Not Your Average Investor Show
Not Your Average Investor Show
407 | How Do Elections Affect Real Estate Investors? - Not Your Average Insights
The presidential elections are just over 3 months away, and it feels like they have never been more more important for the future of our country.
But how important are they for making real estate investing decisions?
That's the question we're discussing on the next edition of the Not Your Average Investor Show!
Join JWB Real Estate Capital Co-founder, Gregg Cohen, and show host, Pablo Gonzalez, to get some clarity on how you should think about real estate investing during an election cycle.
They'll discuss:
- how real estate metrics (like pricing, activity, rates, and regulatory changes) have historically performed for the 3 months before and after elections
- what the tax policies that investors care about are, and how they have changed during elections
- why Pablo fought to have this be a show topic despite how sensitive this conversation is (SPOILER- made the wrong investment decision in a past election)
Don't make emotional investment decisions during emotional times. Listen to understand the data and perspective you need to make smart investing decisions over the next 6 months!
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We have been through the last 10 days of the weirdest political environment of our lives for most of us. So today we beg the question, How do presidential elections affect real estate investors? It's a hot tamale today. Welcome everyone to your weekly edition of the Not Your Average Investor Show. I'm your host, Pablo Gonzalez with me as always, the man that I affectionately like to call GC because he's got genius concepts because he knows how to generate cashflow because he's a great co host and because his name is Greg Cohen. Say hello, Greg.
Gregg Cohen:Hello, everybody. Fantastic to be with you today.
Pablo Gonzalez:Greg, how excited are you for the show slash how nervous are you? Because this is a potential landmine because it's so sensitive for everything. I
Gregg Cohen:know. I know. You know, I try to see a very, very clear of any political conversations. It's not the place of this show, but the place of this show is to help inform and educate and to support everyone as they are making decisions, especially in real estate. And you know what? The election is here. And so we should openly talk about its effect on real estate. So I'm excited. I'm excited. And Yeah, a little bit nervous because I don't know what questions, what political questions you're going to, you guys are going to throw at me, but y'all love me, so I'm sure we'll be fine.
Pablo Gonzalez:Yeah. So help us out. Don't ask political questions. Ask real estate investing questions. This is data plus perspective. We are going to talk about the data of how the market has performed during presidential elections with a man who has lived through four presidential elections as a real estate investor. I, that, that is not to be discounted in any way, right? As, as young and as a baby as Greg is, this is officially his fourth time voting as the big dog real estate investor fella. So, you know, you've, you've been through the cycles, my friend.
Gregg Cohen:Yeah, I don't know how young I am anymore. When we start talking about my expertise about as about how many of these I have lived through, and you all obviously know the gray hair has come. I will tell you that my wife served me a drink this weekend and she labeled the drink silver Fox. So, I guess that makes me more qualified to speak on this subject, but, I'm a little sad, I guess I would say about that. But no, we're excited to be here. It's going to be a good show
Pablo Gonzalez:with an emphasis on the Fox, my friend. You know what I'm excited about? That is not a political thing at all. It's J. W. B.'s incentive package that we got going on. You see, why don't you tell why don't you tell the people what
Gregg Cohen:we got going on? Absolutely. The conversation has been for a year or two years now about interest rates. And, you know, JWB, we're always here to support our clients to be able to invest in real estate, because when you can start to invest in real estate and you hold onto this asset, does wonderful things for you and for your family, for the community, for the country. And this interest rate thing has been something we have tried to tackle for a long time. Just recently, we were able to partner with a lender. And we were able to partner with a lender so that we could buy down your interest rates to a level that we weren't able to before. And so JWB is buying down interest rates for clients who put properties under contract through the end of July, which is what? eight days now from here. And so JWB is buying down three quarters of a point of your interest rates. And so what's happening here is, and we've detailed this on the show, is that many people are waiting to buy until interest rates comes to come down. But that actually is different than what we would advise you to do. Because when interest rates go down, Home prices tend to go up. And so through this incentive, we're able to buy down interest rates, probably to what they will largely be when they come down at some point in the future. And you can lock in a very low interest rate today for your investment property, but you also get to lock in the increase in equity That we think is coming when interest rates come down. So it's a wonderful opportunity. It's about 15, 000 in incentives that JWB is offering. And we're only doing this through the end of July. So it's incredibly important if you're a current client and you want to add properties to your portfolio yet on the phone with our team right now, if you're a new client, it's even more urgent because it takes a series of phone calls to make sure that. It's a good fit on both ends. So we do want to get on the phone with you. If you're a new client, go to chat with jwb. com. You can just send an email to info at jwbcompanies. com. You can give us a call 904 677 6777. You can reach out to the lovely Johanna. She's here on the chat, our community manager and let her know you'd like to be set up for a phone call, but it's a very big opportunity. It it'll increase your rates of return by about one percentage point. Right off the bat, just through this incentive and one percentage point goes a long way. When you're holding onto assets that are worth hundreds of thousands of dollars over the course of 10 years, 20 years, it really, really adds up. So I hope you all take advantage of it.
