Not Your Average Investor Show
Not Your Average Investor Show
412 | “Am I Too Old To Invest In Rentals?” The Ken Meleen Story
If you’ve ever heard anyone say “it’s too late for me to get into real estate,” that’s because they haven’t heard Ken Meleen’s story.
He started investing in real estate after turning 80, and it upgraded his lifestyle in retirement so much that his family is now all involved.
Join JWB co-founder Gregg Cohen as he sits down with Ken to share how he went from thinking he was out of options in retirement, to being in control of his lifestyle (all in his 80’s!)
Ken’s story is nothing short of inspiring, and in this episode, you’ll learn:
- How Ken realized he didn’t have enough for a comfortable retirement, (and how he financially engineered his way out of it!)
- The simplicity and power of managing Florida rental properties from Silicon Valley through vertically integrated investing
- A peek into how Ken’s investments have performed for him
Let’s cut through the uncertainty of traditional retirement plans and discover how real estate can be your path to financial freedom—no matter your age.
Listen to the man we call “the patriarch of the first family of the Not Your Average Investor Show”.
You don’t want to miss this conversation with this inspiring man.
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Today, we got a doozy for you. We are challenging expectations. We are breaking paradigms. We are addressing the number one thing that Greg and I hear when we walk into a room and we talk about how great rental property investing is. The number one thing we hear is, oh, that's great. If I was just a little bit younger, well, guess what? Today we are talking to someone that started investing in his eighties. He is a legend inside of our community. His story is told in the halls of the not your average investor Adams. I don't know how to say that, but you're going to enjoy this one. Hey, welcome, welcome, welcome everybody to the weekly edition of the Not Your Average Investor Show. I'm your host, Pablo Gonzalez with me as always, a man that I affectionately like to call GC because of his genius concepts, because he knows how to generate cashflow because he's a great cohost and because his name is Greg Cohen. Say hello. Great. Bye. Hello, everybody. Fantastic to be with you today. I am hopped up today because the star of the show, we call him the patriarch of the first family of the Not Your Average Investor show. He's there with a matriarch in the background as well. He's got the Duchess's paying attention and talking to his whole family about real estate investing because of how it's changed his life. He took The not your average path in his 80s to realize retirement wasn't working for him and he wasn't gonna stand for it. His name, the legend, Ken Moline. Welcome to the show, Ken.
GMT20240827-163107_Recording_gvo_1280x720:Good morning, everybody. And hello to all my friends that I've met. at the various meetups in Monterey and San Jose and Jacksonville. Good to be with you.
Pablo Gonzalez:It is good to have, it is good to have royalty in the house today. But, we usually start this, this call with a, with a little tradition of sorts. how do we usually kick this off? That would be called the roll call. The roll call baby! Let's go! First of all, to the patriarch and matriarch of the first family of the Not Your Average Investor show, We salute you! Those are our guests today. Check in. Huh? That's right. You are the first to check in today. And behind you, we got the ring master in the house, Drew Barnhill. We got our lead off batter hitting second, John Henning. We got the MVP in the house. Everybody's heard of Lee Bishop. We got our regulars, Gary and Rosalynn Riley from Marietta, California. We regard you. We got to let me see your rigid phone. Bonjour from him and Becky from the Inland Empire. Got to hang out with Reggie and Becky for a couple days out in L. A. Wonderful people. We got the Maven from the mountains of Denver. Leslie Wilson in the house. We got Crystal Lee from Fernandina Beach. Who else we got in here? We got the early bird checking in. Mr. Dean Curry. We got the patron Santorius of Northern Virginia. Michael Santorius. Laura Colby from Washington State. Pop pop. Everett Shapiro in the house. We got m'lady. Ja Chara checking in June. Deel from Maryland. That's a new name. June, new name. Happy to have you. Happy to have you. Welcome to the party. Yeah. Welcome to the party. This is, this is how we start the shows. We got the shaman in the house from the west coast with his Good morning. Good afternoon. Nadine Sha Maria Totino. I believe Maria's becoming a, a repeat, a repeat attendee. Maria and Jean from West Palm Beach, Florida. Good to have the todos in the house. we got Marilyn Kahneman from Homosassa, Florida. Greg. Ken, do you know what, what made Homo Sasa famous?
GMT20240827-163107_Recording_gvo_1280x720:The home of the manatees. Yeah!
Pablo Gonzalez:Home of the manatees! We got Hervé Francois. Hervé is in the house. Hope everybody has been well. Hervé, good to have you back, my friend. We miss you when you are not around. Who else we got in here? We got a, man, Ken, you bring, you bring the folks. We got right along Raj in the house, checking in. We got T. Caster. T, I think that's a new name. Or a new name. Or maybe I've heard of T before. I'm not sure. But definitely, definitely haven't become a regular yet. Hope to have you. Speaking of regulars, Vic Mudrick back from Virginia. He's making himself known here. Thomas Meade from Las Vegas. Tom, that's a new name. Welcome to the community. Hope you make yourself at home. Make a friend in the chat. Who else we got in here? Pamela Myers, our favorite smile from the Pacific Northwest. We got Priscilla. Corso Priscilla. Good to have you here. That's a new name as well. We've got a bunch of new folks in the house. Not a new name here. Eddie Harris from hot Lana. Good to have you, Eddie. And of course, Misty and Troy Johnson from Denver, the ninth most attended made the top 10 best, best attendance record last year, charity Graham, already a regular here. Good to have you back. Charity Winston PC from Maryland. Another new name. We love the new names in here. Just so you all know, if you are new to the show. Feel free to use the Q and a feel free to use the chat to make a friend. It is normally defaulted in the chat to hosts and panelists. So only Greg, I, and Ken can see what you're writing. If you want everybody else to see what you're writing, change to everyone. Tons of knowledge here in the community. People will give you their phone numbers. People will offer you offer to give you some advice just as, just as fellow clients of JWB like myself, but for today, I'm going to The star of the show, the thing that brought you here. Ken Meleen has a extraordinary story which really, really came on the scene for us early on in the Not Your Average Investor show. Under a hundred episodes, right? We're over, over 400. We've told it a couple of times, but in times like today, when we see these appalling Stats around retirement and how that's broken. We have to show people that there is more than one way to do it. Can you are the poster child for that? And I guess I would love to just tee it up for you to, to just tell us where you were at 65 when you were looking at retirement and what your prospects look like and, and talk us through that process. I think there's a lot of learning that's going to happen today.
