Early Retirement is a Mistake, Rent INSTEAD of Buying!

Dave:
Hey everyone, it’s Dave. Today we’re bringing you some stories and some lessons from literally an entire life lived in real estate. Jonathan Greene started walking houses with his dad before he could even drive. Some of those visits might today be called trespassing, but they gave him a unique outlook on investing that almost all of us can learn from even 40 years later. Jonathan has been on the show a couple of times before, but it’s been a few years, so I was really excited to ask him how he thinks newer investors should think about financial freedom, investing, home ownership in this new era where we have a market with 7% interest rates. This conversation had some topics that really might change your mindset about investing, how syndications can be a starting point instead of an end goal. So I think you’ll find it both enjoyable and very helpful. Here’s my conversation with investor Jonathan Greene. Jonathan Greene, welcome back to the BiggerPockets podcast. Thanks for being here,

Jonathan:
Dave Meyer. Thanks for having me for our first appearance together. I’m excited.

Dave:
Well, first of all, congrats on the three P, right? This is your third is hat Trick. Officially, you’ve done it three times now on the podcast, but I’m excited for this. I feel like I’ve known you for a while, but I don’t actually know a lot of your original real estate origin story, so I’m excited for this conversation. So maybe just tell us a little bit about how you got into this industry in the first place.

Jonathan:
Yeah, so I was a child of a father who was obsessed with real estate. He was an attorney and my first career was as an attorney. So I followed in his footsteps that way, but I also followed in his footsteps. The other way, when I say this, I’m not exaggerating, I probably walked a thousand homes before I was like 18, owned a bunch of homes because he was smart ahead of his time, put things in trust. So there were things that in trust, and he dragged me two homes from, I don’t know, 1, 2, 3 years old on going to foreclosures, going through the windows. But I think the most meaningful thing that he did is all the rental properties that he owned. As I was growing up, he introduced me to all the tenants. So I understood Landlording from a much different perspective than I think people do now,

Jonathan:
And I really appreciated the landlord tenant relationship. And as I got older, I became the rent collector and developed some strategies for collecting rent. So I was kind of learning so much about real estate without knowing I was doing that because that’s just how he was. There was no internet. He talked about it in the car. This is just the type of stuff that we did. And he was way ahead of his time. I mean, I don’t know if he ever listened to Carlton Sheets tapes or something, but he was just doing things that we talk about now and back then it was like, I don’t know how he knew this stuff.

Dave:
Yeah, it’s amazing. I was going to ask how he got into it, and you interview a lot of people on your show. We hear all the time that things like Rich Dad, poor Dad teach you the concepts and the value of passive income, residual style income. Was he just into that intuitively? He sort of was a lawyer where you get paid hourly and I’m sure at a certain point you’re like, I don’t want to be doing this every single day for the rest of my life.

Jonathan:
He was in a Wills and estates attorney, so he was therefore involved in real estate and before that he worked as an attorney for the IRS. So he kind of had this tax idea about how good real estate could be, but the hardest thing for me is he passed away when I was 33, which is 20 years ago. So that’s a question I didn’t get to ask him. I learned a lot about real estate, but I never knew did he read a book? Why did he do it? But if I think about him, he was very focused on building generational wealth.

Jonathan:
I mean, I own lots and lots of properties as a child in trust, and he would show me these trusts when I’m like 10, 11, he’s read this, this is how you own this property. I’m like, I don’t even like reading books. Why are you giving me this? But over time I was like, I really started to understand that there was a method to his madness. And so I don’t know how, but I know the why and the why was definitely provide for the future, which he has done. My sister and I are both benefiting from that still and passing that on to our kids.

Dave:
Well, that’s a really a cool story. One, you got exposed to real estate at such an early age, but it’s also an example of I think of what so many people in our audience want to do. So many people are motivated by the same idea of setting up generational wealth to take care of their kids and take care of your family and the way your dad was able to do it for you when you were young, were you into it or were you sort of wondering why he was exposing you to all this?

Jonathan:
Well, my parents got divorced when I was two, so I would only see him on the weekends. So every Friday when I came out of school, he would be waiting for me. The guy, he was never late once. He never missed, he was always there and we would drive from Brooklyn Heights to Westchester, so we’d have about an hour ride out and all he would do would talk about money in real estate and intertwine that with reading dirty jokes out of a book.

