Not Your Average Investor Show
Not Your Average Investor Show
435 | How Much Money You'll Really Make In 10 Years With 1 Rental Property
There is no bigger way to gain empathy for your clients, and trust in a market than being a customer of your own product.
But very few companies actually do that.
That's why this week we're showing how JWB recently used their outcome based investing approach to sell a property, cash in on all five profit centers, and put the profit to work for themselves elsewhere!
Join co-founder of JWB, Gregg Cohen, and Not your Average Investor Show host, Pablo Gonzalez, to go over JWB's latest move with their portfolio.
We'll cover:
- Why JWB is following it's own model with their decision to sell
- What each profit center returned 10 years into the investment
- What it would look like for you in 10 years based on the outcomes you're looking for
- and more!
Our community always loves when we peel back the curtain on JWB's own investment strategies, but we rarely get an opportunity to dive this deeply into it!
Don't miss your chance to listen NOW!
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Today, we are talking about how much money you're really going to make in 10 years with own rental property because We have this rare opportunity where JWB has recently sold a property that they've owned for exactly 10 years. And unlike most businesses, JWB eats their own dog food. What I mean is not that they have weird tastes in cuisine. I mean that they succeed. Based on the same things that help you succeed as well. So it creates this like moment where we can look at exactly what the outcome you were looking for 10 years ago, what the outcome you created 10 years later, and then future pace into like what happens if you want that outcome today. for 10 years to go. welcome, welcome everybody to the 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 cause he's got the genius concepts cause he knows how to generate cashflow cause he's a great cause and cause his name is great Cohen. Say hello, Greg. Hello everybody. Fantastic to be with you today. Before we get started, we got some breaking news. You see, I've heard, uh, I've heard we opened up 10 more tickets for the summit.
Gregg Cohen:Well, hey, we're ready to rock and roll. We have 10 more seats that we're opening up. We thought we might be able to do this just based on the buses and the. Seating and the extra special dinner and events that we have. And yeah, so we have 10 more seats. So if you were on the fence, didn't think you could get in. If you're a JWB client, go ahead, go to, um, it's a JWB summit. JWBsummit.
Pablo Gonzalez:com
Gregg Cohen:and, uh, get yourself a ticket and we can't wait to see you at summit.
Pablo Gonzalez:Love that. Did you have to open 10 more tickets? Cause everything's sold out too fast and there's just been like this over demand. Is that what's going on?
Gregg Cohen:There are a couple of tickets that we have held back because there are some clients, some folks that are about to become clients because they're putting properties under contract that we sort of have held. So we kind of had a little bit of flexibility here. And now that things are taking shape and we see who's coming, we said, listen, let's rock and roll.
Pablo Gonzalez:Let's open it up, baby. All right. I like that. Another big breaking news. This is a graphic that everybody has seen. A couple of times if you follow the show, it's this impact of the impact that we're all making out here, this community that we have, this top line of investors that I've made 2 million plus in profit has been three, it's been very close to four for a little while. We've had this 38 over here of 1 million plus, but, we got some new members of the 500k, the half a mil club, do you see? The half a mil club, yes. Yeah, tell me more about that.
Gregg Cohen:There are eight new members in the half a million dollar club with JWB. That means they've generated over 500, 000 with their turnkey rental property portfolio. So we're excited for their success. We're excited for all of our success here. You know, we have generated as a community, we've generated over 307 million from these turnkey rental properties, portfolios, and guess what? They're all going to really good. People, our clients are awesome, awesome people. And this goes to furthering what makes you happy in your life, whether that's taking care of family, whether that's taking care of charity, whether that's doing great things for your community, sending your kids to college. That's where this 307 million dollars is going to so super excited about it And you know love this continued updates and sharing the success more and more making it making it more visible So yeah, man, we'll keep doing this every quarter for sure
Pablo Gonzalez:Greg I would like to ask you to put a clock on when I become a five a half a million dollar club person I can do that. Please just do some Excel math Do your wizardry. Yeah. And just let's do a countdown. It's all I ask. I've done so much for the show.
Gregg Cohen:I like
Pablo Gonzalez:it. We'll do it. We'll keep you tracking. We'll keep tracking your success. Sounds good. Sounds good. And of course, all these folks like myself, like the many folks that join us here on a weekly basis. It all started with one. Uh, with one step, right? Like this, like initial consultation with JWB, that's free for everybody. You can either call JWB 904 677 6777. You can shoot them a text and they'll text you back at 904 293 0341. Or you can schedule an appointment with chat with JWB. And it's this idea of you first need to build a plan, right? Like we talk about outcome based investing all the time. Like let's just talk about what your outcome is. Let's talk about what it, what it takes to get there. You know, something that you and I have talked a lot about is people pay like 25, for these like real estate training courses. And then they turn around and go, okay, go sit down with JWB. It's, it's something that I have found out. Um, and you know, this is included for everybody that watches this show, right? Like the ability to get on, talk about your why, talk about the outcome you want to create, and have somebody that's a professional build out a plan. I happen to know, because we went over these numbers, that only about 40 percent of the folks that show up every single week are existing clients. So for you, if you're that 60 percent that hasn't that you watch the show, and we love it, and you're welcome here, and all that good stuff, like, you're, you're just not taken advantage of. Of this idea of building out a plan, making it real for you. It's like everybody talks about vision boards. Like let's talk about a real estate vision board.
Gregg Cohen:Absolutely. I mean, you know that making a plan is a success trait in every walk of life. It's very common in the financial advisor world, sit down and understand your goals and your resources and the outcome that you want and the work towards it. For some reason, real estate. Hasn't been done that way prior to JWB, but that's what we believe in here at JWB. And if you want to be a part of that next 307 million of profits generated, it all starts with a plan. So it's free of charge. Welcome for all of you to take advantage of it. And if you'd like to, you can either give us a call or shoot us a text or go to chat with JWB. com and schedule a time to speak.