GMT20240827-163107_Recording_gvo_1280x720:Well, it was July 31st, 2000, my birthday. I turned 65. I decided I was going to get out of the business. I had a few jobs left to clean up, which took another few years. But I closed my office and I moved everything up to my home here I, brought everything home to the office and I finished up my jobs that I had going on and, started drawing retirement money out of a 401k, actually a SEP IRA that I had. at one time I had half a million dollars in that SEP IRA. But, different things happened along the way, you recall a few historic events that took place in the following few years, September 1st, 2001, you all watch the buildings in New York come tumbling down. And the aftermath of that was a crash in the stock market. And a lot of things went haywire. We finally got back on track only to find out around 2007, 2008, which I believe Greg is when you and your partner started investing. The market kind of went south. And with that, my, for my SEP IRA, started going south too. I lost about I'd say around 30%, maybe 40 percent of my investment at that time. So I had to kind of whittle down the amount that I was taking out of it. Which I did, and I continued on year after year after year, come up to year 2018. In 2018, pulled my last penny out of my IRA, was high and dry. What do I do next? Good thing I had a friend who was a mortgage loan broker, and he said there's a new product on the market. That is called a jumbo reverse mortgage, and you can get a lot more out of that than you were able to get out of it out of a reverse mortgage under the FHA guidelines, which I had done a few years before. So, I said, let's go ahead and see what we can do. he had all the paperwork lined up and, by the end of, 2000. Roughly, we had secured this plan, and we're sitting pretty with a little over 800, 000 of cash ready to spend. What do I do with this? I asked my friend. He says, well, if you don't know, just divide it in two, put it in a couple of T bills, and let it ride, and then start searching around for some answers. So I did, I got one T bill for 400, 000 that mature, would mature six months later, another one for 400, 000 that would mature 12 months later. So that would be August of 2019 and, February of 2020. So then I, started searching around and I have a lot of friends. One of my friends was, actually my piano teacher. Why am I taking piano at 83? Because I don't want to stop living. I want to do new things. Anyway, Harold Lipton, one of the investors in JWB said, gave me some advice. He said, check them out. And so I did, I got on a call with JWB and, found out what they're all about, and I have Mike Stewart. Yeah, I got on a 30 minute phone call to Mike Stewart, which lasted an hour because I had a lot of questions. I had no idea what Jacksonville was like, we ended up, he was going to send me a packet of, homes that were available. And, by the time we wound our, discussion up, we were all set to go ahead with purchase in August. Of 2019, which was when our first T bill was going to roll over, we bought two houses. Fortunately, when you buy for cash. The process goes very smoothly very fast. I think we settled and had the homes in hand by September 23 or something like that. At any rate, so we moved on. I'm not sure when you guys started the Not Your Average Investor Show, somehow I was getting information that JWB wanted to encourage people to come and visit them at their office in Jacksonville, and to encourage that they would Provide 1, 000 of funding for transportation and lodging. So Carolyn and I decided we've never been to Jacksonville. Let's go. So we did. Again, we had a session with Mike Stewart and sat down and saw a beautiful little home that we thought we could manage. The one thing we didn't know since I was already in my eighties, I didn't know whether I didn't have a paycheck stub. I didn't know whether I could get a loan on a home. So we worked through it and sure enough, got a loan broker that provided that for us. And we bought a third home and that closed in January of 2020. So here we are, we're, we've got the threesome that, Greg always talks about, kind of get at least three. And I, two of them were fully paid for and one was a mortgage. So, here we come up, what's happening after January 2020? February 2020, my other T bill is going to roll over. Well, I thought, why not go ahead and do the same thing as we did before. We found two more houses and we, settled on, on these two and, signed the purchase contract. We were done with those by the end of February, had them in hand and we passed the magic marker with those five homes. When you own five homes, you get a break on your management fee from 10 percent of the rent down to 9 percent and you might say that, well, that's not a big deal, but it is, it is important and if we can ever get up to 10 homes, we'll be down to 8%. So, what else happened after February, March, March of 2020, all of you were probably glued to your TV sets, because It was announced that COVID had hit with a vengeance, and COVID was probably an even more disastrous thing than the Twin Towers or the downturn in the economy in the 2007 2008 era. People were dying, especially older people were dying like flies. And, I thought, I looked at our portfolio and I said, okay, what have we got? We've got four homes that we own totally. We have one home that we have a mortgage on. what might we have to do to save our portfolio here? And I even, I think I sent some notes to Gray, I said, you know, we could take a little cut in rent to help our renters, our occupants. but it turned out, Greg went through the scenario there at one of our Not Your Average Investor shows, and he said, the situation in Jacksonville is good, our, um, ratio of homes sold to homes listed is very close to one still. I don't think we're going to have any problems. Just hold tight and let's move on. We did in summertime. We thought we still have a little bit of money from this, second TD T bill, and so let's buy another house. So we did for, uh, with a mortgage and that was, number six. Got that all settled in, I think about, August or September of 2019. And, uh, then we decided, okay, well, let's coast a little bit. Let's, I think in the meantime, some, somewhere in there, we've made another trip back to a Big get together at JWB in Jacksonville and had a great time with a bunch of friends there.
