’m honored to be here.

Katie Welsh [2:32]
Yeah, we’re glad to have you. So we were talking a bit before the show. And I wanted to ask your view on the difference between active versus passive income.

Marco Santarelli [2:45]
Yeah, yeah. So you know, I understand your audience is made up of a lot of investors and people who are thinking and wanting to be involved in investing in some way, shape or form, obviously, for the purpose of creating passive income and creating wealth, which is something that I have studied for a long time, and it’s very dear to my heart. And I love sharing that with people. And over the years, we’ve ended up categorizing investors and investing methods as either active or passive. And this will make a lot of sense to most people, because it’s pretty intuitive. But an active investment is something that requires your attention, you know, you may be a day trader, which to me is really not investing per se. You know, we can get into that later if you want. But something that takes your attention and time would be an active approach to investing. So if you’re a day trader, that would be an example, if you are a property flipper, so you’re buying fixing and flipping properties. That’s essentially a business, it’s a job, that’s an active approach to quote unquote, investing. Sure, you can make money and you can potentially make a lot of money, you can also lose a lot of money, and I’ve done both. But the difference between active and passive is passive is something that you invest in generates cash flow, therefore it creates income for yourself. And it doesn’t require your ongoing attention, whether it be hourly, daily, weekly, or even monthly, for that matter. So that’s the long answer to your question about passive and active, I certainly prefer the passive approach over the active the active approach, it has its time in place, and you have to have the you know, obviously, the knowledge for the time for it the expertise in some cases, and the capital, whereas passive investing is not quite push button investing. But it’s a way to get involved in something that generating a rate of return for you. And it doesn’t require a lot of your attention. And even for that matter a lot of a lot of knowledge because if you surround yourself with the right team, then you’ll be able to succeed in whatever you choose to do.

Denis O’Brien [4:43]
I love that. And obviously, like you have sort of ventured into the real estate area of investing quite a lot. So how could you really apply this active and passive income concept to real estate?

Marco Santarelli [4:54]
Well, I’ve jokingly said over the years that there are 101 ways to make money in real estate, and that’s probably very, very true, if not 1001 ways. Because you can get involved in you know, fixing and flipping homes, buying, fixing and holding homes, you can buy passive rentals that are just rent ready on the market. You can buy, you know, product that we offer our clients and something that we offer to people to build their passive income, which are turnkey cash flow rentals. You can invest in notes reits, which are real estate investment trusts that are publicly traded, you can be part of a real estate syndication, which is a group partnership. The list goes on and on. There’s so many different ways. And so, Denis, I’m sorry, I forgot your question.

Denis O’Brien [5:38]
No worries. I was just asking how the passive income or active income like concept can be applied to real estate?

Marco Santarelli [5:45]
Oh, yeah. Yeah, yeah. Okay, guys, sorry. Thanks.

Denis O’Brien [5:48]
No worries.

Marco Santarelli [5:49]
So, the same principles apply. If you are a flipper, I love this example. Because there’s so many of those flipping shows on TV if you’re flipping property, meaning that you’re buying and renovating a property for the purpose of essentially said reselling it to an end buyer, a homeowner. That’s an active approach, you are definitely engaged and involved in that process, probably daily, if not hourly, depending on your level of involvement. That is an active approach passive would be I’ll give you a couple of examples. One is some people invest in, in notes, which are essentially some people might think they think of them as mortgages. That’s technically not the right definition for it. But a notice of promissory note, it’s basically a promise to pay a certain amount over time at a certain rate of interest. Well, think of your bank, your lender, your lender is a note is a note investor, they are essentially lending you money and you’re repaying that money back in the form of a mortgage. And that note is essentially a passive investment for the bank will flip that equation around, let’s say you have, you know, 20 000 50 000, 100 000 thousand, whatever it may be, and you lend it to somebody secured by real estate or any other asset, and now you’re getting paid monthly income, you don’t really have to do anything, you know, you’ve made the loan, you’ve got it secured by the collateral, that whatever that might be the property. And every month you get a check. And that goes on for as long as the note is written for whatever that maturity date is. That’s certainly passive. My favorite is by far, building a portfolio of rentals. Typically, these are single family homes, but they could be duplexes, triplexes and fourplexes. That’s the business we’re in. That’s, you know, what I started doing long, long, long ago. And the reason I love that is because it provides me so many benefits, more benefits than any other asset class or any other investment that you can get involved in. The only exception to that rule would be a successful business. But aside from starting and creating a successful business, which is really not an investment, per se, but real estate is by far the best investment you can make.

