949-392-1999
SHOW NOTES FOR EPISODE 273: PASSIVE CASH FLOW INVESTING & THE ART OF EFFECTIVE NETWORKING
Most people associate real estate cash flow investing with purchasing rental properties and becoming a landlord, but did you know you can generate cash flow as a passive real estate investor, without owning or managing a single property? Today’s podcast guest is Jeremy Roll, passive real estate cash flow investor and founder of FIBI (For Investors By Investors), one of Southern California’s leading investor networking organizations. In today’s podcast, he shares how, through strategic investing and effective networking, he was able to generate enough passive cash flow income to replace his lucrative corporate income, boost his net worth and become financially independent.
What You Will Learn
- What is the difference between “asset-based investing” and “cash flow-based investing?”
- Why real estate investing is superior to stocks and bonds investing
- What happened in 2013 that made real estate passive investing available to all investors, not just accredited investors?
- What the 3 Key Investment Diversification Factors are that help Jeremy pick winning investments every time
- How to invest to protect yourself from the upcoming market correction/recession
- 2 Important Lessons Jeremy Learned That Make Him a Better Investor
- 4 Powerful Tips for Effective Networking
About Our Guest
Jeremy Roll
Jeremy started investing in real estate and businesses in 2002 and left the corporate world in 2007 to become a full-time passive cash flow investor. He is currently an investor in more than 70 opportunities across more than $1 billion worth of real estate and business assets.
As founder and president of Roll Investment Group, Jeremy manages a group of over 1,000 investors who seek passive/managed cash flowing investments in real estate and businesses. Jeremy is also the co-founder of For Investors By Investors (FIBI), a non-profit organization that was launched in 2007 in Southern California – South Bay/West LA with the goal of facilitating networking and learning among real estate investors in a strict “no sales pitch” environment.
FIBI is now the largest group of public real estate investor meetings in California with over 25,000 members. Jeremy has an MBA from The Wharton School, is a licensed California Real Estate Broker (for investing purposes only), and is an adviser for Realty Mogul, the largest real estate crowdfunding website in the US.
More About Jeremy
- From Montreal, Canada
- Spent 3 years post under-grad business experience at one large company and one smaller start-up in Montreal
- MBA at The Wharton School
- Interned at GM while earning MBA
- Moved to LA – worked for start-up for 1 hear
- Disney Headquarters – 4 years
- Toyota Corporate – 1.5 years
- Got out of corporate world after generating cash flow through investments, mainly stocks and bonds
- After the dot.com crash in 2002, he was pretty sick of the stock market and it’s volatility
- He is a low-risk, slow and steady investor
- Watching the market go up and down by 30% day-to-day was not for him
- Being young at the time and seeing the risk of investing in stocks and bonds for his retirement planning, he did not like the lack of predictability
- Not knowing where his retirement account would be in 10, 20, 30 years, especially with the volatility, is what bothered him the most
- Starting looking at other ways of investing
- Predictability was a key factor
A Move Into Real Estate Investing
- Started looking at real estate and cash flowing real estate on the lower risk end
- Started pulling his money out of stocks and bonds and moving it into commercial real estate investing passive opportunities
- 2002 to 2007 – Rotated all of his money out of stocks and bonds into cash flowing real estate
- Was working at Toyota at the time and decided to take a risk, quit his job to see what would happen if he tried to live off the cash flow
- He was focused on growing his cash flow stream so he didn’t have to go back to the corporate world
- Part-time passive cash flow investor since 2002 and full-time since 2007
- A lifelong friends of the family had been syndicating and pooling investors into commercial real estate projects for a while
- Jeremy started asking about cash flow generation to see what they were doing
- He started learning about this type of investing by actually investing along with his family friends
- Jeremy was living in the US but investing primarily in Canada
- In 2005, he could see what was coming in 2008 and started warning people
- He was able to avoid the strong impact of the 2008-2009 recession because it was not the same in Canada
- Started investing in the US in 2009
- He learned that commercial, larger multifamily property investments reduced his risk because of the economies of scale and diversification opportunities. His key attractions to these properties were
- Predictability – sought 80-100% occupancy, stabilized properties
- Diversification – Likes that he could spread his money across many types of commercial real estate projects
- Tax benefits were like “icing on the cake”
- Only drawback is the lack of liquidity, even though that can be offset with enough cash flow
Asset-Based Investing vs. Cash Flow Investing
- Even though he invests for cash flow, he prefers “asset-based” investing because there is less risk
- With “asset-based investing,” you are investing in the real estate asset over the cash flow
- With “cash flow investing,” you can invest in a company and it’s ability to generate profit but there are too many factors that can effect how successful AND consistent that can be
- With land you have something that maintains value over time that will always be worth something
Syndication Investing Today