Pablo Gonzalez:There you go. For those of us following along on the podcast, 677 6777, a call 904 293 0341 to text or go to chat with jwb. com schedule an appointment. That being said, you see Let's get to the meat of the show, shall we? What we call the topic du jour. The topic of the day. Are you ready?
Gregg Cohen:I don't know if I can look at you.
Pablo Gonzalez:Is it freaking you out? I mean, kind of. All right. 10 years ago, you and your partners decided to buy a property or buy probably a group of properties is what I'm guessing that's in here. You had an outcome in mind. That's what made Jake JWB different. This idea of outcome based investing, you have achieved a certain outcome today, which is why we're talking about it. And then we're going to talk about what it looks like for somebody that wants to create an outcome. You know, starting now. Right. Right. So let's start 10 years ago. You're trying to create an outcome. What happened? What were you trying to create an outcome of? If it's okay with you. Yes.
Gregg Cohen:I'd like to go even a little bit farther back because this idea of buying Rental property started day one when I read Rich Dad, Poor Dad and read this book that I, that changed my life. And so initially when we started this company, it was very intentional about building a company that we loved, but also building an army of income producing assets for ourselves, AKA a rental property portfolio. And that rental property portfolio for me and my business partners, was our retirement account. So just like we talk about the outcomes that all of you would like to solve for and planning for retirement is a very common outcome that we get to solve for. That was the outcome that I wanted to solve for back when I was 23 years old. And I wanted to build this business, but I didn't want to just build an active business. I wanted to build an active business. And I wanted to have a portfolio that was going to take care of my 10, 20, 30 year problem out there that would, that would be managed passively. So that was the original intentionality between behind building a, a, a lot, a portfolio of a lot of rental properties. Then, as we evolved as business owners, there became, it became clear that there were other benefits for our clients and for our residents and for JWB for us to continue to invest in that rental property portfolio. When I started when I was 23, we amassed 40 doors within about the first year and a half. Well, since then we have scaled it up to about 400 properties. And so there was some real intentionality about why going from 40 to 400. And so when we look at the example that I'm going to share with you today, this example was purchased roughly, call it 10 years ago. And the intentionality between doing what we did 10 years ago was because in building this business, it became very clear that there was a need for flexibility when it comes to the assets that we sell. Saying it another way, right? Every year, JWB builds, buys, builds, renovates a certain number of assets that we intend to sell. We know our business pretty well. We know how many properties we're going to sell each year pretty well. Yep. And we know how many. We, we need to build and we know how long build timelines take. So that's how we decide how many we're gonna build and how many we're gonna sell. But guess what? You know what, sometime life happens, sometimes things like covid happen. Mm-hmm And in covid times, the number of properties we could have sold could have been three to four times what we would do on a normal year. I
Pablo Gonzalez:remember telling you to hire salespeople,
Gregg Cohen:right? Yes. You, I
Pablo Gonzalez:thought I was a really good marketer.
Gregg Cohen:We all did. We all did. And so what we learned in our business and our business growth is that flexibility with assets that we own that have already been seasoned, that are a part of this model, that are built and rented and producing positive cash flow is a great thing for the what if. and it's a beautiful thing too because as we sit on this, call it kind of like reserve account for us in terms of properties, it's paying for itself. It's the beautiful thing about this asset. So it is there for us. It's, it's. You know, serving that dual purpose of retirement and future gains for the company, but at the same time, it solves this purpose of what, for the, what if in life for the, what if in business, how do I make sure that we're always in a position of strength for JWB? And this asset is one of those assets that we purchased roughly 10 years ago. And that's, and the, and the cool thing is that we continue to do this cycle over and over again. We're making decisions today to build our property reserve account for the next 10 years as well. So it's a, it's an intentionality beyond just the original purpose of call it retirement planning. And now it's about building a strong and healthy business. You know, beyond the things that, you know, are coming down the pike.
Pablo Gonzalez:This is the whole dog food idea, right? Like the fact that JWB eats his own dog food. Cause what I heard from you is the outcome that you were trying to create is very, very similar to the outcome I'm trying to create by investing with JWB, right? Like you were a trying to build a better retirement account for yourself and B Like for you, since, since this is your actual business, having like a pool of properties also serves as like the cash reserves for whenever you need to like feed the, you know, like feed the market or whatever. Right. So it's like you, I'm assuming then 10 years ago, you and your partner sat down and said, okay, you know, we have. X amount of properties our retirement is on this kind of track. Let's add a certain group of them to this in a timely manner in order to like hit those goals slash build this like reserve.
Gregg Cohen:I wouldn't say it was in that order of operations. We looked each year in business planning and said how many assets do we have? How many do we intend to build today? How many do we I believe we're going to be able to sell in the next year. And what do we have left over? And what do we do with those? And so as we were building out, and then the other thing is looking at market dynamics. Did it make sense for us to build more out at that time and then sit on them? And you might, you know, you would look at things like, where do you think home prices are going to go up? Right? Where do you think build costs are today versus where they'll be in the future? So it made sense for us to build, to buy and build more than we intended to sell. And the next question was, okay, well, once they're there, what do you do with them? Yep. And, and so that's kind of the order of operations. We went through that process. We do that every year. But 10 years ago, this property fell into that bucket of like, okay, we've met the demands for what we see today as far as what our clients are going to need.
Pablo Gonzalez:Yep.
Gregg Cohen:Now we can take this asset and put it into that bucket. of, okay, call it a reserve, a property reserve account that will serve many purposes, you know, for our clients and, and for JW. Cool.
Pablo Gonzalez:All right. So that's the outcome, right? That was, that was the outcome you were hoping for. And then we stand here today and you've sold, and we're about to go into like all the different profit centers of the property itself. But let's, those are features to me, right? Let's talk about the outcome that you actually achieved with this thing. Did you end up using it as a reserve that you had to sell to an investor or was it something else?
Gregg Cohen:Oh, yeah. I mean, this is one of, you know, hundreds of properties that the decision has been made with that same mindset that I just shared with you. So yes, that reserve, that property reserve account has paid dividends over and over and over again. You know, if you go back to COVID times, we were one of the only. Companies, the only company I know of, probably one of the only companies in the country that never had to say, Hey, listen, I don't have a property for you. Right? We always had inventory and the reason that we did when everybody else did not was because of this forward thinking.