Pablo Gonzalez:You know what I love about you GC is your brevity. That's one of my favorite things. Just to summarize everything that GC just said, we have been talking for a long time about when interest rates go down, prices inevitably go up. And that means that if you can buy before interest rates go down, you lock in a bump in equity. Now what's holding people back from that. It is the actual interest rate. They want tomorrow's interest rate, and they don't want to wait to refinance the next time. So what JWB has done is not just thrown a 15, 000 incentive package. That's going to help you with maintenance, with closing, with all these different things. That's just cash in your pocket, but it's also going to lock in tomorrow's rate today. So you don't even have to refinance later. You're locking it in at that rate that you would refinance already. Plus you get that gain of equity as soon as those rates start dropping and everybody starts rushing in. So it's a, one of the biggest no brainers in the history of mankind. Very kind of you and the team to do GC, go to chat with JWB. com to get started on that because July is seven days away from finishing. So it's only through July. If you want to lock that in, go to chat with JWB. com, pick a time or go to info at JWB real estate companies dot com one
Gregg Cohen:thing. Yeah, let me add one thing. We had eight purchases of properties last week, eight clients bought properties. It's true. Five of those clients. We're a part of this show and watched this show within the last 30 days. We know you all are listening and I appreciate you. It's going to really going to do good things for your portfolio. Take advantage of it.
Pablo Gonzalez:I cannot wait to celebrate. I think we take those five folks and we set a date for a panel show in a year and talk about how smart all their friends are saying that they are because they bought it a year ago.
Gregg Cohen:Absolutely. I just saw Leslie Wilson. She raised her hand. She said she was one of them. Absolutely. Drew Barnhill was one. And, the other names are probably. We'll do a roll call.
Pablo Gonzalez:You know what, you know what you see? I think you're still getting a little bit ahead of it. Why don't we just kick it off with our usual tradition of how we like to start? Would you say, what's that call? What's that called again? The roll call, baby. Roll call, baby. We got Joanna kicking this off in the chat. A comedian manager, our MVP, Lee Bishop saying hello, everybody. The Maven from the mountains of Denver, who recently took advantage of this special promotion. Leslie Wilson is in the house. We got our usual lid off, lead off hitter batting third today. John Henning. Billy Green saying good morning from the coup d'etat to tippity top mountains of Colorado. We got Christopher Lee from Fernandina Beach. We got the shaman of our community, Nadeem Shah, with his good morning, good afternoon. We got our favorite smile on the Pacific Northwest, Pamela Myers with a hello, JW family, JWB family from Seattle. We got our favorite name to pronounce, GC, Aaron O'Neill. Into the light. Cause she's in the house. We got charity. Graham is back in the house. Good to have you charity. We got our regulars, Gary and Rosalyn Riley from Marietta, California. We regard you. We got Roger from a so called London. Piper, she gets to have you. Marie Rockoff is back because I haven't seen you in a while. Marie gets us good to check you're checking in after a long hiatus. Yep. We noticed. Good to have you. We got Chris consaga from the most. Illustrious place in America, the Hudson Valley. We got it here. This thing is blowing up today. I saw El Gran Amigo checked in. Buenas tardes desde Duval from Bill Shields. Good to have you in the house, my friend. Who else is in here scrolling through? I saw a couple more names. Herve Francois saying, what up, fam? Good to have you in the house, Herve. Always a pleasure when you're here. We got Brian Manhara is in the house, checking in, saying hi to everybody. Who else is in here? All right. Oh, the first family, of course. Ken and Caroline Malin, Patriarch and Matriarch. We salute you. And we've, oh, Madge Garcia is in the house. Jason Sanders from San Francisco, Anthony Brown, AKA AB from DC, Anthony Brown coming in strong, new name, new nickname. Making it easy on everybody. I love it. I love it, man. Darryl Moore from Elvistown, Memphis, Tennessee. And Sylvana Kuchar from New Jersey. We've got a bunch of new names. Welcome to the family. Everybody hope you make a habit out of this. We have this community, make a friend in the chat. Everybody's real friendly. Make sure you switch your chat. To everyone. It starts off as hosts and panelists. So only we see you, Daryl Silvana. Oh, BJ McKay, BJ, all dude. McKay is checking in as well. He knows what's up. Jason check, you know, Zenobia from Georgia as well. Good to have you here. Just make sure that if you're not chatting to everybody, we're the only ones that see it. Love it. I want to be your friend, but everybody else wants to be your friend too. GC, the reason for this show is very closely tied to the reason for this community. For those of you that haven't, you know, You know, been following along or didn't catch this. I started investing with JWB in 2014 because of a friend of a friend, right? Like how many of us, how many of us came to JWB in those days, the Richies, which everybody knows. And 2014 I signed up for a private lending program that worked out phenomenally well, right? I got my two year note paid me back ahead of time. And they paid me back kind of like late 2015 early 2016 and at the time We were going into a presidential election and I thought to myself, you know, I could just keep this money here and compounding at 10 percent year over year, every single year, or because I'm super smart and because there's an election coming and you know, like I'm like crazy, like a fox out here. Maybe I should just take it out and hold on to it and just let's, let's see what happens. And you know, I did that. And I didn't get back into real estate till 20, late 2020, early 2021. And it was one of these like big mistakes of confusing the, the noise and the stress that comes around with presidential elections and the new cycle and all these different things. I think that human beings are really good or really bad at attributing permanent status to temporary things and giving long term things this like attribution of like temporary behavior and real estate is a long term thing. It's a long term proven. Stable thing and I was acting on these like short term incentives So I know that four years ago the last presidential election We decided to again go cross the awkward bridge of we're gonna have a non political conversation about this because it's important enough to make it clear to people making decisions right now in a Very interesting time of the real estate market how to think about All this noise how to think about all this fear and everything that's happening because every election feels like the most important election ever and i'm not here to say it's not but you know There is patterns that you see in the market in the real estate market in the news cycle and all this stuff, right? So i'm just setting that precedent gc Is that is that something that you realize that people go through before I you know told you how smart I am in 2014
