The Passive Income Playbook -A Build to Rent Strategy Giving You Time Freedom & Financial Prosperity

Unlock the secrets to building long-term wealth with real estate mogul Jim Sheils in this latest Legacy Wealth Code episode. Having triumphed over the challenges of Andrew's heart surgeries, my co-host and I, Michael Notbohm, are thrilled to bring you a conversation brimming with strategies for cultivating a robust portfolio. Jim, a partner with Southern Impression homes, takes us through his remarkable journey from seizing foreclosures to pioneering within the build-to-rent sector, crystallizing why patience and top-tier investments are non-negotiable for legacy builders.

Imagine a world where construction loans are a relic of the past. That's the reality we've created at our firm post-acquisition by Sumitomo Forestry, a game-changer for buyers weary of the traditional hassles. In this conversation, we peel back the layers on our edge in securing favorable mortgage rates for clients, while dissecting Florida's housing market with precision. With insights on rental inventory management and risk assessment, we equip you with the foresight to navigate the housing landscape with confidence.

This episode isn't just about the nuts and bolts of the market; it's a masterclass in investment strategy. From the allure of single-family homes and duplexes to the high-demand quad properties, we lay out the blueprint for selecting markets poised for growth. Join us as our guest imparts the wisdom of balancing the scales between holding power and recognizing market corrections, affirming the enduring rise of real estate as a cornerstone of wealth. For any investor, from the greenhorn to the grizzled veteran, this is your map to charting a course toward a prosperous real estate legacy.

Onward!

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Transcript

Speaker 1: 0:00

This is the Legacy Wealth Code podcast helping you build long term wealth and elastic legacy through real estate investing, tax strategies and motivational stories from some of the most successful and influential people out there. Here are your hosts real estate investor and entrepreneur, Michael Notbohm, and real estate investor and attorney, Andrew Hoek.

Michael Notbohm: 0:23

Hey guys, welcome back to another episode of the Legacy Wealth Code podcast. My name is Michael Notbohm, here with my partner and grime, Andrew Hoek.

Andrew Hoek: 0:31

Hey guys, how are you all?

Michael Notbohm: 0:33

We appreciate the couple week hiatus that you guys have been patient on a new episode. Andrew if you've listened to many of the other episodes is fairly stoic and called me and said I got a heart surgery tomorrow and I thought that seems like a kind of a big deal. So, needless to say, he's had a couple weeks of healing and we're back in action and we actually, today, have a guest with us, Jim Shields. He's a real estate expert with extensive knowledge in the build to rent niche, also a partner at Southern Impression Homes, a company that specializes in building rental portfolios in Florida's high growth markets for individual investors and institutional buyers. In addition, Jim is the co-owner and co-founder of 18 Summers, providing family education services to entrepreneurs and professionals seeking to strengthen their family relationships while succeeding in business. So hey, thanks so much, Jim, for coming on. We're excited to chat with you today.

Jim Sheils: 1:30

Yeah, Michael, Andrew, thanks for having me.

Michael Notbohm: 1:32

I guess we didn't share with you that our hiatus was due to Andrew nonchalantly having not one but two heart surgeries Wow.

Jim Sheils: 1:41

We are. I'm glad to see you.

Andrew Hoek: 1:43

Yeah, I'm definitely happy to be back on the other side of it all, so it's definitely good to be here.

Michael Notbohm: 1:50

And nothing makes us happier than talking about real estate. So here we are today. We've got an expert with us. One of the things I definitely wanted to chat with you about is escaping the rat race. Kind of just. People want to get started in investing in real estate and sometimes people think that they don't qualify. A lot of people just don't even, frankly, know where to start. So what is your kind of special sauce, so to speak, that's helped you both help yourself and others around you.

Jim Sheils: 2:19

We just wrote a book called the passive income playbook and it's about my 25 year journey with my wife and my now part building partner, and what I've found is a couple of things about real estate. Investing that first property is probably not going to retire you and if you're putting the pressure on to make it retire you, you're going to be disappointed.