Pablo Gonzalez:I remember you saying that back then and I didn't really understand what you meant, but it's become very obvious to me. All right. So, so then this property was sold to an investor or it was sold retail.
Gregg Cohen:Well, I chose this one for a very specific reason. It was actually sold retail and I'll share, I'm going to, I'm going to keep a couple of things as we kind of go through the storyline, but very intentionally about why I chose this one. So this was sold on the retail market, which is the way that you want to sell your property as well. The reason is because at the end of the day, when you own a rental property and you go to sell the property, you want to get the most return on your investment that you can. And when you sell it to a retail homeowner, you're going to sell it for the retail homeowner price. and that's going to maximize your ability to sell. So the reason I'm kind of going about this step by step is because sometimes clients will say, Hey, well, JWB, it would make me feel really good if after I own this property for 10 years, you guys would just buy it back. And my question, my pause point and what, what my team will share with you is like, yeah, that would be nice for you, but that's not the best return on your investment, right? You're buying in a market where there are a lot of. People moving to this market, there's significant housing demand. And so reframe your thinking to be like, Hey, have JWB manage this asset for a full market cycle, work with us to understand when is the right time to liquidate. And then when it does come time to liquidate. You're going to work with JWB, but JWB is going to help you sell it on the retail market to somebody who wants to move into that house because that way you'll get the most bang for your buck. You'll get the best return on investment. If you want to sell it to an investor, investors buy at a discount. So it doesn't make sense from a return perspective for your objective to be to sell it to an investor. That's in essence, leaving money on the table.
Pablo Gonzalez:We've talked about this a bunch, right? People always ask this in the chat. Do you ever, you know, like will I be able to sell my home to another investor if I wanted to and this is what you talk about, right? Like this idea of like, yeah, you can if you don't want top dollar for it. Yeah, exactly. Like we, we have an
Gregg Cohen:internal, AWB Realty is here. So that you can maximize your return on investment and sell it to the retail market when that time comes up.
Pablo Gonzalez:So back to dogfooding, right? This is you picking out a property that you sold to the retail market because it's most like The type of decision that me as an investor will make if I was to sell it.
Gregg Cohen:Exactly.
Pablo Gonzalez:Right. Got it. All right. Cool. So, let's talk about the outcomes that you created, man. let's hop into this thing, right? So this is the actual property that you had. Purchased 10 years ago in October 6, 2015 for those of you listening in the podcast. It's just a regular looking house, right? Like nothing special. It's a, it's a JWB widget, single family home, purchase date of 10 6 2015, sold, 7 31 2024, it's a three bedroom, two bathroom, 1, 151 square foot house. You bought it for 143, 000 ten years ago. God, I wish I could do that right now. And you sold it for 352, 000. 1, 000. You owned it for 8. 8 years. Anything to call out here, GC, or should we just jump straight into the profits? That
Gregg Cohen:feeling that you just had there is I wish I could do that now. Guess what? 10 years from now, you're going to be saying the same thing about today. Yeah. All of you are going to be saying the same thing for as far as today, because when we bought this property for 143, 000.
Pablo Gonzalez:Yeah.
Gregg Cohen:Everybody said 10 years ago, I wish I could have bought that. Yeah. You know. Yeah. It is the cycle of real estate, psychology of real estate. Psychology. Yeah, yeah, yeah. It happens. So, we struggle to understand that this is the most consistent asset class when it comes to appreciation. And we struggle to make the connection between taking prices today, plugging in that appreciation rate, and seeing what the value will be. So that feeling that you had, I like it, appreciate it, but just know it's the same feeling you'll have in 10 years. It'll happen again in 10 years.
Pablo Gonzalez:I remember feeling that in Miami multiple times of just like, oh man, Little Havana? Really? Something for 300, 000 in Little Havana? Right? Like, and now those are a million bucks. So, anyways. keeps going up. we talk a lot about the five profit centers, right? And we like to lay them out in this pie chart, right? So five profit centers being. Net rental income, how much your property pays you every, you know, like, pays you over time in cash, minus expenses, your tax savings, your, with, self explanatory, principal pay down, right, how much your resident has paid down the loan for you, home price appreciation, which spoiler, it's the biggest piece of the pie, and then inflation hedging, right, so like, kind of like how much you are not losing or gaining against inflation, And when we break this one out, we see what we always see, the Pac Man principle. We see that home price appreciation here in green makes up the majority of the, the majority of the pie and everything else is just the mouth of the Pac Man. First question here, GC, why is principle pay down zero?
Gregg Cohen:That's a really good question. So, that goes along with the debt. So, the debt that we chose to put on this property was actually interest only payments, which means that it does not pay down the principal. So the, the debt is actually, the principal pay now is actually zero because of the type of loan.
Pablo Gonzalez:Got it. So this is interest only, I guess you would also be having, Oh no, nevermind. I was going to get too smart for myself here. Next thing I see here is average home price appreciation of 8 percent per year. Normally we talk about 5 percent per year here in Jacksonville, how come this is 8%?
Gregg Cohen:Well, that's what the market did. So we always under promise, we aim to under promise and over deliver. And when we think about the projections that we use, as far as what did we assume home price appreciation would be each year, you know, roughly nine years ago when we bought this property. We didn't put in our numbers eight percent, right? We would have assumed something roughly around four, four and a half percent at that time. So this is just an example of when you buy in a market where population and median incomes are growing and going up you're setting yourself up to under promise and over deliver to yourself and you're doing it in the the profit center that Has the biggest impact for you. And so that's what you've seen here. There's a direct relationship here between 8 percent home price appreciation each year. That's almost double what we would have expected. And then the Pac Man principle, even, you know, as you can see here, normally you have between 60 to 80 percent of your total wealth pie driven by home price appreciation. And that's when you have normal home price appreciation. Well, when you under promise and over deliver for yourself and you have more home price appreciation because you chose the right market, well, that Pac Man gets larger. You can see here that roughly 91 percent of our returns came from home price appreciation on this property.
