Real Estate Explained

Investing Young, Scaling Smart, & Playing the Long Game in Real Estate with Kareem Yousef

• Nick Bush

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In this episode of Real Estate Explained, Nick Bush sits down with Kareem Yousef — team lead at Cornerstone Realty Group — to talk about adaptability, leadership, and building a real estate business with real impact.

Kareem shares his journey from growing up in Kuwait to launching a thriving real estate team in the DMV area, serving the Arab and North African community. We dive into what it really takes to lead a successful team, how understanding your clients’ culture can become a competitive advantage, and why solving problems — not just selling homes — is the future of real estate.

We also break down key investing lessons, from house hacking to building a multi-property portfolio, plus how Kareem leverages tax strategies and 1031 exchanges to grow smarter, not just bigger.

Whether you're an aspiring agent, a young investor, or a seasoned professional looking for a fresh perspective, this episode is packed with actionable advice for growing a business that lasts.

🎧 Tune in to learn how adaptability, strategic thinking, and cultural connection can fuel real estate success.

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Speaker 1:

Welcome to Real Estate Explained, the podcast that gives you a backstage pass to the ever-evolving world of real estate. I'm your host, nick Bush, a realtor with over a decade of experience helping clients buy, sell and invest with confidence. Whether you're a first-time homebuyer, a seasoned investor or just curious about the market, this show is for you. Each week, we'll dive into trending topics, break down the latest real estate news and bring you expert interviews with the pros so you're prepared for every step of the journey, ready to turn your real estate goals into reality. Keep watching. He's like I have no idea where this fire came from.

Speaker 2:

I was like what do you?

Speaker 1:

think, stopped it. He was like God, bro, I think it was electric. Well, actually, what I found out is I renovated my kitchen. I had the worst contractors ever. The company is called Blackpool, Terrible, blackpool, terrible. They do stuff in McClane.

Speaker 2:

Boycott.

Speaker 1:

Blackpool yeah, I don't know why they. And so what did he say? He said that it was like some Electrical Wiring or something. They used the wrong thing and they didn't cover it. It started a fire. And people were my house was on the market and people were like, hey, bro, there's a fire, there's a fire. People were like what's up with the fire. I'm like what fire are you talking about? I was like there's no fire. My house never been on fire. And then people were just like okay.

Speaker 2:

And then one agent was like no, there was a fire in here and of course you drove up all the way from Fredericksburg to check it out.

Speaker 1:

And then she sent me the, fixed it and it was now. It's now the house is rented out, but, um, oh, you didn't have selling it. You end up putting, no, I was selling every house except mine, bro, and uh, it just didn't. It just didn't sell rest, and I talked about that a lot. Um, I think no, hpap was was part of the issue and, um, it's east of the river, so, uh, yeah, you need hpap funds. Like sometimes a lot of people need hpap funds and I think rates like really affect that market a lot. So it didn't sell and so now we have a tenant in there and it's. It was actually the plan to keep it. It was my plan to keep it forever or for a long period of time, but I think at that time we wanted to sell it and now now we're kind of chilling yeah, now it makes sense.

Speaker 1:

So welcome to the pod bro thanks bro.

Speaker 2:

Thanks for Thanks for having me over.

Speaker 1:

Of course, man. Thanks for you know. I hit you in the DMs. You were like super down, yeah. So I appreciate that.

Speaker 2:

It was the same day that I was here last week with Boston.

Speaker 1:

I was like that's cool Shooting videos for yourself. Yeah, yeah, yeah. Oh, I saw the team With.

Speaker 2:

Javier Photoshoot day.

Speaker 1:

Yeah, yeah, yeah, team day yeah.

Speaker 2:

Awesome man, where do I start? Born in Egypt, grew up in Kuwait, live in the US now, oh wow. So I guess what they call a third culture kid.

Speaker 1:

Yeah.

Speaker 2:

To ask me that question. It's like where's home?

Speaker 2:

And I freeze for a second because I'm like where was I born or where did I grow up or where do I live now? But, um, yeah, man, I'll um so team lead, uh co-team lead of of um Cornerstone Realty Group. Uh, we launched the group in uh 2022. There's five of us now. Um, it all started with my mother, so that's how it all started. Uh, mary McHale she uh launched her real estate career back in 2018. There's a really cool story behind how all that happened. We can maybe dig into that later, but it was never really the plan when we moved here in 2013 from Kuwait to get into that industry.

Speaker 2:

Long story short, long story short. I've been going at it as a team since 2022, licensed since 2021, but, you know, got into real estate a little bit before that.

Speaker 1:

And I'm happy to share that in a bit.

Speaker 2:

Yeah, but it's been awesome. It's a lot of work. You know, leading a team is no joke. One of my friends, based out in toronto his name is ibrahim hussein just posted a huge viral post about the reality of running a team okay and uh, man, that hit hard and I kind of it was a shared struggle that I didn't really realize that it's like wait, everybody goes through this yeah so it's been. It's been a learning experience, but it's a little bit more of an intro of who I am and what we're up to right now.

Speaker 1:

And shout out to your team bro, everyone on there, like your mom and you know it's just when you see like a great family, because obviously your brother's on the team your mom's on the team. And then I met I forget her name. Marianne, marianne, I know she's like family or family friend.

Speaker 2:

I remember her name Marianne. Marianne, I know she's like family or family friend. I remember that listing. Oh, it was insane, bro Rami.

