Jordan has a passion for helping people do better with their money. Today, he’s here to tell us about saving money on real estate, and a way to passively invest in real estate that anyone can do. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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“You can get some pretty decent yields off REITs” - Jordan Goodman
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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

First off, I hope you’re having a best ever weekend. Because today is Sunday, we are doing a special segment called Skillset Sunday, where you’re gonna come away with a skill that you will either have honed even more, since you listen to this, or perhaps you will acquire, because you didn’t have the skill. We’re gonna be talking about a couple different things. One is if you’re a doctor, police officer, firefighter, our guest is gonna tell you how you can get great deals on real estate; the topic is “Heroes come first.” And we’re also gonna talk about how to verify mortgages, PMI and escrows, and who knows where the conversation will take us from there, but those are some specific skills that you’ll have at the end of our conversation.

With us today to talk through that, Jordan Goodman. How are you doing, Jordan?

Jordan Goodman: Great to be with you again, Joe.

Joe Fairless: Nice to have you back on the show. A little bit about Jordan – he’s been on the show two other times; one is episode 499, titled “This trick will pay down your mortgage in a few years”, and another is episode 858, “How to verify mortgage payments and score big refunds.” So we actually covered the mortgage thing on the last one, so we’ll focus on “Heroes come first.” If you’re curious about verifying mortgage payments etc. then feel free to listen to episode 858.

With that being said, Jordan, do you wanna give the Best Ever listeners a little bit of a refresher about your background and then we’ll dive into the “Heroes come first”?

Jordan Goodman: I’ve been a personal financial journalist for about 40 years. I was at Money Magazine for 18 years, NBC News for 9 years, Marketplace on Public Radio for 6 years… I’ve done 13 books on different aspects of personal finance, including a lot of real estate things. My website is MoneyAnswers.com, and I’ve got lots of resources there. I do the Money Answers radio show, I’ve got a Money Answers YouTube channel, so I’m there to help people with all their financial questions.

Joe Fairless: 40 years of being a personal financial journalist… What are some bad pieces of advice that you’ve seen out there?

Jordan Goodman: Well, usually it comes in the get-rich-quick category, I should say. Lately, it’s been cryptocurrencies. You invest in Bitcoin and you’re gonna be able to retire the next day, and other cryptocurrencies things like that. People wanna believe these things, but it’s usually not true. So I would say that’s the general category of bad advice I see all the time.

Joe Fairless: Get-rich-quick stuff… And in terms of good, solid advice that you’ve seen the more successful people implement in their business, what would you say falls into that category?

Jordan Goodman: Learn what you’re doing. Don’t just jump into something without understanding what it’s all about. A lot of people will go to a real estate seminar, Joe, and come out of it with 10 pounds of stuff, and they think they’re gonna be a real estate millionaire the next day. It doesn’t work that way. Real estate can be very profitable, but it takes some knowledge. It takes some network of people to make it happen. So don’t expect instant success, which is what everybody is looking for.

That’s why you’ve seen a lot of people over the years sell all kinds of enticing real estate programs, and most people don’t either implement them at all, or give up on it and never succeed.

Joe Fairless: What are your thoughts on trying to time market cycles as real estate investors? You’ve been a financial journalist for 40 years, so you’ve clearly been a part of some cycles..

Jordan Goodman: I’ve seen some big ups and some big downs; it’s about ten years ago that we had the beginning of the financial meltdown, where real estate led on the way down. Before the official meltdown of Lehman Brothers and AIG and Fannie Mae and Freddie Mac, real estate had already been contracting for about two years. So it’s not as though it happens one day. These are cycles that you can get a sense of on the way up and on the way down.

Frankly, right now – it depends on the city, but some things are definitely slowing down. Where I am in the New York area, sales are down about 20%-25% over a year ago, because the new tax law changed. It’s much more expensive on an after-tax cost basis to own real estate that it did before, and you don’t get the full value of those mortgage deductions, state local income taxes, property taxes, things like that. So it’s definitely affected the real estate market.