Denis O’Brien [7:58]
So just going back to what you mentioned earlier, speaking about flipping houses, I know that you don’t really view that as investing. But I wanted to ask you why.

Marco Santarelli [8:9]
The way I define an investment is if I put $1 in, I want to make sure that I’m receiving $1, one point something back, I want to receive a $1.10 a $1.20, back for every dollar I put in. And so to be defined as an investment, from my perspective, it has to have cash flow, it has to generate income for me, if it’s not putting money in my pocket every month, or every year or every day, then it’s not an investment. So think of it this way, it’s the difference between creating a stream of cash, a stream of cash flow, versus a chunk of cash flow. So if I’m flipping a property, I’m invested in that financially, time wise, energy, knowledge, you name it, I’m invested in that in so many different ways. But there’s no rate of return until I actually finish the job. and sell that property. And I do that successfully. And ultimately, when I do sell it, I turn a profit, then I get a chunk of cash, well, that chunk of cash is a capital gain, it’s essentially a return on that initial investment. And it’s a capital gain, therefore it’s going to be taxed as a capital game. When I have income coming in, whether it’s from a note or through a rental property, that’s also income, but I don’t have to do anything other than, you know, oversee everything, I don’t have to do anything to have that stream of cash. So the difference is we’re talking chunks of cash versus streams of cash. So whatever you do, if you’re a day trader, you’re creating chunks of cash, you’re actively involved in creating, hopefully, you know, a trade. And that’s what flippers are they’re traders, they’re buying property, they’re doing something to it and hopefully adding value by improving it, and then reselling it as quickly as possible. So all they’re doing is they’re their quote unquote, day trading real estate. So streams versus chunks.

Katie Welsh [10:5]
Okay, so I wanted to ask, because you have been talking all this time about different types of investments. And, you know, we hear often that real estate is a good investment to have, for most people, not everybody, but mostly, but what are some of the key tips that you could advise somebody who is already owning their home and now going out and looking to purchase a property as an investment?

Marco Santarelli [10:35]
Well, that’s a very, very broad question. So let me begin by saying this, you mentioned the word home your own house, that is not an investment. You may have heard this before. If you haven’t, I will explain it. Your home is not an investment. You know, a lot of people seem to think that if they buy a house, they made an investment and they pay it off. They’ve you know, they’ve got their nest egg, or at least part of their nest egg, you know, for their, quote, unquote, retirement. The problem is, is that a home, your own home, your principal residence is a liability, and it will always be liability, why it’s what we just talked about a couple of minutes ago, there’s no cash flow, it’s not generating income, does your house does your home you live in put money in your pocket every month? No, it does not. Even if it’s free and clear, you don’t have a mortgage on it, you still have property taxes every year, you still have utility payments to pay every month, you still have insurance that you need to pay every month or every year. So there’s always and then you’ve got maintenance and repairs. So you’ve always got expenses and liabilities attached to that property, it’s never generating income for you. The value is that it’s shelter, it’s your it’s a primary residence. Now, if you compare that to a rental property, you’re providing a service to someone else, your tenant, and that’s providing value. So if you’ve got safe, clean, functional housing, that you can provide, you essentially have your own little business, it’s your investment, and that’s the passive income that comes in is from the rents that they pay. So the other part of your question, you know, some tips, while the tips could be, you know, a mile long. I’m not even sure where I should start with that. But you know, I would definitely say, My first tip would be, essentially my first of my 10 rules of successful real estate investing. And this applies to everything, not just real estate, and that is educate yourself. Knowledge is a currency. And the thing is, is the more you learn, the more you earn, the best thing you can do for yourself is invest in yourself. Invest in yourself first, before you invest in, you know, stocks, bonds, mutual funds, reits whatever real estate, it doesn’t matter. If you are ignorant, it’s going to be very expensive for you. So the best thing to do is invest in yourself. First, start building your knowledge base, and you don’t need to be an absolute expert, you just need to learn enough to know the right questions to ask and, and how to navigate yourself through whatever that investment class is. But at the same time, you’re going to have a team around you you’re going to have you know your CPA or tax advisor, you’re going to have your your attorney or attorneys, you know, asset protection in general business, you know, when necessary work with these people every day or every month or even every year. But they’re there if and when you need them. You’ve got your property managers, you’ve got your acquisitions person, whether it’s a real estate broker, or a turnkey real estate provider like ourselves, or a wholesaler, or somebody that’s providing you that inventory. And on and on the list goes, you know, you’re going to have a team surrounding you. So if you build your knowledge, and you have the team of people to support and guide you and, and help you get to where you want to go, in other words, your financial and investment goals, then you stand a great chance of success, and the only way to fail is to quit, so don’t quit.