Speaker 1:

Shout out to Rami. He was like, bro, it's going to work, let's still cancel it. I remember, and you see, you guys, and you see the love and the closeness and the hustle and just like the intelligence, and you guys are just crushing and the hustle and just like the intelligence, and you guys are just crushing Right. And then I just see your mom and I'm like, you know, like that culture is created with the parents, you know, and so I'm always just in my mind like an admiration of you guys, like from a distance. So I appreciate you for coming in here and so you hinted at it, right, like how you for coming in here, and so you hinted at it, right, like how you got into the business. Well before I ask you that does the team niche down in anywhere specifically Like buyer, seller move up buyer, etc.

Speaker 2:

So I would say ours isn't more geographical, or buyer versus seller. I think, thankfully, this year we've been focusing more on listings and our marketing and a lot of the campaigns that we've been running. However, I will say our niche is truly the North African Arab community. I'd say that's been the community that we've been able to connect with the most right, okay.

Speaker 2:

Because I don't like to say that that's all we serve, because it's truly not all we serve. I went to Virginia Tech so I helped a lot of Hokies a friend of mine, friends of mine that are buying their first home. Maybe they're just getting engaged, you know. I like to say there's this very predictable trajectory of like you graduate from, like UVA, virginia Tech or one of these schools that are a little bit further from the DC area, right. Then you move up here Arlington's like the place to be, and then you know then, they move out to DC.

Speaker 2:

They're like I want to go, you know cross you know, across the bridge and live in DC and experience that Northwest lifestyle for a bit, is usually when I get the phone call of like we're kind of sick and tired of DC, we want to move out.

Speaker 2:

And I'm like where's the next place you guys want to go to, like we want a townhouse or something. Right, that's kind of where we've been coming in. But I will say, the community that we've connected with the most and we do most of our events with, and such has been the Arab and North African community in our area here in the DMV area.

Speaker 1:

Okay, and there's. I mean, it's a very diverse area, so there's plenty of folks.

Speaker 2:

It is and I will tell you it's gotten a lot more diverse over the past. I wouldn't even say 10 years Over the past, like six to seven years there's just been this crazy increase in just people coming in and just a lot of diversification, and not just in people moving here, but actually making an impact. Like you see, a lot of these cafes, coffee shops, restaurants, where you know you have, like Yemeni coffee shops coming in and Saudi Arabian coffee shops coming in and Lebanese restaurants that people truly enjoy man, there's a lot of culture that's been being brought into this area, for sure.

Speaker 1:

Yeah, and so well, let's just stay there for a second then, because obviously that community has been here for a long time. I mean, I grew up in Annandale, so Annandale was like the United Nations. I remember they did a study in high school Like really it's. I mean, when someone can't pronounce a name, I'm just like why can't you?

Speaker 1:

just read it, bro, or I can tell where someone's from Connor from looking at them. I remember they did a study when I was in high school. I graduated in 2008. And Annandale was 80%. It was like 84% international, and then the rest was black and white. And I looked at the stats recently and I think that number is closer to 90% now, and so for me that community has been around for a long time. I don't think there was a lot of North Africans at Annandale North African Egyptian Morocco but we had a lot of Ethiopian West Africans and we had a strong Afghan community also.

Speaker 1:

Oh yeah, strong Afghan and Palestinian community, and so this community has been here for a long time. You guys are servicing them. How have you been able to kind of like impact, like get into that community and become the experts there, impact them and like what were they missing?

Speaker 2:

that you guys provide.

Speaker 2:

Yeah, oh, dude, awesome question.

Speaker 2:

Here's a big thing that I've been talking to a lot of people in our consultations and, um, um, there it's been one of our biggest missions, nick is how can we fill that gap where, for the longest time uh, let me just talk about the egyptian community okay, like, go one step deeper, right, because I can't speak for all the communities uh, there's a lot of different countries North African and Middle Eastern countries, but I'm gonna talk about the Egyptian community specifically For the longest time.

Speaker 2:

There's a lot of great Egyptian realtors and just real estate professionals, right, lenders and such. We believe that we've been able to step in and fill a gap where, for the longest time, people had this stigma of I don't want to work with another egyptian because they are less than, or the quality of work is less than, like this or that person that's grown up here, that's been here their whole life, uh, right, whether it's a language barrier, whether it's not just even a language barrier, but just understanding the culture, and not just the culture food, drink, all that I mean, like the culture of buying and selling homes, and being able to be a dominant, exactly.

Speaker 2:

Being a dominant force in the real estate landscape. So we've stepped in and here's truly how we've been able to connect to those people is that they've started to realize wait, Cornerstone Realty Group and the people that are working here they can speak our language, they understand our culture, as in the Egyptian culture, but at the same time, when they're out there making calls and negotiating on our behalf wait a minute. They're speaking the language, they have the connections. So that's been the biggest thing is letting people know hey, I know for the longest time, maybe this, this or that person that had their license and called themselves a realtor that helped you buy your first home back in 2015. You know, it was an absolute horrifying process, but here's how we're different.

Speaker 2:

Yeah horrifying process, but here's how we're different, yeah, and to be honest with you, it's been kind of, um, we've been kind of swimming upstream a little bit, because the stigma is, oh, you guys are from egypt, you guys are just like any other arab or or um, this whole thing about egyptians not being arabs, but yeah, I know that thing.

Speaker 1:

When I when I said that I don't know if he feels it Arabic speaking.

Speaker 2:

I should say realtors. So we've been trying our best. I should say I'm not saying we're fully there just yet, but to set a new standard of these Arabic speaking realtors that are able to compete at the highest level.

Speaker 1:

Okay, that's great, and I mean you guys. Online presence is strong. I appreciate you. We're trying, you're building a brand and a reputation there and so really like you felt like what they were missing is just like an advocate from their culture that they can depend on. And so how old are you, Kareem?