Pablo Gonzalez:let me slow you down It's an incredible journey. And what I want folks to understand is, number one, this idea. that when you retire and if you retire counting on a specific amount of money, to last you, that since we are living longer and longer, the chance of these unique events that happen, that disrupt everything around you, and makes retirement way more volatile. You described multiple events that you went through. You went through September 11th, you went through the great housing recession, and you went through COVID, during these periods that like greatly affected where you were. That's one thing that I want to, I want to dive into in a second, because we're going to talk about this idea of how quickly half a million bucks goes away in retirement. But the biggest question that I, that I want you to answer that I think is going to really turn the light bulb on for people is. Tell us you were in retirement living month to month on the cash flow that you had your nest egg producing. Tell us where you started with that cashflow and where you ended up by being like a really astute financial engineer and investing in properties with a strategy that you did, how, how that increased your living, your, you know, your living cashflow that you were able to do.
GMT20240827-163107_Recording_gvo_1280x720:Yeah, well, let's go back to the March of, 2020 when we had our fifth homes. At that point, I don't know exactly what we were drawing, probably close to 6, 000 a month, and we had one mortgage payment to make, so that was a little over 1, 000. So we were, we were drawing 5, 000. When I had sat down with Mike Stewart before, I said, I need at least another 2, 000 a month to balance out my needs versus my supply. And we did that with the first two purchases. So we were getting a lot of cashflow. We started paying down the mortgage at an accelerated rate. I've not been able to do too much more of that in the last year or two, but that's about where we were at. And then with the addition of homes, seven and eight later on, our net cashflow is over 10 grand a month.
Pablo Gonzalez:was it when you retired?
GMT20240827-163107_Recording_gvo_1280x720:When I retired, I think I was drawing about 3, 000 a month. From my IRA, and I, I could see that that was going to fade away. So I don't know if this is where you want me to talk about this little chart.
Pablo Gonzalez:In a second, in a second. I just want, I just want Greg to kind of explain how one can possibly go from having three, you know, like already being at retirement age. Having 3000 bucks a month in cashflow and thinking that that's for you to how you have turned all of this thing around, late in life, not with an active income. Do you see, you want to, you want to kind of touch on that?
Gregg Cohen:I think this is just such a beautiful story. And I, and I just sit here and I, I love hearing the story of how. You know, our community is not normal. That's why we're called the Not Your Average Investor Community. And I think investing in rental properties, thousands of miles away, Ken lives in California, we're in Jacksonville. Ken, I would imagine you had never been to Jacksonville before, right?
GMT20240827-163107_Recording_gvo_1280x720:I had never been to there.
Gregg Cohen:You had never been to Jacksonville. You didn't know JWB. Had you ever invested in rental properties before?
GMT20240827-163107_Recording_gvo_1280x720:I have had rentals before and they have Had mixed adventures dealing with them.
Gregg Cohen:Makes sense. I hear that a lot. So, some experience in rental properties, probably more negative than positive, and the thought of building a better retirement account thousands of miles away with a company that you didn't know personally a lot, you know, personally before getting to know us. I mean, there are so many reasons to not Then throw on all the challenges that you're faced with. Right? Talking about September 11th. Right? Talking about the Great Recession. How about just learning about what a reverse mortgage is? It doesn't matter what age you are. That's, that's a, these are hard things to, to go through. And so, I look at what you have done for your family and I am in awe. It's really awesome to see what you have done. And I want everybody, because I hear a lot of excuses as to reasons why people can't get into real estate. And when we get the opportunity to share one of our stories of our Not Your Average Investors, there's a million reasons that they could have not done what they did. There's that reason out there all the time, which is, hey, my friends and my family probably don't think this is the right thing to do, right? It's, it's not the traditional way to build a better retirement account, but you have to be supported by folks who have gone a different path and have been successful. So I always like to highlight how many obstacles you have overcome because I think it's really extraordinary and it's something that others can learn from. And then the idea of building a better retirement account is so true right here. We try to shout this from the mountaintops that there is an opportunity to build a better retirement account. Ken, it sounds like you did everything right. Right, you deserved a really comfortable retirement based on, you know, your work till 65 sounds like you had a successful business. You built up a very nice nest egg. You did all of this right. You deserve to have a comfortable retirement, but in traditional assets, many times it's a bumpy road. And unfortunately it was a bad time period. And that may happen to all of us when we get to be 65. So this concept of building a better retirement account insulates you. Hopefully we never have events like September 11th, and hopefully we never have the great recession to the depths that we did, but being able to sleep well at night, knowing that God forbid, if that should happen, You don't have to have those terrible decisions to make. Like what do I need to scale back in my retirement so that I can continue to support my activities? So I think it's a wonderful story. And I think it is just kind of a culmination of kind of all we talk about building a better retirement with somebody who that had so many excuses that you could have made to not do this. But what, what did you do? You reached out to your team. We talk about why the team is so important here. Yeah. Your team started well before JWB and we're an extension of your team now. It started with your friend who helped you understand reverse mortgages and you being open to that. It helped, you know, with your friend Harold, who's your piano teacher, that is a JWB client and he referred you to JWB and now JWB is your team helping you build a better retirement account. So I'm just so proud of the story and I want others to look at this and say, listen, those excuses as to the reasons why I can't do the same thing. Let's put those to the side. Let's be like Ken. Be like Carolyn, be like the Malines, right? Because everybody has the opportunity to do this with the team supporting you.