Dave:
So he knew enough to keep you entertained

Jonathan:
And that was, I didn’t know what I was learning, but I wasn’t uninterested because he would break it up. One of our tenants in Yonkers was an electronics store, so at the time, this is pre-internet I had in television, which now if you saw it, you’re like, this is the worst video game console ever. But it was amazing. So when we went to collect the rent on the way back, every time we would stop in and I would get a game and that was kind of the thing that he understood. And then when we would get out, we would go, we would get a Sunday and a Turkey sandwich, and then on the weekends we would go to yard sales and when we would be at yard sales, I would be able to buy a basketball or a football or I’d be looking for baseball cards. So he was very smart about having alternative opportunities to present these learning basically modules, but always make sure that I wasn’t bored and I had something to do. He was always okay with like, Hey, well now we finished three yard sales, or actually seven, let’s go to Caldor and get some toys. I’m like, yep, sounds great.

Dave:
The outdoor man, that’s a blast for the past that is well out of business,

Dave:
But that’s really cool about trying to find a way to teach your kids something fun and interesting while they’re young and impart these lessons. Given this pretty unique exposure to real estate at such a young age, you become an attorney. Did you ever think you’d just go straight into real estate?

Jonathan:
Well, I mean you have to remember, it’s so different for people now because they have the internet and they can watch YouTube and they can understand seek financial freedom, which again, I think is a mistake too early. But I did what I thought I was supposed to do. My dad was a lawyer, I was involved in real estate and I just kind of went to law school and I was a really good lawyer 10 years ate as a prosecutor and two as a criminal defense attorney.

Speaker 4:
But

Jonathan:
Then my dad passed away and when he passed away, that’s when I didn’t need to do law anymore. He loved that. I was also a lawyer. He wasn’t a trial attorney, so he would come watch me in trial, which it’s really cool to even think that that happened.

Dave:
That would be so intimidating, but that is very cool.

Jonathan:
Yeah, it was basically my dad and all my friends. I was a trial animal, so it was kind of more, it was kind of a show sometimes, but just the fact that he could do that after he passed away. I was still involved in real estate this whole time, small scale flips here and there, flipping houses that I lived in, which is one of the things that I’m best at, just buying good living there, enjoying it, and then making money later. So then I kind of transitioned to more full-time entrepreneurship in a bunch of different areas.

Dave:
Well, before we get into that, I’m curious, you sort of snuck in there that you think going for financial freedom too early is a bad idea. Can you explain that?

Jonathan:
Yeah, so I’ve kind of been on this trip lately and again, posting in BiggerPockets and talking to people about it in the forums, there’s this thing out there where I’m seeing a lot of people in their early twenties just talking about retiring and quitting their nine to five, and I just think, well, but the nine to five is awesome. I was fortunate. My dad built up a lot of real estate for me. I still worked. I still work every day. I like working. I don’t know what the lore of fire is. I don’t want to retire early, I don’t want to retire.

Dave:
Totally.

Jonathan:
I think it’s about this mindset of, well, I got to get out of my nine to five, and now I find employers don’t appreciate their employees. The employees don’t appreciate their employers and they don’t understand that because you’re keeping your job. That’s right. And if you try really hard at your job, you’ll keep making more, which is what I did when I worked for the government. Everyone was more like just getting the minimal pay raise and I was like, no, I’m going for it all. And I did really well at the government, which is actually hard to do. But yeah, I think it worries me that people are looking to quit when the nine to five can really be the absolute foundation that you carry with you until you build a long enough runway and then you still want one or two more years after that.

Dave:
I completely agree. I mean, I’ve done the same exact thing even as I’ve built a bigger portfolio and have more passive income, I keep working one because I don’t really know what I would do. I enjoy my job, I enjoy it.

Jonathan:
Yeah, me too.

Dave:
And I think that it’s the biggest benefit to your investing career is having a good high income job. I chose throughout the first several years of my investing career to go back to grad school. I could have spent that time flipping houses or wholesaling houses or something, but I thought, Hey, I’m going to go increase my earning potential by getting an advanced degree and then I’m going to use that money to invest in real estate, and that’s obviously worked out well for me, but I think just even grad school or not, it’s just a good policy because last thing is if you want to go into real estate full-time at 25, unless you’re coming from a huge amount of wealth, you’re going to have to put in more than a nine to fives worth of effort to replace your income in almost all circumstances. So you’re not actually financially independent, you’re just working in real estate instead of working whatever industry you were before.