Pablo Gonzalez:Got it. And for our friend that's listening to the podcast, I haven't really said this yet, but basically in just under nine years, this rental property returned generated 164. 1, 000 plus in profits from a total acquisition and liquidation costs of 25, 000. That number of like acquisition costs of 25, 000, Jag is calling it out in the chat. Oh man, I would love that too. Right. That's that similar psychology of wish I could have bought something for 130, 000 or
Gregg Cohen:no. I totally understand where you're going. Yeah. GAG is going. So let me, let me explain it a little bit more. When I'm saying acquisition and liquidation costs, that's not the initial investment.
Pablo Gonzalez:Oh, okay. That is
Gregg Cohen:not the initial investment. Okay. So those are
Pablo Gonzalez:fees for when you bought it and fees for when you sold it. Exactly.
Gregg Cohen:Got it. So that is. Your closing costs, you're selling, holding and closing costs. You can think of things like real estate commissions when you sell the property or closing costs and things of that nature. So, probably could have been a little clearer on that. But that those are, those are the costs that come along with buying and selling the asset
Pablo Gonzalez:are the interest at. I'm seeing great questions in the chat. If y'all could use the Q& A, it would be better because I might lose it because it moves, but I'm going to try to just get to them real quick. Adam Coletta is asking, are the interest payments included in the total acquisition and liquidation cost? I would assume that that's covered in net rental income, right? Exactly. Okay, explain that.
Gregg Cohen:Yeah, when you, to calculate your net rental income, you, you take your gross rental income. And I happen to remember this because I put all the numbers together on it, right? We generated about 131, 000 in gross rental income over these nine years on this asset. Well, we had about 118, 000 in costs that come along with that. So think of things like interest payments, which was the question right there. Rental expenses, maintenance costs. Marty Quinn
Pablo Gonzalez:asked about maintenance costs. Yes. Maintenance costs is in there. All
Gregg Cohen:included there, right? Property taxes, insurance costs, all of those things. And all of these things are laid out for all of you when you make investment decisions to buy an asset. Mm hmm. Well, that's how it all shook out. And you know, of course there, these are built to be cashflow positive. So you take the gross, you minus the expenses that come along with it. Your net, your net rental income is that roughly 13, 000 there.
Pablo Gonzalez:Got it. million dollar question from patron Santorio's. Greg, you held it for eight years. What compelled you to decide to sell versus hold for the balance of the cycle or depreciation period?
Gregg Cohen:Great question, Michael. Mr. Patron Santorio. So here's what went into the decision to sell this asset when we did. So if you go back to, you know, owning this asset for roughly nine years, the debt market call it nine years ago was very different than it is today. It's hard to put in perspective, but the, the lending world that is available to you as a client today especially because you're not somebody who has hundreds of real estate properties on your credit already. The lending market today is so much more advantageous. There's so many more options for debt. When we bought this asset. And then we went and got the debt on it. Our options are inherently more limited for us than it is for the everyday investor. And the reason is because when you have a certain number of properties on your, that you own over a certain number of properties, your, your, you, you can't get Fannie Mae loans. You can't get the conventional loans that are largely backed by the government. But you can. But I can't because I own too many. And so I have to go to alternative lending products. And and so that's what we do with these alternative lending products. They're out there, you know, that's why you never have to worry about having too many properties on your credit. Like we have 400 properties we own still able to get lending, but there's, it's not as advantageous. There's always these additional rules and things that you have to comply with. Well, for us on this purchase and on this batch of purchases, the lending product that we. Had for the debt was a balloon payment. A balloon payment was due at a certain time. And I think that was ending right about now, right? So, and this isn't the only loan. There's, there's a hundred loans that were a part of this transaction. So the question for JWB becomes, okay, what's the best thing to do? I think what Michael's getting at is, Greg, you preach holding on for a full market cycle all the time. Why would you sell owning it roughly nine years? Well, it's because I 100 percent believe in buying and holding, but you can't make that decision in a vacuum. This is the value of working with a team that manages over a billion dollars in these assets. We get to understand what your personal situation is situation is, and then, you know, we get to help you solve that problem for JWB. We always want to keep our money moving. We always want to keep our money moving. And with the um, decision and, and the work that would go into, you know, replacing the debt with other debt for a hundred properties times a hundred thousand dollars or whatever the loan was, you know, it became. a good option for us to just sell that asset at the same time. And again, I'm going to share the, the, the final kind of like why this all came together is because we got to think about who we're serving here. And so we're going to be able to show a clear win for the purchase person who owns this house. So we took into account, okay, we've got this balloon payment that is due. We're planning in advance. It's making sure that our capital is moving. We have a significant amount of equity sitting in that property. We got to get that moving. Do we want to go on and replace the debt? Well, sure. We could do that. Or do we want to get the money moving, take this one asset, sell it, and then make somebody really, really happy on the back end? That's really what it came down to and why it made sense for us to sell roughly nine years in. Tell
Pablo Gonzalez:us that story, GC, right? I like that. To me, this is the, this is the outcome. It's one of the beautiful things of this asset class. It's that you can have your outcome in mind and. Whether your goals change or situations change or it just so happens often folks get better outcomes than they, that they expected or they're, they're just like happy to be in this asset class because some other externality happens to take place. You want to tell us what you mean by this other win apart from getting out of the balloon payment? Yeah, absolutely.
