438 | How To Reach Financial Goals With Real Estate: An Example of Outcome Based Investing

Outcome based investing is a different way of doing it, and while we can talk about it all day long, there is nothing like seeing it in action.

That's why we are bringing on a JWB client that has gone through it to make it really easy to understand.

Join Allie King, the manager of the JWB portfolio management department, and Not Your Average Investor Show host, Pablo Gonzalez, as they help you understand:

- what type of outcomes can be achieved by rental property investing
- why folks choose rental properties over other asset classes to reach their goals
- how it feels when things don't go exactly according to plan when investing in rentals
- and more!

This is a behind the scenes look and access to a real JWB client that has been through the journey you are on (or thinking about being on) and succeeded.

Don't miss your chance to LISTEN NOW!

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Transcript

Pablo Gonzalez: 0:00

Today, as we bask in this glorious after summit glow that everybody is feeling, everybody that showed up, we want to bring it back to basics. We want to bring it back to outcome based investing, this unique approach to real estate investing and the business model that needs. It's necessary to support it and the results that it can achieve. Welcome, welcome, welcome, welcome, welcome everybody to the weekly edition of the Not Your Average Show. I'm your host, Pablo Gonzalez, with me today, standing in for GC. She has been recently promoted, right, Allie?

JWB: 1:32

Yeah. Allie

Pablo Gonzalez: 1:33

King. Why don't you tell us about the new title you got going on here?

JWB: 1:36

Yes. Gladly. So I am. Oh,

Pablo Gonzalez: 1:39

thank you so

JWB: 1:40

much. I am the manager of the portfolio management team. So previously was a supervisor, newly a manager.

Pablo Gonzalez: 1:46

Let's go. That's awesome. And the world famous, the man, the high tight rope, walker, circus master, the ring master, Drew Barnhill. Welcome to the show, Drew.

Drew: 2:01

Very nice to be here today. Thank you guys for having me.

Pablo Gonzalez: 2:03

Drew, how are you glowing?

Drew: 2:04

I'm blowing, man. Every year I get re energized by the Summit. It's, uh, I see, um, lots of old friends that really kind of pick me up. And then Jay Kuroki, mentioned, is a new friend of mine now. Yeah. Met, uh, Jay there. Awesome guy from Connecticut. It's just this is this is truly a community, and that's one of the things I like about it is a great investment, but it's also truly a community and everybody pulls for everybody else, and we're always bouncing ideas off each other. Hey, what do you think about this? What do you think about that kind of thing? So it's a it's a great club to be a member of, I will say.

Pablo Gonzalez: 2:40

I agree. Anything stick out for you Ellie from Summit? Anything, uh, anything you're thinking of? I'll go first so you can think about it.

JWB: 2:45

Okay, go first.

Pablo Gonzalez: 2:46

I, um, this is the fourth year we do it, and I'm starting to notice a pattern, right? Like, we always end with this, like, happy hour. And as we're in this happy hour, I've started to realize, like, I see folks coming up to Greg one on one during that happy hour, and it's always a very similar, like, body language that I see. And I can tell that he's having these conversations of, like, cause they come up to me and they say the same thing. It's like Man, this is so much better than I expected. This is really special. Right? Like it's like these like people have this like open posture and Greg has this like heartfelt accepting posture and I've started to like get that pattern recognition in and like now I get to watch it and I know what's Happening and it really fills my bucket. It really fills my bucket this idea that You know, he and his partners got to build this company as like as a business owner. You don't you don't get many opportunities for people to just Acknowledge all the effort that you've put in and the benefit that you've created for the world And I think it's really cool. Like that's that's the one thing that was new for me this time like recognizing that

JWB: 3:51

I think for me it's that It's very clear for me on the inside knowing that we are wanting to Have long term partnerships and truly it is that we are more than a property management company more than a turnkey investment provider but that we are True partners and when you get to have these in person interactions and you're building those relationships It takes it to the next level and I think it makes it that much more clear to all parties involved like We're in this together and we are in this together for life and like I am your go to you are mine we have each other's backs and it truly just feels that way to me every time.

Pablo Gonzalez: 4:25

Yeah. Drew, you said that you were, uh, exchanging gold nuggets. Did you take away any, any, and either any new gold nuggets that you heard for the first time that you didn't realize, or something that you shared with someone that you felt like was, you know, their, that blew their minds since you're capable of both.

Drew: 4:39

Gold Nuggets. well it was great seeing John there again, he's my finance guy and I'm talking with him about things now. That's one of the things I'm trying to do is get myself in a position now where If things go right, I might have, I might reposition like four or five loans, you know, and, and between getting new and, you know, kind of, and, and, and, and refinancing. So, uh, the interest rates have to cooperate, of course, but that's, you know, kind of something I was kind of looking through and it was, you know. And you know how I love that, you know, kind of working my way through that, see how I can, I can get to do that. So, so I'm kind of prepared for that. I'm thinking about this summer, this fall, we may have an opportunity for

Pablo Gonzalez: 5:22

that. That's cool. You are the ultimate, you are the ultimate financial engineer of, of. Of this, uh, of this community, my friend. So it's cool. Um, all right. So let's get into your story. Drew, but first, we've got some breaking news. Allie, are you breaking news for the first time ever? Somebody else or the GC breaking news? I

JWB: 5:38

think I'm breaking news and it's exciting news to break because it's everything, all things, rental homes, marketing, and leasing when it comes to leads, I think the biggest pain point for a real estate investor is when their home is vacant, so want to kind of drop some stats on where we're currently at. With all that goodie, crushing it

Pablo Gonzalez: 5:56

in

JWB: 5:56

2025 so far with rental home leads, we've been able to drive in over 13, 000 leads so far in 2025 for rental homes. And that is up 138 percent from last year.

Drew: 6:11

A lot of interest,

JWB: 6:13

a lot of focus on marketing and driving those leads. And that has led our leasing team to be able to successfully rent over three or exactly. 307 homes so far in 2025. Which is a 60 percent increase from this time last year. So really, really big push there. Our JWB world record for homes rented in a single week is 53. Two weeks ago, we rented 51. Last week, we rented 52. So naturally, we're breaking that record. World record. And excited to share that with you guys next week when we break it.