Jonathan:
Yeah, I mean, well, think of it this way. This is an example I know I was talking about just the other day. It’s like someone has a really nice steady nine to five, say they make a hundred grand, and if you make even 80 grand and you live in the Midwest, you’re doing well compared to what your housing costs are. So you have a nine to five, you don’t work weekends. You could spend the whole weekend with your family and then you want to trade that in to get say, five rental properties. Okay, great. Well, you’re going to get calls at 24 7 and they’ll say, oh no, I’ll hire property management. Well cool. Then your cash flow is going to be a lot less, so you’re going to not be able to reach what you think is financial freedom as soon as you think. And in my opinion, what I’ve been talking about a lot is no one’s chasing financial freedom because that’s a scalable thing that’s different. What’s financial free to you is not the same to me, not the same to someone else. It’s certainly not the same for someone in Los Angeles as it is for someone in Topeka.

Jonathan:
So they’re chasing time freedom, but I’ve been on time freedom for now since my dad passed away when I left a government job. I’ve been in entrepreneur roles building my own businesses, but I’m always working and I like to work, but now I choose which things I want to work on and which things I want to grow and build. Most of them are inside real estate, but I’m also open to other businesses and even me now, look, I’m 53 now. Sometimes I think, yeah, I would take a regular job. I don’t want to go to an office every day, but steady paychecks sound great. It is great. It’s smart.

Dave:
Yeah, I completely agree with you. I think the moniker financial independence is a too broad and it doesn’t really say anything. To your point, my personal goal has been what I would call work optional. I’ve always wanted to just be like, if I want to take six months off, if I want to take a year off, I would love to have the real estate backstop that so that I could do that. Or if as my career progresses, if I want to work in a job like you’re saying that perhaps isn’t the highest paying opportunity that I could afford to do something that I’m passionate about rather than just something that is maximizing my income.

Jonathan:
Yeah, I mean I did that too. I was in the art world for six years. I had three galleries and then I was a curator at a museum.

Dave:
What really?

Jonathan:
Yeah,

Jonathan:
I like entrepreneurship. During that time I was still doing real estate and a lot of the things that I did with art were based on real estate. I bought a building in Sarasota in an artist colony called Toll’s Court, and I put a boutique in gallery in there, and that’s how I started my art career, but it was based on real estate. So a lot of things that I do now when I’m looking for real estate, I’m looking for mixed use buildings all the time. That’s my jam. And everyone’s like, why do you want that? I’m like, well, because I’m going to use one of the retail spaces. I’m going to create something that I want. Or my son is really into board games. So we talk about opening a board game shop where people can come and do board games. I want to do things that are cool and I’ve built up, again, I’m 53, I’m not 26 saying, Hey, I want to get out of it. I’ve been out of it, but I want to be in it all the time. I like working, I like making money, I like helping people. So I don’t really see the end of that, the retire early like you were saying before, what would I do?

Dave:
Alright, it’s time for a break and then we’ll have more of my conversation with investor. Jonathan Greene, thanks for sticking with us. Let’s jump back into this week’s investor story. Wait, I want to get back to this art thing because I did not know this about you. So you started an art gallery and you’re selling art and it was related to real estate. Did this help your real estate investing career or what was it?

Jonathan:
In some ways they weren’t related. It was just kind of my first, when I left being a prosecutor, I opened a criminal defense firm. So that was really my first entrepreneurship, but it was still based on being an attorney. So I did that for about two years and then while I was finishing that up, I bought the building in Sarasota with my ex, and we just started this half boutique, half gallery thought it would be cool, and the art thing really took off. So I ended up with three art galleries in Sarasota and then one became really contemporary. We were doing art fairs. I think I did 13 art fairs all over the world, and then I moved the gallery to the lower east side of New York and I start doing a build out on a rented space on the Lower East Side on Clinton Street in 2007, late 2007.

Dave:
Lucky. So

Jonathan:
I’m renovating the gallery, my ex and I decided, Hey, we were already divorced. We’re going to move back to New York. Eventually the kids are going to move, we’re going to move separately. We’ll both live there and then the bottom drops out of the market. I have two houses for sale in Sarasota and I’m in the middle of renovating a gallery on the Lower East side where I have a three year lease. So I’m like, what am I going to do? I’ve already invested too much. I can’t get out of it. So I finish my renovation, but my houses in Sarasota didn’t sell.

