The X-ray Beam: Joe Fairless (Best Real Estate Investing Advice Ever)
For an audio version of this post, please click on the speaker icon (top left).
Welcome to another installment of the X-ray Beam series.
I was first introduced to Joe Fairless and his popular podcast, “Best Real Estate Investing Advice Ever,” when I was asked to share my story of how real estate investing helped me on the path to financial independence (you can check out that episode here.)
I only thought it was fair to turn the tables and ask if Joe could grant me an interview about how he developed his passion for real estate and share some insight for my readers who are looking to add real estate to their portfolios.
He graciously accepted.
[Disclaimer: Joe Fairless is launching the Best Ever Real Estate Investing Advice Conference, which I am an affiliate of, held Feb 20-22,2020 at Keystone, CO.
If you do decide to sign up for the conference, I will receive financial compensation at no extra cost to you.]
It was only recently (May 2017) that I caught the real estate bug and now dedicate a majority of my portfolio towards that sector.
Your background was initially not in real estate.
Tell us a little about that phase in your life before you pivoted towards real estate?
How did you develop an interest in real estate and when was your “aha moment” that this was indeed a venture worthy enough to deploy your own hard-earned dollars?
During my senior year at Texas Tech University, I was a part of the advertising team.
This team and I spent the entire year preparing for the regional advertising competition between other Texas university advertising teams.
Through this team, I was able to meet with Texas Tech alumni who were currently working in the advertising field.
After graduating, I moved to NY and started off as a junior project manager making $30,000.
50% went to rent and 50% was left over to pay for everything else.
I was able to save up $1,000 and invested in a 12-month CD.
One year later, I received my initial $1,000 back plus $16 in profit, which was then taxed!
I knew I needed to investigate other avenues, so I purchased “Investing All-in-One For Dummies”.
I immediately gravitated towards real estate.
Next, my sister sent me “Rich Dad Poor Dad” and I was hooked.
It was at that point that I began my search for my first real estate investment.
If you had stayed on your original career path, do you think you could have achieved the success you currently have with real estate?
By the time I quit my full-time W2 job to become a full-time real estate investor, I was the youngest Vice President in the history of the New York advertising company I was working for.
However, I was working 12-hour days doing something I didn’t care about.
Because of this disinterest, I do not think I would have achieved the success I currently have in real estate.
I had reached a ceiling in my advertising career because I lost my original passion.
I wanted to command my own time and focus on something I was passionate about.
At this point, I owned 4 single-family homes, was teaching others how to invest in single-family homes, and had decided to transition into multifamily after attending a Rich Dad, Poor Dad seminar.
In November of 2012, I sent my family an email letting them know that I was going to leave my advertising job in January of 2013.
Your podcast, “The Best Ever Real Estate Investing Advice Show,” is the world’s longest running daily real estate podcast (one that I was honored to be a speaker on).
That is quite an achievement.
What made you decide to start a podcast?
I originally started the podcast because I wanted to make money.
I knew that if I was able to create a large enough audience, I could then offer paid sponsorships for my podcast.
In addition, there are many other more important benefits to podcasting than money, and I can directly attribute a lot of my apartment syndication success to the podcast.
It would seem that having such a prolific podcast would burn through a lot of topics quickly.
How do you keep coming up with ideas to keep the podcast fresh?
The focus of my podcast is to provide listeners with the best real estate investing advice ever from real estate professionals covering a wide range of fields.
From investors to property managers to brokers to lenders to even business professionals and celebrities.
While there are common threads between successful real estate investors, everyone has a unique story to tell.
As long as you know how to ask the right questions, no two interviews will ever be the same.
I am a huge fan of multifamily apartment syndications and it seems this sector is of particular interest to you as well.
Can you explain to my readers why you have focused on this particular real estate niche and not others?
As I mentioned previously, I transitioned into multifamily after attending a Rich Dad, Poor Dad seminar.