Drew: 6:49

Yeah, that's pretty awesome. Considering this is not the best time of year to be, to be renting houses. It's a, it's an off season. So that's, that's a kind of pretty awesome to be doing that at this time.

Pablo Gonzalez: 6:59

Yeah. Listen, as I look at these numbers, I think of what we talked about some in the summit, right? Like, uh, we talked about this idea of. Long term thinking, owning the outcome, and outcome based investing. And, and, and when I describe this idea of owning the outcome and, and what vertical integration really means, uh, owning the property management experience, owning the money supply, owning the land supply, but within all of that is a very underestimated You need to be really good at driving marketing leads to your homes in order to rent 6, 000 homes. So this idea of like, 13, 000 plus leads so far, up 130%. It's just this like, commitment to like, continual improvement and excellence across every department of JWB in order to be able to own an outcome.

JWB: 7:44

Yeah. And finding in, in your years where you're slower, maybe your months where you're slower, where is it that you can really push the envelope? And we, we found that in the marketing with the lead. So that's what we focused on and we're able to see the results. February rental income. We were able to pay 1, 774 clients, a total of gosh, what even is that number? 5, 408, 309 clients. 5,

Pablo Gonzalez: 8:15

408, 309 distributed in the pockets of JWB investors. Yeah. Yeah. Very cool. Very cool. That's some good breaking news right there. Insane. I'm into it. I'm into it. All right. Let's get into, let's get it. First of all, Drew. for having me. Drew's like, responding to everybody that's commenting him here, but Drew, you only have it on panelists and, and, and, and, uh, postings, so nobody is seeing your effort for the, as a man of the people, that isn't just on the big screen, but also interacting in the chat. I don't want that to go unnoticed. It goes into everyone when I'm not a panelist

Drew: 8:51

and when I am a panelist.

Pablo Gonzalez: 8:55

There you go. There you go. Just know everybody that reached out to, to, to Drew in the chat has gotten a response. It's only us that got to see it though. So, um, Drew, let's get into your story, man. Outcome based investing. You've been doing this now even before you got to JWB, but tell us about who you were when you got to JWB and what you were trying to accomplish.

Drew: 9:17

Well, I've been involved in, uh, rental properties before, uh, probably for, I don't know, 20 years. And I have a lot of experience of, A, managing the properties myself, B, bad property managers. I did all the right management power to myself, but it was, but it was a damn job. It was just got to be too much of my time and I didn't like it at all. Uh, tried several property managers and, and really, uh, never really got the service that I, I felt I served. And part of that I really think is, is stand alone property managers. Uh, their incentives basically are don't lie with their customers because they make money on terms, you know, so they do a turn every year, but that's not good for you. But that's good for them. Kickbacks on maintenance. That's good for you, but not good for them. One of the things that when I first, uh, you know, was looking for was the whole property management side of it. And I love the idea that JWB had property management along with their turnkey. And I understood this because basically, and Greg and I had a long conversation about this in the beginning, is that property management for JWB is different. It's not something that they have to make. A ton of money on it is something to incentivize us to buy more houses, and that made a lot of sense to me because of the fact that if you know he explained to me this one time you buy one house from us and you have and you have a horrible probably management experience. You're probably not going to buy any houses again. And that's part of our, the big part of our turnkey business. So, in the beginning, I remember me telling him he was not really interested in getting into property management and then literally got into property management just because he had so many of his clients tell him that the property manager picked me up and was just not doing it right. Uh, so that excited me because to me, I felt like I had a company that was aligned with my values and interests, you know. Because, and j W's always gone outta their way to, uh, to incentivize me from the property management end of it and, and thing, and, and you know, and it is worked with me'cause I keep buying more and more houses. So it's, it's kind of a symbiotic relationship. That's it is. I know. Good. Good for them. Good, good for me. And that's, and, and that's what's, you know, uh, that's, that's what you look for in any, uh, business transaction. You know, uh, besides everybody becoming good friends here and I don't like that, that was just an added bonus.

Pablo Gonzalez: 11:55

Yeah. Ellie, do you get that a lot? Right? Like I, Drew kind of took me back. We were, when we were eating that dinner with the walk around money dinner, um, Drew said something like you mentioned something about like being the top of the top of property management is not a very high bar, right? But like basically putting down other property managers, when, when you start interacting with new clients. Do you get a sense that they're like set up to expect something different, um, before JWB and then now after JWB, they have to kind of like understand that this is a different kind of thing or what's your, what's your exposure to like what the rest of the property management market looks like?

JWB: 12:31

Yeah, I, I think it does come down to expectation setting because Some just markets are completely different with what's expected in rental properties. Like for some markets, it is completely normal. If you are a renter, you bring your own refrigerator with you everywhere. So there are just like normal things to navigate of what's different between each market. But the biggest piece is how passive or how involved you are as an investor and that. Expectation is going to be different across different companies. Some can provide you property management services but cannot provide you leasing services. Some are used to having their eyes over every single invoice that comes in to where we run our game to be very passive to say You sit back, let us handle it, and then let's review everything and being able to build that trust. It's going to vary depending on what your background is on how, how to build that trust and which is the best avenue to take for that.

Pablo Gonzalez: 13:27

Drew, what helped you, what helped you come to that, that realization of this is a different type of property management?

Drew: 13:36

Well, it makes sense for me for numbers wise, and I always, you know, I'm an accountant, so I always kind of go back to numbers and everything like that. And I understand, and one of the things I understood why, you know, private managers have such a hard time is because literally, their incentives You know, are not aligned with the customer and J. W. B. I saw where property management just one portion of the pie so you could they could run as if their business model is different in that they are a turnkey operator and making money on the houses. And therefore, the property management is an ancillary business designed to drive the first business. And that made sense to me, you know, I just, then I started watching, you know, you and Greg on the show, I think that was in 2020, you know, and everything like that, and I really got a good vibe from you guys, and that was, uh, so, uh, I said, let me give this a try, because the point on that in my life is, I don't want to manage property myself, you know what I mean, I don't, I don't want the mess and the fuss of it and everything like that, and, and J. W. B. Gladstone makes things so easy for me, uh, you know, I've got a team that helps me out, you know, Uh, I mean, Laila has been great with me, Allie and Caden and all of them have just been, you know, anytime I need something, they're there for me. Uh, you know, even sometimes I ask questions that they can't answer, but they find answers for me, you know. Uh, and I, I do really enjoy that and they generally go out of their way to find answers for me and, and to make my, uh, experience a successful one.