GMT20240827-163107_Recording_gvo_1280x720:Well, I want to add two things. One thing is, people may not be aware of what's available in the way of a reverse mortgage. There are investors who pool their money together. And then they have a group that lends money out to people like myself who want a better living and don't want to have to have the regular house payment. So a reverse mortgage is where they lend you money and perhaps only up to 50 percent of the value of your home, a fairly reasonable rate. In our case, we got the loan for 6%. And, we can take that money and do anything we want to, we can go on a world cruise, we can climb a mountain, whatever. But we chose to invest in real estate with it. And, the interest rate that is charged once a month is simply added to the principal. That you owe. Now, in our case, we are adding to the principal at the rate of about 6 percent of the loan value per month. However, in Silicon Valley here, we are seeing home appreciation at the rate of probably close to 10%. So, our home appreciation is running away from our expense. On the side of the, reverse mortgage. The other thing I want to talk about is that shortly after we got our first homes, September of 2019, you folks began the program, Not Your Average Investor Show. I don't know if it started before the end of the year or it's slightly after, but the show answered so many questions that if we didn't have questions answered, we could shoot them to you on the, question side and, get answers for it. And we've developed a just a further bond of this is the way things are run at JWB and I, I gained a great appreciation for the interest that. Greg and your and your partners have in providing for people like me an opportunity to invest money safely, securely, and without having to worry a thing about it. I don't have to worry about the renters. I don't have to worry about all I have to do is pay the pay the mortgages.
Gregg Cohen:You know, Ken, that's, I mean, this is why I love Being here on the show with all of you, you guys got to realize I've been running this business for 18 years. We've been doing the show for four, four and a half, and I haven't had the opportunity to work directly with clients for a long time. So this has been a great gift for me to be able to, to get to know you, Ken, to get to know the folks that are benefiting from, you know, the 130 folks that are working here and getting to see these stories, you know, as a business owner, as you build a larger business, many times you get, You don't have that opportunity anymore. So that's, this has been one of the greatest gifts that I, I get to have this conversation because 18 years ago when we started out, this was, this was a, this was a dream that I would be able to have a conversation with a Ken Moline who would share what you just shared.
Pablo Gonzalez:I love it. this is a dream for me too, right, to have this whole group of people come together. And just so everybody knows. You know, we're going over Ken's story right now. Now we're going to talk about a couple of hypotheticals that can put together. another prepared man that wanted to show you got you all like how deeply he's thought about it. And then in the last section of the show, Greg has put together Ken's entire portfolio journey. So you'll get to see exactly how much Ken has invested, how each prop and, and how it's returning. And the details, we're getting some questions about that. So we're going to, we're going to hit on that stuff in detail. But for now, Ken, you know, you said basically that you had to start 500, 000 before you, you know, before that kind of like, started running low for you. And you took the jumbo, the jumbo reverse mortgage on your home. You put together some numbers about how quickly half a million bucks goes in retirement. You want to talk us through that?
GMT20240827-163107_Recording_gvo_1280x720:Yes, I did. I just did a hypothetical with, An investor who comes up with, save half a million dollars, 500, 000 in a, IRA or 401k or something like that. And, at their 65th birthday, they retire. They no longer draw a paycheck. They, start drawing from their retirement fund. And, let's say they were earning 6, 000 a month. So, one of these upper middle class. Executives, I guess. I don't know. And they decided, okay, I'm going to take, two thirds of that, two thirds of that amount in, in pay as I go along my way here. So and in their retirement account there, let's say they're earning 5%. Okay, I did some numbers here and I added 5 percent of income to the top end as I went down through year one. Of course, you end up. If you take out your 48, 000, that's 4 times 12, 4, 000 times 12, you'll end up with about 477, 000 in your account. Skip down to year 5, you have, drawn out to the point where you have about 378, 000 left in your IRA. By year 10, You're down to about 210, 000 in your IRA account, and by year 15, you're pretty well, you have pretty well washed it all away. Now, how many people at age 65 can look forward and say, I don't know what kind of circumstance, external circumstances are going to prevail? I don't know if I will live another 15 years. I didn't know that I would live another, in this case, 24 years. But here I am, ale and hearty, and still going on enjoying life the JWB way.
Gregg Cohen:I love that right there. You know, and you just outlined an example where I think you put in a 5 percent return each year on those numbers. And they still, in that example, still ran out of money. at year 15, I believe you said. And so that's when, that's when traditional investing actually works. It still isn't working. You're still faced with this question as you are in retirement, which is, For many people, how much do I need to scale back my expenses so that my retirement account can last as long as I live? And how cool would it be to not have to ask that question, right? Ken, I would imagine you had to go through that tough process. And it was exacerbated as bad as it was for you because of the hits that the market took. But what, what was that feeling like as you were drawing down on your retirement account and knowing that you were still relatively young? And, and could you just kind of take us through the depths of that? It's not something I've experienced and I'm sure others might be experiencing that as well. What's that feel like?
GMT20240827-163107_Recording_gvo_1280x720:Well, in year 18, when I, when I did come to the end of the retirement funds, I was faced with, some decisions I'd have to make. We could sell our house here. We're in Los Altos, California. We could sell our house here, take the money, go and buy something smaller, for cash, live, live off of that. I don't know if there were a whole lot, lot of other options. I was still drawing social security, so I had money coming in from there, but that was, it was, it was going to be a situation where we would probably have to sell the house. And, this is a home we've been in for 40, 45 years. We built it, for our pleasure. We have a beautiful, beautiful kind of a mountaintop view of over the Santa Clara Valley and, we're close to our doctors and our friends. We don't want to move, but that was a decision that was looming.