Gregg Cohen:You know, I just I'll keep a big picture here for a second you know, I just think in the world today, it's so hard to win, right? It's hard to like, from an investment perspective, it's hard to win. It's hard to make a really good investment that, you know, you're able to hit your goals. But it seems like we're just so divided in this country that there's this expectation if you win that somebody else has to lose. Right. And you see this played out in the real estate world, too. If you're a rental property owner, right, the general narrative is that if you're an investor, the resident has to lose, right? And we don't believe that. We never have believed that. And I think that we have a special opportunity specifically in our asset class and within our community here to change that narrative because JWB sits at the intersection of solving our investor needs and our resident needs and our community needs as well. And we really take it seriously. So when we see an opportunity to help a resident of ours become a homeowner, we jump on that opportunity. You've seen us become even more intentional about that over, especially over the last year or two as we've unveiled programs like the JWB Homestead program, where we are the only property management company in Northeast Florida. And maybe in the country that actually pays their residents to become homeowners. And this doesn't come from your rent that you're, that we're collecting for you. JWB as a property management company pays our residents a hundred dollars a month when they fulfill the obligations of the lease, like paying rent on time and taking care of your home and things of that nature. So they build up thousands of dollars of equity, and then you know what we do? We go and help them become homeowners. They're able to earn those thousands of dollars, and then it decreases their closing costs when they become homeowners. And so we care very, very deeply about helping our residents become homeowners. And why do we do that? It's because homeownership is one of the It is one of the quickest and easiest and most long lasting paths to financial security, to better communities, and it has rippling effects for future generations. Our homeowners out there, on average, have 300, 000 of net worth. Our residents out there only have 8, 000 of net worth. And when I say our, I mean America's. That's data from the National Association of Realtors. So when you see an opportunity to help somebody as a resident, as a renter, go from an average of 8, 000 of net worth to becoming a homeowner and earning and having potentially 300, 000 of net worth. You take it if you care about those folks. And so we've aligned a lot of our business to make sure that everybody can win here. That was a. That was, you know, just sharing that was the mentality behind why we do what we do. And it became a very easy decision on this one property here to make that dream a reality for our, our renter. So JWB's own renter was the person who bought this home. And not only were we able to help that person become a homeowner, we package all of these services to help that person actually accomplish the goal of homeownership. So like, for example, here you know, down payments are hard to come by for all of us, right? Especially for renters. Right? Well, we are experts in the down payment assistance and grant programs that are offered here in Jacksonville. And so this homeowner here was able to walk into this home and they had 17, 000 of their down payment granted to them in down payment assistance. This was us being able to secure this from the city programs that are able to do this. So 17, 000 of their down payment was supplied for them because of our services to help them become this homeowner. And that 17, 000, guess what the interest rate? is on that, that loan, that down payment assistance.
Pablo Gonzalez:What is
Gregg Cohen:it? Zero percent.
Pablo Gonzalez:Oh, wow. So that's just a grant?
Gregg Cohen:It is a grant. It is a zero percent interest, no payments loan that is given to this first time homebuyer, our resident.
Pablo Gonzalez:Yeah.
Gregg Cohen:Right? It only has to be paid back when they sell, which I hope is never. so, so when you see an opportunity to do, do well here, sure, we did well financially, but I think there's a real yearning in this country to do well and to feel really good about it too. Yeah. And that matters to us and I hope it matters to you too. So this is a great example of how everybody can win and we don't have to fall victim to this narrative that there is a, an adversarial relationship between a property management company or a landlord and a resident. We can empower everybody to win here and this is a great example of doing that.
Pablo Gonzalez:So if I was to summarize that as quickly as possible. Sorry, I went
Gregg Cohen:on a little bit of a tangent there.
Pablo Gonzalez:Listen man, I believe so much in everything you're saying. A, we, we talk all the time about the economic flywheel of Jacksonville. And how, you know, you're working on every level of the economic flywheel from Improving homes to improving neighborhoods to improving downtown to attracting jobs to raising the median income and the number one way that you can make sure that people don't get left behind is to plug them into that economic flywheel via homeownership. I've also, as you know, been on the Board of Habitat for Humanity in the past. I'm very familiar with the idea that the number one thing that breaks intergenerational poverty is homeownership. 100%. And getting, and getting people a hand up in that world is You know, like the number one thing that you can help them with in America statistically speaking. And getting them prepared and, and, and helping them through these like home ownership, down payment assistance programs and like teaching them how to maintain a home and all the things that I know JWB does in the background, but we don't really talk about a lot. Plus the Homestep program and all these different things. But if I was to summarize, the answer to Michael Santoro's question is you had a balloon payment to pay off. And that, that incentivized you. You were, you like keeping money moving because it is your business model and you're a financial engineer and you also had a unique opportunity to make one of your residents, a homeowner through the assistance and all the things that you're making.
Gregg Cohen:Bingo.
Pablo Gonzalez:Okay. Super. I'm glad we got to the bottom of that. Real quick last before we now talk about, so that was 10 years ago, right? Like, let's get into what it looks like today. What outcomes you can achieve, but I just want to answer a couple of questions here from from the community. What was your anonymous at 10 day asked? What was your cash on cash return on this? Do you know?
Gregg Cohen:Close to infinite, we'll call it. So, you know, we talk about how we're financial engineers, and this is how I try to teach and share with all of you. You gotta realize, JWB borrows money from our clients as private lenders. And then we use that money to then build this asset where everybody can win, and we extract a profit on it, and then we move that private lending money to the next one, to the next one, to the next one. You know, it's the reason that we're able to do the type of scale that we're able to do. It's because we're masters at using other people's money effectively. When you use other people's money effectively, your return on your investment becomes Infinite or close to it. So we leverage our assets and then we move that money Just like we talked about me keeping our money moving is an important thesis and business practice for us. So I didn't put the return on investment calculator there because I thought it might distract, but at the end of the day, leveraging other people's money will continue to keep your return on investment high. And there are ways to do it where you can do it responsibly. and that's, you know, one of the success principles for JWB.
Pablo Gonzalez:Nice. All right. Two of the sim of similar questions. One is by Hall of Famer first baseman, Jim Kirko and also Ronald Thwing. What was your down payment of amount on this? Do you, do you remember if it was like 80 percent financing, 75 percent financing?
Gregg Cohen:So you got to understand it's different for JWB than it is for our clients, right? So JWB buys a house that is. either a piece of land, or it's a house that is in severe distress. So this is where it's different for us than it is for you.