JWB: 15:08

Yeah. So I think a big piece of. Of your initial statement at least was when it comes to the alignment with avoiding Vacancy, that's a huge thing for us to where some other companies are going to be incentivized of I want the shortest lease Because then you're going to have a turnover and then you're going to pay another tenant placement fee Where for us we are aligned that avoiding vacancy is going to be key at all costs even if that means Not getting a tenant placement fee paid every year. We do not want that. We want to avoid that because we are just a returns driven business and you are not going to hit those returns if you're going through a vacancy every single year on every single property. So we work to avoid that and we have an alignment there.

Pablo Gonzalez: 15:50

Yeah. It makes perfect sense. It's, it's kind of, you know, what, what y'all are referencing essentially is. That piece of different business model, right? Like this, like, vertically integrated, fully aligned between departments, between clients, and, um, and property management company, between residents and city and real estate developers, right? Like, that was kind of like what was on the Display throughout, throughout the summit weekend. Um, Drew, I would love to talk about outcomes, right? Like we talk about this like outcome based investing. What is it in particular that made you want to invest in rental properties? Like what was the outcome that you were trying to achieve? from investing in rental properties that had you kind of persevering through, um, the work that you had to do for yourself, the bad, you know, third party property management experiences, and still looking for another solution. When you finally came this way and decided this was it, um, what, you know, kind of like what, what is the outcome? What was the why? Well,

Drew: 16:51

for me, it was kind of setting me up for, uh, for retirement. I mean, I, I did it at 401ks and IRAs and still have some of them. But I like the fact of especially a turnkey operation like JWB as far as setting up for retirement. Basically, I'm setting myself to a point where I have cash flow from these properties. BA basically, you know, you have IRAs 401k, but you're taking money out of them when you're diminishing them each month. I can take money outta my properties as, as the cash flow and my assets don't get diminished. Uh, so I, I can't, to me, it's a long-term view of I can't run out, I can't run out of my money, finished my money out because the assets never, I, I never take a portion of the assets. And that's, that's kind of, uh, very exciting to me. I mean, I like that fact. Uh, and you know, people tell me, well, when do you plan on selling these properties? I don't ever plan on selling them. You know, I mean, to me, that doesn't make a lot of sense. Besides which, if I need to take money out of them, I can always refinance, as I tell people all the time. Uh, debt is tax free cash flow, you know.

Pablo Gonzalez: 18:04

Spoken like a true financial engineer. Were you going to say that?

JWB: 18:06

I was going to say we just spent a good amount of time this weekend when I watch people ask Drew some questions and his answer a handful of the times always ended in I like using other people's money. And that was just a solid ground to go off of. But you mentioned retirement being a key reason. And I think that's huge and something that we try to at least drive all of our clients is to, if you can categorize your why for getting involved with real estate investments into a term, is it leaving a legacy? Is it supplemental income? Is it retirement? Is it a kid's college fund? Whatever that is, being able to define that so that we can continue. To go back to that when times are really great, maybe when times are a little not great, but being able to drive home to that reason and remember not letting emotion get in the way. Is it time to expand? We've got goals to hit. We're just a very goal driven company. So being able to put that as an extension onto our clients is huge.

Pablo Gonzalez: 19:08

Yeah. And the, the why, right? Like the outcome that you're trying to achieve this idea that a different style of retirement is an outcome. Pretty common one, right?

JWB: 19:19

Yeah.

Pablo Gonzalez: 19:20

Like, and, and, you know, Michelle says it, Oh, that's a great point. Drew, when you're saying this idea that we've been conditioned to think that retirement is about. Save and grow, save and grow, save and grow, and then stop growing and to just start spending and start taking it out. The different outcome that that retirement through rental properties is, is what you said, drew this idea that you hold onto the asset. You're able to take money out of the asset without losing the asset. You're able to pull money from the asset tax free as opposed to taking a big tax hit whenever you need to like tap into the asset and that sets up these opportunities for what I continue to call you right for financial engineering this this kind of like these options that you then have right like we talked in the summit of of this idea that you can use a rental property to, in 15 years, pay for your kid or your grandkids college education and then hold on to that rental property and 15 years later, it can also pay for a major medical expense and you still have it throughout all of it. And then we also tied it into this idea of, you know, JWBs use these rental properties to build this business and do these things. And now they've like Been able to drive a different outcome, which is affecting the downtown and building a city and all these different things. Drew, you want to, you want to tell us, we're going to go into your actual portfolio and how you purchase them. And we're going to storytell and we're going to show your returns, which. Look magnificent, by the way. I'm sure I'm sure you know, Mr. Mr. I have a excel sheet for everything.

Drew: 20:50

It's helped that I haven't had a turn in two years and that that is so blessing. Uh, I did have one year where I had a turn twice in one house and those things happen. You have to understand those things, those things happened. Uh, you know, misfortune comes and you know. But if you well diversify yourself, you'll never have to come out of pocket for a turn. The more houses you own, the more you, you, you, you, the other houses kick in to pay for whatever it is, if you've got a problem job, you know what I mean? Um, probably you've been through a problem job before, so it does happen, you know.

JWB: 21:24

And being able to separate that single property view to the full portfolio view is helpful with that. If you have more than one. to view it as what it is, as a performing portfolio versus an individual asset.

Pablo Gonzalez: 21:38

Tell us more about that, Allie, right? Like, I think this is, this is something that we've really championed a lot on the show. It's, you can look at the house as one thing, or you can look at like this cobbling together of a portfolio that by itself can drive an outcome. Talk, talk to me about the difference between the, you know, when people show up thinking, let me pick up a house versus how do I build a portfolio to solve a problem?