Gregg Cohen:you know, the thing about. What this show can provide for people is a roadmap to having options. And if you can learn from somebody like Ken and from the veterans that we have here as the Not Your Average Investor show you can see that this has, this has been done by others who have been successful. And if you get started on it, what you're trying to create is options. So that when you get to a retirement age, you don't have to decide, do I have to sell my house and leave the community that I've been in for 45 years in order to have my retirement account and my retirement be comfortable? Create an environment where it's an and conversation, not an or or a but conversation, right? That's what we talk about when we're talking about building a better retirement account through rental property investing. And so, you know, Ken, you're still, I think you're, you even hosted one of the Not Your Average Investor meetups at that beautiful home that you have, right? We did. There you go. Well, if you know that, that is a proof right there of how this thing comes full circle. So it's, it's, It's pretty incredible to watch your journey,
Pablo Gonzalez:you know, Greg, I'm not a numbers guy, but I just did a little bit of a calculation, right? If we are talking about, cause cause Jag is in the chat asking, is this still possible today? And I think just from a conceptual standpoint, if we're using this baseline of 500, 000, right, which by the way, is more than the median saving that the average American gets to at 65 years old, right? I think those numbers are about 300, 000, but let's say somebody gets to 65, they have 500, 000 in their retirement savings. And they put money into a. So some vehicle that's paying them 5 percent that to me is 25, 000 in cash flow a year, right? That that will that will continue to to do that Whereas if I just think about the very just like meat and potatoes numbers of this Homes in Jacksonville right now are around 250, 000. Rent in Jacksonville right now is around 1, 400. I'm looking at just like one to one comparisons of that of 25, 000 bucks in cashflow that doesn't have a lot of that, that does not per year that doesn't have a lot of upside versus closer to 28, 000 a month in cashflow that doesn't have a lot of upside. And then I think about, well, If we were to do that year over year, rent is going to go up. So that cashflow is going to continue to go up versus that 5%. That doesn't. And then I think about these other options that can has. Figured out for himself one, the jumbo reverse mortgage that added to that piece of the pie that works really, really well, you know, in this kind of scenario, but beyond that, the idea that, you know, once you find some more money to invest, you can then, and, and, and start generating cashflow from that stuff. You can then take these homes that you've put these, the 500, 000 into refinance, get other homes, increase that cashflow, right? Like am I, am I, am I understanding it correctly that even in today's environment, you would still be at a more, it would the, with the right creative financing and the right, You know, scenario, right? Which is why people go to chat with jwb. com and have your team build out a plan for them. But even in today's market, if you reach this kind of retirement issue at 65 and you wanted to increase cashflow and have it continue to grow as opposed to just like max out the cashflow you can get and then have to like siphon off of that for the rest of your life and hope you don't live another 28 years. Am I still right in believing that this is still an option?
Gregg Cohen:Yes, absolutely. You know, that's where the planning component starts. And it might be, if we, if we're sitting down with somebody that has a half a million dollars in their retirement age, the first question we're going to ask is how important is cashflow to you? And we might build that plan entirely around achieving a certain cashflow number for that individual. If another individual comes in a different stage of life, and says that they have 500, 000, but cashflow is not as important to them. Total return on investment is the most important thing to them. We might build it very differently. We probably would, right? The cashflow plan, the max cashflow plan is probably going to be all cash purchases. The total return on investment plan is probably going to be using conventionally financed properties to build your portfolio. And so that's the beauty of this asset class. It works when you are in your 20s. It works when you're in your 30s, your 40s, your 50s. It works when you're in your 80s. There's just flexibility that you have here. And so that's why we love the seat that we sit in because clients get to come to us. We jump on the phone. We have an honest conversation about their goals and their resources. And then we get to, to do some financial engineering. And it's so much more than just the asset. That's why we talk about the team is so important here, because if it was just the asset, we might not, and it's an inexperienced team. They not might not build it to achieve those goals of max cashflow or max return. So the flexibility of this asset class, the limited barriers to entry of this asset class, allow this to be a great investment, whether you're in your eighties and just starting just like Ken was, or whether you're in your thirties. Right? The truth is, the sooner you get started in this, the more flexibility and options you have. But it works perfectly compared to other options when you're in your 80s, and I think most people believe that that's just not possible, but look at Ken. It absolutely is possible.
GMT20240827-163107_Recording_gvo_1280x720:Well, one other point in the discussion, I think you have brought out figures in the past that, most people who put money into retirement, put it into stocks and bonds, bank notes or things like that. Less than, what is it? Less than 8%, Greg, that actually put their money into rental housing.
Gregg Cohen:61 percent of Americans own stocks and bonds and 12 percent of Americans own rental properties.
GMT20240827-163107_Recording_gvo_1280x720:Okay.
Gregg Cohen:But the stats show that people deep down believe investing in real estate long term is the best investment for them. So their actions don't line up with their beliefs. And the reason is because it's hard. They don't know that a team exists like JWB that can make this easy for them.
GMT20240827-163107_Recording_gvo_1280x720:One other caveat that we probably ought to throw out there is that my case, is reflects perhaps what many people along our ocean borders can do. if you get into Midwestern America, you're gonna be, mom and pop maybe have paid off their house, but it's only worth It's going to be hard for them to, to get into a reverse mortgage situation that is meaningful. So I don't mean to overwhelm people with, with my success, they have to look at their individual situations and, make decisions accordingly.
Gregg Cohen:I think the key here is not so much how you did it, but how kind of who you are and how you took on challenges and how you take on potential excuses. And I think that's the biggest takeaway rather than whether a reverse mortgage is right for somebody or not or building a rental property portfolio the exact way you did is the exact way we would do it for another client. But just look at how you took on all these challenges. I think that's the key. And I think that's the biggest reason why people don't get involved in rental property investing. It's because they feel like you know, that those challenges and those excuses are too much.
GMT20240827-163107_Recording_gvo_1280x720:I have had a life full of challenges. When I was in my thirties, I was not happy with my job. I sought out for another possible situation, contacted an employment agency. And I said, what do you have in the realm of possibility? Got a call back a couple of days later and they said, We have, we think we might have a place for you on a job in East Pakistan. And I said, where is that? That was my knowledge of world geography. We ended up going over to East Pakistan, now Bangladesh, and spent two and a half years there, with a good paycheck, a good, situation. They moved my family over there. good schooling, good. There was a eventful thing in my life, but that was a challenge.