Katie Welsh [13:58]
I love that. So I do want to pivot a little bit because I’ve heard you say the term reits quite often. And I don’t know what that is. Can you explain it a bit.

Marco Santarelli [14:9]
So what I’m saying is reit the T, so REIT reit. And I mentioned I normally don’t talk about it at all. The reason I mentioned it several times is just because you know, we were having a conversation of, of active versus passive, and I wanted to provide some examples of passive investments, and so a reit is simply a real estate investment trust. And what that is, is it’s a publicly traded company, that pools investor capital together, this is no different than buying them in a mutual fund. The differences is the mutual fund is investing in securities, like stocks and bonds, etc, different paper assets, whereas a reit is investing in real estate, it’s investing in hard assets, not paper assets. So the reit may own, you know, hundreds of millions, if not, you know, a billion dollars plus of real estate, and you are one of probably 10s of thousands of investors that have a small small piece of that reit, the reit is required to pay out 90% of all its profit back to the investors every year that is a legal requirement. The other 10% I guess it covers fees and management of the Fund, which is pretty steep, in my opinion. So that’s all it is.

Katie Welsh [15:27]
Okay,I just a little confused. I just wanted a little clarification.

Denis O’Brien [15:31]
I really like your view on assets, and you know, like looking at things as as investments. So, if I’m understanding what you’re saying completely is that you basically define an asset as something that’s specifically income deriving. And, you know, like, that’s why you look at something like flipping houses and you say, no, that’s not really a good investment. Because you know, your cash is tied up for a long period of time. There’s a lot of uncertainty in terms of when you actually realize that when you do eventually sell it, are you going to even make a profit on it, have the market conditions change your instead of like viewing that as sort of like you’re an uncertain investment, you’re saying that rather only classify something as an investment, when it is income producing, and it’s only really an asset, when you are seeing that result. And also like that’s you, you spoke about investing in yourself, and it’s the same thing, you’re acquiring knowledge, because you are going to be income producing yourself. So I just wanted to call that out quickly and say, I like that approach.

Marco Santarelli [16:31]
Yeah, and just one point of clarification, you mentioned asset a couple times, really, it’s, it’s an investment, not so much on asset, like the asset is, you know, whether it’s the hard asset or soft asset, like a piece of paper, it’s the fact that that asset is generating income that makes it an investment. So you know, what you were trying to say, and you got it right, but just for your listeners sake, an investment generates cash flow. In other words, they will put money in your pocket every month, that’s an investment. If it’s not generating income, it’s not an investment, whether it’s an asset or not, like I have a car, and a car is an asset to somebody, although it’s a, you know, a terribly depreciating asset. But it’s an asset in somebody’s eyes. But the thing is, is not putting money in my pocket. So really, that asset is a liability to me, therefore, it’s not an investment. So if it was generating income, you know, if I was renting my car like Avis does, well, then those depreciating assets are investments to them there assets are generating income. So I don’t want to complicate this and keep talking about it. The point is, is an investment puts money in your pocket. That’s plain and simple.

Denis O’Brien [17:39]
Right. Yeah. So speaking about investing in houses, so I know that you don’t always advocate that you should be even looking in your own market that you’re in. And sometimes it’s best to look a bit broader. So what is your view about that? And, you know, like, do you think it’s really important to be market agnostic?