JWB: 21:58

Yeah. And I think I, That should almost always be the vision, even if you know you're only getting into one. It's a what are my overall goals? How can I reverse engineer the math to get there? And then exactly like Drew hit the nail on the head to be able to supplement each other because some are gonna ebb and flow. They might be doing that at the same time at some point in the cycle, but it's being able to hold on them and to zoom out. It's really easy to get emotional about a single property. But if you take the emotion out and solely look at the numbers, I want to look at the portfolio as a whole, because when one is down, that can be when my other one is up. And if I'm only focusing on the down, I'm not focusing on what the reality of the numbers and the returns actually are. So it's kind of, uh, A fact checking your feelings with your portfolio manager here where you're saying, all right, I'm feeling, I'm feeling a type of way about this singular property. What's the reality of my actual money? Where am I at? Let me lean on you. Tell me how I'm doing. And then our team is able to paint that picture for you. And it might be the reality is that you're at a low with the portfolio, but what's the game plan? Are we, are we long term buy and holding? What was that? Why, how can we get in here? Portfolio as a whole over individual asset every day.

Pablo Gonzalez: 23:11

Was that always your approach, Drew?

Drew: 23:13

well, as I got older, it started, it started to be, it started to be more and more for sure. Yeah. You know, and that's something that I kind of, I kind of wanted to get into it. And, uh, uh, quite honestly, JWB has been a better experience at this for me than at any other time in my real estate investment. It really has been. I'm so thankful for finding JWB and what you guys have done for me. That's awesome. That's awesome.

Pablo Gonzalez: 23:39

Well, let's talk a little bit about kind of like the externalities, right? I'm gonna, I'm about to pop up your, your portfolio. We're going to go over like the journey of buying homes and the returns there. Before that, I feel like there's been outside of just this investment. You were just talking about it. You were like really researching Jacksonville. You eventually decided to move, you were going to move here because you were researching and then you've moved to Florida just down the street from us in Margaritaville. Talk to us like exclusive of the portfolio, just the mindset of doing this stuff and the community and how you've, you know, you started in like Woodstock, Georgia, and now you're living in, in, in, in Margaritaville. Tell us a little bit about the effect of like the whole experience for you in your life.

Drew: 24:20

Well, that was a time when, when, yes, that I had decided I wanted to move back to Florida. I was actually born and raised in Florida, in Fort Lauderdale, South Florida. And then left after college and lived all over the country. And I, and kind of the last 10 or 15 years, I decided, well, I wanted to end up back in Florida again. So when I started buying, uh, JWB houses, I said, well, Ann Jacksonville seems like a pretty neat area. And I started studying it. Uh, and I had made up my mind to move to Jacksonville, and I actually looked at properties there. Uh, and then I had a couple of old college buddies that, uh, uh, that were talking about moving back to Florida as well. And, uh, one of them, his wife's cousin had, uh, had bought this place in Margaritaville, Daytona Beach. And I didn't think much of it. So then, uh, we decided to go down there and visit this place, and I went down there with him, and we visited Margaritaville, and it was just an amazing, amazing community. It was, you know, it's a 55 plus community, basically for people that want to go out partying rather than sitting on a rocking chair on a porch. It is, it was just, it kind of spoke to me there and everything like that. So we all decided to come and we all ended up buying houses in March and it wasn't Daytona. It's about an hour and 15 minutes from, uh, downtown Jackson, Jack and Bill. It's also an hour from Port Canaveral. And I love to go on cruises and everything like that. So that was real convenient for me as well. Uh, so it was just a great area, you know, and, uh, you know, and, and so I, I bit the bullet and, and, and, and, and bought a place, had a place built and, and, and, and bought that and that was a two year process because they had a waiting list that was a year long, you know, so, uh, yeah, I went ahead and did that and, and I, I, I'm, I'm loving it down here. It's, it's awesome. It's literally like living in resort.

Pablo Gonzalez: 26:24

You've got, you've got that life situation. You're also kind of like always on like a cruise or always on a vacation, right? I guess, I guess the picture I'm trying to paint is like, you've really set yourself up to, to have options in life and like live a, live the life that you're essentially having a good time. Most of the time I hear from you, man, you know,

Drew: 26:44

options are good. Yes, yeah, at some point in your life, you want to be able to do what you want to do when you want to do it. And that's, that's, I think that's a goal for most of us, you know, and I think less than that, in that respect that I had a lot of good people that I could travel with. I mean, Yeah, I got a three month stay in India for my job where they paid for the whole thing. So that was kind of, that was, that was nice, you know? So yeah, life's an adventure and, and, and live it up folks, you know, that's, that's, that's my model. All

Pablo Gonzalez: 27:16

right.

JWB: 27:17

Right here.

Pablo Gonzalez: 27:17

You heard it here. Speaking of adventure, I think you're going to like the cover page of your little portfolio show. So this is, uh, this is going to be Drew's portfolio. Speaking of adventures, he's here swinging on a swinging on a, what is it? A zip line. I believe

Drew: 27:31

that is. In Belize, in Belize,

JWB: 27:36

how do you keep up? I supposed to

Pablo Gonzalez: 27:40

know. I love it, Drew. So just a quick disclaimer, right? This is Drew's numbers. We're going to go over some numbers. Everybody should do their own due diligence. Um, Um, this is, you know, past performance, future results, all the, all that good stuff. Right. So like do your own due diligence. Um, these numbers are not guaranteed. That being said, Drew, here is your, here's your purchasing journey, right? Like it looks like you, we were just talking about it, right? You were, you were trying to remember if you had come and hung out with us before, before investing or not, but you bought this home May 26. That was before you ever met anybody at JWB, probably before that. That it, that, that famous meeting with Jen, um mm-hmm And that, I guess that was like you coming in from the show talking, like looking for it. You bought that home mm-hmm And then you bought a couple more in December. Can you kind of like talk me through. That first purchase and the next two?

Drew: 28:35

Well, the, uh, the first one, I've been listening to you guys on the show since like November, December 2020. And that's when I decided to make this then. So I said, I'm going to buy one and just see how it goes. And that's what I bought 53, 53 Alpha Avenue, which I really loved. It was a great building in Murray Hill neighborhood, which is a really up and coming neighborhood. There's, it's near, uh, Um, uh, the Avon, uh, neighborhood. And so Avondale. Yeah, Avondale, there you go. The, the, kind of really nice right next to the river there. So it's, it's, it's a neighborhood that's really kind of starting to come up there. So I, I, I really like the appreciation for that. So I went with that initial one and then it was like two months later that Jen and Rene and I had that first, uh, uh, that, that, that first meet up there.