Prior to attending the seminar, I came to the conclusion that single-family home investing would not allow me to scale as quickly as I wanted.
I was making about $100 per month from each of the four SFRs [Single Family Residences] I owned.
I was only buying about one per year because that’s how long it took me to save up for the down payment.
So I attended the seminar because I wanted to learn how I could achieve financial freedom faster and more efficiently.
At the seminar, I was told that you can only achieve financial freedom by either investing in mobile homes or investing in multifamily.
I now know that you can achieve financial freedom with any real estate investing strategy, but, back then, I took their advice at face value.
I didn’t know anything about mobile home parks.
But I had lived in an apartment between 4th and 6th grade and then again after graduating college.
Because of this familiarity, multifamily resonated with me and I decided that this would be my investment strategy moving forward.
I now continue to invest in multifamily because I think it is the most recession proof asset class.
During the economic boom, starting from the economic recession to today, the number of renters has increased.
Usually an increase in renters is expected during an economic downturn, but not during an economic boom.
So I realized that we are now living in a period in history where the number of renters (and therefore the demand for multifamily) is not only going up during economic depressions but the growth is continuing into the economic booms as well.
I predict that if another downturn were to occur, the demand for multifamily rentals will grow even more.
One of the scariest moments I had was when I first decided to deploy my money towards a syndication.
It is quite hard to write a 6-figure check to an entity that you have never dealt with before.
What is some of the advice you have to offer my readers when they are faced with the same dilemma?
Any precautions that you feel are mandatory before investing with a syndicator?
I am in the process of writing an entire book on this subject and I currently have a helpful resource at www.besteverpassiveinvestor.com.
The main concern of most, if not all, investors is to preserve their capital.
Sure, they want to make money.
But there is a concept called loss aversion which shows people have a stronger reaction to losing money than making money.
The best apartment syndicators therefore have processes in place that reduce the probability of losing all or a portion of investor capital.
There are three major risk points in apartment syndications: the team managing the deal, the business plan, and the market.
More risk means a higher probability of losing money.
So, would-be passive investors need to determine what the apartment syndicators are doing to reduce risk in these three areas:
- Regarding the team, have they done this before?
- Were they successful in the past?
- Is there an alignment of interests between the team members and between the team and the investors?
- Who is managing the apartment community and what is their background?
- Regarding the current business plan, has the team implemented the same business plan in the past?
- Do they plan on forcing the value of the property through physical and operational improvements?
- Is the compensation structure fair?
- Regarding the market, is unemployment low?
- Are new jobs coming to the area?
- How many Fortune 500 companies are headquartered in the market?
- Is the population growing?
- Are the rents increasing?
- Is the type of apartment they are buying demanded by the dominant demographic?
Understanding who is managing the project, what the business plan is, and why they are investing in that market will help passive investors understand how risky the investment is.
Social media is famous for highlighting only the wins of individuals.
Rarely do we see individuals share their failures.
Can you share some of the failures you had while developing your real estate empire?
My very first syndication I did lose money.
I paid back my investors out of my own pocket and gave them a 14% annualized return.
It was before I met my current business partner and before we formed our company Ashcroft Capital.
I learned a lot of lessons from that experience, but the main one is that it is important to focus on my strengths and to have team members, business partners, and vendors work on the areas of the business that I’m average or not good at.
My first deal I did everything – found the deal, worked with investors, and oversaw the execution.
I didn’t have the background to be proficient at executing the deal and it showed.
Now the co-founder of my company focuses on the execution component because that’s his specialty.
I think that lesson can be applied to other ventures as well.
Just double down on your strengths and then identify the right people to do the other responsibilities in your business – it’s a good recipe for success.
Real estate, like almost everything else in the investing world, has a typical cyclical pattern.
Where do you feel we are currently in this cycle?
Are we near the end of a real estate boom?
Do you feel someone about to invest in real estate may have “missed the boat?”
Rather than trying to time the market, I focus on recession proofing my investments as much as possible.