Dave:
So

Jonathan:
For the year that I had, my gallery was open for a year on the lower East side. It was the worst time to be an art. No one was buying excess art at that time. But I traveled back and forth to Sarasota every single week. I was in Sarasota three and a half days, and then I would fly to New York, open my gallery, and it was only open in the days that I was there, so I could take my kids to school on my three and a half days. And I did that for the whole year of 2008 to 2009.

Dave:
How did that story end? Did you sell the gallery and the houses

Jonathan:
Gallery? I got out of the lease. I had to pay to get out of the lease. I sold the houses both at losses,

Jonathan:
Which was hard because the worst story, I may have told it before the house that was like the house, it was my favorite house that I’ve ever done. Built a back house with a three car garage, built a pool. It was just awesome and I put it up for sale. This is a good lesson though for flippers. I put it up for sale for 2.3 million thinking like, oh, this is the best house ever. This is before the market dropped and I got an offer for 1.4 in the first week, and I was like the most curses I’ve ever said in my life, because I was the owner that now as an agent I never want to work with. I was like, no, this is the best house. Of course, I didn’t take it. I was very offended. Then the bottom drops right after that, I ended up selling it for under a million, and that’s just, but people say, how do you recover from that? I had other real estate and it’s just part of doing business in a downturn, you accept that you’re going to take the two losses. So I took two losses, but eventually got everybody moved and I’m still in the northeast now back home.

Dave:
So I mean, you’ve been through it all. Let’s fast forward to today now because curious, what are you focusing on in this type of market?

Jonathan:
Well, it’s been interesting. During the pandemic, my sister kind of didn’t want to be in the real estate game anymore, so we sold off a bunch of our older properties in New York that were holdovers from my dad’s that we had been managing for years. So she’s kind of out of our real estate business. We only own one property together now I think. And I started to repopulate. I did what we call stockpiling the gunpowder. I have the opportunity out through my podcast to interview a million people all the time. So I started to reconfigure the way that I invest and I stopped thinking about flipping even though I do. Well when I flip, I never really flip more than two at a time, and usually it’s just like a couple, two or three a year. And I started thinking about syndications and more turnkey passive opportunities because I’m getting older. And I also started to think more about what my dad did. I haven’t done as good a job as him for my kids and started think like, okay, which of my kids want a house hack which want to own properties that are turnkey and now start to involve them in the process of like, look, these are our holdings. This is what I’m looking at. These are the things that you’re going to be in charge of. So I’ve been focused much more on syndications. I read, obviously you’ve had, Brian’s been on a lot. He wrote

Jonathan:
The book, the Hands Off Investor. That book was my first guide into figuring out syndication same. And then I had a bunch of syndicators on my podcast and I was like, wait, this is starting to make sense. And to me it’s really interesting because now I’m invested in Chicago DFW and Madison, Wisconsin, but I would never get a single family there,

Dave:
Right?

Jonathan:
But I’m in the market. It’s interesting. I don’t go and say, oh, I have 52 doors in Chicago. I I have a very small portion of that, but I’m in that market and that’s interesting to me.

Dave:
First of all, thank you for not counting things syndications you’re invested in towards how much real estate you own. That drives me insane.

Jonathan:
Yeah, me

Dave:
Too.

Dave:
But just want to explain for anyone who doesn’t know what a syndication is, it’s basically when investors pool their money together to buy a large asset, usually at least on this podcast when we’re talking about syndications, it’s typically multifamily, but you could do it for self storage, you could do it for office retail, whatever. So why, Jonathan, you have so much experience in real estate that you could, I believe could feasibly pull off most strategies. Why do a syndication where you’re not as active and you’re pooling with other investors rather than just buying your own small multifamily, buying an eight unit in Madison, Wisconsin? If you like the market,

Jonathan:
I mean, I think it’s like a not how principle. I’m getting smarter about giving away some of the time to people who are experts in the field. If you just, all three of my syndications now are all multifamily. I have zero interest in owning multifamily on my own. I don’t enjoy being a landlord even though I’ve been a landlord for 30 years. It’s not what I want to do. I don’t want to respond to calls. I don’t want to manage the manager on property management,

Jonathan:
But I like that I have, again, options in multifamily and options in these areas and that I’m hedging my bets based on data that other people spend all of their time working on. And by reading Brian’s book, I also understood, okay, well the operator’s going to be important. So I’m betting on the operator and that’s, again, this is leveraging my time in a better way. There’s always risk. Syndications obviously have risks. There’s been a lot of bad press on them, but if you’re betting on the operator, to me that’s a much better educated risk that I’m making with someone who only does that than again, trying to flip with a team that I don’t know in a market where I’d need to do enormous volume to earn the same return.