Jim Sheils: 2:39

Now, in the good news is that first property is not going to bankrupt you probably either. You know there's that fear as well. But what I've learned, really you know 25 years in real estate investing there is a nurturing to it. There is a planting of the seed. You don't feed off a seed so much in the beginning. But if you start to really look at the most successful real estate investors right is that saying don't wait to buy real estate? Buy real estate and wait. When you can get into the right areas with the right fundamentals and you have some patients, that's when things can really start to kick into deer and by kicking into gear you're going to have better results.

Jim Sheils: 3:19

This is the biggest lesson, guys, that I've learned is I own way less property numbers of properties today than I did, let's say, 10, 12 years ago, and right now I have way more equity and cash flow than I've ever had. So I always encourage people don't get wrapped up in the number, the quantity, get wrapped up in the quality and if you have some patience, that's what I've seen work for. For the majority of the people like myself and many clients that I've worked with, that's been kind of the secret sauce a little bit of patience, choosing quality over quantity and looking long term. That is absolutely key, not putting the pressure. I need to be retired off these two rentals in the next 12 months. That'd be nice, but it's not normally the norm. But I can tell you a lot can happen in three to five years with a few properties.

Andrew Hoek: 4:11

Jim, tell us a little bit about what led you into the build to rent sector. It sounds like you started potentially outside of that. Is that correct?

Jim Sheils: 4:20

Yeah, andrew, I was actually doing bulk foreclosures After 2008,. I was buying foreclosures in bulk for myself and investors were hiring me to work those properties. There was a great time at that post-2008 to buy properties cheap. I was in North Florida, which had a great growth pattern. But by about 2014-15, the numbers really started to change. There was a lot of investors jumping in and put a lot of pressure on where you're. If you're going to buy a property that you need rehab, you had to cut corners or you had to go where as you didn't want to. None of that's good.

Jim Sheils: 5:03

So my now building partner we had done different properties together and he had just him and his father actually own a management company and I had hired and fired four property managers. Where I was in Northeast Florida and came to them, they were doing a better job than I had on my own. He said to me hey, what if we threw in and we just built some houses, new construction rentals, instead of trying to find old fixer uppers? And it was literally that organic. There was no term build to rent. That's only come along in the last five years. So we were doing build to rent way before the term even came. So it was really entering a necessity where we wanted to keep doing deals, not only for ourselves but investors hired us and we just we didn't think the fundamentals were still sound for the old fixer uppers.

Jim Sheils: 5:51

They have been priced too high, you'd have to cut corners and we wanted a better approach. And now, after doing thousands of the old properties versus thousands of new construction, there's no comparison. You know, the numbers don't lie when it comes to performance, length of tenancy, maintenance, repairs, headaches, even value growth and rental and market appreciation. I hung up my rehab shoes about seven years ago as we were transitioning. I don't seem to be picking them back up, guys, I think. I think.

Michael Notbohm: 6:25

Andrew is ready to move in with you If you have your if you have your rehab shoes hung up.

Michael Notbohm: 6:30

I can tell you we've had many conversations, just, you know, dealing with local, you know, just kind of city garbage with the red tape and just the endless reinspections on things that were fairly common sense items. It's like when you make that transition, I'm sure that is a game changer. So what would you tell? Because the fewer base that we have and listener base is really a mixed bag of people who are seasoned investors and then there's also those who are just getting into an investing. So new construction, you know, build to rent, I think for a lot of people could sound intimidating. What are some of the things to worry about and what's some of the things that you know? Just, this is the natural progression of how things go.