Gregg Cohen:You know, I mean, yeah, that's, that's what people typically do. We pay a lot of attention during election years to the election news cycle. Many times there are curveballs thrown. our way. This election cycle is certainly no different. Maybe the biggest curveballs that we have ever seen in an election cycle. And so that kind of dominates the thought and the news and, and all of that. And then I think the other part of this is that So, we just assume that real estate acts like every other asset. And we've done a number of shows to talk about what, what does a real estate cycle really look like versus what do we think a real cycle looks like. Typically when we talk about a cycle, we think that there are ups and downs and we think that those are gains. and losses. But as we have shown the actual data in real estate values, what you typically find are periods of higher gains and periods of lower gains when we're talking about rent price appreciation and home price appreciation. It's so consistent and that's one of the reasons why people love this asset. So you've got kind of two things. You've got the just domination of the news cycle because of the elections that it is important and it creates even more importance in our mind. We're thinking about it all the time. And then we assume that real estate acts like every other asset. So we assume that sitting put and not doing anything is a good idea. Or we assume that it is a It is something that is a conservative idea. We don't want to lose money. We don't know how it's going to land. So a lot of people are just like you, Pablo. And they say, you know what, there's a good decision to be made there, but any decision right now is not a good decision. Let me sit put, let me just sit here with the money, not doing anything. But what I hope to show people on the show today is that there's a real cost. And especially in an asset that is consistent and it performs consistently throughout, you have to understand what is the opportunity cost that you are incurring by making that decision to do nothing.
Pablo Gonzalez:Well stated my friend, well stated. So now if we're going to talk about this scenario, I think the intelligent thing is to start with kind of setting expectations and. Talking about the different economic indicators, we can, we can maybe talk about that would affect the real estate market, right? And just talk about the macro economy. Then we can talk about the micro economy. Of course, we know that we know that real estate is a local game. So. We're going to talk about Jacksonville and how that's doing and those trends historically. Then we are going to talk about what we talk about a lot on this show, something that became very clear to us. I don't know when, but this is a very emotional journey, right? I'm not talking about the elections, real estate. It's an emotional journey. Right. Like there is this whole behavioral finance movement around real estate. So we can all understand the behaviors around it and why people tend to shoot themselves in the foot. So let's talk about the emotional piece of it. And I think that's, that there's going to be a lot of value there. Do you see, cause I don't think a lot of people have been real estate investors through for presidential elections, right? So you've really, whether or not, whether or not you know the data and the trends and perspective, which you do, cause you always do your homework and you're a superstar, but like the, the emotional baggage. That you've, that you've, you know, you now been through it enough times to, to get that. And then we're just going to talk about, Hey man, what, what, what it looks like right now, right? Like we are, we're on a weird place. So let's talk about what it looks like right now. So I'll start off with just the macro indicators. And we did, we did some research on property value trends. Interest rates and mortgage rates, market activity and transaction value, investor sentiment behavior, regulatory and policy changes, regional variations, economic indicators, and consumer confidence. And I don't want to go one by one because it's going to bore you because they essentially all say, Run up to the election, the three months right before the election, things slow down activity wise because it is a, is a level of uncertainty. There's that saying confused buyer doesn't make decisions, right? So people are kind of like waiting around and then post election. What the data says is that historically, whatever the trend was already happening, just continues to happen and or accelerates to catch up from the slowdown before. What, how does that sound to you as far as like an overall summary GC?
Gregg Cohen:Yeah, I mean, I'll just speak from the real estate perspective. You know, you have to understand that I have been putting the majority of my assets and obviously JWB's assets in real estate ever since I started to invest 18 years ago. So we never once, my business partners and I never once in any of these elections, did we stop and say, Oh, you know what? We really need to let's, let's pause our activity right now because we're not sure how this election is going to land. I mean, that's just. That just doesn't happen here. So it's always unique to me to have this conversation because in the world that I live in, in real estate, you know, real estate continues to perform in election. So it is somewhat foreign for me to even think about pausing or slowing down or investing because. I understand how this thing works, and it works largely like you said, whatever that trend is before largely continues after the election and overall we know that even in election years and in non election years, real estate is consistent, it generally goes up in value. So, you know, in my world, there's never a, there's never a pause. As far as a real estate investment decision. It's not because of the, or there's never a pause because of an election. I can tell you that. but for the rest of the world, that all makes sense. Things slow down. And then what we do is after the election happens, we rally largely as a country. And we continue to put our one step in front of the other foot in front of the other and, you know, returns and yields. You know, tend to follow suit with, with the trajectory they were on before.
Pablo Gonzalez:Yeah. So very easy to see that, right? Very easy to be like, Hey, trust GC. He's got a really like likable face. But you know, we did some actual as you always do, you always go a little bit deeper into, into the data, right? So you can offer the perspective GC put this chart together here that is a pretty compelling argument to the idea that. I mean, you see the headline of this thing for anybody listening on the podcast, U. S. home prices increase an average of 7. 2 percent after election year in election years. All right. So you went to back to 1984 after 1984, the home price appreciation, uh, went up. Ended up being 1. 6 percent 88 was 11. 7 percent 92. 2. 5 percent 2000 was 4. 3 percent August 2008. We know what happened there. The Great Recession happened and that's the first time it went negative August 2016, 5. 6 percent in August 2020, you know, post post pandemic 25. 3 percent a little bit of an outlier there. Anything that you want to point out in this chart GC.