Pablo Gonzalez: 29:22

The original meetup. Yeah. We call you, we call you the ringmaster cause you were a circus major in college, but also cause you were the first person to gather, gather the community in IRL, right? That was Jen and Rene were in Atlanta. You reached out on the show. You guys got together, but yeah, continue, continue down the story. I had to, Dean told me how to explain your nickname. So I wanted to do it.

Drew: 29:41

Okay. So then, you know, at that point I said, well, I'm going to try to, I'm going to, I said, I'm going to do it and then I'm going to buy another house next year. Well, things accelerated a little bit, uh, because, you know, basically, the interest rates dropped to a point where I said, this is crazy. I mean, because, uh, whereas interest rates were at record low levels, and people said, well, it'll be like that forever. And I said, no, record low means They've never been there before and so when you go to a place you've never been before, don't expect to stay there for very long. So I hurried up my thing and I bought two more houses in December. Um, one of them is kind of interesting. I actually, uh, got the closing the deal and arranging that closing as I was driving down to, uh, to a cruise. I was taking a cruise in Port Canaveral. And I was driving down there and setting the whole thing up on the phone while I was driving down setting up the closing and everything like that, because the closing they wanted moved up. So I said, well, I'm heading on a cruise. So I literally, they set it up for me to go by McKillop. So I literally on the, on my way down from Atlanta to Port Canaveral, I stopped at McKillop. To close, uh, those deals right then, right before I drove down to Canaveral to get on the, on the cruise there. So that was kind of an interesting, uh, interesting story, too. So I got, uh, those two done. And then I said, well, I said, let me, as many as I can afford while these interest rates were like this. And then, so then I, uh, I actually bought two. So I bought five in little over a year, maybe 13, 14 months, uh, now that one, the interest rates got a little bit away from me then, cause this one, it just started to go up then. So I. Basically, uh, when I purchased, you know, got the down payment on these things and everything, the rates were still low, but they went up quickly. So what happened was on this one, so I did that one and that one came in at about 6%, which is good for us nowadays, you know, but at that time, you know, we were kind of, so then, and then they really went up more. So the one I did in June, I actually paid cash for, but I really wasn't cash. I used actually Uh, balance transfer offers from credit cards to pay for that one. I actually did. Uh, because at that point, you know, I knew I could recover from that, and I didn't have to worry about my credit, it dropped my credit, getting all those credit cards, you know, anyway it dropped my credit score, I think, from like, 790 to like 650, you know, because yeah, because of the, uh, utilization rating, but I had worked everything out so that I knew that I wasn't going to need a million or five or eight credit for a year. So, so, and I can recover from that. So, so that, uh, that worked out fine. Let

Pablo Gonzalez: 33:51

us, let us caveat that. Caveat that, that, that one real quick. Right. Um, that is a super advanced technique that, this is the reason why we call Drew the ultimate financial engineer. But yes, he bought, he bought, he bought a home based on zero interest credit cards that he pulled out. He keeps it meticulously daily on a spreadsheet where he knows every single piece of interest. He's like the ultimate money hacker, um, not something that is for most folks, but one of the great reasons of coming to the summit, being there because people are doing really, really interesting ways of buying properties, right? We always talk about this idea that capital is like, It's everybody's first thing that like, I don't have the money, but you can always find the money. It's, it's all about like knowing what you're doing. Um, so I just kind of wanted to put a little cold water on that one. Uh, because it's not,

JWB: 34:43

you know,

Pablo Gonzalez: 34:44

but, but talk to Joe about

JWB: 34:45

that.

Drew: 34:47

I'll also say this, have a budget and do your forecasting. You know, I was able to do this because I had, you know, I had a lot of monthly free cash flow. So, you know, I knew it would be a temporary situation and everything like that and I had budgeted everything out for the next, uh, year and a half, basically. So how I was going to do this. So, that's the thing about it, is that you're right, you know, Pablo, it's not for everybody. You've got to do these kind of things, you've really got to, uh, to budget, forecast, and, and stay on top of everything. To me, it's a hobby. I'm one of those people. I like playing with money. You know, like I said, some people, some people garden. To me, that's landscaping. Some people build furniture as a hobby. You know, that's carpentry to me. Those are jobs. To me, playing with money is a hobby. You know, I know it's a chore to some people, but it's As an accountant, I've always loved that. I guess that's the reason. Ellie, you had

Pablo Gonzalez: 35:39

something to add?

JWB: 35:40

Yeah, I was going to say, I think that can be a cool technique maybe to pay for a turnover. Maybe you weren't expecting a turnover, there was an early termination in your lease, and that came up, and maybe you weren't prepared for that. I think reserves are going to be huge, but life happens, maybe something else happened that you weren't expecting, and an interest free credit card can be a solution for that. I think it, With extreme attention to

Pablo Gonzalez: 36:03

detail.

JWB: 36:05

To purchase a whole house with it. But nonetheless. He's our expert, other people's money.

Pablo Gonzalez: 36:09

Allie, I wanted to talk about a part in that story. Um, drew talked about this moment, right? Like rental properties had a moment in like mid 2021 to early 2022, where it was like the deal was the dead and people like rushed into it. I remember. I remember Drew and Jen got into this like contest and see who could like acquire the most properties. Talk to me about the change in dynamics of like that moment and why even today, even though, even though we're not at those interest rates, why people are still buying.

JWB: 36:37

Yeah, I think you guys know it here best, but the biggest piece of the puzzle, at least in the Jacksonville market, is that appreciation piece. So the earlier you can get in. That's going to give you the longest runway for your assets to perform. So even trying to time all of the unpredictable things, if we had a magic wand to know exactly what interest rates we're going to do, this community would be the first place to know that. But really it's, it's doesn't make sense to try to time it with that, or even to try to time what the prices are going to be for the homes, because we know it very well in this market, the prices are only going up, which are, It can be good and bad, right? Good for you if you're an investor, because that means your home's gonna be worth more money, but less good if you're saying, oh, I'm gonna wait five years, or I'm gonna wait to see what rates do, because if those go down, your home price is going up. So it does, if you're trying to time it for solely on interest rates, it doesn't make sense, and it doesn't, it's hard to try to compare it to those really low times, because exactly like Drew said, We had never been there before we got there. We're probably not going back there. So trying to have this, this false hope that you're going to get your interest rate back down in the twos is going to lose you so much money along the way that you could have already made up an appreciation tenfold by the time you're waiting on that rate. Yeah.