Jim Sheils: 7:15

Yeah, I mean again, I always ask my seasoned investor friends and I'm in a lot of mastermind groups and different. I'm always, at events, learning. Still, I always ask that question about taking inventory of would it be better to own less of better quality? Because there comes a point where a lot of us start in more marginal properties that had more repairs than we knew and is that the best way to stay long term? And maybe some say yes but a lot say no because they're trying to buy back their time and I found that you know the new construction model, you can go into less properties but I think get better results, and so that's something for seasoned people I always tell them to consider. And for newer people, you know you got to look at ROT and that's return on time.

Jim Sheils: 8:05

A lot of the new people that we work with, for example, I'm not sure you're you're listening base, but you know we have a lot of successful professionals and business owners and they they want to be involved in real estate but they don't necessarily want to be in the trenches with it. They don't want to be negotiating with the contractors and subcontractors and learning the areas and figuring out their own financing. You know they kind of. They want to be exposed to real estate but not in, and that's where I tell people, you know, look at the models that are going to be less demanding on your time and that's that's that return on time. And that's something that you know, I think can't, can't be discounted, and if you truly are looking long term, the condition of the property no one wants to talk about this. But those older properties, you know, there's some that are built well, others that are not.

Jim Sheils: 8:55

And if they're in areas where it's constant turnover. Is that really going to create generational wealth? Are you really going to stay long, long term in those another 20 years? It made me change a lot about myself, you know 10 years ago, and it could do the same for others. I'm not sure.

Andrew Hoek: 9:12

Hey, jim, talk to us a little bit about the financing on the build to rent. I mean, I think most people that the dabble in rehab know there's a ton of products for fix and flip loans. You know they're they're used to kind of seeing that what. What do you typically see on the build to rent? Is financing more difficult? Are there a number of products that have rolled out? And especially, as you said, you know you started kind of before it was an it thing. What does that look like over time?

Jim Sheils: 9:37

Yeah, it's like even for good builders out there with a good balance sheet, right now the banks kind of have them in handcuffs and they're wanting everything pre sold, you know. So you have to usually sell it pre construction, which you know. That's fine. I've done those and we've done lots of those for our clients. I bought them. But a lot of people don't want to wait 12 months for a property and so that really holds the builders back.

Jim Sheils: 10:01

For us personally, a part of our business was acquired last year by Sumitomo forestry. Sumitomo is the big financial conglomerate of Japan. You know they were broken up in World War two. Warren Buffett has invested very heavily in one of their other conglomerates, but they now back us. We have zero bank debt, which is very rare for a builder of our size, and they've given us the green light. So for our personal building, having this bigger partner now and with part ownership of our company, they fund us completely, which is which is a pretty good thing For other.

Jim Sheils: 10:36

For other builder friends out there they're doing new construction or even if you're building a single family family home or smaller property. You know you can get construction loans but they're tedious and there are a lot of paperwork for our buyers. You don't need one. So if you're buying a new property with us, we're on a continual build cycle. So someone can step into us and buy a home that's completed or within 60 days of completion. They don't need a construction loan, they just need permanent financing, and financing is the key out there right now. So a lot of builders actually come to us right now. They'll have a piece of land they'll hire us to build because we actually can finance their project for them as part of what, what we have in our overall bankroll.

Jim Sheils: 11:18

Then we also now have bought money. So we pre buy mortgages for our clients. So someone's buying a duplex with us, let's say we pre buy money. It's not cheap, but it's worthwhile because where most people are getting locked in at 7, 7.5%, we're locking our people in at 4.75 right now. So that's, you know, several and if someone tried to do that on their own, they'd be paying their lender 10 points to do that. So that's financing is. I don't know about what you guys are seeing, but it is. That's the issue out there right now. We don't have a real estate issue. We have an interest rates and financing issue, and so we're always trying to solve those and right now, with our building operation being fully funded by our parent company and us pre buying mortgages for our investors, that's been a huge help to keeping us sustain a really good volume.

Michael Notbohm: 12:10

When you make a good point.