Gregg Cohen:Yeah, I like the fact that there are what I would call two outliers there.
Pablo Gonzalez:Yeah.
Gregg Cohen:And to me, you know, I don't know if they balance each other out or whatnot, but, you know, it's, It's good to have two. It's good to have a negative outlier being what happened during the great recession. And the fact that real estate caused that recession makes sense as to why real estate values would have gone down there. And then, you know, the COVID effect of 2020 to 2021, obviously unprecedented as far as the what that has done as far as real estate price appreciation in Jacksonville and across the U S. So the, the bottom line here is take the high outlier and the low outlier out of the equation. And what you find here is incredible consistency. You see growth happening from this time, which I just chose August because we're on the doorstep of August to a year later. It largely performs just like real estate performs in non election years.
Pablo Gonzalez:Right. Cause 2000 to 2008, we had the same president. There was an election year somewhere in there, but we all know that the market was super hot in 2004.
Gregg Cohen:Right.
Pablo Gonzalez:So that would probably drive up the average.
Gregg Cohen:Well, actually there, I did include 2004 and 2012 here, but I had to fit it all in one slide. So I cut out the years that weren't noteworthy. So I think the returns were the appreciation was somewhere around three to 5 percent for those other years.
Pablo Gonzalez:Cool. Yeah. So interesting. Right. Yeah. So. You know, you're highlighting these like regime change years, which if, you know, sensibly that is the most chaos, most uncertainty when, when something's changing over, I suppose, hey, everything's good. And the incumbent is going to win. We obviously have no idea what's going to happen in this election. especially given the last 10 days. But I like, you know, I like looking at this thing. I, you know, I look at these outliers that 25. 3 tells me it probably pulls things up pretty good. And that's 6. 3 negative probably pulls things down pretty good. It feels if I was to say this, like 7. 2 percent average, I think visually I'd probably feel more comfortable thinking that visually I would see like a 5%. Five and a half, but that's still, you know, like that's still historical home price above the average us home price appreciation historically. And right online with average Jacksonville home price appreciation. Right.
Gregg Cohen:Exactly. U. S. home price appreciation year over year on average is right around four and a half percent year over year. And Jacksonville is 4. 9%. So yeah, you know, you take those two out, you're probably somewhere around 5%. And that just reinforces this point that real estate continues to chug along. And for some reason, people want to make it act or want to think like it acts like other asset classes, but it doesn't. It's, it's always. Interesting that this asset class, real estate, tends to get the sensational headlines of waiting for the next crash when crashes just don't typically happen here. As the data supports.
Pablo Gonzalez:Yeah. And as we always talk about, right, some people talk about how liquidity is the reason why they're not in real estate, but in reality, liquidity is the reason why you are in real estate. Right. Because it smooths out. We talk about cycles in other ways. And a cycle means it's like super high up in a super low down and a super high up in a super low down when in real estate, it's really more like a step ladder up of, you know, like increasing slope, decreasing slope, but still going upwards, increasing slope, change, decreasing slope, change going upwards. It's calculus, no big deal. But it's, you know, cycle isn't really, you know, apt to, you know, talk about the highs and lows, the lows in real estate happen just kind of situationally when something happens in a property and you're like, Oh, okay, well, I got to cut a check. But you, if, if you can really look at the asset as well, how has it performed up until now? You see that you've been largely winning and you'd be a fool not to sign up for the next like round of winning before the next thing happens because someone lives in your house, right?
Gregg Cohen:It's, you just have the answers to the test. You don't have to be a genius to figure this out, right? You understand the asset. People need shelter. They want to pay rent. And we understand that over time, real estate tends to grow. And so as long as you can be in the game long enough, which is dependent on your experience and enjoyment, which is about having that team to support you. As long as you're in the game long enough, it's hard to lose when you own real estate.
Pablo Gonzalez:Especially in a critical need, right? So, Which is the workforce housing stock that JWB offers, right? So we also know real estate is a local game, right? So GC went, did his usual good boy homework and he put together the, the local statistics here, right? So it shows once again, Jacksonville home prices have increased an average of 7. 8%. In election year since 2004 in 2004 was 19 percent 2008 went down 18 percent 19 percent We you know, we know this great recession happened Then 2012 was up 19 august 2016 was up 5 august 2020 up 15 percent So like even when we zoom into the local economy jacksonville has performed that same way anything you want to say about it here g?
