The HARDEST Lessons in Real Estate Investing (That Save $$$)

Welcome back to another episode of the Roots Podcast. I'm Max Moore joined by my host Tyler Lingal and today it's a mini episode. We have just got done recording with Cibic who is like I think he might have the most broad perspective of real estate of anybody that we've ever had on the show. This is like a 101 episode taken to a 401 level and Tyler and I did our best to pull you guys back in and synthesize it as great as we could because Sib has like I don't know the guy is so experienced and very very well-versed in the macros of real estate investing. I think you and I probably we just play in the kitty pool. Sib is out in the deep end like dude we need a life jacket. Jumped off the big high dive board the diving board the and did like four flips on the way down. Yeah. Yeah. Um, what was your greatest takeaway? He mentioned some clickbait interest rates in the middle. Where do you think he he he is a financial adviser, so he can't actually say his predictions. Where do you think he was kind of alluding to there? Yeah, I think he certainly expressed that he through through his tone that he feels like rates have been high for a very long time and it's like time to bring them down. But he's a real estate investor. So like we're all inherently all of us that own real estate are biased towards wanting lower rates because it puts money in our pockets, right? We can refinance and cash out and have a lower payments. But I think that he probably has been watching the macroeconomic trends and he's seeing that, you know, inflation has come down to close to 2% which was their target. Why are we still at near 7%. That's probably what's going on in his brain. Um but uh he was not allowed to make predictions because that goes against uh code of ethics for um you know him being a financial planner. But talking about takeaways, I I I want to hear your take on this. I think it was just like it shattered some paradigms of mine of like it's about capital uh allocation and just him thinking about how to use capital and his first statement was if you have the 50k don't spend it just preserve it just set the whole tone of like this guy thinks way differently. I don't think anyone else who came on our podcast would say keep the 50k in your pocket right right now right now. No. And he obviously there was huge uh conditions on that statement and he's saying you should use that but he was basically saying learn sweat equity right now like get in the game rub shoulders until you have a deal that's 80% on discount that you can go buy. I think Iworked uh a ton before getting into the game of real estate and not once did I have somebody tell me go be a broker or join a property management company and work sweat equity in those lanes. It was all like, "Yeah, go get a property and do a flip on your own or go get a primary residence and fix it up or go house hack or go do this." It wasn't go find employment within the lane. I loved that because it puts you in the streets. It puts you uh in the shoes of the investor. Actually puts you just like managing their asset, right? And there's no greater value and relationship than that. Well, you're right. And it it does what it says it does. It gives you equity with nothing but your sweat. you put no money in, but you get knowledge, tactics, experience, and possibly actually entry into deals. But I think like I want to go back to the capital allocation cuz I'm I'm learning I'm verbal processing here from that. But I think it was less of like, hey, you need to run through brick walls to get in that first deal, which is mostly the narrative, and more like where are we at in a market cycle. It was about truthfully it was about playing market cycle and like seeing how it all works which most people aren't smart enough to know aren't confident enough to know where we're at but he's been in the commercial game and I feel like I think that if he's a residential investor it would have been a totally different narrative but he's a commercial investor so he sees residential that way which is much more cyclical commercial real estate because of the way the debt structured. Yeah. Yeah. He went strictly operates. I asked family question and he spotted me, right? And he basically said to summarize for people like right now is a terrible time to invest in commercial real estate. That's basically what he said, which is obvious because like the prices are still high, the rates are high, you're going to pay more in interest than you will in cash flow, so like of course, but us bringing that down, we're like, but but wait, house hacking, you should still do it, right? And it was interesting to reconcile that. Well, I think uh getting your first house is much different than going and investing, right? He took it straight into uh the uh advantage point of an investor, right? As opposed to like, oh, I'm just, you know, John Smith. I have a W2 job and I want to be able to build wealth over time or um he's talking to the sophisticated investor. We're talking to the masses, right? And we're talking to the person that wants to break in as opposed to the person that wants to build off. Oh, he was actually just talking to us who we do want to go. We want to get we were fiercely writing notes on how to I want to ask you what was your uh biggest takeaway? Yeah, my biggest takeaway was uh the discipline in a real estate investor, the importance of discipline, the importance of patience, and the importance of being opportunistic. So, not saying no just to say no because it's not the right timing or you don't have the right capital. Like go have