Drew: 37:57

And, and can I add something to that? We have a course basically, and we say basically, Uh, marry the house. Date the rate. Yeah. Explain that, Drew. You can get the house and it may not be the rates you want, but then you don't have to time the market, uh, because if rates go down, you can refinance and that, that's the thing is if you get the house at a good price and the house is appreciating, that's the number one thing. Rates go up and down. And, and one thing I'll say is I really was not timing the market when I bought the, basically the rates were already there. I knew they were there. So I was just doing everything I can to get as many out as quickly as possible because I knew that this was a time. That, uh, that, that, that was probably not going to be repeated in my lifetime. So that, you know, that didn't spur me to go as quickly as I could at that point. But I just bought a house in, in, uh, November this year. So I'll continue to buy houses. And, you know, you know, that one was not at the rates that we're, you know, that we had back then. But then again, you know, the house, you know, I got the house, that's what I wanted. It cash flows. And it's another piece of the property and if rates do come back again, well, I have an opportunity to refinance that and, uh, and even take money out of it, I think.

Pablo Gonzalez: 39:20

Yeah, talk us through that one, right? We have one, the one that you said in, uh, you probably like closed somewhere around their third, fourth quarter of 2024. What was the thinking there? Was it just like you, you had stacked up enough acorns? Was there, was there like a, A moment in time. Did you refinance others to get this one? Kind of like talk us through that, that, that, well,

Drew: 39:39

that you put conventional loan there, but that was actually A-B-S-E-R loan.

Pablo Gonzalez: 39:42

Oh, okay.

Drew: 39:43

I don't know maybe that you guys call those conventional, but that was actually A-B-S-E-R loan and basically you guys had a real special on, so there again, I not going to, it was kind of like I was not going to buy until probably early part of this year. I was gonna buy another house and that was one that, uh, I was like. Okay, you guys just ran this special and I said, I got to take advantage of this.

Pablo Gonzalez: 40:05

Drew, talk to me, talk to me about a DSCR loan. What does that mean? Is that a cash flowing thing? Like I'm super interested in doing that.

Drew: 40:12

It's a debt service coverage, uh, rate, you know, uh, basically what it means is that you don't have to qualify conventionally, you know, and as far as the DTI in a property, the loan is on the property and not on you. So basically, uh, and the debt service coverage, what we're looking for is they will loan a certain amount of what the house will cash flow. Uh, and as far as that goes, it's about, you know, if you could be in, in, in around the one range and you could pretty much get that, but, but basically they'll loan you the amount of money that they, uh, that, that you can, you can get out of cashflow. It's more of a, almost like a commercial loan kind of thing is they're looking at what the place will cashflow and not what, you know, what your finances are. And, and I actually couldn't qualify for that loan conventionally because I had done some other things and, and I, and I knew my DTI wouldn't work at that point for that house. So the DSCR may have made a lot of, uh, a lot of sense to me in that respect.

Pablo Gonzalez: 41:14

Uh, Ali, have you, have you dealt with a lot of these DSCR loans? Do you know kind of how that we're like, I, is that a. I mean, I'm just like, well, why haven't I done this?

JWB: 41:24

Yeah, I had not heard the term until earlier last year. So that was something that we were looking to get creative. With our lenders and said what are our options for clients who maybe the numbers don't make sense because of interest rates Or what are just more options for clients who maybe they've maxed out on a certain amount of loans Maybe they're looking for more flexible options within their llc. So it was something that we really explored with our lender

Drew: 41:53

base

JWB: 41:55

Heard of it. I mean sure i'm sure everyone else in my world had heard of it But for me, it was my first time hearing of it And then presenting it to clients and seeing it be a real option, but it was something we really started focusing on in 2024. And it might not always make sense, but he hit it right there where it's underwriting the asset versus the human. So depending on what, how you're qualifying and what your options are, it can really broaden your horizon and allow you to get a property. Which like in Drew's situation, we had other incentives running at the time. So he, he could have waited to do it a different way, but it makes sense to be able to capitalize on our current incentives and see what options are out there. And that did, that makes sense.

Drew: 42:38

And I, and I will say this, that it didn't, DSCR didn't make as much sense three years ago when, when the mortgage rates were so low, because DSCR rates were like. Two full percentage points above your regular mortgage rate. Now that mortgage rate has gone up and the DSR, which rates have not gone up near as much, you can, they're within 0. 4, 0. 5, you know, they're within a half of a percentage of, of, uh, of conventional loans now. So they've become a really, uh, a much more attractive, uh, uh, way to go in this, in this market for sure.

Pablo Gonzalez: 43:11

Yeah, and, uh, Lee was just saying it, right? We got John, John, um, Siebert was at the summit. He was talking about the DSCR product. Anybody that wants to, you know, this is part of having a vertically integrated team that owns the outcome and owns kind of like all the different pieces. If you are curious about the DSCR loan, all you got to do is go to chatwithjwb. com. Get on a call. Somebody like Allie will be able to talk you through what it means per property, per your portfolio, per your why and the outcomes that you want to create. So if you go to chat with JWB. com, that's the next first step. I'm actually writing a note to myself. I really want to have this conversation. Yeah. Yeah. Yeah. Cool. All right, Drew, you're ready to see, you're ready to see how this thing has performed.

JWB: 43:51

Sure.

Pablo Gonzalez: 43:51

All right, here we go. As we know. There's five profit centers in rental property investing. There is a net rental income of which since 2021, you've had 24, 544. You've had tax savings of 5, 800. You've had a principal pay down of 27, 000. And then you've had the big one, the HPA, 181, 000. For a total profit in just over four years, or maybe a little under four years from when you started up two hundred and thirty nine thousand five hundred sixty six and a whopping rate of return of twenty three point twenty two percent. What do you think about that?

Drew: 44:31

Uh, no, that's pretty good. It's actually been better than the tax savings as well. I

JWB: 44:35

was gonna, I did my eyes at that because he told me that his tax savings. The tax

Drew: 44:39

savings is, is, is very, it's very low as a matter of fact. And part of that is because I'm, you know, I have a job that I make a lot of money now. So, so, you know, the tax savings is going to depend upon, you know, basically your W 2 income. And I, uh, happen to have a high W 2 income. So that it's been much more. I've done this tax savings has just been a big boom for me, you know, in that respect. So

JWB: 45:06

under promising over delivering what we have listed for his tax savings is lower. He is again, the ring master and knows how to do everything on the back end to make. Make the money go further. So he has even more profit than what we have outlined here.