Pablo Gonzalez:Great illustration of not being average can write like I think the, the older I get, the more I realized that, you know, most, most people have. they're adverse to change. They're adverse to you know, looking at their current situation and thinking, what about outside of the lines? Can, you know, where outside the lines, can I find an advantage here? And I think, you know, from moving to Uzbekistan to investing in rental properties in your eighties, you've probably had to kind of like, You know, look outside the lines, look for your own joy, set your own priorities, follow your own path. And it's, it's one of the common themes that we have here. if we can, I would love to answer a couple of Laura McElroy's questions that she has here in the Q and a GC, and then kind of like lead that into checking out Ken's portfolio. I think we're all, I think we're all looking forward to seeing the five year returns Um, but Laura is asking can I use my regular SEP or IRA or Roth to invest in building homes with JWB, or do I need a self directed account like a solo 401k?
Gregg Cohen:I'll take that one. You can use any of those that you just mentioned there to invest in real estate does not only have to be a solo 401k.
Pablo Gonzalez:There you go. So get on the phone with JWB. They'll kind of talk you through what you got and help you figure that piece out. That's easy by going to chat with JWB. com or shooting an email to info at JWB companies. Anonymous Attendee, a fellow Frenchman from Reggio Fonces backyard asks, Is it too early to retire at 55? I'm wondering what would be my portfolio like if JWB rental cashflow will be my main source of income?
Gregg Cohen:Oh, Anonymous Attendee, I love that question. You got to get on the phone with us. We would love to build that out. That's one of the most fun things. We get to sit down, we get to build this out for you, show you what it looks like, maybe over a 10 year or a 20 year period of time. So jump on the phone with us. We are, we're excited to look at that together with you.
Pablo Gonzalez:Cool. And then the shaman, the Dean says, does a person have to own the house, right? Outright and have no mortgage payments to do a reverse mortgage.
GMT20240827-163107_Recording_gvo_1280x720:Question to that is no, like if you had a, cash out, no what's the term
Gregg Cohen:cash out refinance.
GMT20240827-163107_Recording_gvo_1280x720:You could have a loan on the house at the time you seek to do the reverse mortgage. What the whole thing goes through escrow. And the present lender is paid off in that process. And new lender is put into place and they then own the total. You can't have more than one loan. I don't believe at one time, but, that's how it works. They pay off the old loan and move on.
Pablo Gonzalez:There you go. All right. You see, you want to walk us through Ken's investment journey. Laura did have a couple more questions, but I assume they're going to get handled in the conversation, which is how much it can have in retirement when he retired. Ken, you said that that was 500 grand. The first retirement?
GMT20240827-163107_Recording_gvo_1280x720:No, it was, more like, I'd say around 300. Okay.
Pablo Gonzalez:Okay. And then
GMT20240827-163107_Recording_gvo_1280x720:I was already drawing my social security as was Carolyn. That brought in about 3000 a month.
Pablo Gonzalez:Okay. And then was Ken able to pay off the mortgage he made on his own home and get that free and clear and free again?
GMT20240827-163107_Recording_gvo_1280x720:I probably will not in my lifetime. Okay. That's
Gregg Cohen:the purpose of the reverse mortgage, right? You don't make a payment each month. So,
GMT20240827-163107_Recording_gvo_1280x720:yeah, let me get, let me give the reality of that. when we took out this, the jumbo reverse mortgage. It was for about 1. 5 million. we got, over 800, 000 cash out of that since then, in the five years since then, it has grown to a little over 1. 9 million, but the value of our house has gone from about 2. 5 on up to above 4 million in, in price.
Gregg Cohen:that's when that works out really, really well. Uh, that's incredible, right? And that's not to say it'll always work out that way when you do a reverse mortgage, but just an example of how being educated and understanding the risks, that are there and the rewards, right. And Ken listened to this show, Ken listened to others that he trusted. And he said, you know what? I think real estate values are in a good spot. And so what he's seen is that the pace of real estate appreciation has outpaced the you know, the, the loan that is accruing on, on his home. Is that a fair way to say that, Ken?
GMT20240827-163107_Recording_gvo_1280x720:Yeah.
Gregg Cohen:All right, team. We ready to see the numbers for Ken and, Maleen family here? I
Pablo Gonzalez:think
Gregg Cohen:we're ready.
Pablo Gonzalez:I think we're ready.
Gregg Cohen:first and always, whenever we're looking at real numbers, Just want to make sure everybody is ready to do their own due diligence. Ken has been gracious to share his story here. We're all blessed to be a part of this experience. Ken has also allowed us to look at his real numbers, which we're going to look at here. Just know that expected returns on investment are estimates. They are not guaranteed. If anybody tells you they're going to guarantee your return on investment in this day and age you'll probably want to Take a pause and cause that's not normally how it should go. So, nothing's guaranteed. Do your own due diligence. Keep tuning into a show like this. And with that, we will take it away with Ken's story here. There is our patriarch or the first family of the Not Your Average Investor community. Mr. Ken, thank you again for being here, buddy. And thanks for sharing your story. Here, here are the numbers. Here are actually what Ken's. journey has looked like by the purchases that he and Carolyn have made here. So, he talked about his story starting in 2019 with those two purchases here, and you see how he purchased those homes for cash, right? We see in 2020, he made four purchases. Just again, as we're talking about overcoming fear, on our last quarterly market update, We talked about how fear leads to inactivity and there's an opportunity cost to inactivity. There was a lot of fear in 2020 and it was justified. But there are those like Ken that did not let that fear paralyze them and lead to inactivity. And as you can tell, he made four purchases in 2020, largely because of his relationship with JWB and for you all being in this community here. That's what helped him overcome fear. And as you can see, the purchase prices back in 2020 were a lot lower. These are his actual purchase prices than what they are today. So when we talked about what that opportunity cost of inactivity was. At that time, it was large. And we can tell that because you'll see the amount of home price appreciation and total returns that Ken has been able to enjoy now largely because of who he is and his opportunity to overcome fear and surround himself with a great team. And then his last two purchases came in 2022. So that's a total of eight purchases here. You can see there's been a mixture of cash and conventional loans. Again, when we talk about the power of a team here, Ken wasn't sure that he could actually get conventional loans. But he understood the power of the five profit centers. And when you buy with conventional financing, you're able to unlock and maximize your return on investment through those five profit centers. And so again, he sat down with our team and we said, okay, well, we've meet, we've met the cashflow requirement of this plan through the cash purchases. Largely. Now we can start to layer on some conventionally financed purchases and really supercharge these returns. And that's largely how that conversation went. And you can see here that he's got a beautiful mixture here of four cash purchases and four properties that were purchased with a conventional loan. Does that sound about right, Ken?