Gregg Cohen:Yeah, I so it reinforces the same thing that we're talking about on the national level. We're talking about on the local level here. You know, I just I want to point out that I mean, these appreciation numbers are really high, right? Like 19 percent appreciation from 2004 August 2004 to August 2005. You know, down 19 percent in the Great Recession from August to August. Up 19 percent from 2012 to 2013. And then in 2020 up 15%, you know, I chose, I happen to choose a date in August to August. And you know, I'm doing that because that's what is required for this show right now. You can have large swings when you go from month to month, right? So you could have a slower growth month in, you know, July. And then you could have a huge uptick in August or vice versa. And so it can be kind of be swayed. I don't want people to think that 19 percent year over year is normal, or even that we had 19%. appreciation from 2004 to 2005. But because we're talking about a decision that you can make today, that's why the data is what it is. So just to give some perspective, again, the normal home price appreciation in Jacksonville is about 4. 9 percent per year. I don't have what it was right off the bat from 2004 to 2005 year over year, but it wasn't 19%. The one where it really was in the, you know, 20 percent range. was 2020 to 2021. The other ones just happened to be what that month was because of the data that we needed to support today. Did I make that make sense? Pablo?
Pablo Gonzalez:Yeah. That
Gregg Cohen:makes
Pablo Gonzalez:a lot of sense, man. You're tempering expectations. You know, this is, this is what you, this is what you do. You're the turtle, right? Like you, you, you're tempering expectations. I, You know, I, what's funny for me is I know this, right? I know not to expect more than like 5 percent home price appreciation over the life of it. And yet when I look at these numbers, which look astronomical, like cartoonish, I think of, I just think of the 10 years I was in Miami reading every single headline about how Jacksonville is one of the fastest growing cities in America and one of the best places to live in America. That I've been reading since consistently since like 2012, you know, 2011, and I'm not surprised to see these numbers. And then I moved to Jacksonville five years ago and I realize why this place is that and then COVID happens and it accelerates all these other trends of everybody understanding that they can live in a place like Jacksonville and Jacksonville is still like the only underrate, the underpriced city in Florida where you have like the hedge for risk of a city, but you also have all the tailwinds. of Florida. So I don't know, man, the, for me, the, the eye test of looking at this thing and being like, yep, no, no checks out for me. Right. Like I wouldn't have, I wouldn't have thought that you had to, that you had to temper it. And it really has been like feeling it that high and these like big bumps.
Gregg Cohen:Yeah. What you should take from this data is that It's there's certainly not variability here, right? There happens to be one year, which was the Great Recession, which was an outlier. But you've seen it now from the U. S. Perspective. Overall, home prices have gone up every other year. You've now seen it from the Jacksonville perspective. Every election year, home prices have gone up. Don't get it. So excited that it's 7. 8 percent in those month to month that I, that I happen to choose versus overall, it's 4. 9 percent of that. That really doesn't matter. But use this information to your advantage to get over the hump of how costly inactivity is. Because if you take, you know, 5 percent appreciation or 8 percent home price appreciation, and you multiply it times what market values are today, you're potentially leaving. 20, 30, 000 on the table. Thank you for bringing that slide up just in the, in the nick of time, Pablo. Cause I couldn't remember exactly what the number was. So it's
Pablo Gonzalez:what I do, Craig.
Gregg Cohen:So I started to put the, to try to connect the dots right now, home prices in Jacksonville are about 360, 000. And so if you can use this information to your advantage, if you happen to wait a year from now, if you're somebody and you're like, well, I do want to invest, but all the noise, all the headlines are saying I should wait. I know about elections and I think that waiting is a good idea. Here's what it's costing you. If you wait one year from now to buy your Jacksonville rental property, and it appreciates 7. 8% the new purchase price will be 388, 000. And so not only will you now have to pay 28, 000 more for the same property, but you're also giving up 28, 000 worth of equity. That could have been a big step forward for your financial future. And in addition to that, we're not even talking about the other profit centers like net rental income, principal pay down, tax savings, and then inflation hedging and inflation profiting, which adds up to thousands of dollars more. So that's the big takeaway here is there is a real opportunity cost for following the herd or doing what average investors do right now, especially when it comes to real estate, they tend to sit on the sidelines. This information what you've seen now for However many, let's see, we had 10 elections. We just looked at, we looked at the U. S. We looked at Jacksonville overall. The chances that this one is an outlier, relatively small. In fact, there's a lot of information and. data to support potentially an even bigger bump to home prices than we've seen in the past. So use this information wisely. Don't sit on the sidelines. If it's something that you know, real estate, it's right for you. Now's a good time to invest.
Pablo Gonzalez:Yeah. Well said, man. And you haven't even mentioned the fact that the incentive is also in place, right? So like, again, to recap, right. Purpose of the show today is to pierce through the noise and the anxiety and the fear and give data with perspective. The data and the perspective show that Real estate market does well in election years. It has an average of 7. 8 percent appreciation. We're not saying that that is what you're going to expect this year. We're saying that generally elections don't affect the real estate market in a, in a, in a way that doesn't. You know, like that, that makes it not a reason to invest. So all we're doing is dispelling the idea that if you are in a buying cycle, you believe what we believe. That we want to build an army of rental property, of rental income properties and like retire differently than everybody else. And what's giving you the yips is the fact that we are in this like really funky looking election. And the world seems to be burning around us. We have the data to support. That real estate is going to do what real estate do while that, while the rest of the world is doing what it's doing. And the, the very real cost of inaction of being like, eh, doing what I did in 2014 for somebody who was going to say, I'm going to give it off a year is essentially a 56, 000 swing of in inequity. Cause you lose the 28 that you would have gotten. Plus you're paying an extra 28. In, in, in purchase price. And the other argument would be, well, I want tomorrow's interest rate want right now, JWB is offering tomorrow's interest rate today, plus an extra 15 G's to add to that swing. So go to chat if that's where you're at, you know, like get out of paralysis mode, go to chat with JWB. com book a call or send an info info at JWB companies. com or we reach out to Joanna right now. We got a question here. Not your average guest. If you checked in from the, from a text message, then you show up as not your average guest. So that's what I'm going to read here. It says, how will JWB continue to keep supply up with demand? Any new markets?