the relationships to go find it, but be disciplined to not buy the wrong deal. Look at the macros that are in front of you and be patient to wait for the time cycle. That was my takeway. There's my summary. How will you implement that in your own Yeah, right now I'm just dealing with trying to evict a tenant. So, I'm going to focus in on that and sit on the sidelines for sure, which I've already had forecasted for this year. I'm not purchasing another rental, not doing any flips, just doubling down on roots and and focusing in, which I think is in tune and in line with where he was at. Right. The equity piece, the 2% cash in to have 20% equity. I would love to exploit that and and prioritize time in the next 6 months, right? Like to summarize what I learned is like build uh build strategies and knowledge on how to leverage other people's money right now. And if that means go sitting at people's feet and networking and taking the meetings, what you should do, but that's the fastest way to build real wealth in real estate is leverage other people's money by being useful to them. He was like, find the highest net worth people. What do they need? Oh, they need deals or they need expertise or they need someone that can manage it. Fill a gap. Plug a hole for them and you're going to get a slice of that pie. And don't go try to force your way into it like I frankly have with, oh, I'm going to be 100% equity holder, buy the single family rental. Yeah, that that there may be a time and place for that, right? Maybe right now isn't. But he also said if you have a deal in front of you where you can buy 80% uh on the dollar, then you should go do that. He wasn't saying to the exclusion of always be open for the right deal um at the right moment, but right now at large it's better to focus in on having a skill and being a he used the word more than any person on our podcast subject matter expert so much that I'm going to go home and just reflect on what am I becoming a subject matter expert so that if I have a deal then I can we send this to a high net worth person and they say yeah sure I'll wire the money to how I come and do this deal with you right now are we going to do this tomorrow like no like this is opportunistic right which is what sibs I think his life is an example of like he's just been patient and opportunistic he didn't even really get into investing until he had built up a lot of money from his W2 job as a in the financial world financial corporate world and then he bought you a multif family villa package of student rentals probably at an opportunistic time and then from then on out he had deals fed to him that he waited patiently and just picked the ones that made sense. So I think like I'm veral processing but like I it just turned turned my paradigm a lot on like what intelligent investing looks like. Yeah, I think patient is the the best key word, but also being equipped and ready. Like there's a difference between going out and buying your first house act and buying a package of uh deals that you're able to flip for, you know, uh buy for one and sell for two the year after finance for two. And you know this like right like people are going to watch this and they're say Max dollar I'm not houseing anymore. I'm going to be like Sib and store 100k in my account to go buy that 50 unit. I'm like bro you're an idiot. That's what I'm gonna tell you. I'm gonna say bro stop doing that. You're never gonna do that. You're going to get wife and kids and you're going to forget all about this in three months or not three months but like you're going to literally forget all about the whole idea and get you're never going to make that happen. You actually should if you're young and single which a lot of people listen still go do the house act still go build the equity like the whole idea and that's why I was trying to chime in there on the podcast of like you still want to turn that liability of your housing expense into that asset or some sort and S wasn't going against that. Sib's just talking at level 4. 0. Yeah. Right. Well, before you you arrived and before we were recording, he was telling us about how he lived in the penthouse of one of his commercial buildings downtown. Like he did that, too, right? He accidentally He rented recently. Yeah. He actually No, wait. He told me he rented. I forgot that he owned the freaking building. Yeah, he was renting to himself, right? He he turned the the money was coming in some other way to to be able to turn that liability into an asset. It wasn't him. So that that's got to be goals living in a penthouse of the apartment building you helped develop, right? That's that's wild. But he didn't I want to remind people like Yeah, he he built the Alain building downtown. It's it's on East uh Street. Like it's it's beautiful building. He certainly didn't have over 50% equity in that. This takes an army of equity holders. And that's built through getting lucky on a few deals, but also managing that relational wealth. And like you can just tell when he sat down with us, like he genuinely was wanting to help us. That's just as important in his journey as the the the finding the Bloomington deal that performed well in E1031. It was the relational wealth that I'm sure got him to the point where he can go build a freaking apartment built complex, right? It's It's absolutely who you know. It's not what you know. It's getting into the grassroots and doing experience. So, if you want to meet new people, come out to our next master class. It will be hosted in early December. More details down below. Make sure to like and subscribe. This has been another mini episode.