Marco Santarelli [17:59]
I think it’s critically important if I was an investor in the stock market, and I did my research, and I found out that Coca Cola was by far the one and only stock investment that I should make, because it is by far, you know, the best stock pick that I could go with today. But I happen to live in Southern California. So therefore, I decided not to invest in it, because I believe that I can’t or I shouldn’t, that’s ridiculous isn’t it? I mean, you wouldn’t do that would you?

Denis O’Brien [18:31]
Nope.

Marco Santarelli [18:32]
Right, so I don’t need to live in Atlanta, Georgia, where the corporate headquarters of Coca Cola is, in order to invest in Coke, I could live anywhere, I could work anywhere. I like I have my trademark saying live where you want invest where it makes sense. I’ve trademark that many years ago. Because if you’re going to be smart with your money, your investment capital, your savings, and you want to turn that into an income stream of income and rate of return, then why should you limit yourself to let’s say, where you live in Virginia, which is, you know, many parts of Virginia are very expensive. In fact, some you know, areas where you live or are arguably way overpriced. Same thing with coastal California, you know, here, if you want to buy a three bedroom home, you’re probably looking at 800 to a million dollars 800,000 to a million dollars plus, you know, that doesn’t make sense, financial sense, it’s not going to rent for enough to cover all your expenses and generate a good rate of return. But I can do that in so many other markets, because the United States is made up of over 400 metropolitan areas. In fact, you know, I track as part of the service that we provide for free, everything we do is for free to our clients is we track 405 markets around the country. And we can tell what these markets are doing, you know, we have a dialer finger, if you will, on the pulse of what these markets are doing. So what’s happening in, you know, your neck of the woods in Virginia is going to be different than what’s happening and say San Diego, California, which is different than what’s happening in Detroit, Michigan, which is, of course going to be different than what’s happening in El Paso, Texas. So if if markets are that individualistic, which they are, because all real estate is local, it’s not national, it’s all local. In fact, it’s hyper local. Because even within a market, you have sub markets, you have different areas and neighborhoods. And what happens in one neighborhood may be completely different than what’s happening in another neighborhood on the other side of town. So when you recognize real estate is being very local, you have to be agnostic, you cannot be married to your own local market. And a lot of the gurus out there mistakenly provide bad advice to wannabe investors and they say well only invest within an hour or two hour drive where you live. Well, that’s that’s foolish. You know, that’s, that’s bad advice. Because you may not have any available inventory or good deals within a two hour radius of where you live, the number may not make sense within three hours where you live. So you can’t just limit yourself that way, you have to look at the country as being a country made up of hundreds, literally hundreds of real estate markets. And that’s how you choose you pick the markets that make the most sense for you and your investment goals and you want growth. You want growth and stability in that market.

Denis O’Brien [21:21]
Marco I know you spoke a little bit earlier about your 10 rules for successful real estate investing. Could you maybe give us an insight into the others are like what exactly is that? Is that something that people can get hold of or…

Marco Santarelli [21:33]
Yeah, so the 10 rules are posted on our website at noradarealestate.com and passiverealestateinvesting.com. If you go to the first website, it’s it’s a perennial post, it’s always at the top, it doesn’t ever change. But yeah, I mean, it’s just a, you know, listen, in fact, I even had an infographic that you can download, it’s a good size, so you can print it out larger if you want, and post it on your, you know, wall by your desk, or wherever you want. But yeah, I’m happy to share as many as you want. But the first one that we talked about, you know, that’s educating yourself, you want me to share a couple others?

Katie Welsh [22:5]
Yes, please.

Marco Santarelli [22:7]
Yeah. So I always start with the education because I think you have to invest in yourself first. And you know, that’s foundational. The second rule is essentially to set yourself investment goals. And I know that you know, people talk about this from Brian Tracy to Tony Robbins to you name it. And it is really important to actually think about it and write it down. You know, a goal is different than a wish everybody’s wishing to be rich, everybody wishes to have this and that, whether it’s material or otherwise. But when you actually write down very clear, specific and measurable goals, you’ve now created, essentially a roadmap for yourself. Now, if you just break that down into steps, you now have an action plan, you can put a little square box beside every one of those items, and just check them off as you go. But if you have a good plan, and you have clear, specific, measurable goals, and that roadmap is laid out, you can’t help but become successful in time as you just go through that list. So it’s important to visualize your goals, be clear about it, write them down, review them regularly, and then just pursue it. Because if you don’t take action, of course, the best plan in the world is going to still be a failure for you. execution is everything I like to say

Denis O’Brien [23:20]
That’s True.