Speaker 2:

20,. What am I now? 27. 27. So you're pretty young.

Speaker 1:

I got into the business at 25, 26. And so you're doing young. I got into the business at 25, 26. And so you're doing that. And I know culturally right, like age matters you know, for sure For sure. So how were you able to like? First of all, why did you get into real estate at such a young age? You went to Virginia Tech. I'm sure you didn't go to tech thinking. I'm going to come out and be a realtor.

Speaker 2:

No, it wasn't a plan.

Speaker 1:

And then, how have you been able to like, why did you get in and how have you been able to build your business and your reputation as a young person? That's an awesome question.

Speaker 2:

I'll give you a quick backstory as to like how it all started, because it started way before I got my license. You know, I went to Virginia Tech and, to be honest with you, I moved here from Kuwait when I was halfway through my sophomore year, Ended up going to Robinson secondary.

Speaker 2:

And you know know, finished off my junior and senior year over there and, and I'll tell you, for the longest time I remember this, you know, hopefully my parents watch this but, um, I really fought my parents on going to virginia tech for for my first year, because I didn't know much but I knew that I wanted to do something big. But they were like, hey, I want to just stay close. It's a very cultural thing, right, stay close, go to George Mason or go to Nova or do something. Stay close to home. We just moved to the country. What do you mean? You're going to go live three and a half hours away from us for four years, like that wasn't something. That, which I completely understand. My parents now, they just didn't get it right. We at that time, right, we're extremely new. So I went to virginia tech and I did a dual degree in economics, in tech management.

Speaker 1:

So it's like when people ask me they're like real estate.

Speaker 2:

What? Why did you get into, get into real estate? So, um, I graduated virginia tech and I'll tell you, during my summers and, um, you might know this or know this company, but during my summers and, uh, during last two years of high school and then all throughout college, I used to do door knocking for dream home.

Speaker 2:

I'm not sure if you know dream home remodeling I don't think so a bunch of high school folks around here used to go work for them niche, uh, a good friend of mine, he's one of the owners and uh, they pulled me in and that's where my love for like sales came in.

Speaker 1:

Yeah.

Speaker 2:

Like I was this young 17-year-old, 18-year-old knocking on doors, yeah, and setting up appointments that like 28, 29-year-olds were not doing, okay. So I remember, like after a couple summers doing that, I came in and I was like you know what, I want to take it to the next level. And I remember I went and sat down in Nisha's office and I was like you know what, I want to take it to the next level. And I remember I went and sat down in Nish's office and I was like Nish, I want to take it to the next level, I don't want to knock doors anymore, I want to be the one selling the exterior remodeling products. They sell, like roofs, windows, all that stuff. Right, he looked at me. I was 18 at the time, or like 19 or something.

Speaker 2:

It was like you know what kareem he's like the youngest guy that's doing sales with us is 36 35 he's like, but that beard makes you look like you're 28 so he's like you know what I've had.

Speaker 2:

I've had a beard for a bit. He's like if you're up for it, let's do it, and I'll tell you. Um, that's been that. That was a big game changer for me because I got in. I started doing that during the summers. I got an internship my junior year at Capital One. So where, fast forward. I ended up working there the first two and a half years out of college or three years, sorry, out of college, but I interned with them at their headquarters in Tysons. So that's where my tech management side really kicked in.

Speaker 2:

I did product management and tech management. It was awesome Corporate. Everything was so great. Man like yeah think about the bells and whistles that you see when it comes to working the corporate world uh the traveling, the beautiful office, um, you know, I and I absolutely love everyone that I worked with over there, but I always had this itch and I'm like, is this what I really want to do long term?

Speaker 1:

Yeah.

Speaker 2:

And I know it's kind of a longer story, but this is where it gets me to. Covid hits and I was supposed to go back to Capital One right after my senior year. Because I got right after my internship. They gave me a return offer, so going into my senior year I already had a full-time job lined up with them.

Speaker 1:

Which is why you go to Virginia Tech.

Speaker 2:

And it was awesome, man, yeah it was an awesome company, awesome offer, covid hits. We were at Key West for spring break and we got the news. So I'm the type of person I can't just sit still for too long. And they were like yep, classes are canceled for the rest of the year, don't come back to campus.

Speaker 1:

Yeah.

Speaker 2:

So I remember very well that you got the news on Saturday. On Tuesday I call up. Who do I call up? I call the Dream Home Remodeling niche and I go like niche, what I know the world's ending. But I'm going to come back to Nova, I'm going to pack up my stuff and come back. Can I work for you guys again? He's like listen, it's commission. I don't know if he's like I don't know if we're going to sell a single roof or a single window. Yeah, come back and we'll see what happens?

Speaker 1:

Okay, Went back man.

Speaker 2:

And I don't know if you remember, but because people were home and they're like oh my God, I didn't realize my roof was that nasty.

Speaker 1:

They had to make it more comfortable inside their homes. Exactly.

Speaker 2:

They're like wait a minute, the second level is hot, so it boomed. So I did that from March all the way through July when Capital One was about to start. That's where it gets me into real estate, because I remember very well July rolls around, I'm getting into Capital One, made all this extra money that I wasn't expecting to make. And then I think about it. I'm like what does a typical high school senior oh sorry, college senior do after they graduate? I'm like they go to Europe. What did they go to Asia? They travel. I'm like I can't do that.

Speaker 1:

The world's ending.

Speaker 2:

I don't need a new car. My car works just fine. It has four wheels and it drives me wherever I need to drive it. And I'm like you know, I remember my mom's in the industry and I see her like selling stuff left and right and I ask her I'm like mom, what's the minimum that I need to buy a home?