Michael Notbohm: 12:11

So I guess, my question along the line of what you're. You know, totally on board with you what you're saying about financing, In fact. So we're in Tampa and there's a number of projects that you know basically were announced and now they're just kind of in a holding pattern until rates lower and they, they can move forward. And I think that there's just a level of uncertainty with everything right now. Right, I mean, you turn on the news and one channel tells you one thing, another channel tells you the other thing, and so there's somewhat of a, I think, hesitation by a lot of investors. When you're doing new construction and there is a 12 month lead time, you know, obviously, applying your 25 plus years of experience, like, what else are you looking at to know I want to keep moving forward and I'm not going to be caught holding the bag 12 months from now?

Jim Sheils: 13:01

Meaning if you're building it yourself.

Michael Notbohm: 13:03

Yeah, because so I mean. Well, you are, your model is you're building it and then you're having an investor's buy it from you and then hold it. As you're building these, you have a certain amount of lead time and an expected exit price. What kind of metrics are you looking at to make sure you're not going to see a huge correction by the time you're done?

Jim Sheils: 13:22

Yeah, this is look. If anyone tells you they're in the build to rent business and they're not concerned about values or what the rents are actually going to be or is the rental demand still there, they're just not telling the truth, they're not really in the game. So we're constantly pulling market data on how many building permits are coming out. You know how many new units are coming on the market and 12 different markets in Florida. We're always looking how many units are coming out, how fast is absorption occurring. You know what are the rental rates at. It's really a constant checks and balances. You know constant research to always be trying to navigate that ahead and the good news is I think with the residential it's a little bit easier. Residential just seems to be at least where we are in Florida. We've had so much growth they're already.

Jim Sheils: 14:12

Most of the areas that we build in are extremely behind in needed rental inventory, especially small residential. You know the bigger commercials and apartment buildings. They're not, as I'm not seeing them, as favorable as they were before the pandemic. People like to be spread out, have their own yard. They'll choose the half of a duplex before a unit in an apartment building almost every other time, almost every time. So that's super helpful for what we're doing. But we're constantly looking like to see and also we don't like to take a lot of risk. So it's a very simple supply and demand. If we get like a report from the municipality, like Southwest Florida, fort Myers was were down there or building in many of the sub markets of Fort Myers Well before the pandemic even started, they showed three years behind a needed rental inventory. So we like to have that wind at our back and when you look at that that helps.

Jim Sheils: 15:07

You know, am I going to be holding the bag? Some people just start building and they're not even checking to see how many permits are being pulled. You know how much rental demand. How quick is absorption? Are prices staying steady? What type of inventory? So we don't just build single family. What separates us from some other build rents is we also build duplexes and quads, so other residential investment real estate that shows really well in performance and value growth and we know there's a need for those. So again, we're always trying to look at the need. And you know, stability, stabilization can go from five days to 95 days now but again, a real real estate investor knows that stabilizing is just that upfront cost to get the property going, and then you start to get on your way.

Andrew Hoek: 15:54

Jim, it sounds like you guys stay four units or less. Is that? Is that accurate?

Jim Sheils: 15:59

Yes, sir, and we stay in the realm of residential Now. We'll hold quad communities for, you know, for some individual investors and even some family offices or hedge fund groups, but our bread and butter is individual single family duplexes and quads.

Andrew Hoek: 16:18

Do you find that across those the single family, the duplex and the quad the demand is pretty similar, or do you get more demand on any one of those?

Jim Sheils: 16:28

You know they're all pretty similar in demand. The quads are an interesting kind of unicorn. You don't find them out that much. I mean, you guys are in real estate. How often do you find a quad coming up, you know?

Speaker 1: 16:41

oh, you still get residential financing.

Jim Sheils: 16:43

They're usually older they were, you know, back in the day and even now they're still. They can be very hard to get approved. And you know a lot of builders like a lot of the national home builders. They're like what do you build quads? You're nuts I'm not going to waste my time with that and they're too small for the commercial guys. So the quads are kind of a unicorn and they also obviously give you the most amount of tenants under one roof for one loan. So all of them have a good demand. But definitely quads have an interesting look taken at them by a lot of investors and a lot of action too.