Pablo Gonzalez: 45:20

I love it. I love it And then you know always here on the right. We like to show the distribution the pie chart of the profit centers This dark blue one here is home price appreciation Everything else is the rest of it. It's why we call it the Pac Man principle, right? Home price appreciation is somewhere between 60 to 75 percent of your total profits. So when you look at it on a pie, it looks like the Pac Man. Everything else just looks like the mouth of a Pac Man. This is why we preach investing in a growing market, right? Investing in a high appreciation market. That cash flows, you know, like a least neutral so that you can participate in this home price appreciation. Um, if you are maximizing for just cash flow, you're tripping over dollars to pick up the pennies. Exactly. Um, and that's that. What do you think? What do you think, Allie? When you go, do you guys, do you review pie charts with folks? Do you do, like, when you look at this thing, tell me, tell me more about, like, the review that folks get when they're talking to their portfolio manager.

JWB: 46:18

Oh, yes. I would love to. Thank you. All clients all turnkey clients are going to have this tool built out for them. It's available about a month or so after closing is when it gets updated or uploaded. We updated on a quarterly basis for all of our clients. So that one was updated through the end of 2024. In the next couple of months, it'll be updated through Q1 of 2025 using our quarters with Q1 being January, February, March, um, and we update it quarterly for clients so that they can have a real snapshot of how is my asset actually performing. I might have an inkling or I might have a thought of how I think I'm doing all right, but being able to put numbers and figures like that in front of a client is huge. And it's just, it's mind blowing every time you get to display it, but we really strive. for all clients to review this annually with their portfolio manager. You might think you already know everything that's on there, but then that's an opportunity for us to review your goals. What's happening over the next year for you. What else do you have going on in your investments that might be outside of JWB? What is this fancy DSCR product that's hit the market that might be really attractive for you, depending on what your goals are. So while it's easy to L all clients that we have are, have access to this tool all the time, but being able to get on that call and go in depth with your portfolio manager is crucial for your planning because you're not only going over your assets, you're reviewing your goals. You're talking about when you want to acquire next so that you are on our radar. If Drew says, I, I think I want to buy around July of this year. I'm able to click that date on his profile so that when I have incentives coming up, I can reach out to Drew of maybe that incentive is live in June. And I can say, Hey, Drew, I know you mentioned July. This is huge. This is flashy. You are who I thought of when I saw this because we're having those conversations actively. So you're on my radar of who to reach out to. And then we're also pairing that with a full slideshow of the Jacksonville market. So you know where your investments are. I want to give you a snapshot into what is that market doing as a whole. Maybe it is time to, to pull the trigger on a few more that you were going to wait on. Get creative with your financing and your opportunities because here's what's happening now and being able to to be the experts for you. I want you to be able to be hands off and sipping margaritas in Margaritaville and not having to keep pulse on Jacksonville neighborhoods and how they're performing and what's going on in them. I want you to be able to attend this call once a year and us to be able to give you the overview snapshots. Now your, your client relations coordinator is going to call you more regularly to talk about the day to day of the property management of rents, rent collected, leasing's coming up, maintenance needed, renewals, et cetera. But this is almost a zoomed out version of like, this is our plan, what's happening within the next year and what's happened in the past year.

Pablo Gonzalez: 49:24

Good stuff. Good, good explanation. So that, that to me is a key piece in owning the outcome, right? Like a key piece in this like vertical integration piece, um, that we talked about a lot during the summer. It's if you don't have somebody on the team that is kind of. Or seeing what your outcome needs to be and keeping you on track, looking for opportunities, talking you through the hard times, um, and, and, and just keeping you informed, right? Like it's much easier to fail, whereas like that piece is handled by people like you.

JWB: 49:58

Or just out of sight, out of mind, doing it annually. You might have no idea what your numbers are doing or just the opportunities or where you're at with your goals. So we want to make sure we put it in front of your mind at least once a year.

Pablo Gonzalez: 50:11

Love it. Um, I got a question here from Roger Evans. If you're in, maybe Ali, you can, you can shed some light on this or Drew, if you've ever been through this, but if you are negative cash flowing, when you purchase a property by conventional loan, how do you stay ahead of the payments, especially when everything like insurance and taxes and stuff tend to increase yearly?

JWB: 50:29

Have you ever had that happen, Drew, if you've been behind on cash flow?

Drew: 50:32

Well, I mean, there's, the only way that you can really rectify that situation is, is, is, is, is refinancing. I don't know of any other way. If you're in negative cash flow, And you don't, you know, and you don't change the, uh, uh, the expense end of it. And the only way I can think of to do that, you might, you might be able to shop around your insurance, see if you can get better on the insurance taxes or taxes, that's what they are. And, uh, so you either got two ways to go. You either got to increase the rent, or you got to, uh, lower your, uh, your, your mortgage payment. And that can be done with a debt, debt, or, you know, it, it. If it is a negative, I don't know how much of a negative cash flow, but hopefully you can hold on until, because rents, rents will rise, you know, I mean, that's, that's, that's pretty much a given, especially in a market like, like Jacksonville. But you could also look into maybe refining some of that debt and seeing if you can get a, you know, I'm not sure what your rate is on that, but you might be able to do that.

JWB: 51:31

Yeah, I think it's a good, I, I'm glad you brought up the increasing rents because We're in a market right now, right, where maybe keeping your rent the same is going to make more sense than it going on the open market and sitting and having a vacancy going through a property turn. So it's something that we can always balance the numbers out with of maybe you are going to be slightly cash flow negative and maybe you're going to be there. For the next year or maybe even a little longer, but I think the longterm buy and hold paired with that portfolio mindset is really, what's going to get you the gold, especially knowing that there are going to be options where let's keep this and know that your, your large scale outcome is going to be a success when we are watching rates and looking for refinance opportunities, when we are reshopping insurance. So looking at it on a. On a macro scale of what we can do might not always be an immediate solution to it. And if raising rents out the roof could just actually push someone out. So really being able to balance the numbers there.