GMT20240827-163107_Recording_gvo_1280x720:Yes, except that we did, we took one of the cash purchases and did a cash out refi in order to find, to get the cash needed to, do the last two purchases.
Gregg Cohen:Absolutely. And so that's when we get to sit down with our, our clients. Usually that's, you know, a couple of years after a client sits down with us, there's that conversation. Hey, listen, we might have enough equity now here. that we may want to do a cash out refinance from the equity that you earned. Pablo and I have had a lot of these conversations. I know he's sitting on the doorstep and he's looking for his portfolio of three properties, three JWB properties to turn into little baby properties is what we call them. So Ken was able to have that same conversation. He had the equity built up and then he was able to take one of these properties that was owned free and clear in cash. And then turn that into a couple more baby properties. Is that, is that the way that that went?
GMT20240827-163107_Recording_gvo_1280x720:That's the way it went.
Gregg Cohen:There you go. So you can kind of see when we're able to bring folks in, we start with a plan. But this team component and this financial engineering continues throughout. And it's not that every single time you want to buy properties, you have to save up 75 grand. Our team are experts at helping you look at the assets that you already have and helping those assets grow so that you can reach a portfolio that can deliver for you today and as you get closer and closer to retirement age. All right, so without further ado, let's take a look at the numbers here, Ken. So this is all by way of the client ROI tool, which we have here. This is available for every client of JWB. And what you're able to see here is your rate of return, your total profits, including all profit centers. And your profit centers that it's including are home price appreciation, principal pay down, tax savings, and net rental income. So Ken, you made a decision at a time to take money out of T bills back in 2019. I don't know what the yield was on your T bills, but I don't know, a couple percent maybe?
GMT20240827-163107_Recording_gvo_1280x720:Two percent, yeah.
Gregg Cohen:There you go. And you are able to then find a better investment backed by a great team. And since you started investing with JWB, your money has earned 14 and a half percent return each and every year. When you take that type of money and it earns a 14 and a half percent return. What that equates to is over 800, 000 of total profits by investing in your JWB portfolio. And that's broken down into these four profit centers here. You've got your home price appreciation, your principal paydown, tax savings, and net rental income. So, Ken, I know you were asking about how much have my properties appreciated? Well, your, your eight properties in totality have appreciated over half a million dollars. Did you know that?
GMT20240827-163107_Recording_gvo_1280x720:I wasn't sure.
Gregg Cohen:It's quite a large number, right? That was the same amount of money that you worked your entire life to build in your nest egg at 65, right? And you've been able through, again, overcoming fear, surrounding yourself with the right team, understanding how this investment can pay you five ways, been able to build out just that one profit center, has matched what that original nest egg was for you. Ken, what are your thoughts when you see these types of numbers?
GMT20240827-163107_Recording_gvo_1280x720:I'm thinking what a wise man I was back in 2018.
Gregg Cohen:I concur. I concur. We all,
Pablo Gonzalez:we all agree, Ken. We're thinking that plus how jealous we are about how wise you were.
Gregg Cohen:So take us back. Cause I know at some point this was scary for you. You know, again, we didn't know each other. We're on other ends of the country. You know, you had probably had more negative experiences, rental properties than positive ones. I'm sure at some point there was a leap of faith. Take us back to that moment there and then maybe juxtapose that with what this has meant for you now being on the other side of five years and taking that leap of faith and seeing these numbers. What, take us through that journey.
GMT20240827-163107_Recording_gvo_1280x720:Well, when I first had a conversation with Mike Stewart, I was obviously curious about, what were the downsides? Are there any downsides to investing in real estate there across the country? And, had a discussion with Harold Lipton as well. And, it appeared to me that well, all my fears were assuaged. They were set aside. it looked like by taking the action that we took buying those first few homes, we satisfied the primary reason for investing in the first place. And that was to boost our cashflow up to where we could handle some of the large bills that come during the year, such as, Life insurance, car insurance, home insurance. they, they just, they hit you, you know, three or 4, 000 here pretty soon. It's, there's a lot of money involved there.
Gregg Cohen:So for you, it, the reason that this started to click and make sense for you is you, you looked at what your bills were. You looked at your alternatives to it, to do some investments. And then you looked at rental properties and you said, you know what, I have a lot of confidence that rental properties can meet what my bills are, my baseline bills. But then there's all this other upside behind it, which are the other profit centers to be on. Is that how it went?
GMT20240827-163107_Recording_gvo_1280x720:And we were not going to have to sell the house.
Gregg Cohen:Yeah, exactly. So everybody comes into this asset class. Well, I won't say everybody, but many people, especially newer investors, they come into this asset class and they, they are totally focused on cashflow, which Ken is talking about cashflow being important, right? It is important. to understand what your cashflow needs are. But what many people fail to realize is that beyond cashflow, there are these other beautiful profit centers and these other beautiful profit centers actually make up a bigger percentage of the overall pie of returns. And it's something that Pablo and I lovingly refer to as the, what is it? Pops
Pablo Gonzalez:the Pac Man. The Pac Man principle.