Marco Santarelli [23:21]
So yes, set those investment goals. The third one is something we just spoke about. And that is never speculate, you know, always have a long term perspective in mind, that doesn’t mean, you know, invest, sit back and and think you could sit back forever. No, it just, it just means that you have your investing with a long term perspective, you’re not chasing short term capital gains, like we talked about before, which is, you know, essentially what flippers are doing, or people were speculating in the market, you know, back in 2003, or 2005, even into 2006, you might remember, you know, we had the precursor of the housing implosion here in the US, which came to a head in 2008. But that’s because people weren’t investing. And you know, we’ve talked about this, but when you buy property, for the purpose of chasing after appreciation, the hope of appreciation, you’re not investing, you’re speculating, even if you have cash flow, that’s still a speculative nature, you have to put cash flow first. And that’s my fourth rules invest for cash flow. When you put cash flow, first positive cash flow, meaning it’s generating a rate of return putting money in your pocket, you have a, you know, a cash on cash return, you have a yield, all that kind of stuff. Now you’ve got an investment. But if you choose your markets and neighborhoods properly, you will still gain appreciation over time, that will probably mirror the real rate of inflation. And that’s what you want it to do. You know, hot markets certainly appreciate faster than the norm. But as long as you’re not investing in those markets, just for the sake of you know, riding that wave, then you’re not speculating, so put cash flow First, invest for cash flow. And then number three is, you know, never speculate. And then we talked about number five, which is be market agnostic. And, you know, I’ve explained the reasons why you should be market agnostic, number six is, is tied to number five. And in fact, it’s, it’s heavily tied to number five in terms of being market agnostic, and number six is to take a top down approach, a lot of investors, you know, get stuck looking at analyzing a property, you know, they might see it’s in great condition, or maybe it’s been beautifully renovated. The numbers look good on paper, maybe it’s even leased and it’s generating a positive cash flow. In other words, there’s income coming from it. But they don’t step back to consider the neighborhood and what’s going on in that neighborhood. And what’s in the greater area around the neighborhood, the submarket and then the market itself. That’s the backwards way of doing it. In fact, some investors don’t even go backwards, they just get stuck on a property. And I made this mistake myself. But the right way to do it is to start with the market. First, pick a market that has growth, stability, it has a vibrant economy, there’s low unemployment, good job growth, population growth. So that’s where you start, that’s the best approach. And then at that point, you start to break it down into various sub markets and neighborhoods and and when you’re at the neighborhood level, that’s when you look at the desirability those neighborhoods, schools, crime, various amenities within, you know, a one to five mile radius, maybe 10 mile radius, you know, you just start thinking about it as if you wanted to live there, live there. And you can even talk to locals and property managers to give you, you know, some perspective on that. But start with the market, work your way down to the neighborhoods and then look at properties within those areas. That makes sense. Because you can’t move a property, if you buy a property, you’re stuck with it, you can’t just uproot it and plop it down in another, another city or another neighborhood, it just doesn’t work that way.So number seven is to diversify across markets. And this is really geographic diversification. So you wouldn’t just pick one market and you know, invest in 5 10 20 properties in that one mark, although you you could, and I did. But I like to suggest that you invest in a minimum of three and probably no more than five different markets, and you just build a good footprint in each of those markets. And that