Gregg Cohen:Great question. This is one that we get quite often. So what we're talking about, what the Not Your Average Guest is asking about specifically is JWB demand and JWB supply, I'm assuming. And they're asking if JWB is going to go to a new market. So You know, the way that JWB keeps up with demand for our clients is that we have planned decades in advance for this. JWB are one of the things that we're great at that kind of separates us and gives us a, a competitive advantage is that we have been acquiring lots of for over a decade. And we have over a thousand lots in our inventory right now that haven't even been built out. And we continue to buy the right amount of lots every single year. And we sit on these lots. And we sit on these lots because we know the data that I share with you that generally real estate goes up in value. And if you think about it from a business perspective, we have to pay some holding costs on each of these lots. But at the end of the day, home values going up generally pay for those holding costs. So we hold on to land, and we have in house construction because we're vertically integrated. And every year we sit down and we say, you know what, let's estimate what the demand will be for our clients who want to purchase homes. And we build that number of homes. And so, you're not going to sell JWB out. As far as the number of properties that you guys want to add, it's never happened. I don't think it'll ever happen. And the reason is because of so much forward thinking so that we buy the land in advance, we sit on the land and we can build it out to meet our investor demand. That The reason that we had to figure that out is because we wanted to stay in Jacksonville. We felt we could do more, we could make more of an impact on our community, and we felt we could deliver better risk adjusted returns on investment for our clients. by being in one market here in Jacksonville. And we felt that we could do more for our residents as well, as far as improving the quality of life for those renters that are renting from us and improving our neighborhoods. And so if we were going to take that stand, which we did 18 years ago, and I'm still taking that stand today, we're not going to new markets. We had to figure out another way so that we could keep up with the demand for our clients. Because most other operations go to other markets because they don't have enough supply. So, our solution to that problem is just what I laid out to you. We, we buy land. We sit on land many times and for many years. And then we build that out to account for the demand that our clients are going to have in that calendar year.
Pablo Gonzalez:The answer is vertical integration as always, right?
Gregg Cohen:There you go.
Pablo Gonzalez:I love it. By the way, that was Eves Richard Doyle. So, happy to have you back, Eves. Haven't seen you in a while. All right, GC. So that is the, that is the initial framing of the conversation. What is the data with perspective? What does it tell us? The data with perspective tells us that real estate is going to continue to thrive and it's going to continue to do well for you. So if you're thinking about it don't let the election be the thing that stops you now. I would imagine that even after seeing this data, the emotional toll of these swings, right? Like the conversations around, yeah, but this tax plans out there and yeah, but this and that, right? Like I can think of a couple, I can think of a couple things that feel like always get lopped around in this like battle of haves and have nots that seem to be playing out in theater. And it's this idea of are we closing loopholes for The wealthy, right? Like, are we taking away 1031 exchanges? Are we going to take away the step up basis? Are we going to go into, particularly this time, you know, are we, are we just going to like implement rent control for everyone? You I wonder GC in your four election cycles, is this new? Does this always happen? You know, like how do you feel like the first time that you were a real estate investor in an election, how much more seriously did you take that threat than you're taking it today? Can you just give us a little bit of on the emotional, on the emotional, um,
Gregg Cohen:yeah, I don't remember how to, seriously, I took it, you know, 16 years ago. It's hard for me to compare there, but you know, I can tell you that it's important to stay informed. It's important to stay abreast of what is being talked about because there can be significant ramifications across our country and across our asset class here. But I will tell you the rhetoric that I hear today is very similar to the rhetoric I hear on both sides. For the last election that we had and the election before that and the election before that I'm sure it was the same, you know, we we have to stay informed. We have to stay aware, but we also need to have the perspective that this happens. This type of rhetoric is a part of the election cycle and very infrequently do things change to a point where it should change the decision of buying single family rental properties. And the data supports that. If there were major sweeping changes that made this asset less desirable at any of those elections that we just detailed, those election years that we just detailed and, and the months after, you would have seen sharp changes. You would have seen declines in home prices because of You know what was you know, what was enacted either in the election, you know, the person who was elected and then enacted shortly after, but that just didn't happen. It's been consistency throughout. So keep that in mind. I think it's important. I think it's our duty to stay informed, but just realize that a lot of this will not pass. A lot of it will be talked about. Maybe some things do change, but a lot of it doesn't. And you know, whatever gets passed or whatever doesn't get passed at the end of the day, real estate consistently performs. And the thought of potentially things passing usually is not a good reason. It's not the equation of what the opportunity cost is that you're giving up doesn't typically play out where it makes sense to sit on the sidelines.
Pablo Gonzalez:I think it also bears saying, because I had this conversation with Pop Pop four years ago, right, like, it also bears saying that even if some of this stuff passes, everything that shows up on the Performa, on the deal sheet, is not changing. Right, like, the deal itself is not changing. The thing that would change if one of these loopholes got closed or something like that, it's just like, What the bonus side of all of this stuff is, it's like, you know, how much more tax can you defer when you are like doubling up on wealth creation by refinancing and buying again or 10 30 wanting, or, you know, like, or giving it down to your kids if you're already given them a cash flowing empire, you know, like, are they going to keep all of it? Or are they going to keep a little bit less of it? Right? Like, it feels like things on the on the periphery of of it and it can be distracting to the nucleus of the conversation, which is a better way to retire, a better way to build wealth that has worked for more Americans than everything else. Right?