Pablo Gonzalez:Yep.
Gregg Cohen:And what JWB does is it buys that distressed asset or not built out asset, and then we borrow funds to go and build that asset out. And so, you know, our down payment structure is not going to be our client's down payment structure. We get private lending that we then use those funds to build that out. In essence, we have very little or no money of our own into each. Yep. And then we turn the assets over and over. So my example of sharing it with you as the, as the company is going to be different than what you would experience, you should expect somewhere at a minimum 20 percent down, but more often is somewhere around 25 or 30 percent down for your asset.
Pablo Gonzalez:Okay, got it. Before we get into that example, so we can answer these questions, Neil Pate has a question. Welcome to the show, my friend. Hi, how do you address the problem tenants, damages, evictions, and time wastage as a result of a result, which your firm does differently than others? Unfortunately, I had a lot of problems with single family homes and reluctant to pursue it further.
Gregg Cohen:Well, Neil, I think you're in the right place. Thank you for being here. It's, it's not uncommon that people have had struggles. I think the desire to get into owning single family rental properties is there, but the execution for many people outside has not been great, and it keeps them from this asset class. So I think you're in the right place. How do we do it differently? I think it starts with goal alignment. It starts with the fact that we're vertically integrated. And if you can keep one thing in mind when you're making a decision to invest in rental properties, keep in mind that the person that is selling you the house must be the person or the company that is collecting the rent. Yep, the person who's selling you the asset needs to be the person who's delivering long term. And for JWB, property management is under one roof, just the same as sales and construction and every other part of our business. And what that does is it creates an environment where we must perform. There is no place to hide. There is no blame game because it is all internal. And what I share with you as far as how we're going to take care of your money, there's nowhere else to blame. It's just us if it doesn't work. And that leads to thousands of better decisions. And it's, it's, it's something that for any client out there, any, any investor out there who's thinking about buying a rental property. Make sure the person who's selling it to you is literally the same company as the person collecting the rent.
Pablo Gonzalez:Greg, you and I were talking about it this weekend, and to me, you know, we talk a lot about vertical integration. I think it makes a lot of sense if I'm thinking about it from Neil's standpoint of, okay, if I've had problems with this in the past, was I, you know, buying this deal off of a provider that then introduced me to a property manager that then didn't live up to Expectations, are they under promising or over delivering? And vertical integration is one way to say it, right? Being all one under one house. Like, you've created this operation that does everything from land acquisition and banking for a long time to inventing bill to rent single rent, you know, single family homes, to being able to, like, acquire assets, remodel, and operate them, to having a property management company in house, to having a portfolio management division that allows you to, like, Pace yourself and understand the portfolio you're building and stuff like that. I summarize it all as like you have taken extreme ownership of the problem. That is, that is my answer to Neil, right? Like, how do you do it differently? You have, you have gone through the lengths of making sure that all the different joints in this process possible, you can own, as opposed to how do you make a sale, you, you incentivize your team from top to bottom on how can we not just sell these homes, but how can we keep these clients as part of the family, continue to serve them for 30 years. That's how I would answer Neil. Well said okay. All right That's a little preview of what we're gonna talk about during the summit. All right GC Let's talk about the next 10 years. Okay, if somebody was to say hey cool. You did this 10 years ago That's great looking in the past. What does it look like today? I'm talking about my money today
Gregg Cohen:This is In real time, you know, we're going to be doing this show 10 years from now. We're going to look back. We can reference the show in real time. I'm telling you, this is how it's going to play out if you are to purchase a JWB rental property. This is one that is currently available here on 31st street. Estimated rate of return somewhere between nine to 10%. This one happens to be 9. 6%. 213, 000 purchase price, built in 2024, four beds, two baths, 1, 184 square feet, and it is rented at the time of purchase. That means it is already rented, it is seasoned with a long term resident in place, and that monthly rent is 1, 250 a month.
Pablo Gonzalez:All right. So if I buy this thing the way that you just described it in 10 years, what happens?
Gregg Cohen:Over in the next 10 years, you'll make over 112, 000 in total returns estimated for just this one rental property. And here's where we can get a little bit closer to like understanding initial investment because we're talking about you making this decision today as a client. And when you buy the property, you have this beautiful loan structure that is available to you. It's typical, we'll call them Fannie or Freddie loans. These are conventional loans. You don't have to deal with all the stuff that I have to deal with, right? It is served up on a silver platter for you. And so your initial investment on this one, including your down payment and your closing costs is estimated to be. 78, 469. Your portfolio should grow over 120 112, 000 over the next 10 years, leaving you with a portfolio value of 191, 000. Estimate, you know, we forgot to do in the beginning. Now that we're getting into numbers here, I forgot to give the disclaimer. All of these numbers that I share with you are estimates. I am not a financial advisor and neither is this guy. He just looks so good over here doing what he does. I just
Pablo Gonzalez:sound really smart.
Gregg Cohen:And I, and this is a great time. If you guys haven't reached out and you want a copy of these slides, you guys can have them all. All the assumptions are there at the bottom. You can just text our team 904 293 0341. But guys do your own due diligence. I'm here to help. But let this be the beginning of your due diligence and surround yourself with those that you trust when making a decision.
Pablo Gonzalez:So, outcome based, investment based, right? Like, if we're, I'm looking to have you know, 191, 000 to, I guess you could do a lot with 191, 000. That's, that's at least four years of college, right? There you go. In most, in most institutions right now. There you go. If my kid's eight right now. You know, that's, that's one way to pay for it. It could just be a better retirement. It could be increased cash flow, all these kind of different things, right? Like, this is what it looks like over the next 10 years. If you take this same approach, going to chat with JWB. com and, and, and booking a call allows you to like build a plan that makes that tangible, that makes that obvious. If you want to do that. And again, as always, we like to show the Pac Man because it's five. profit centers. And again, as usual, home price appreciation is the Pac Man. Everything else is the mouth of the Pac Man. This is why when people obsess over cashflow markets and they want, they just absolutely need it to reach some kind of like level of cashflow, but they're not looking at the home price appreciation of that market. And they're not factoring that piece in. They're missing out on this, right? Like when you were just showing me something about somebody in Detroit. That left a testimonial saying that they were trying to like, sell all their properties in Detroit and get into Jacksonville. Because Detroit's got all this cash flow, but it's not reaching their goals. They want to come to Jacksonville where they have a growth market.