just leads to geographic diversity. Now, typically, those are going to be different states, you wouldn’t want to be, let’s say, in three different cities all in the same state, although you could and there’s nothing wrong with that. But But being in different states, not just different cities also helps reduce that, quote, unquote, risk for various market declines. And real estate is cyclical, you’re going to have times when that market is appreciating, and there are times where it’s taking a breather and depreciating, and it will cycle some more than others, we call those cyclical markets. But for the most part, you’re going to weather through all that, because why you have positive cash flow, that cash flow is the glue that keeps your deal together, and allows you to build equity and wealth over time. So diversification is smart when it comes to building a portfolio in real estate. And that’s usually just geographic in nature. Number eight should be pretty straightforward to everybody. Although some people believe that they can’t invest, you know, outside their local market or in another state because they have to manage the property or they have to drive by it every day. That’s nonsense. Number eight is simply use professional property management. And so you’ll never be managing your own properties unless you’re a property manager by trade, or you really know what you’re doing you understand the laws, you have good people skills, marketing skills, you understand, you know, your local state laws when it comes to tenants and landlords, and you know how to handle tenant complaints or excuses if and when they come up, then you shouldn’t be doing management, just hand that over to a professional management company, let them do it, it’s well worth the expense, it’s not a cost to you, it’s a business expense. And then spend your time finding more deals and you know, educating yourself and you know, focusing on your, your career, your job and your family to spend time and on the things that are very important to you outside of real estate. Number nine is maintain control, that’s the beautiful thing I like about that real estate compared to other asset classes or other types of investments is you own your portfolio of real estate, you own those properties, you are the boss, you are the CEO of your company, and you’re not at the whim of other people that can, you know, rip you off or, you know, provide fraudulent transaction, or, or you know, have the value of your investment go to zero like you can, you know, with various companies or the stock market, you know, you have a valuable asset that will never go to zero. You know, so I’m assuming you’re buying right, of course, but you It allows you to maintain control, and you’re not leaving it up to you know, corporations and fund managers. And then last but not least, is is number 10. And that’s leveraging your investment capital. This is huge. This is powerful. And this is one of the things that really separates investment, real estate from every other type of investment and asset class. And that is that you can leverage your savings, your investment capital]five to one as much as five to one. Which means that I can purchase $100,000 three bedroom rental property in the Midwest or the southeast, you know, any of the 22 markets that were in that property will generate a great rate of return a great cash flow, it’ll build wealth for me over time. But I only need to put 20% down, I only need to $20,000 plus closing costs to acquire that hundred thousand dollar three bedroom home in a really nice neighborhood like a B plus type of neighborhood. And that leverage magnifies my rate of return and allows me to have 100% of the benefits of that real estate with only 20% of the purchase price. That’s incredible. That’s called leverage. And that’s a powerful, powerful thing about real estate. That’s why real estate investors not only store their wealth in real estate, but accumulate and great wealth and grow their wealth in real estate is because of the fact that they can leverage and they can borrow against that property, or their properties all tax free. So that is an incredibly powerful benefit, if you will, of investment real estate. And that’s number 10.