Dave:
I will say for everyone listening that syndications, I think it’s a really interesting way for people to get into real estate, but it is a little bit more advanced. Brian Burke’s book is great. We actually just launched a new podcast here, BiggerPockets called Passive Pockets, all about this kind of investing. I will say that for most of these deals, you do need to be what’s called an accredited investor, which means that I think the most recent definition is still that you need a net worth of a million dollars or you need $200,000 of income or 300,000 for a married couple, and the minimum investment for these deals is often $50,000 a year or higher. So this is definitely not a low money kind of strategy. This is why I think a lot of times you see people either who, like Jonathan and I were talking about earlier, have a good job and can qualify for this do it. Or as you sort of progress through your real estate investing career and you’ve done some flipping, you’ve done some hands-on stuff and you want to start pulling back, getting more of that time freedom, you start looking into these types of syndications.

Jonathan:
Yeah, I see syndications and turnkey and things that are at least more passive. They’re going to attract a lot more younger investors who are making money now because I think those people are going to stay renting. They’re not going to be dunking their nest egg into a home because they can’t afford it or else what they can rent is way nicer than the same payment for what they can buy. So the enjoyment versus, hey, I can invest in something that’s a little bit more stable that I don’t need to manage. I think it’s going to be a different option. And I think the landscape’s changing a little bit because of the affordability issues with housing in America.

Dave:
This is a great topic. Let’s go here. This is something I’ve been just thinking about quite a lot is that for so many Americans now, if you’re renting is a better option, that’s just the math. You can look this up in a million different ways, and I’m not an agent, but Jonathan’s an agent saying this and it’s just true. And if you do the math for a lot of people, it makes more sense to rent and to invest the money you would use for a down payment into either a rental property or into a syndication like that. Is that sort of what you mean?

Jonathan:
Absolutely. I’m looking at the landscape. I look at what the rentals look like at a certain price point, and then I look at what that same payment would get you. And in most markets what you can rent is much nicer. Plus, if you’re renting, say you’re young and you’re renting a condo, you also get amenities. Do you want to be in a cool building when you’re in your twenties that has a gym and co-working spaces, or do you want to try to use a closet as your office? I mean, these are things where it’s like everyone’s been told home ownership is the path to greatness. And I’ve always been a homeowner, I love it, but I don’t think it’s the same look now. Rates are high, prices are high. Everybody said, oh, well, if the rates go high, prices will go down. Nope, didn’t happen.

Jonathan:
I mean, not at all. And in a lot of markets, especially where I am, it’s really crazy. So I just think that if you have the extra money and you’re going to rent and you’re looking on one hand, I’m going to do a burr or a flip, which Burr is very hard to do right now, flips. I really am worried for people who try a first time flip just because everything can go wrong versus syndications and turnkey with vetted providers on each, I just think they’re going to start going to these things that are actually closer to passive than what people call passive. We all know landlording is not passive. Even if you have a property manager, you have to manage them or you’re losing money. So I think it’s recreating what people think of these words and what they think of what we’re talking about. What is financial independence? It’s going to look different.

Dave:
Yeah, it’s wild. And I know that a lot of folks are waiting for affordability in the housing mortgage to come back and it’s certainly possible, but I actually on our sister podcast on the market, I was speaking the other day to an economist from Moody’s, and he and his team did some research that said that to get back to 2019 levels of affordability. So just normal affordability was pretty normal back then compared to historical average. We would need interest rates to go down to 2%. That has never happened. Even during the pandemic when the federal funds rate was zero, mortgage rates were still usually around 3% or a little bit higher. So the probability of affordability, getting back to pre pandemic levels is very low. And if that were to happen, it would have to require some sort of economic catastrophe. And so it’s not like all of a sudden people are going to be super eager to be buying real estate. So I think you’re right. And it’s kind of just this sort of existential question almost for real estate investing and for home ownership is like, what does that mean for American culture and our society? Because we have always said that home ownership is sort of the path to wealth, and that might be changing. We got to take a break for some ads, but stick around because later in the show I’ll ask Jonathan what advice he’d give to younger investors who still want to take a more hands-on approach in today’s market.