Andrew Hoek: 17:13

Okay, you mentioned you're in 12 markets in Florida. Do you have certain things that you're, are you looking at future growth or you're looking at existing growth? What are some of the things that are leading you into those? And then, conversely, are there certain markets that you try to stay out of and what's leading that?

Jim Sheils: 17:31

Yeah, great question. So we, there's five factors, five factors to real estate growth and and I I don't depend on appreciation, but I do my best to get in its way that's always been my motto from a mentor taught me that over 20 years ago and we always look for these five factors Economic growth, population growth, a good affordability index. This is super important Because this, I think, determines whether, where, where you're going to have cashflow or whether there's still room for growth. So if you're in the market where the average price of a home can be afforded by the average family income, that's good, that's a good score on the affordability index. You know, go outside to like a San Francisco, holy cow, you're not even close. The average family income for a price of home not even close.

Jim Sheils: 18:19

We still have great affordability indexes in our markets, you know, and they're desirable, and there's healthy supply and demand there. Those are our five factors Population growth, economic growth, affordability, desirability, healthy supply and demand. We look for all five of those, andrew, and we got to have all five and that affordability index. That's really important because we're not in Miami, we're not in Orlando, we're not in Tampa and I, like all those markets People are like well, isn't that all Florida is? And I said well, I used to think so, you know, growing up in the Northeast. But you know we go to those more second tier markets where we feel the buy-in is still really affordable and even with a new construction in a B or A area, we can still get you cashflow off the bat. That's something that we fundamentally look for because if we believe, as we continue to do, that we put ourselves in our clients, in a good position.

Michael Notbohm: 19:12

So are you guys identifying individual lots that you're building on, or are they like a neighborhood that you're converting into build a rent? What does the model look like?

Jim Sheils: 19:21

Great question, that's so we, I love scattered lots, so we. Right now we have over 5,000 lots in Florida and we love scattered lots. So scattered lots means an existing neighborhood, you know, probably built in the 60s and 70s, great ratios of homeowners to renters. We go in and buy up all the vacant lots in there and we'll build single family homes and duplexes. They do really well, value really well, high demand, safe areas. We'd walk through there at 10 o'clock at night, no problem. We'll also buy entire.

Jim Sheils: 19:53

You know land tracks, you know a big piece of land and you know one thing I tell people too is this isn't a quick flip. You know I did a lot of fix and flips over the years, which are great. That was how I got started. But you know these bigger pieces of land sound really cool but it could take two years to get these things going. You know that is a long time. So what we'll do is, yeah, michael, we'll take on whole communities. But let's say like we had one in Jacksonville 800 lots. It was a defunct golf course. We divided into 800 lots. We sold off 650 of the lots to national home builders because they're going to build their nice houses there, and then scattered within. We kept 150 lots ourselves to build our build a rent product. So we sometimes for larger buyers will build out a whole community, like a whole quad community or even a whole community of single family homes. They want to own and rent the whole thing. But for our individual investors we found especially for single family and duplexes.

Jim Sheils: 20:51

We'd rather get them in established neighborhoods that have a mixture of homeowners and renters. We think that's the best for them. So we kind of ride between those two choices.

Michael Notbohm: 21:00

I like that.

Andrew Hoek: 21:01

Jim, I think you just alluded to it a little bit there, but your buyer pool is it? It sounds like it's a mix of everything, from one one individual to Institutional-sized buyers. Is that correct?

Jim Sheils: 21:14

Yeah, we have over 950 individual investors and we work with a couple of the larger hedge funds. We've worked with Haven Realty, which is JP Morgan's group. We've worked with Americans home for rent invitation homes. All these guys are kind of the big ones in some family offices, but I'd still say our bread and butter is the individual investors. You know we really enjoy that. That's what you know.