Denis O’Brien [31:18]
Thanks, Marco. That was really insightful.

Katie Welsh [31:20]
And I feel like through the whole thing, I felt like there’s a theme of doing your homework and investing in yourself and taking your time and really making sure that you’re choosing the right area and the right house and everything for yourself and your goal.

Marco Santarelli [31:35]
Yeah, that’s that’s all woven in, you know, those 10 rules and everything we’ve talked about. It’s just invest prudently and wisely and I mean, meaning don’t speculate and invest in yourself. So you understand and recognize when you are when you’re not. I mean, that’s everything we’re talking about today.

Katie Welsh [31:52]
Yeah, I love it

Denis O’Brien [31:53]
Very important. Money clan we’re just going to take quick break, and then we’ll dive right back into the value link round. Money clan, one of our favorite ways to consume media is with Audible. You can grab a free 30 day trial, if you use our special link, head on over to chainofwealth.com/audible and get access to your free ebook. It’s definitely worth it, Katie, and I highly recommend it.

Katie Welsh [32:17]
Okay, Marco. So I ask everybody who comes on the show what their plan for saving is, and especially for you, you have to put the money down for to be able to buy these houses correct?

Marco Santarelli [32:33]
Well, you really don’t have a choice. Because if you’re Look, if you’re going to buy real estate, it’s no different than buying anything else. The price is the price, right? Whatever you find or negotiate. And that’s what you need to come up with. Well, in my hundred thousand dollar example, if you don’t have $100,000 in cash, and many people do, but many people don’t. So if you don’t have it, but let’s just say you’ve, you know, managed to save up, you know, well, I shouldn’t say save up, but it does often come from from savings. But if you’ve got 25,000 50,000, whatever it is of investable capital, you’re going to use that and try to get the best investment that you can and put that 20% down, I guess this is a long answer to your short question. The short answer is that the hundred thousand dollar property is $100,000, no matter how you pay for it. So you can pay for it all cash, or you can borrow as much as you can and put a down payment. Most investors are putting 20, maybe 25% down. And so if I have $20,000, I put $20,000 down towards it, that’s my equity, all I’ve done is I’ve moved my capital, my $20,000 from my pocket, or my savings account into the property, I’ve just moved it to allow me to own it and control it. Well, where’s the other 80% come from? Well, that’s why you have lenders, lenders, such as banks and other you know, lending institutions and mortgage companies are wanting tripping over themselves to lend you that other 80% or 75% of the purchase price. Because it’s a great investment for them. You know, they make a lot of money off of mortgage loans. That’s how banks stay in business from lending out money. So they want to lend money out they have to otherwise they wouldn’t be in business. So they’re looking at you know, you to qualify with residential real estate. But they’re also looking at the property. And that’s why they ordered an appraisal, they want to just make sure that the property’s in good condition. And it’s valued at whatever the appraiser values of that, well, if that property is valued at 100, or 105 tousand, you’re buying it on 100,000, you’re putting 20% down, which is 20,000. The other 80,000 is coming from the lender. And so that’s as simple as it is. I mean, it really is amazing and powerful. And the fact that you can borrow and leverage five to one is incredible, because you can’t do that with any other asset class.

Denis O’Brien [34:54]
Yeah, that’s true. So do you have a favorite book that you are currently into?

Marco Santarelli [34:58]
It’s amazing how often I get asked this question. And I never have an answer for it. The problem is, is that there are too many damn good books. And you know, I literally have over 1000 books. And it’s really hard to pick a favorite book, but I’ll throw a few of them out there just because they’re top of mind. And for anybody listening and enjoying what I’m talking about, I would highly recommend reading these books. And if they resonate with you, if you love what you’re reading, and it makes sense, even if you’re you’re already investing in real estate, and now all of a sudden, you’ve had an aha moment and you realize that oh my gosh, I really should be pushing the gas pedal on this, then, you know, talk to us talk to my team are you know, we provide free strategy sessions with our investment counselors all the time, we can help set you on the right course. So you can make this work and happen for you. But my first book would be this is more of a foundational book and a mindset book. And I’m sure you’ve heard it many times. But Rich Dad Poor Dad by Robert Kiyosaki.

Denis O’Brien [35:57]
Yup.

Marco Santarelli [35:58]
So it really positions everything we’ve talked about, and then some, but it changes the way you think because a lot of people are not taught finance, or investing in school. And so they really don’t understand it. So this lays that groundwork, that foundation for it. From there, I would probably read Gary Keller’s The Millionaire real estate investor. Now that book is all over the place. But it’s brilliant. It’s it really talks a lot about a lot of good things that help to put a lot of the pieces of the puzzle out in front of you and starts to stitch them together. And if I can throw one more out there, maybe shamelessly it’s not out yet. But I am actually releasing my book, which is named after my podcast called passive real estate investing. Yeah, and I’ll be actually offering that for free. It should be out by the end of September, this what I’m being told. And so just, you know, keep your eyes on our website or our newsletter, because I will be announcing it.

Denis O’Brien [36:58]
Fantastic. Marco, we’ve absolutely loved hanging out today. Do you have any other last parting piece of advice for our listeners, and then we’ll say goodbye.

Marco Santarelli [37:8]
Parting words is two things. I you know, number one, you’re listening to this and you might be excited about it. Or maybe you already have, you know, 2 3 5 10 houses and you’re thinking oh yeah, maybe I could do more. Or maybe I could do better and prove what I’m doing. Well, that all starts with educating yourself. But more importantly, take action. You know, I’ve talked about this before, but execution is everything you can have the greatest plan in the world. And you can have the greatest team surrounding you. But unless you actually, you know, I call it MCH make crap happen. Unless you make things happen, your goals and your dreams will not materialize. It’s just that simple. And for those who are interested, I have a great primer called The Ultimate Guide to passive real estate investing. It’s a free download. It’s really the mini mini book version of the book. And you know again, that’s a free download off of our website so that I would recommend that.

Denis O’Brien [37:59]
Fantastic. Money clan we’ve been hanging out with Marco you can check out his websites it’s passiverealestateinvesting.com as well as noradarealestate.com. Definitely check out his website. There’s a lot of great information on there. And if you are interested in real estate, this is definitely a resource you should be checking out.

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