Dave:
We’re back. Here’s more of my conversation with Jonathan Greene. For people who don’t have the funds or don’t qualify as an accredited investor, how would you start in this market?

Jonathan:
The way that I would do it if I was new and I had limited capital, but a little, and I wanted to flip, say I would be going to real estate meetups until I met a flipper, I would ask if I could visit the site and if I really like what I said is like, can I invest just a little bit into your next flip, whatever it is, 5% anything, and then get a ride along. Basically I’m going to ride along because contributed to it and you’re not in a 50 50 thing with your friend from high school because neither of how to do anything. So why do you want to do that? You just try to make a little bit of an increment or don’t even do it with the money, just ask if you can swing by. And that’s where I see better partnerships coming, investing a little income in what somebody else is doing so you can kind of get the educational ride along. And I think that’s a good strategy. But as we were saying before, when you’re talking about syndications, patience is the issue. Nobody’s patience, why they’re looking for hacks for everything. And they’re on TikTok all day saying, well, how can I figure this out? It’s TikTok that’s not

Speaker 4:
Real.

Jonathan:
Some of the stuff is valid, but a lot’s not. So I think if people can think and go back to the principles of real estate, buy real estate and wait, that’s what you’re supposed to do, it’s great because contrary to syndications, which are illiquid, your real estate portfolio is usually pretty liquid. It’s one of the most liquid assets that you have. So if you have five units and then you want to sell one, you can sell one. So I just think that they’re going to have to think differently. The same way with renting, and if you become a choice renter and you appreciate the enjoyment of the rental and you get a benefit of that, and you said, like we were saying in the beginning, you keep that W2 job, you get really good at the W2 job, so you’re making much more than everyone. You’re going to create a much bigger foundation where you may end up getting two or three different type of assets. Maybe you do get a small multi house hacking is still a great idea. I still love house hacking. If I was younger, I would house hack. I mean, I even think of buying a three family now and having my kids live on both of the other levels. They both live out of the house now.

Speaker 4:
That’d be great,

Jonathan:
But they conceivably might do that because they like the real estate portion. So maybe old house hacking’s going to come back.

Dave:
Yeah, yeah. Well, I want to ask you about your kids just in one minute, but just back to this idea of affordability, and we talked about this, that people are impatient and I think this goes back to the earlier conversation about financial independence and wanting to quit your job as quickly as possible. Am curious, or at least something I’ve just been thinking about recently is that for a while there in the 2010s, it was feasible to be able to do this, to work for three to five years and maybe be able to quit your job and replace your income, but that’s not normal. At least when I look at the historical data about opportunities in real estate, this idea that you could buy things super cheap, you could do the perfect burr and get a hundred percent of your equity back, people have anchored themselves and start thinking that that’s what we should expect. That was the anomaly. This time right now is actually kind of normal. It’s low affordability, but these types of interest rates, these types of deals where you have to dig and search and work for them, that is the normal thing and it’s, there’s still good ways to invest in real estate, but I think we’re sort of going through this transition as an industry where it used to be for a couple years it was abnormally easy and now it’s just reverting back to the normal level of difficulty that it’s always been.

Jonathan:
I’ve always been an appreciation investor. I didn’t have to be a cash investor, a cashflow investor, but I think people are going to have to really start looking harder and knowing more because no one can tell you what the appreciation’s going to be. It’s not guaranteed. So you have to be better at understanding the markets that you’re buying and so you can hedge your bets better. And I think growing up that I was always good at buying single family houses, so almost most of my best investments of all time have been houses that I lived in. And people think, wow, that’s not even an asset. No, your house is your biggest asset. Absolutely. I knew how to buy, I knew how to renovate, and sometimes I renovate early, sometimes I renovate late, but I knew how to buy in neighborhoods that weren’t there yet, but we’re still nice and I wanted to live there. So people need to stop discounting their personal residence and thinking, I’m not a real estate investor. If you own a house, you’re a real estate investor and you can’t get into this home my forever home, that’s not real. I’ve moved 500 times.