Jim Sheils: 21:36

I was, and my partner, chris and his father were, you know, and so we've really we build a lot of successful smaller portfolios. You know our average, you know client who's really found success. They own between three and ten properties and they've been into them for for a few years now. So they're really producing at a great cash flow. They're to lower LTV and that's still our bread and butter. And these are some of them are in real estate. We have a lot of realtors or mortgage people who are in markets where the numbers just don't work and so they'll come to us. We also have a number of business owners, professionals, doctors, dentists that again, they want exposure, real estate, but they want someone else to do the homework of figuring out and, you know, be able to put guardrails around their time and are you all?

Jim Sheils: 22:26

you're in Florida only only in Florida, but the plan is over the next two years with with Sumitomo or a parent company, there's already some expansion plans We'll go into Texas and Tennessee, which are two states we like, as you had said, is there's something you avoid, andrew, and I got to it a little bit like we avoid the biggest markets in Florida, not because we don't like them, we just don't find that off the bat cash flow and we feel like they're a little more priced up. What we do is we also look for landlord friendly states and that's something I really encouraged all your listeners. Things have changed over the last five years very different than I had seen the last 25 years. You got to go to a state that allows you to collect rent and doesn't penalize you for doing it. So I always I like Florida, I like Tennessee, I like Texas because their landlord laws are fair and that's important if you're depending on cash flow from, you know, renting property.

Andrew Hoek: 23:23

Yeah, that's funny, you said so. I'm a real estate attorney, is part of my part of my world and and so right around the COVID we started getting all these investors from the Northeast and New Jersey and New York and that was their comment. They're like we got to get out of these states. It's impossible to get anything done. We're coming into Florida full speed, so it's it's interesting to watch.

Jim Sheils: 23:48

No, and as from the legal side you see that and from the friend side, I know you guys said you're in Tampa have a good friend to his wife, reclose, relocated to Tampa in the pandemic. They had built up a very good portfolio in upstate New York that they worked years on. It was producing good money, probably 1720 grand a month. It went from that to losing them 10 to 12 a month, and we're not talking for two months, we're talking 14, 16 months. That's detrimental and for the smaller. Our job always, I'm sure, as you guys educate with our clients is to take risk off the table. So, for example, we we were doing some things in Georgia. We liked Atlanta, we like the growth patterns. We've completely pulled out. We've sold our rental portfolio there. We've we've sold our development projects we still had, because the landlord laws changed so much in COVID. We can't in good conscious continued to build there and rent there for ourselves or our clients.

Michael Notbohm: 24:43

So are you guys keeping a good portion of these, or is most of the model?

Jim Sheils: 24:48

some properties within our, you know, within every project that we do and then we manage probably 95% of what we build okay, yeah, that was gonna be my next question because, like you said, doctors, dentists, etc.

Michael Notbohm: 25:02

That are Interested in getting in the game but just don't have the time or bandwidth to manage everything themselves. So one other thing, just kind of shifting gears a little bit. But when we started this little legacy wealth code you know to us was teaching people how to buy real estate, build a long-term wealth and ultimately leave a legacy that's meaningful. It looks like you've started 18 summers all these interview topics that you sent over to us. I'll have a pretty common theme that you know you share a fairly Common interest with us, which is invest in real estate, but do things from a time perspective that mean the most to you. So talk a little bit about this 18 summers.

Jim Sheils: 25:43

My wife and I started 10 years ago as more of a passion project and we wrote a book that we didn't even want to write but, long and behold, it became a number one bestseller, wall Street Journal bestseller and it just shows that real estate investors, entrepreneurs, they want to be successful in business but they also want to be successful at home. And in the rush up that investor mountain we can all get wrapped up in in best intentions, but you can miss the boat on some really important years. That was something a mentor of mine told me. He said they'll still be your kids after 18 years. But I'm telling you it's different. He's like make the most of those 18 summers. They'll want to come back for more. You'll never regret it. You'll be there in the most important times of their life. And and so it really.