Gregg Cohen:Yeah. I think it's a really good point. You know, one thing that is, is talked about, I think every election cycle is doing away with 10 31 exchanges or making them less advantageous. Well, in the evaluations that you're making decisions on. If you're buying a JWB property, we're not assuming that you're doing a 1031 exchange. We're not even assuming that 1031 exchanges are possible in the pro forma. So while I don't think those are going away, I haven't heard that that is imminent. You know, even if they weren't there, that we should be able to perform on the pro forma regardless of that. So that's a very good point there. I mean, you know, these are macro. Things that could potentially change, so you could make an argument, well, listen, if this changed here and this changed here, then there'd be less demand and it would affect everything on the evaluation. But I think you're probably closer to paralysis. By analysis, if you're really going to that, to that level, when you can just look at the data over the last 40 years and see that home prices have gone up every year, absent of the great recession in Jacksonville and across the country. And rents have gone up every year, absent of the great recession in Jacksonville and across the country. And you can either take that and say, I'm going to make a decision based on that. Or you can go to the nth degree of figuring out all the potential ramifications. If you're like me, I'm going to make that decision to invest in something that has proven consistent and, you know, obviously with a team to support you and make sure that you're going to enjoy the investment. And then when things change down the road, we'll figure that out. I'll figure that problem out, you know, when that happens rather than doing nothing.
Pablo Gonzalez:That's a really good point, man. That's, that's kind of like the morale, the, the lesson of this call. It's just like, or at least the goal of this call is to pierce through analysis by paralysis, right? Like, don't, you know, like this isn't, this isn't a moment to like freeze up and like as if, as if like you're in danger because, you know, Everything feels so like dangerous and scary. The Maven said it well here. She's saying this is a calming conversation, Greg. I agree. This is the most, this is the most calming conversation that has anything to do with the election that I've had in the last 10 days and probably the last year. so I don't know, man, speaking from personal experience, right? Like, I can feel a very big difference between my plans for how I viewed my financial future based on what I was doing in my 401k and like, you know, like the, the average stuff that I was doing and the moment that I started investing in real estate, my, I don't know what it is that my energy around it, my my anxiety around it has changed because it feels like I am building a financial baseline on a very, very solid foundation. So everything else that I do is gravy, but this little You know, portfolio that I've been able to build in the last four years just feels like that rock solid foundation for everything else. And in times of uncertainty, in times of chaos and all that, you know, under, if there's a great storm, you want to have a rock solid foundation. And the thing that's going to help you, whether it is essentially the lesson here from the emotional standpoint.
Gregg Cohen:I love it, and I love the journey that you're on too, and you know, you've obviously shared with me we've been in this journey together, and it's been wonderful to see because I know, you know, I know that you have a penchant for wanting to you know, wanting to take a, you know, a risk, right? You're able to take risks, right? I like to gamble. Yeah, you like to gamble, right? And then the Black Swan events, right? You want to be able to have some powder to be able to take advantage of those dynamics in the overall marketplace where you can get a really big gain. Sure, you're going to take on some risk and be able to get that really big gain. But I think the coolest thing has been, you know, right along your side here, seeing you separate and say, well, this is retirement for me. This plan is the bedrock of my retirement. Yep. And that's what JWB Rental Properties has been for you, but that doesn't, it's not everything for you. You're just, you have very clear segments of how you invest. And then there's a segment over here where you get to, you know, tap into Pablo at the Bellagio, you know, but that's just not this. And you can have this and you can have that. Um, and, uh, but many people feel like it, everything has to be together. They feel like they have to have that fear, that lack of peace of mind that comes with most assets out there. And they think that real estate is going to perform like that too. They think that there's going to be lots of ups and downs in real estate. And I just, I, I hope, you know, I, I, I just hope people realize that this is such a beautiful asset for what it is and it's so consistent and you can do so much good in the world and then you can have that peace of mind which probably allows you to take other risks, more risks in other places and kind of feed the beast there a little bit.