In some areas like Seattle and San Francisco it’s still super-hot, but I’m seeing signs of slowdowns already. In the mortgage market – fewer mortgage applications, nobody is refinancing their mortgages because rates have gone up, so I’m definitely seeing some signs of slowdown, but not the kind of surge we had before the crash we had ten years ago.

Joe Fairless: Have you interviewed a bunch of people over 40 years in the industry?

Jordan Goodman: Yeah, like hundreds, basically…

Joe Fairless: What’s an interview that stands out?

Jordan Goodman: Related to real estate specifically?

Joe Fairless: Yeah, related to real estate specifically.

Jordan Goodman: There’s a guy named Mitch Stephen I interviewed recently, who just like you came up not knowing real estate, learned about it, and has a huge portfolio of income-earning houses, and he shows people how to do it.

Joe Fairless: Oh yeah, “My Life in 1,000 Houses” author?

Jordan Goodman: That’s right.

Joe Fairless: Yeah. Great book, very entertaining book. That book has come up a couple times recently.

Jordan Goodman: I’ll give you another one – there’s a guy named Lance Edwards, who has something called Big Money in Small Apartments. His whole thing is to buy small apartment buildings – either four units, up to maybe 20, and do very well building a portfolio of income-producing properties.

People have specialties that have worked for them, that they teach to other people. Those are just two of many examples of people that do it right and are successful in real estate.

Joe Fairless: Alright. Let’s talk about Heroes Come First. What is Heroes Come First?

Jordan Goodman: Heroes Come First is a program where heroes get big discounts on buying and selling homes and mortgages. Heroes are defined, Joe, as doctors or anybody in the medical field, dentists, police, firemen, EMTs, military – either current military or veteran – clergy, educators, things like that.

Joe Fairless: Yeah, I like it.

Jordan Goodman: They’re helping professions. And it’s nice to say “Thank you for your service”, but this is actually giving them money, so it’s much better. The website they go to is HeroesComeFirst.com, and there are two things – when you buy a home or sell a home through a real estate agent associated with Heroes Come First, you get a rebate of one quarter of their real estate commission, which can be thousands of dollars, depending on the price of the home. So that saves you money right there.

And then, when you buy a home and get a mortgage, they give you discounts on mortgage rates and all the closing costs, points and fees involved; appraisals, escrow, legal fees, just a whole bunch of different things that they give you discounts. They just have to go through people that are associated with that program, realtors and escrow agents in the lending firms and so on. But there’s a real way of giving back to people who often don’t get much of a  financial reward for being heroes. So again, they can find out more about it at HeroesComeFirst.com. They’ve also got a phone number – 888-437-6114. That’s helped a lot of people who have a hard time — let’s just say the military alone; they have a hard time with what they earn, being able to afford a mortgage and buy a home. It helps a lot of those people get into homes that they wouldn’t be able to afford otherwise.

Joe Fairless: When you speak at a conference and there’s a Q&A session, what are some typical questions that are asked of you?

Jordan Goodman: About this particular subject, or other…?

Joe Fairless: Others, yeah…

Jordan Goodman: What I hear a lot today is “How do I earn a decent yield on my money?” People have money sitting in the bank in checking accounts, CDs, savings accounts, pretty much earning zero, or certainly less than 1%… So “Where can I earn a decent yield on my money today without having to take huge risks?”, that’s a question I get all the time, and I’ve got a good answer for it, if you’d like the answer…

Joe Fairless: What’s the answer?

Jordan Goodman: The answer is secured real estate funds, because those pay 8% yields over a one-year timeframe. You can get monthly checks if you like, or you can reinvest them and have it compound at 8%. There’s a website for that, too – securedrealestatefunds.com. They’ve got a phone number, too: 888-444-2102. Now, this is what are called crowdfunding funds. They get money from the investor, the minimum is $5,000 and a one-year hold, and then they pool the money and they lend short-term to commercial real estate projects all over the country, different kinds: medical buildings, apartment buildings, assisted living, student housing, all kinds of different projects. And the people who have been running this fund have been doing this for 30 years, and they’re very careful about who they lend to… So it’s a way of getting [unintelligible [00:11:48].27] the price of the shares doesn’t really fluctuate up or down. It stays pretty much at $10/share. So there’s a way without having to take any principal risk, to earn 8% on your money as long as you can put in $5,000 and hold it in there for a minimum of one year.