Jim Sheils: 26:28

It changed the way I looked at things many years ago. And so we work with lots of different investment groups, entrepreneur groups, my wife and I both and just say how do we be successful in business and successful at home? And that is the theme of 18 summers. And we've, you know, been able to write some pretty neat books and have some classes, workshops, which we didn't realize was so needed until we started doing it. But there's a lot of ways that the three of us can figure out how to better our business. There's very few things out there for investors and entrepreneurs Clearly laid out of how do you be a successful entrepreneur and keep your marriage and family life strong. Very few things to that exact niche.

Michael Notbohm: 27:11

Yeah, I'd agree with that. This whole thing started now you've got. You said, workshops and masterminds. Is that something that people can sign up and be a part of? What does that look like for you guys?

Jim Sheils: 27:22

Yeah, a lot of. There's different ones. People can sign up for a lot of times Individual investor groups or entrepreneur groups will hire me to come in and speak or facilitate a workshop. So it's again more of a more of a side project. I don't like to be on the road much anymore. Again, I have five children, so I really I like adventure. We work. Right now I'm in our house in Costa Rica. I work here three months out of the year but I like to be with my family. So I do go out on the road for my family consulting talks, but not as much as I used to because I I'm a homebody now. I'm not afraid to say it. I don't need that, that road adventure Nearing down on 50. I'm like, I'm good, oh.

Andrew Hoek: 28:07

How old are your kids, jim?

Jim Sheils: 28:08

I range two to 20. So we got the game All right you do.

Andrew Hoek: 28:12

Yeah, that keeps you busy.

Jim Sheils: 28:14

It sure does either busy or insane, or both.

Speaker 1: 28:20

So you know your experience. I think is is pretty broad.

Michael Notbohm: 28:24

You know started with doing those bulk rehabs or bulk foreclosures, rather. Do you see any of that kind of stuff on the horizon for the average investor looking at things? Is there anything that's a red flag to you?

Jim Sheils: 28:36

I have not seen anything from the people I'd listen to and I wish I'd listened to in 06.07. I don't see anything from the bigger points until very late in this decade, you know, 2029, 2030. There could definitely be a correction and that's something that you always want to look for. However, what I always tell people, is I survived?

Jim Sheils: 29:03

2008. It wasn't easy. It was painful. I could have survived it so much easier, guys I mean so much easier If I had owned less of better quality with less leverage.

Jim Sheils: 29:14

That's simple. There's never been a time in In a seven to eight year span, or definitely a 10 year when it's been bad to hold. The three of us could have gone in on a single family home together in Jacksonville, florida, in mid 2007 the worst time supposedly in the last hundred years and within six and a half years we would have been above that pricing with rents up. So this is where I like holding power, because if you will just not look six months, but you'll look at least five, six years and you have the type of property that Perform it, I don't worry about things like that anymore. My portfolio is probably at about 28 29 ltv now.

Jim Sheils: 29:50

So I'm not saying you have to be that low again. I've become an old fuddy duddy. You know, not very aggressive, but but as you build that, if you're owning less, you're not over leveraged, it's in good condition in solid areas, you can rent your way through. You know a short correction of two, three years, like we saw. You know eight. It was only one year in the tougher areas with deferred maintenance, because no one likes to talk about this. But guess what? Deferred maintenance always comes due at the worst possible time, when you've got the least amount of cash.

Jim Sheils: 30:22

So I like to avoid deferred maintenance in my properties. Um and and again, it's, it's, it's a very, it's a very simple ah, it's, it's just for me, it literally. I know, I repeat myself, but own less, better quality, less leverage, you'll be able to power through those shorter things. But you know, you look at any graph of, like the fed charts from the last 110 years, real estate has always continually gone up. There's dips and there's this and we all know about. My grandfather bought his house For this if I had kept it to be worth this. I believe in that and unless our money system completely changes, I don't think that's ever changing.