Jonathan:
That’s how you make money is you trade up and move. And now it’s really hard. It’s why people are stuck because they don’t want to move out of their 2.75 rate and go upgrade and there’s no inventory. So I understand them, but look, at some point it’s not going to work. You’re going to have to figure it

Dave:
Out. I completely agree. I think people overlook the primary residence. There’s so many advantages to thinking of your primary residence as an investment from the financing to the tax benefits. There’s just so much that incentivizes you rather than going out and buying your perfectly manicured recently flipped or recently built Dreamhouse. If you want to do that, fine, but you’re missing a financial opportunity, which is your decision. But if you want to turn your primary residence into investment, you absolutely can. That’s just how a lot of people do it. I was actually just talking to Henry Washington about this, and right before we got on, I was talking to James Dean or he was telling me a story about how he did this with his primary residents. It’s how almost all of the successful investors I know not necessarily got started, but sort of augmented their portfolio, especially early in their investing careers.

Jonathan:
That’s what my dad did. I grew up the second that the house was the best, he’s like, we’re moving. And I’m like, what? And I was only there on weekends. My stepbrothers and sisters should have been more about it and he would say, no, we’re going to make this much because I did all this. And I’m like, oh, okay. I understood that even at 10 years old, because he didn’t ever talk to me like a kid. He just we’re going to make whatever amount of money. Yeah, that makes sense. We should move. I never was tied emotionally to real estate because I moved so much and I grew up living in apartments. You’re not really tied to real estate when you’re in an apartment, whether you own it or rent it, it’s just an apartment in Brooklyn. You’re going to move.

Dave:
Well, that actually brings me to my last question here, Jonathan. So you said that you had this really unique exposure to real estate as a kid, and it seems like it’s created a really amazing foundation for you over your 30 year real estate career. Have you exposed your kids in the same way?

Jonathan:
Not the same way. And I think it’s partly because technology provides so many other outlets. As I was saying before, when I was riding in the car with my dad, I couldn’t look at my phone or play a video game unless it was like that electronic football where it’s just little dots. So I had to listen to him. My kids from the time they were little we’re looking at video games or things in the car and everybody likes to put it on parents. Oh, well, you could have just forced them to talk. It’s like no times were different, and we grew up as parents differently than my dad did. So I’ve done a good job exposing them much more now that they’re both adults. They’re 21 and 23, and I think I really have a smart plan for where I want to go, but they weren’t as exposed as I was, but they also weren’t not exposed.

Jonathan:
They did plenty of homes that we lived in. I explained why we were moving. They’ve understood rental properties that we bought. They understood short-term rentals because we’ve owned short-term rentals 20 years ago, and we used to go stay in them and then explain how it works. So like me, I think through osmosis, they probably know a lot more than they think they know, but now they’re both very interested. And my plan is basically to have two family meetings a year where we go over all our assets and how much they’re worth and what the distributions are, what they pay, and why they’re there so that they can start to scale over time and understand that there’s a lot of diversification in real estate, but I also want them to see what I have in stocks and why.

Jonathan:
So I don’t think I’ve done as good a job on the trust end as my dad, but I think I’m doing it now. But I think technology corrupted a lot of things that, again, not my fault, not technology’s fault. It’s super useful for real estate, but it also gets in the way of a lot of one-to-one, which I still have a great relationship, fortunately with both of my kids. But yeah, it is tough. It’s a different time. Growing up without the internet, we just went and got lists from the courthouse. My dad knew everyone, so we would just go and he literally, if the door was locked, he pushed me through the window and that’s how we got in and we’re like, oh my God, you were trespassing. I’m like, this is the late seventies. It’s fine. I still look at real estate through that lens, and I think that’s what helps me be a better investor, a better coach, and just a better real estate advisor in this climate, because I don’t look at it just as numbers. That’s meaningless to me. Like we’ve talked about. I’m an asset hunter. I look at the asset. I like to help people, but sometimes there’s things you have to do.

Dave:
Well, Jonathan, thank you so much for being here. This was a of fun. Always a great conversation with you. If you want to check out Jonathan’s podcast, we’ll put a link below or you can always connect with him. He is one of the most prolific forum members, community members at BiggerPockets History. He has given away so much information for free in the BiggerPockets community. Definitely go connect with him there, Jonathan. Thanks again, man.

Jonathan:
Thanks, Dave. I always appreciate it.

Dave:
Thank you all so much for listening, and we’ll see you next time for the BiggerPockets podcast.