All I know for certain is that at some point in the future we will enter another recession.
When that time inevitably arrives, I want to make sure I’ve positioned my portfolio to not only survive but thrive.
So, I’ve studied how different investments perform during economic recessions and economic booms.
That is one of the reasons why I prefer multifamily over the other investment types.
The DOW Jones has more than quadrupled since the 2009.
Unemployment has more than halved.
GDP has increased by nearly 30%.
Historically, more people own during economic expansions and more people rent during economic recessions.
The period after the most recent recession, however, has been unique.
More US households are renting now than at any point during the last 50 years.
And the renter population has grown nearly every single year since 2010.
Sure, the overall number of home owners in the US still exceeds the number of renters.
But renter growth outpaced home ownership in 97 of the 100 largest cities in nearly every year after the recession.
And the number of major cities where more than 50% of the population chose to rent has increased substantially.
A Freddie Mac survey in 2017 provides even more evidence, with results showing only 41% of respondents expected to buy a home, which is an all time low.
In conclusion, people are still choosing renting over owning a home even during a time of massive economic expansion.
And the major reason why (student debt, poor credit, tighter lending criteria, people starting families later, inability to afford home payments, etc.) will remain with us in the foreseeable future.
If more people are renting during the economic expansion, then I am confident that an equal or greater amount will rent during the next economic recession.
If you are interested in learning more about why I am confident multifamily will thrive during the next economic correction, you can check out my blog post on the topic.
We are a month away from the 2020 Best Ever Real Estate Investing Advice Conference, held in Keystone Colorado from February 20 to February 22, 2020.
What are some of the highlights of this conference and what can an attendee expect to take away from the event?
I started the Best Ever Conference because I identified a need that wasn’t being fulfilled by other real estate conferences.
The need was a conference that was uniquely curated towards the goals of the attendees.
We asked people about their real estate investing goals and major pain points and selected speakers to address those specific needs.
Besides listening to speakers who are addressing their specific needs, attendees can browse exhibitor booths that offer products that address their specific needs, and form networks with both speakers and other attendees.
Countless attendees leave the conference with more than just massive increase in motivation.
Partnerships are formed.
Deals are done.
And pain points are addressed.
What are some of the benefits of attending this conference in person rather than say trying to obtain information from podcasts, books, and other online sources?
The quality of attendees.
The active investors who attend tend to be very experienced, with most of them focused on commercial real estate.
We have content that is specifically catered to high-net worth accredited investors.
Something else that I think it unique about the Best Ever Conference is the amount of time set aside for networking.
There is ample time to network in-between speakers.
People continue to network over lunch and dinner.
We always have an after party at the conclusion of day 1 so that people can get to know each other more personally.
And since the conference is held at a ski resort this year, a lot of attendees will extend their stay to hit the slopes and network even more.
Books, podcasts, and other online resources can be great tools.
However, it is difficult to network with a stack of papers, a cell phone, or a computer screen.
Additionally, at the Best Ever conference, you will receive the distilled information from dozens of speakers.
It is like being able to read dozens of the top real estate investing books in two days.
Any last parting words?
I have a vision board on my wall and I update it every year with the year’s goals.
But one thing has been consistent throughout the years.
It’s a quote from Tony Robbins that says “The Secret to Living is Giving.”
I live by that.
So if anyone has any questions or anything my team and I can help them with please reach out to us, or if you’re looking to passively invest you can fill out a form at www.investwithjoe.com or www.investwithashcroft.com.
If you are interested in checking out previous individuals that were brave enough to expose themselves to the beams of the X-ray, please check them out here.
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
NOTE: The website XRAYVSN contains affiliate links and thus receives compensation whenever a purchase through these links is made (at no further cost to you). As an Amazon Associate I earn from qualifying purchases. Although these proceeds help keep this site going they do not have any bearing on the reviews of any products I endorse which are from my own honest experiences. Thank you- XRAYVSN