Michael Notbohm: 30:58

Well, it's a very sophisticated model that I know that most of the I would actually argue to say all of our wealthiest friends share, which is, buy good properties and don't sell them.

Jim Sheils: 31:10

It's pretty simple.

Michael Notbohm: 31:12

Pretty simple.

Jim Sheils: 31:13

But the problem is you've got to be willing to look past the nose of six months.

Jim Sheils: 31:17

Right, we can only look out, just the end of our nose. Three to six months, let me, can I do that? And and that just ruins it, you know, and that's also. Or a lot of people get into crappy properties for their first few properties and they beat the hell out of them for two years. They throw up the white flag, they says we're out, we're never doing rental property again and I go dang. Instead of buying two or three crappy ones, what if you just bought one good one?

Michael Notbohm: 31:40

Just one good one.

Jim Sheils: 31:41

You know To stop with the hundred house club. You know I believed in that shit and it was just and I surpassed it and doubled in. I was miserable. So you know quality over quantity. Do your numbers Strategic where you're buying, not only landlord loss but where's growth occurring. You know you can do a lot with a small portfolio.

Andrew Hoek: 32:01

I love that message, jim, because one of the things that we always drive home is that you know, real estate isn't easy, but it's simple if you stick to your fundamentals. Well said, well said and that's so important and it gets overlooked. And Getting back to the basics and sticking with those is. There's so much to that, so.

Jim Sheils: 32:20

Absolutely.

Michael Notbohm: 32:21

So I'm going to put a link in the show notes for uh, for your books, and then you know what can we do to help you. Are you looking for more investors? What, what?

Jim Sheils: 32:30

I mean we're always bringing on. We bring on new investors weekly. You know we're at nearly a thousand investors and and we're expanding our operation. We're very excited about the success we've had for so many people out there and we're continuing to grow Into the growth markets of florida and then other states of of good landlord like, uh, texas and tennessee, and, and we we enjoy being able to buy back our people's time. You know that they don't have to do all the all the grunt work that we, the three of us, know can take a lot of time. So Read our book, check out our website. If we can help you, great. We're not a fit for everybody, but for the people that, like our principles and fundamentals, we've been able to build some real, solid Rental portfolios that I do believe have that ability for generational wealth.

Michael Notbohm: 33:22

Yeah, you've had some super good points. We're Beyond glad you came on. I know we had to uh to move our last one with everything going on, but I'm glad we got this episode uh recorded and I think it'll be a very valuable one for our listeners. Hopefully some people reach out to you and start that journey of investing in real estate.

Jim Sheils: 33:42

Well, it's good either way. It's good chatting with you guys. I appreciate the conversation.

Michael Notbohm: 33:46

Yeah, you as well, andrew got anything else?

Andrew Hoek: 33:48

I don't, jim, really appreciate you coming on and and, as I said, great message and and kudos to you on the success of your company and and, uh, yeah, I'm excited to see where you all continue to go.

Jim Sheils: 34:00

Thank you.

Michael Notbohm: 34:01

I am a little jealous here in Costa Rica, I'm not gonna lie.

Jim Sheils: 34:04

but it is what it is Carry on maybe next year I'll be there with you. Didn't happen when I first came here 24 years ago, but now I'm able to spend time here.

Michael Notbohm: 34:13

That's, that's the power of lag right there, yeah living, every living, everything you teach, which is, uh, one of the one of the things you very rarely see these days. So appreciate, uh appreciate, you coming on. So all right guys. Well, this has been another episode of the legacy wealth code podcast. Until next time on word.

Speaker 1: 34:31

Thank you for joining us for another episode of the legacy wealth code podcast. If you enjoyed this episode, click subscribe now and never miss an episode. Until next time On word.