Pablo Gonzalez: 52:37

I've heard that you guys also help kind of like you'll look at like the private lending side of it. So like if you can increase your passive income through private lending in order to cover that kind of like, uh, That rent profile and that that provides like that gap piece to keep you like even that's another way of doing it as well Right many different ways to skin the cat based on your based on your situation, right? Yeah, um hall Kirko has a has a question for you drew drew explained at the beginning that he likes the cashflow without causing the asset to depreciate. However, with 24k of rental income over three years, it really cannot finance a retirement. Do you look at that cashflow as future benefit or is 800 a month what you were planning for?

Drew: 53:17

Well, it's actually more than 800 a month, so I'm not sure that they get it. Right now, my, my cash flow, well, but, but you see because of maintenance costs in there, so, but basically the cash flow is about 2, 000 a month, but then there are maintenance issues you have to take into account there, so I don't, the cash flow, basically right now, the cash flow is not something I necessarily need because I have a high income W 2 job. And, you know, and, and the tax savers, quite honestly, is a bigger, you know, bucket for me right now. So I don't worry too much about that. Now, further on down the line, when I'm not working anymore, then I'll structure the cashflow, you know, it's a lot of it where you're at in life and what you need. I mean, you know. I mean, JWB will tell you all the time, they can structure a cash flow portfolio, they can just, they can structure a growth portfolio, you know, just depending upon your needs, and you might reach out to them for that, because like I said, right now, I mean, my cash flow is fine, but it's not something that, uh, that I, I rely on, uh, uh, so to speak, you know, like I said, right now, so it'll be something down the line that I'll, I'll, I'll further on. Right now, I'm in an acquisition meeting. You know, so that's, that's my priority. So, I mean, if I can get, if I can get another house and I'm just cash flow, even that, and that's fine with me, you know, uh, because like I said, I'm just acquiring assets now, but as I shift my strategy, when I, when I don't have that high paying job anymore, I'll shift my strategy down to, and to, to get more cashflow. And, you know, that's, uh, and you can adjust these things all the time.

JWB: 54:57

Love it. Strategy specific that is adjustable based to where you're at in your life and being able to build a portfolio around where you're at specifically and where we're trying to get.

Pablo Gonzalez: 55:06

It makes me think of what we say often. It's not about cashflow today. It's about cashflow when you need it. Yep. Right. So Drew, you are stacking up chips, you're building up net worth, and then you're going to leverage that net worth as the financial engineer you are to secure the cashflow you need when you actually.

Drew: 55:23

Right now, I'd rather have. Uh, 10 properties with a total 1, 000 cash flow and 5 properties with 2, 000 cash flow. Because it's just, it's, it's, the asset right now, the asset is something that I can leverage and maneuver as we go along. So that's why I'm trying to accumulate as many assets as I can. No,

Pablo Gonzalez: 55:43

love it. That's a, that's a great, that's a great takeaway right there. Um, the maven, Leslie Wilson says that she, she sees that you bought one property with cash and not financing. Why? Leslie, you might have, you might have missed it, but drew actually bought that. Do you actually have a credit card debt?

Drew: 55:59

Yes, because it was the cheapest form of finance at the time. They were all 0%. It was 0 percent credit card debt. And I, I still, I've been using that for 15 years. You know, and because literally it is the cheapest one financ you get. And then I, I stumbled across another thing is that you get a little esoteric. I had a couple of LLCs'cause I had businesses and everything like that. And credit card debt on, uh, on LLCs does not report to your personal credit bureau. So you can actually do those without having a hit to your, your credit utilization and your credit score personally. So that's, you know, but. I'm always looking, you know, I love the word arbitrage. That's, that's, that's, that's, yeah, you know, that's one of my favorite words and I'm always looking for ways to maneuver money and do my advantage.

Pablo Gonzalez: 56:45

Love it. Love it. Um, this was awesome, Drew. We're still, still basking in the after summit glow. All of us having a great time, man. It was really good seeing you this weekend, man. Like as, as always this, um, You know, I'm really, really grateful that you were like first guy to like raise the hand and bring people together. What were you going to say?

Drew: 57:04

Real quick, can I give a shout out to John Siebert? He's awesome. If you haven't talked to him, he's, he's great. Not only will he get you in the right, but he'll talk you through it and explain to you so you understand why the loan that you need is, is there. And he's a, he's a great partner for JWB and he really is, is awesome and I highly recommend I love working with him.

JWB: 57:25

Yeah, he's incredible. Wonderful resource and an extension of the company because he knows. Also, our goals and we're wanting to get clients to so being able to add that to the vertical integration is an extreme asset

Pablo Gonzalez: 57:38

Yeah, John Siebert Patriot Home Loans Patriot Homes Lending page JWB partner who sponsored the summit, right? So he was there hanging out with all of us. This was awesome folks alley. Great job. First of all For those that don't know, Allie had 0. 0 voice on Saturday night. I'm

JWB: 57:56

so bad. I couldn't sing karaoke and I just had to raise the roof in the background, but we're back.

Pablo Gonzalez: 58:04

She sent an email as late as yesterday evening saying, Hey guys, just in case my voice doesn't miraculously return overnight. Uh, I hope you have a backup plan. The backup plan was just me and Drew hanging out, but I'm really glad that you, um, you did it. Tea,

JWB: 58:18

honey, lemon. Success. Little bourbon. Mindset. Mindset.

Drew: 58:25

Awesome. Yeah. I'm glad it happened that way because I love Pablo but it's nice having you on the set as well, Ally.

JWB: 58:33

Well, thank you. And thanks for joining us today, Drew. Yeah,

Pablo Gonzalez: 58:37

I don't disagree in the least. It is great to have Ally. It is great to have the community show up. We just spent the whole weekend together. Um, and even still you show up in force today, 90 plus folks. I'd never, never, never take for granted the idea that you take an hour of the middle of your workday to come here, get educated, connect with folks, ask great questions. You are the reason why this community exists. And Drew, you as the ring master, you are one of the. Big, big reasons. This community exists. My friend. I appreciate you so much, man. I'm so happy. I got to see you so happy to see your returns and do well, man. Thank you for doing this. And, um, you know, any advice you have for folks as we sign off here, bud?

Drew: 59:13

Don't be average.