Speaker 2:

And she goes like oh, 3% down some closing costs and this, this and that. So I do the math and I'm like that's like 27 000 at a 500, 500, 000 price point. Yeah, I'm like I can swing that. And um, remember very well like I started my job on july 14th, I capped on one and by august 14th I closed on my first home boom in springfield. Yeah, um, now to I remember, looking back, what was I 22 at the point I was like whoa, what did I just do? But I'll tell you now, nick, I look back, it's been the best and I'm not just saying personal experience the best financial decision I've made to date.

Speaker 1:

Because the house is appreciated, or oh yeah.

Speaker 2:

It appreciated. I learned how to house hack. I learned how to be a landlord at a young age.

Speaker 1:

Yeah.

Speaker 2:

It allowed me to buy many investment properties after that, just because I got that muscle flexed at the age of 22. It was good bro, right, so that's how I got in. It wasn't as a realtor.

Speaker 1:

It was as an investor really.

Speaker 2:

It was just a homeowner slash investor right the whole house hacking thing and from there man, just the itch of, of wanting to get back into sales is what made me get my license in 2021 yeah start the team in 2022 and then go in full-time at 2023 and so how many homes Uh? We have? I have four individually. Okay, one with a partner. Uh, that's a duplex that we, uh, my partner and I own, so that's five. And, uh, we currently own a flip that we're working on right now.

Speaker 1:

Okay.

Speaker 2:

Um, but that's gonna that's not an investment.

Speaker 1:

We're going to be selling that pretty soon, and are these all local DMV homes?

Speaker 2:

No, they're not actually. Um, that's something we can also chat about, if you'd like. I how do I say this? I'm a big believer that it's to start off as an investor. It's very hard to penetrate the Northern Virginia market.

Speaker 1:

DC is a lot easier.

Speaker 2:

Yeah, unless you're living in the property, do I think it's an awesome idea to house hack real estate here? Absolutely yes. But if you're going to tell me to buy an investment property and put down 20% but the starting price point is $550,000, $600,000, I don't think everybody's got six figures in the bank just sitting and ready to be deployed into a property.

Speaker 1:

Exactly.

Speaker 2:

So I bought properties. The first two investment properties I bought were in Lynchburg Virginia.

Speaker 1:

Okay.

Speaker 2:

I bought in chesapeake, uh, and one of the flips was in richmond, and then the um, uh, and then I just bought another one in lynchburg, actually in january so are you targeting the college rental market?

Speaker 2:

you know, it's funny, that was the initial thought but, weirdly enough, even though all my properties are within like a four minute drive from liberty university, all, all of them are rented out to families or professionals. But I do get the mix of both families and students that reach out to me. But you know, for some reason the ones that have clicked with me have been families in the Lynchburg area the one in Chesapeake actually it's a duplex. The one in Chesapeake actually it's a duplex, so half of it is rented out to students because there's several universities around there around the Norfolk area.

Speaker 2:

And the other half is just another family.

Speaker 1:

Okay, that's dope. And when I reached out, I was like hey, what do you want to talk about? I could tell that you were passionate about how real estate and taxes fit together and how you can save money via taxes and really gain leverage that way. So what's your mindset around that?

Speaker 2:

Okay, there's two different conversations to be had here and I think one conversation which I know a lot of realtors and real estate professionals watch this uh or this podcast, and you know I know you have a huge network in this area, nick a lot of people know who you are and and uh and uh, and you know a lot of a lot of friends and I think that's been a big thing for me, just like diving deeper into this community and that's how we got to know each other yeah but there's that side which I think, if you're a real estate professional and you understand the advantages that you have as a real estate professional when it comes to owning real estate, it's mind-blowing, Like mind-blowing, Because I think one of the biggest things that real estate agents that do well and sell, they come at the end of the year, they sit down with their accountant.

Speaker 2:

They're like how much do I have to pay?

Speaker 1:

in taxes.

Speaker 2:

They're like I have to cut a $60,000 check to the IRS. I wasn't planning on that right, unless you have, of course. You have a really, really good CPA that you work with, solid bookkeeper and such A lot of them also. I want to just be very clear like you might have the best CPA out there, right, but if they haven't dealt with real estate investors, specifically man, there's a lot of money being left on the table, and I think one of the biggest things that I've personally taken a lot of time to study is to understand all the advantages that I get as a real estate professional. The IRS has a definition to that, by the way. You can't just have your real People think, oh, I have my real estate license, so I'm a real estate professional.

Speaker 2:

I just want to be very clear. Like if you have your real estate license on the side, but you have a job, a full-time job, that's like where the majority of your income is coming from but you're selling one or two homes, you don't qualify as a real estate professional.

Speaker 2:

You have to prove to the IRS. Hey, I'm putting at least 750 hours into this. This is something that I'm doing day in and day out. But, man, I'll tell you, I'm working on my taxes right now, actually, and it's gotten more and more complicated every year because of what I'm about to share and it's just learning about cost segregation and learning about bonus depreciation and how those two things work together. As a real estate professional and a non-real estate professional.

Speaker 2:

Okay, it's called a straight line depreciation and, of course, not advice, and I definitely cannot harp on this as well as a CPA could or a real estate tax consultant could. But I'll just give you how I understand and how it's applied to me and, of course, talk to whoever you need to talk to to explain it a little bit better than I will. But if you really think about it, you have the which is such a hack. Tell the government. I don't want to wait 27 and a half years to depreciate my property. I want it. I want to depreciate it today, yeah, like all of it today. So instead of 27 and a half years where you take, like, the value of the home right the taxes, value of the home, subtract land because you can't depreciate land yeah right then that that that's divided over 47 and a half years.