Joe Fairless: What do you personally invest in?

Jordan Goodman: I have that, I have a diversified portfolio of stocks, I do some really conservative things, like real estate investment trusts and master limited partnerships, and I do some aggressive things – I do some high-tech stocks, lately I’ve been doing some cannabis stocks, I dabble in options a little bit… So I kind of do some conservative stuff and some aggressive stuff.

Joe Fairless: What was the thing you said after REITs?

Jordan Goodman: Master limited partnerships, MLPs.

Joe Fairless: What’s a master limited partnership?

Jordan Goodman: A master limited partnership is a publicly-traded company that typically owns oil and gas pipelines that bring the oil and gas from the fields where it’s discovered to the refineries. They have a huge capital investment to put the pipelines in, but once they’re in, it’s like a toll road, and they’re collecting money as the oil and gas is being transported through their pipes. They have yields of 4%, 5%, 6%, and they don’t trade up and down that much… But it’s a nice way of getting a decent yield, which you can reinvest.

It trades more on the transmission cost of oil and gas than the price of oil and gas itself. I’ve got several of those that worked out quite well.

Joe Fairless: Why REITs?

Jordan Goodman: REITs are a way to buy institutional real estate. You can have different kinds, you can have them regionally, like just Washington DC area, or just retail, or just office buildings, or just apartment buildings; there’s different kinds. They are interest-rate sensitive vehicles, so when rates go up, they go down; when rates go down, they go up, in general, so you have to kind of realize that… But you can get some pretty decent yields on REITs, and the advantage of a REIT is that they are not taxed at the corporate level as long as they distribute 90% of their income to their shareholders, so you get a bit of a tax break; that’s why the yields can be higher, because they’re not paying corporate taxes… And the same is true of master limited partnerships as well, by the way – they’re not taxed at the corporate level. Only you as a shareholder pay tax on whatever dividends you receive from either a REIT or an MLP.

Joe Fairless: Have you looked into investing in private deals and have you invested in any private deals as a limited partner or a joint venture?

Jordan Goodman: I have not done that, actually. I know people who do it. I don’t have the bandwidth to do all the due diligence on it; in my case it isn’t necessary. The Secured Real Estate Fund kind of does it for me, and I’d rather have them do it and be more passive. And you can do really well being active the way you are, but it’s just not the way I’m put together. I’m doing radio shows, writing books and doing other things all the time… And REITs do something similar – you have a professional manager managing it for you.

Joe Fairless: What’s the latest book you wrote?

Jordan Goodman: The latest book I wrote is Master Your Debt, Slash Your Monthly Payments and Become Debt-Free. That’s the one, when we talked on the earlier episode about the mortgage optimization strategy to pay your mortgage off in 5-7 years instead of 30 years… And I’ve got all kinds of other things in there about improving your credit, and how to get the best mortgage, and credit score… It’s all about the whole world of credit and debt.

Joe Fairless: And that’s episode 499, and then also episode 858 – Jordan talks about verifying mortgage payments. Anything else that we haven’t talked about, that you think we should discuss as it relates to information that real estate investors would be interested in?

Jordan Goodman: I’ve created a special landing page for your folks, that might be helpful for them to take a look at, which is go.moneyanswers.com/bestrei. There’s some links there for them. At my website, at moneyanswers.com, I’ve got all kinds of resources and videos, I’ve got a YouTube channel, and links… I take questions from people… So I’d just love to be a resource to help all your folks. I’ve got quite a few e-mails from your last show to help them make sound decisions in real estate.

If you do it right, it can really work well. You just don’t wanna over-extend yourself, or get into something you’re not really familiar with. Understand it really well before you actually go into action.

Joe Fairless: Jordan, thanks so much for being on the show, talking about the different aspects of, well, bad advice you’ve heard, and good advice that you’ve heard, as well as the “Heroes Come First” program, and some miscellaneous other things that we discussed.

Thanks for being on the show again. I hope  you have a Best Ever weekend, and we’ll talk to you soon.

Jordan Goodman: Thank you so much, Joe. I really appreciate it.