Gregg Cohen:That's exactly right. Have you ever heard the adage like, what is it? Tripping
Pablo Gonzalez:over pennies to pick up dollars, tripping over dollars to pick up pennies. There you go.
Gregg Cohen:That's what most rental property investors do. They, you know, split hairs over 10 a month of extra cash flow here and there and whatnot. And they're missing the biggest part of the pie. And the biggest part of the pie is a home price appreciation and the way that you get to successful home price appreciation is you choose the right team. So you are excited to stay in for a full market cycle and you choose the right market and then you wind up with a pie that looks like this.
Pablo Gonzalez:Love it. And we've got a couple more questions. We're going to tap into. Neil's got a followup that I really want to dive into, so that's, that's the key. That's the key to wealth here, right? Home price appreciation. That being said right now, minimum investment in the JWB portfolios right around 50 K plus estimated hours of nine to 10 percent interest rates. Right now, folks are recently closing at 5. 65%. That is a. Less than most people right now. Absolutely. Yeah. And that is because there's a couple of incentives out there, right?
Gregg Cohen:That's because of, there's a couple that is because of incentives, but also just our lending network, right? This is a lending network specific. They have to be approved to be a lender of JWB and they have done. hundreds, if not thousands of loans for our clients. And so you do get better rates just simply by being a JWB client. and in addition to that, and then we do have some really special incentives. Guys, we have up to 13, 450 of incentives and these are offered for all purchases. In the month of February, and so we have a lot of our friends who are going to be at summit. So guys, this, there is intentionality behind the incentives that we're offering today because these are going to be available you know, through the end of February, which is when summit is. So we're excited for, for all of you to continue to add to your portfolio and you'll be able to talk with your portfolio manager about that today and all the way through summit. But guys, here's the deal. You got up to 13, 450 of incentives. Every purchase receives between four to 6, 000 as a maintenance credit per property. And what this means, it's a property management incentives. It means on your first statement, you receive a check for between four to 6, 000. And if you're asking why is it between four to 6, 000, it's because it's equal to 2 percent of your purchase price. And so, yeah, so you get that four to 6, 000 right off the bat. And we know that the biggest pain point for you as a rental property investor will be, Pablo? Maintenance. Maintenance. And vacancy. And vacancy. And so this 4, think of that as your piggy bank to account for that. Because it is going to happen over time. Now you can pay for it with this incentive. In addition, we are also waiving the initial tenant placement fee. So this is about a 1, 450 value and that's per property, no limit to the number of properties that you can purchase by doing this. And we do have a three pack bundle incentive bundles. I think we are definitely the MVBs now.
Pablo Gonzalez:Most valuable bundle. We are. Oh yeah. Especially after Sunday. I think we are
Gregg Cohen:now. Um, so for clients that, um, you know, start with a plan and want to move a significant amount of capital over and purchase multiple at one time if you purchase three or more at one time, you get an additional four to 6, 000 off which, will decrease your closing costs and initial investment.
Pablo Gonzalez:There you go. You know, we're going to dive right back into the questions, but again, the way you get started, you can call, which is 904 677 6777, text 904 293 0341, or just go online and schedule an appointment at your convenience, chat with jwb. com. Again, free service is not like a, it's a, it's a slow process to do this, right? It's first figuring out, it's very different than most other experiences, it's first figuring out. If this is right for you, right? Like what are you trying to achieve here? Does this actually fit? This isn't like a get rich quick scheme or anything like that Then it's all right Let's build out a plan and show you what that would look like and if that looks good Then it's like all right now let's talk about do we sell you something or not, right? So, totally worth it. It is Free service that I feel like anybody that's trying to build a real estate portfolio should do. So, let's get back into the questions here. We've got a bunch. Uh, the Maven from the mountains of Denver, Leslie Wilson says, Does JWB give their renters and new retail homeowners a book that discusses how to care for their homes? For example, the importance of changing the furnace filter regularly and cleaning their gutter of debris.
Gregg Cohen:You know, I'm not sure about that. I can ask the team. I'll write it down. I know that there are certain requirements that you must give, especially to, to homeowners. And I don't know if that type of material is, is covered in there. So I'll write it down and get back to you soon.
Pablo Gonzalez:Okay. Phil Caparuso has a question. I read through the email that Greg sent out with info regarding the rental property metrics. Great stuff. JWB manages my properties, so I am invested. My only concern for the long term is the size of Jacksonville, geographically speaking, and the amount of land available to be developed, thereby increasing the supply and therefore influencing pricing. Does the City of Jacksonville have any limitations on new construction? Can you shed light on this concern?
Gregg Cohen:Phil, first of all, thanks for being a client. Thanks for being here. Totally understand where you're coming from as far as you're concerned that, you know, while we have been under supplied and housing, you're saying, listen, Jacksonville is a place where you have a lot of land that can be developed. And if a bunch of builders come in and start to build a ton of homes, well then that, that could flip on its head and we could have a ton of supply, not enough demand, and then he's concerned about pricing going down. So I, I understand where you're coming from. I love that you're thinking along those lines of understanding how pricing works. The great news, Phil, and we shared a little bit about this on the last quarterly market update, is that we are still way under supplied when it comes to single family homes. In Duval County, the best way to keep a handle on this and for you to have peace of mind is to keep tuning into the show, especially the quarterly market updates, because that's where I do a deep dive specifically on months of inventory. Months of inventory is one of the best ways to measure the amount of demand that we have and the amount of supply that we have, the amount of people buying homes, and the amount of homes that we have on the market. You would start to see significant increases in inventory if the number of homes that was being built. skyrocketed and you would start to see months of supply change. At last look, I believe our months of supply is about four right now. And to put it in context between six to seven is normal, lower than six is a good sign as far as pricing, pricing stability and pricing increases. So I love where your head's at. I would say, keep tuning in. I'll continue to share the data with you. But we don't have any concerns of that now or anytime in the near future.