Speaker 2:

Well, what the IRS allows you to do through a cost segregation study is you bring out some engineers, they go ahead and there's different levels as to how you can depreciate different parts of your property. And then they go like, hey, instead of depreciating your home and giving you maybe like a $5,000 depreciation on your Schedule E every year, well, we can depreciate all the property today and we could depreciate $150,000. Crazy, right, $160,000, $200,000. Well then, it's like, wait a minute, you do that, and if you're a real estate professional, what you're allowed to do then is use that to offset your active income. That's where differentiation comes in. That's why I said there's two different conversations. Well, if I could do that and I could go and sell a lot of real estate, but also I'm encouraged to go buy real estate that I'm going to depreciate to offset my day-to-day income. It's like, wait a minute, I'm actually deferring right, the right word is deferring a ton of taxes, A ton of taxes yeah.

Speaker 2:

And the big secret here. People go like well, karim, there's something called depreciation recapture, right? I'm like, yeah, absolutely. I mean, when it comes time to sell the house, you're going to have to pay the depreciation back. But if you're thinking like an investor, you're like my plan is to roll that property into another property through 1031s. You're just deferring your taxes and kicking the can down the road.

Speaker 1:

So we own our house in DC. We bought for 490 in 2021. So the balance is somewhere in the low to mid fours. Now it's appreciated to 625. That's what the market says Now. The market didn't react to that sales price, but we reduced the sales price and it didn't react to that either. So I just think it's not the right time to sell. We have a tenant in there and so we have, you know, around 100K more or less net cash flow, right, and I look at my wife all the time and you know she, she would rather get out of it. She's like let's just sell it, like I don't like this house anymore.

Speaker 1:

Yeah, and I'm like I only want to sell if we 1031 exchange. Yes, I'm like we don't need and you know there's privilege, right. I'm like we don't need the hundred thousand dollars. What are we gonna do?

Speaker 2:

we're gonna put in the bank account we we're going to blow it.

Speaker 1:

I'm going to try to buy the next property. I'm like let's just shift it to another investment property, so we're not paying any taxes, and then we can buy something bigger, and so the 1031 exchange is so powerful.

Speaker 2:

It is, it is man. But I will say, in your case, you just lived there right Less than two years ago.

Speaker 1:

Yeah, so we won't have to pay capital gains taxes anyway. So we have like a four-year window to do that, which is a positive, because the home is only going to appreciate over the next four years so we might end up walking away with more cash. So break down. Since we're talking about it now, break down capital gains taxes and your thought process around it.

Speaker 2:

Tell the people what they are and how you're going to benefit with the negative, the positive Sure I think just to clarify also and I mentioned that you just lived there- yeah that, when it comes to buying anything like a stock, crypto and real estate, whenever you do sell that asset off, any gains that you make, there's capital gains that you have to pay, which is pretty much a I'm trying to find the right word it's the government's way of making sure that they're taxing you correctly on the gains that you've made on every asset that you've sold, in that case, in real estate and in your case, right. What the government pretty much says is that, hey, listen, you have a it's a two in five rule, right? That's kind of the short version of explaining it. I'm pretty much saying, hey, listen, you have any five years.

Speaker 2:

When it comes time to sell the home, if you've lived for two years out of any of the last five years, then if you're married, you have up to $ hundred thousand dollars in capital gains that you do not like. If you've made like two hundred thousand dollar profit, well, you're not paying any capital gains up to five hundred thousand dollars, and then, if you're single, it's up to 250. Right now, there's been a lot of talk about this, by the way, because, um, I read something that said that that those numbers were set back in like, I don't like the 90s or the 80s or whatever it is, and people are arguing and saying that needs to change. Man, that five hundred thousand dollars. I know it's like a big, big number, but people are saying people have set, are sitting on a lot more equity than that right now especially after the impact of covid exactly so.

Speaker 2:

The problem is is I've sat in listing consultations. People are discouraged to sell their home once they realize how much capital gains tax they have to pay, they're like, heck, no, I'm not going to do that, right. So what's their other option? It's 1031, but then they're intimidated by 1031. They're like what do you mean? I have 45 days to find this, or 60 days to find the property and then put it under. You know all the numbers and the you know, 1031.

Speaker 1:

The moving parts kind of intimidate the average person. So I'll say I'll say it over here, I'll say the 1031 often intimidates the average person. It does.

Speaker 2:

It does. So there's been a lot of talks about like we need to revisit those numbers because think about what that'll do to the to, to to our market. Right, we're seeing such a lack of supply over the past what five years now?

Speaker 1:

Yeah.

Speaker 2:

But what if you told people hey, listen, the capital gains break goes up from $500,000 to a million. How many more people would be like listen, I'm willing to sell my house now If it's going to save me a million dollars, if I'm not going to have to pay capital gains on a million dollars, oh, I'm all for that.

Speaker 2:

Yeah $500,000 is just not going to do it Because, depending on your income, you're going to be paying up to 20%. So if you made $600,000 in capital gains tax, well, the first 500 is forgiven or whatever you want to call it, but they look past that.

Speaker 2:

But then just for the first $100,000 that you're going to make on top of that, you're paying $20,000 to the government. So that's been a big thing. And again, if you have that investor mindset and you're going to make on top of that, you're paying $20,000 to the government, right, so that's been a big thing. And again, if you have that investor mindset and you're willing to 1031 things, great. But if you're not, people are thinking twice before selling their homes nowadays.

Speaker 1:

So how are you thinking about your portfolio? Are you buying a whole investor? Are you going to eventually 1031 up to bigger properties? What's your mindset?