Pablo Gonzalez:It's a calm in the storm. It's a home base in like a game of tag, right? You can, you can go back to it, right? Like when you need that, do you see, so then just to kind of summarize things of what we've talked about so far, the, the data plus perspective shows that real estate not only doesn't suffer, but does well in election years, historically. And, We showed that on a national level, on a local level. And then we talked about the idea that the emotions around real estate and the emotions around, you know, election years are kind of similar, right? Like they can get, they can get you to make the wrong decisions and attribute the wrong values to the wrong actions. But. We are, real estate actually is that thing that you can anchor to that can be grounding for you on a financial level and on an emotional level as this thing keeps trying to build here. I want to get into, so the things that I like the most about the Today, buying in real estate and see and just like send it over to you and you tell me if you think that that has anything to do with elections or not. First of all, MVP, Lee Bishop, you may have heard of him. He has a Q and A here. He says, Greg, given what you said over the last four years, home price appreciation still showed positive performance. No matter who wins the election, home price appreciation will continue to perform in the same fashion. Thanks for pointing this out, brother. And I, you know, lead your, this is why he's the MVP, right? This is where I was going with it, right? Like I home price appreciation, which is the, where the biggest wealth comes from in rental property investing, right? Like there's five profit centers. All of them are there essentially to like keep you on the game, to hit those big home runs with home price appreciation over time. And when I look at home price appreciation and rental demand in Jacksonville, Florida, today, I see a market that is number one, very, very stable. That is the one underpriced market in, in a, in a very, very like high growth state. It is a city where the urban center is within one year of hitting a tipping point that we have all figured out and we've seen happen in other cities and we know what's coming and you can set a clock to it. So we know that when that happens, we can expect higher than average home price appreciation. And on a macroeconomic level, we are in a period where there has been high interest rates for a long time, which has suppressed buyer activity, which has kept demand on the sideline. And we have been told that in the short term, we're expecting to see a rate drop, which means that we expect all this demand to come from the sideline and pour it in when it happens, which means another another lever of factor, another factor of, of proof that supply will continue to not meet the demand, which means that home prices will go up in everything that I just said. None of that is affected by an election feels like to me, or is that true?
Gregg Cohen:Exactly. And we didn't have those, those two main points we didn't have in, you know, 2016, you know, we didn't have it in 20, 2020. I don't remember what interest rates were in 2020 in the election cycle, to be quite honest. But I don't remember. Let's see. No, they were. I mean, interest rates have been low since the Great
Pablo Gonzalez:Recession, man. Yeah. I forgot when they actually dropped. Since 9 11, interest rates have been super low.
Gregg Cohen:Yeah, exactly. Well, they were zero in, you know, in the election in 2020. 2016, they were still super low. But right now, right, we have the high interest rates, which means that when they lower the interest rates, Additional reason to believe that home prices are going to go up along with the revitalization of downtown Jacksonville and the fact that we have 4 billion of construction going on in downtown Jacksonville. And the data shows that. In downtowns that have been revitalized, you see 27 percent more home price appreciation. That's over a 10 year span with downtowns like Denver, Tampa, Austin. So you've got these two factors that you didn't have in these past election years that we've detailed here, which would support higher home price growth.
Pablo Gonzalez:Yep. So again, if the one thing that is. If the one thing that was stopping you was fear of what's going to happen with this election, I hope we helped you stabilize that thought. If the other thing that was stopping you is that you really want to wait till tomorrow's interest rates, you don't have to do that anymore, right? Because now there's this JWB incentive. Go to chatwithjwb. com, send an email to info at jwbcompanies. com, Joanna just put it in the chat. You can get that conversation going for seven more days. You can get. The best of all worlds here, if that's what you're doing. So this is a, I feel like this is one of those moments, man. This feels like this week is one of those weeks where we know already know that five people from this community have decided to take the not average step of like, yup, this is a inflection point in wealth creation for me. And I hope that a couple more kind of follow suit. I would love to if I was, if, if I was in that cycle and I, and I had the, and I wasn't already all, all, all, all in on this. But it seems like a, it seems like a great gesture by you guys to offer this incentives at this point in time. Have this common call. Man, I know that it feels weird. Like, I'm like, I'm in Leslie's same headspace. I'm like, man, this is a, an extraordinary calm feeling while talking about something that has generally really made my heart rate blip. So I appreciate this call. I thought it was really good, man.
Gregg Cohen:You know, I appreciate all of you. It's, it's a little, uh, nerve wracking talking about political topics and doing it live and all that. But, you know, every time that there is something that I, I feel a little bit nervous about getting on to the call, you guys, this community is just amazing. You guys, we can focus on the task at hand. We can make sure that this is a positive environment where we all realize that we're all on the same team here. We're all, you know, rooting for the same country here. So. Thank you guys for the community and the environment that we get to be in and that Pablo and I get to show up each and every week and, and try to provide some value for you guys.
Pablo Gonzalez:So true, my friend. It reminds me of when we were getting ready for the summit and you had Bella getting ready to speak and you're like, well, what if, what if it doesn't go well? And I'm like, man, there couldn't be a safer room for, for someone to be vulnerable than, than this community, man. So, agreed. I echo that sentiment. I appreciate the community members. I appreciate all the, all the new names that showed up. I appreciate all the old names that re showed up to this, right? Like Eves and Hervé and, Medge and, you know, a bunch of folks that don't come to every single show. And of course, I appreciate the folks that come to every show, right? Like the Lees, the Mountain Mans, the, the, the Lesleys, the, the Nadims, right, of, of, of the world. And of course Aaron O'Neill into the light. So. It's been it's been a good one, man. We appreciate every time you take an hour out of your day in the middle of a Tuesday to spend some time with us. It never, never goes for granted. That's why we try to talk about the most important topics, the most impactful topics that you can. And as you know, if you ever send us a suggestion, we'll do a show about it because if you've got one question, then there's at least 100 other people with that same question next week. We are going to break, be breaking down this new report of the new blueprint for the real estate edge that was published by McKenzie. It's got some really interesting data in there that we wholeheartedly agree with. So we're going to add a little nuance to it and how it looks in real life. But you know, anybody that is really trying to get an edge in real estate, there's nobody like McKenzie, like the name of McKenzie putting together a research report that has a whole bunch of credibility and validation. So we hope to see you all on Tuesday. And I don't know from now until then, GC, what do you think they should do? Don't be average. See you all next week.