Pablo Gonzalez:There you go. Jacksonville continues to be a growth market. Neil Pate has a follow up question. He says he did go with a similar vertically integrated, same issues. Unfortunately, problem is the property management department. GC, how do you all do property management differently?
Gregg Cohen:Well, sorry that you had that experience. You know, Neil, what I would suggest is that you jump on the phone with my team and we can go through an in depth conversation specifically where your challenges are, where your pain points are, and what does JWB do to solve the problem. But what I would just say right off the bat. You know, here's, here's another kind of, it's a layered thing. First, are they vertically integrated? Then what do they do to show that they win when you win? Yeah. Okay. So here's an example. Most property management companies out there only sign one year leases, but I know as an owner of rental properties and because I manage all of your rental properties and I see how your returns are generated, I know that long term tenant stays are the key to success for you as a rental property investor. But the question is, why do people only sign? Why do property management companies only sign one year leases? It's because it is an easier way to manage the property management business, but it creates more risk and lower returns for the end client. So another question you might want to ask, Neil, or I'm not sure if, if you had this experience was, what was the average length, length of lease that they signed right off the bat? And what's the average duration of resident stay? That for JWB, we only signed two and three year leases and our average duration of residence day is four and a half years. So very hard to see those types. I've never seen those other types of numbers and other companies. So. That might be another help, you know, to kind of crystallize what's different about JWB than the competition.
Pablo Gonzalez:Length of resident stay as an average KPI, and do you measure yourself to it, and how do you incentivize that, right? Like, you guys don't just do that based on long term leases, you also have a Really well developed renewal program. Yeah, you renew what 70 80 percent of leases.
Gregg Cohen:Yeah over 70 percent last year
Pablo Gonzalez:Yeah So
Gregg Cohen:which is the best I've ever seen
Pablo Gonzalez:a couple couple couple things there to think about right like that like that piece of it If you are if you are thinking that long term you are probably attracting higher level You're doing what you need to do to attract higher level residents Which is what he is kind of like saying he's got an issue with like unruly residents and unforetold maintenance expenses and stuff like that and you are Also building out these properties because you are one person, you know, like you're one operation The properties you bring to market are built to a certain are brought to market at a certain standard that avoids kind of like some of these things, right? Like you, you build in durable materials that are easy to maintain, easy to replace, hard to break, essentially.
Gregg Cohen:Exactly. That's why I think getting on the phone with our team is a great opportunity to go through and hear what your concerns are and just see if the solutions that JWB can share with you make sense as to solving that problem. Because we could go into construction. We could go into how do we incentivize our folks to sign those long term leases? How, how do we? Resign 70 plus percent of folks that want to come up for renewal. How do they independently make that decision to stay on with us? So it's, I love where your questions are. Let's, let's give you and us that space to have a deeper conversation.
Pablo Gonzalez:Yeah. And HCTN says, yeah, long term leases are great, but you also need a good tenant vetting process, right? So like, I don't know, maybe, maybe that's a show idea, right? Like what's the tenant vetting process? What is, uh, that that allows for stuff like this, right? Writing it down. If you ask, we deliver community. All right, GC, we are at time. We have a couple of questions left, but we can get to people, you know, we can, we can, um, reach out to y'all and, and make sure that we get in contact with you. Good stuff, man. Yeah, I was, uh, I was pumped when you said that you had this example of. You know, eating your own dog food and proving this thing, right? Like the idea of outcome based investing, what the outcome was planned, what the outcome was achieved and kind of like how that is created to me is like a really, really important piece of the pie that I think we got to explain in a unique way this time.
Gregg Cohen:I love it. And I want everybody to know that what I'm sharing with you, as far as the decision to buy a rental property today, guys, JWB is doing today. what we did 10 years ago with this property. It's another asset, right? We are continuing to build up that reserve. And in 10 years, we will have a similar success story. So, you know, I am right alongside you when, as I am advocating to buy and hold and hold on for a full market cycle, just know that I'm with you. Because this is what we believe. This is the success. This is the model that you can tap into.
Pablo Gonzalez:Love it. You see, next week, I believe we are, um, Man, I don't have the list of topics for next week, but I remember We got a good show for next week. Oh, I
Gregg Cohen:know. It's in downtown. Is it the stuff that I did? The deep downtown?
Pablo Gonzalez:Oh, yeah. Yeah, GC just took like a deep dive into these like stats of like how we talk about, you know, we continue to talk about how like Jacksonville is the next Nashville. It's the next Tampa. It's the next Austin, all these different things. And it's, it's easy to think that, yeah, they're probably started ahead of us ahead of us on the blocks. GC found some data that will blow your mind. Of exactly when things change for them and that's gonna allow you to understand how to like really predict this like next great market awakening I can't wait to be there man.
Gregg Cohen:Love
Pablo Gonzalez:it, baby. I want to thank our community for being here We have we have like a new standard. We are now over like a hundred people every single episode every single show of this year so far. So we have really like elevated the amount of folks coming. Love seeing you folks in the chat. Love seeing everybody participating. This community is what makes Oh, Scott and Guido says, what's the number to call for investors?
Gregg Cohen:904 677 6777 is the number to call. If you want to text us, uh, 904 293 0341.
Pablo Gonzalez:Yep. Joanna just put it there. You can go to chat with JWB. Anyways, the community is what makes it great. Everybody's showing up here, adding context, making friends, uh, asking us questions, showing up live. It never, never ceases to amaze me that we have a hundred folks to take an hour of the day on a Tuesday to just be here, be educated, connect with each other, and eventually show up at summits like we're about to have, which is going to be a great success. So never take that for granted. Thank you so much for being here from now till then. Do you see any piece of advice for people? Don't be average. See you on the next show.