Speaker 2:

no, that's a great question. I, you know, um, for right now, yeah, for right now, my plan is to hold on to the properties I'm a big believer in in the lynchburg area. Uh, I think there's been a lot of growth in that area lately and uh, um, the university is expanding there. There's two universities there. There's two hospitals as well Sorry, there's three in one college and two other universities, so that area is just expanding right. So I don't plan on selling those properties anytime soon. However, I'm also really big, I'm a big believer of pivoting when you do see new opportunities. So could I potentially 1031 those in the next five years, 10 years maybe, um, but I definitely don't plan on just pulling the plug and being like oh, I, you know, I gotta use this money now, because I will say this nick, and sorry to um. I'll touch on one other thing, because people tell me I get this question a lot. Well, cream, when am I ever going to reap the benefits of all these, all these investments?

Speaker 2:

right and I think that's when people like really need to understand the idea of. I think it's one of our other topics, which is leveraging debt yeah and um, how banks are willing to lend quite a bit of money based on hey, what equity do you have? So they'll lend you. So they'll give you debt, or they'll lend you money and the collateral is equity.

Speaker 1:

Exactly.

Speaker 2:

It's like here's my portfolio of whatever million dollars, however, XXX whatever.

Speaker 2:

However, an investor grew their portfolio to and now they're borrowing money against it, or people don't realize this. You do have an option, by the way, to pull HELOCs on your investments. You just have to make sure they're on your taxes for a certain number of years, and you know lenders can speak on that better than I can, right, I'm not sure about all the details around that, but people understand that is that you park your money in in an asset like a piece of real estate. That doesn't mean that it has to sit there for the rest of your life. You just have to wait until you sell it to when you can reap the benefits or 30 years years until there's cashflow and component.

Speaker 2:

Yeah yeah, yeah, yeah, I mean, you can borrow money against it. You can roll that into something else. You can I don't know remodel. You can borrow money against it and remodel that property to increase your rent. There's just so many ways as to how real estate investors are actually reaping the benefits of their property on a daily basis, not when they just sell their property.

Speaker 1:

You know that's interesting and I actually have this. You know, it's kind of a dialogue. I'll call it because the tax code is obviously well, the tax code is written for everyone in America, but the rich and wealthy take advantage of it. And my argument is that sure, the rich and wealthy take advantage of it, but they have to become extraordinary to be able to take advantage of it.

Speaker 1:

Yes, but I mean you bought four houses, you know, starting at 22. Bronson's 24. And I just told him, before we started the podcast, I said, bronson, you need to be buying a house every year dude.

Speaker 1:

You know To. You know, build wealth, absolutely to build wealth, and you'll be a millionaire in a few years, just off of how many properties you own, what the value of those homes are. But I think it's interesting because people take for granted the leverage that you can create from putting 3% down two or three times, and it's almost like you're encouraged in america to go to debt, to go into debt, uh. And so when you look at that, are you more of a cash flow focused investor?

Speaker 1:

yeah, or are you a buy and hold? You know value investor yeah, good question.

Speaker 2:

Um, look, I I I think it's hard, as I, as I just mentioned, as I just mentioned, I'd have two different conversations, depending on what the person's end goal is. If the person is local and is going to be working in I don't know, in dc and tyson's, whatever it is, and they're going to be putting three percent down in their home, I'm going to tell you right now you're going to have to live there. And if you're not, house hacking and renting out the other rooms or the basement or whatever it is.

Speaker 2:

you're probably not going to be cash flowing much here. But let's say, for example, somewhere like Lynchburg, southwest Virginia, southeast Virginia. Those markets have a lower barrier to entry, exactly yeah, price points can vary from like 150 to 350. So the 20% doesn't hurt as much right Now. At the same time, the rent to sales price ratio over there is definitely a lot better Like I'll give you just an example Like you know a property that you buy down there. For example, I actually just helped one of my partners purchase a duplex at the beginning of the year new construction for 350. And each unit's renting for like 16, 16.50, something like that right.

Speaker 2:

So it almost touches that 1% rule that you might see on bigger pockets and such. You go tell an investor here in the Northern Virginia area hey, how's the 1% rule looking for you?

Speaker 1:

They're gonna look at you crazy, right? Is it getting 8% cap rate? They're like no, no, no, it doesn't work like that here. Yeah.

Speaker 2:

So it depends. And that's why I say look the. So that might sound like I'm telling people do not invest in northern virginia.

Speaker 2:

Actually that's completely wrong, because because I believe in northern virginia, you see appreciation like you don't see anywhere else and it's not just the appreciation, not the rate of appreciation, but the stability of appreciation, like, if you think about it, nick, one of the biggest things I've been telling people that are you know, I've had like at least 20 calls over the past, since April 2nd when the stock market I mean, thank God today we're ticking back up again, but I've had so many calls with just a lot of fear. Calls is what I want to call them right, and I've told people they're like ah, I don't know, this area might tank this, this, this, and that I tell them all right, I've actually had this training with my team this morning. Right, we pulled up charts of housing prices, the stock market, mortgage rates over the past 10 years. Right, studied all of it. When COVID hit anywhere like New York City, los Angeles, parts of Chicago, those are areas that people are there and they're living there because they want to live there.

Speaker 1:

Yeah.

Speaker 2:

This might sound kind of weird, but I don't think any being in the DC Northern Virginia area is anyone's like first choice, like they're like. If you could ask me to live anywhere in the US, I'm going to live in Virginia. That's not everyone's first choice. It almost feels and I know this is not true because I truly love this area but it almost feels like everybody's here because they have to be here. What I mean by that is either work, because we have markets in the country here, or schools. Yeah right, so don't compare me to or this area to like iowa and I was like prices are down in this area. I'm like I'm looking, we send out newsletters month month over month with month over month data and I'm like where have prices gone down in this area? Do we see slight dips, right, that are cyclical are? Are you going to compare January to like last July?