Gregg Cohen:it's the Pac Man principle. And you're gonna, you're gonna see it in textbooks for years and years and years, reading about the Pac Man principle, maybe one day. But let's, let's look at Ken's overall return on investment by Profit Center. And that's why it's, it's good to understand what your cashflow needs are, but realize Not all of you need cash flow today, right? You may be like, Ken, and you need cash flow and we build a plan like that, but you may not. And the bigger thing, the bigger part of this pie here is what, Ken? What is the biggest part of your pie?
GMT20240827-163107_Recording_gvo_1280x720:Home price appreciation.
Gregg Cohen:Home price appreciation. And that will be the same way for all of you who invest. We see this over and over and over. Every time we have the opportunity to have a client on here, we show this return on investment by Profit Center. Doesn't matter when they bought. Doesn't matter how they bought, what you see is between 60 to 80 percent of your total return on investment by Profit Center, after you hold on, is going to be Home Price Appreciation. That's why the team is so important to make sure that it's a great experience. And that's why the market is so important to make sure that you're, you can grow from all five Profit Centers and know that it's a growth market like home, like Jacksonville, where Home Price Appreciation has gone up. So, Ken, there's your story, my friend. How do you feel?
GMT20240827-163107_Recording_gvo_1280x720:Successful.
Pablo Gonzalez:Rightfully so.
Gregg Cohen:You should. You should. it's a story that we get to, we get to share numbers like this.
GMT20240827-163107_Recording_gvo_1280x720:Well, you asked quite, you asked Greg how I feel. I feel comfortable with the decisions I have made. We have made, Carolyn and I together. And I feel, like we are doing the best we can with what we have available to us.
Gregg Cohen:You know, I think a comfortable retirement is what you deserved. It's what people in our country deserve. It's what a lot of our clients deserve. And so when you talk about how you're comfortable now, enjoying retirement, that's the goal. And it's because you took a leap of faith. You put your trust in us. We're so thankful that you did. But if everybody can have a comfortable retirement, who has done it right, like you have, That's what rental property investing allows for. And you know, most people don't realize it, but it's right underneath our nose. It literally is right down the street. It's right down the street from where you are. It's these beautiful assets. Once you have the right team that can unlock it for you.
GMT20240827-163107_Recording_gvo_1280x720:Well, my recommendation is to check in with JWB and talk to the Greg's team or other people on board there and go through some numbers and They will guide you into ways that you can realize this kind of a dream.
Pablo Gonzalez:Love it, Ken. Well, we appreciate you taking time to be here, you know, and, and, you know, just so everybody knows, Ken sent us an email himself saying, Hey guys, I'm coming up on my five year anniversary. I think it's time for me to come back on and share. You've been on a couple of times before. It's been, it's been about two years since we have you on, but I feel like we mentioned you every other show just because it's so extraordinary. You've also been gracious enough to host meetups at your house. You have been, you and Carolyn we call you the first family, the Not Your Average Best Show for a reason. You have been a real integral part of this community coming together. You've been a story that we rally around. That I think inspires everybody. Yeah, pulled in like a hundred people showed up today to hear your story in the middle of summer on a, on a Tuesday afternoon on a work day. So, you know, man, just I put in the chat that I'm really pumped that we've gotten to do these shows with you over the years and that you're, Your daughters and your grandkids and their kids, you know, in the future, they're going to be able to pull up these shows and see what a brave, what a smart, you know, patriarch and matriarch they had with you and with you and Carolyn that have, you know, done these things to, to change the, to change the future of the financial trajectory of your family. I think it's absolutely extraordinary, man. It's really cool to watch.
GMT20240827-163107_Recording_gvo_1280x720:Well, thanks for the opportunity problem. And Greg,
Gregg Cohen:I feel like we're leaving this on just a little bit of a somber note, almost just because we're so inspired that I feel like we're in the presence of greatness here.
GMT20240827-163107_Recording_gvo_1280x720:That Greg by just put me on your schedule 10 years down the road.
Gregg Cohen:Yeah, let's do it. I love it. Well, we're gonna, we're gonna have you back to do a re up of the story much sooner than that. But You know, Pablo, you mentioned the word bravery, and that's what I feel when I think about Ken and Carolyn and his entire team. Again, so many reasons to, to not do what you did, to kind of take a low as me attitude, and that is not you. So I, I hope even beyond the wonderful success that you've had with the financial part of this, just Be like Ken. Think about what Ken overcame to get to the point where he is. and I think if we all think a little bit more about that, probably lead happier lives and end up retiring comfortably like you.
Pablo Gonzalez:Love it. We got a couple of questions in the chat that we didn't get a chance to, but we want to get you out of here on time. We'll have the team reach out and answer some of these questions or tune in next week. We are going to be, I forget what the name of the, the name of the show we're doing next week. Oh yeah. The fed just announced that it's time to bring the rates down. What does it mean? It is time for not your average insights. Join us on Tuesday for the latest breakdown of what is going on with rates, what it means for real estate investors, what it means for all of you. So, Jamila, we'll get a call to you. I think Sandra is also asking for a couple of things. We'll send this out to the team. We'll make sure that we get in contact answer the questions that we need to answer, but man, okay. This community is special. It is so hard to even begin to describe how much it means to us that you take an hour out of your day on a Tuesday to be here, take an hour every day, multiple times to be a guest like can tell your stories. Ask these questions, help us show people that even though you're not average, it doesn't mean that you're alone. There's other folks that are taking these decisions that are taking control of their retirement, that are making not your average financial investment decisions so that you don't get the average results that we're all saddled with. And I feel like I'm in great company. So hope to see you all next Tuesday. In the meantime, any advice you have for people, Ken, what's the, what's the advice for folks before the, before the next show?
GMT20240827-163107_Recording_gvo_1280x720:Don't be average.
Pablo Gonzalez:Let's go. See y'all next