Speaker 1:

Well and people are making more. The income is higher here.

Speaker 1:

People are making you know, you can get to $120, $150 here easily. I was in a house with some clients and they're looking at $13, $15 is kind of where they are. I've helped these clients buy seven houses this is number seven, yeah, and we were in a million dollar house. And we were in a million dollar house. It was like 1.1. They were just like let's see 1.1, this house. We like I think it's cool and we were sitting in there and we were like man, it feels like a starter home, right, you know, 1.1 million dollar starter home. And if you tell someone that in North Carolina, they're going to be like what are you talking about? It's interesting because people do want to live in New York. They're like I'm going to live in a 300-square-foot house for a few years and vibe out in New York, chicago's, the New York of the Midwest, and then who would ever want to live in California?

Speaker 2:

So I feel. But what happened during COVID? Those places were ghost towns.

Speaker 1:

Ghost towns. Why? Because the vibes were gone.

Speaker 2:

Exactly, and again, there was no reason for them to be there anymore, right?

Speaker 1:

Yeah.

Speaker 2:

So that's one of the big reasons why I'm such a huge advocate of this area because you're making money on the back end.

Speaker 1:

Yeah.

Speaker 2:

You're making money when it comes to equity in this area, but I don't want you to come in here and expect you're making cash flow and the job market is strong. So, yeah, schools are strong, yeah.

Speaker 1:

And I mean they're still finding places to. You know, winchester, Western, prince of William County is blowing up. I feel like I can talk to Kareem for two hours, but let's you know, to avoid that, I'm gonna, I'm gonna. I have this like true or false segment right, and so I'm gonna ask you three questions. I'm gonna ask you and then just elaborate cool on each individual. One Time in the market is key to selling your home at the best price.

Speaker 2:

Timing the market.

Speaker 1:

Yeah, is time in the market key to selling your home for the best price.

Speaker 2:

I do believe. Yes, true.

Speaker 1:

Okay, that's true.

Speaker 2:

Yeah, I think that's true.

Speaker 1:

Okay.

Speaker 2:

So, in this area, what do you think the best time is? So I would say that you know, I always say this. Our spring market here starts mid-January and it goes on a run all the way until, in my opinion, July 4th to mid-July, yeah. July 4th to mid-July, yeah, and if you ask me why I'm like, well, I think that we see the most competition, actually, weirdly enough, in like the March.

Speaker 2:

Yeah, february March, right, if you think about listings start hitting in January, march April, like February, march April, we're seeing the craziest competition, right? Just try to compete on a house in Fairfax, two, three weeks ago, um $600,000 listed. Um, it went for $700,000 and it's an 1800 square foot home. It's nothing crazy, right? 32 offers on the property. Um, they had 30 of them were over asked, or like 32 were over asked. Sorry, 30 with financial, because she gave us it was pretty cool. She's on the Fox Homes team, devin Fox's team.

Speaker 2:

She said that I was very nice of her to send like a breakdown that I shared with my client to kind of like set expectations. Here's what kind of market we're dealing with right now.

Speaker 1:

So I'd say past.

Speaker 2:

July 4th, man, people are on vacation mode.

Speaker 1:

Yeah, right and august dead oof.

Speaker 2:

Uh, you know we had a listing. Uh, the contract was a little bit later than we wanted him to be and we listed, right like the second or third week of third week of august man it was. It was hard to sell that one because, think about it everyone's already settled in, schools are going back in. No one's like actively shopping at that point, and then it picks back up again in september, weirdly enough so really that first uh, september and october typically pretty busy around here I would say yeah yeah yeah, yeah, for sure, compared to august, which is weird, right yeah, I always say august and people are settling back in also, schools start now in august versus september yeah

Speaker 1:

and then there's no beach here. So if you want to take that last vacation, you have to go away. So really, january to June I mean July is the first six months of the year. Six and a half seven months of the year is where you go. I like that, okay. And so this is an interesting question, the way it's worded. But I'm going to ask it like this. But, um, I'm gonna ask it like this what do you feel like from a marketing strategy standpoint when you guys list a home? How does your process differ from another agent's?

Speaker 2:

process. Yeah, yeah, I know I'm um dude, I'm actually. If you asked me, uh, what do most people do? Actually, we actually mentioned this in our in our listing consultations. Man, I actually heard this from.

Speaker 2:

I was at EXP Con in October and Dan Beer, top listing agent in all of San Diego man, the guy's a beast. He was talking about how you go in there and you talk. If you think about it, most agents have a three-step process. They come, they sit down at your home, they sign a bunch of paperwork and they take some pictures and upload on the MLS and they just sit and wait. All right, I mean, we can talk about staging and all that, but I have a little bit of a different take when it comes to our listings. I'm like, man, if you're not doing, in my opinion, if you're not doing the legwork, if you're not doing, in my opinion, if you're not doing the legwork, if you're not putting in the work, if you're not running the open houses, if you're not knocking on doors which I know people like moved away from right now. But, man, that's how I started my love for sex I love, don't knocking yeah.

Speaker 2:

I love it. You look at a postcard and you might have the prettiest face, but if they can't talk to you, the odds of them actually calling you or doing anything I don't know. I know mailers are successful, but compare that to being in front of someone, knock it on their door and tell them hey, we're selling your neighbor's house. We'd love for you to stop by with an open house going on. We'd love to get to know you and you put yourself or myself in front of someone like that and we just start a conversation. Oh man, huge competitive advantage compared to just sending out a mailer or putting out a video on facebook or instagram yeah, you're hitting the streets, man, you're really actually.

Speaker 1:

You're actually trying to sell the home versus letting the market sell it for you. Um, and so we have to touch on interest rates for buyers. Should buyers be waiting for interest rates to drop before purchasing, or should they get into the market now?

Speaker 2:

That's an awesome question. Of course, the very easy answer is to say no. What are you waiting for? Right, what are you waiting for? And I think that goes back to you asked about timing the market as a seller. I think that same exact question can be applied to buyers, right, because that's pretty much what you're asking. Should buyers time the market and wait for the perfect interest rate to hit, and then should they pull the trigger? Then? Well, we just talked again. Going back to the same exact training we had this morning with the team how can you time the market? Warren Buffett said if we all time the market, i'llaires right, like, like at what? So what's the perfect number, you tell me, is it six? Is it 6.2? Is it like? Is it seven like? What's the perfect?

Speaker 1:

yeah, what's the number? Yeah?

Speaker 2:

it's you there and that's why I say stop being so focused on a number and be more focused on one does my family really need this move right now? Two, do I love this house Like? Do I see my family and I living in this house and making memories of this house? And number three, most importantly, can I afford the monthly payment, regardless whether the interest rate's at 11 or all the way down to 4%? You know, I bought a home at 2.75. I bought a home at four and a half. I bought a home at seven. I bought a home at 7.125. I bought I've borrowed money for some work at 11%. Right.

Speaker 1:

Private, money.

Speaker 2:

I don't care. As long as the numbers make sense for me and my family, I don't care what that interest rate is. I feel like people get so focused on that that they lose the true objective that they're trying to accomplish, which is I want to get into the first home for my family, or I'm trying to upgrade my home because our two-bedroom condo is no longer working for me and my four kids.

Speaker 1:

Yeah, you know. Yeah, agreed, agreed. All right. So, as we wrap up to ask my question what's the one critical, actionable piece of advice that you would offer to homebuyers and sellers navigating today's real estate market?

Speaker 2:

Awesome question. Listen. I think that, without a doubt, the team what I mean team, I'm not talking about like a real estate team, but the team that you partner up with, and what I mean by that is that your agent, your lender, your title company, like I people uh, really overlook that and they think, oh yeah, all title companies are created equal. No, they're not, or not. Or I'll say they are, they might be for someone until they face some real title work or title issues. Then you really learn the value of your title partner. So and not just that your contractor, like, if you don't have the right team to attack this market, you're losing. So how do you know that? Well, you ask around, you ask the questions, you ask the person you're interviewing before you decide if that person's going to help you buy your first home or sell your home or whatever it is Like. Hey, it's cool that you have all these accolades and accomplishments. Tell me more about your team.

Speaker 1:

You know it's funny, in the buyer console I always tell people. I say, hey, I'm going through this, um, so you understand, you know the home buying process and all the moving parts, but you should also know that I I know this information as well. You know like don't just go with an agent that you meet in an open house or somewhere else. Like make sure your agent knows the information and understands the nuances of the market.

Speaker 2:

You know, I can break that down to you.

Speaker 1:

And then what about for sellers?

Speaker 2:

So for sellers, I know I'd almost say it's the exact same thing. You know I'm dealing with a listing right now, um, and I actually love these listings because the bigger the problems, the more excited I get. Uh, I love those listings where the seller's not in town, they don't have the time, but they need to get the property sold. It needs work. It needs work, we need to clear up some stuff with the bank. I love those listings, man, because, again, when you partner up with someone with the right team oh, she gave me the keys, we signed the listing doc. She gave me the keys, she went off to her next thing. She doesn't have to worry about her listing anymore.

Speaker 2:

Why, I called up my contractor. We painted the house, we did the bathroom, we modeled the bathroom, we did this, this and that. I got the stagers in there, I got the photographer, the VR. That's when you have a team where everything's just a call away. It's so different than someone that tells you get your home prepped, remodel it and call me when you're ready for photos. I Remodel it and call me when you're ready for photos.

Speaker 2:

I mean, come on right, because a big thing that I always say is that if you're ever going to remodel your home with the objective of selling it. There's a difference between remodeling your home for your own purpose because you want to live and have a green I don't know kitchen right, so that's very personal preference. But if you're gonna spend money and remodel your home to sell it and you and your realtor or your team you know whoever it is is not advising you as to what exactly the market is looking for nowadays, you're you're throwing money down the drain yes, right, you need to find a very an agent that will be extremely honest oh yeah, oh, oh yeah oh yeah, I agree.

Speaker 1:

Well, thanks for coming on. Man Appreciate it man. Shout out to Cornerstone everyone over there Appreciate you. I have to get your mom on to hear this story that you that you you know mentioned earlier.

Speaker 2:

And how can?

Speaker 1:

they? How can they find you? How can the people find you?

Speaker 2:

Uh, you guys can come over. I'm in Springfield. Um, no, I, you know, I always like to give a first. Uh, you know our team, if you're like Cornerstone Realty Group, uh, dmv is the. Uh, our website is cornerstonedmvcom. Um, always, man, I love, I love meeting new people. I don't care what industry or if they're even in an industry, right, um, but I think Instagram might be the coolest way that I connect with people.

Speaker 2:

Uh, kareem yusef or things like kareemyusef with one s, that's a big thing. Yeah, um, so yeah, man, and that's it, and our team is a cornerstone. Uh, dmv on instagram as well solid, solid thanks.

Speaker 1:

Yeah, thanks for jumping on.

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Nick Bush

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