- There are a lot more real estate investing opportunities today than when he started 17 years ago
- Laws changed with the SEC 506c rule, in 2013, making it easier for people to invest in real estate through crowdfunding
- There is also better access to more information via the Internet, BiggerPockets.com, forums, etc. to collect data on operators (deals that have gone bad or were good), sponsors, etc. to help you make better investment decisions
- His preference is to invest with Sponsors that he has successfully invested with before – lower risk entry point – however, if you invest too much with the same person you have a diversification challenge
- Number one concern is who you are investing with
- Number two is property appeal
Three Key Investment Diversification Factors
- To insure investment diversification, he limits in three areas
- Operator
- Tries to limit how much he invests with one operator
- But he prefers to invest with operators he has invested with before (knows how they work, execute and how they report)
- Gravitates toward operators that have the same thought process as him (conservative, under promises, purposely over delivers)
- Asset class
- Favorite is commercial real estate
- Rotates what he invests in based on where we are in the economic cycle
- Currently he is in
- Office
- Industrial
- Self storage
- Mobile home parks
- Apartments
- Retail strip centers
- Avoids hotels (because of AirBNB’s impact)
- ADR (Average Daily Rate) changes to radically to predict
- Is interested in senior living but has not invested
- Geography
- Operator
Investment Strategies as a Downturn Approaches
- He has personally watched/experienced the last two cycles as an investor
- The market we are currently in is rife with many over-priced properties
- Good for sellers
- He is most interested in properties that are under market
- As you build a good network, you get more and more unique opportunities
- He is looking forward to a downturn so that there will be better opportunities
- Needs to look at the asset in how it will do in 5-10 years down the road because of lack of liquidity
2 Important Lessons Jeremy Learned That Make Him a Better Investor
- Focus more on the person over the property, when selecting investments
- Be more strategic when selecting investments
- After 2008, apartments were in big demand
- 2013, he shifted out of apartments (too expensive)
Creating His Own Investor Networking Group
- Back in 2007, there were not all the online networking opportunities so he had to attend one or two meetups a week
- He also scheduled many one-on-one meetings
- He did this for 5 years
- Some meetings were good, had good speakers and good networking
- Other meetings were just big sales pitches
- Some of the sales pitch meetings still attracted a lot of great people to network with
- He would sometimes bring some of his work from his corporate job to do at a table in the back of the room during the speaker’s presentation and sales pitch. At the end, he would do the networking
- When he quit his corporate job, he didn’t have the work to do but went to the meeting anyway. It was a painful 2 hour sales pitch. It was at that time he thought of starting his own group where sales pitches weren’t allowed
- Went through meetup.com and started his own local networking group called FIBI (For Investors By Investors). The parameters were:
- No sales pitches
- People can come together to network, exchange information and know there was no sales pitch
- The meeting cost was low to just break even
- He picked topics and speakers he wanted to hear as an active investor
- He started the group for two personal reasons:
- To find new investment opportunities
- To learn from other experienced investors
- His first meeting was at a Starbucks in West Los Angeles – three other people showed besides Jeremy
- He was committed to making the group the best he could and was willing to put in the time and effort to see that through. He knew it would take time to grow and he never gave up
- He wasn’t concerned about the size of the group. What was most important is that the right quality people came and participated
- He also continued to attend other groups and meetups to continue to make strong contacts along the way
- Today, he has over 30,000 members and meeting attendance averages around 200 attendees per meeting
4 Powerful Tips for Effective Networking
- Approach as many people as possible
- Set a networking goal – “I will meet at least 5 people at this event”
- Start off the conversation with questions:
- What do you do?
- How can I help you?
- He has found this to be extremely effective
- People drop their guards and open up more to you
- They are more willing to share leads and referrals to help you
- He sets out to help as many people as possible. He finds it always comes around in the long run
- If you start off pitching the person, right off the bat, you will only turn people off
- Be consistent and keep attending meetings
- There will be good nights and bad nights but, over time, if you just keep going and put your self out there, you will yield amazing results in the long term
- If you are shy, for some reason can’t attend meetings or just have a hard time networking at meetings, consider online networking through sites like BiggerPockets.com or Facebook investor groups or forums
- The Results for him…
- In 17 years of networking, he has found 4-5 people who have literally become “lottery ticket status” in terms of their great quality referrals to him
- Every year he has made first contact connections with literally hundreds of investors ever year
- Networking changed his life. It brought in the capital he needed to leave the corporate world and become a full-time investor
Advice for Old Dawgs Interested in Passive Investing and Networking
- On Passive Investing
- Be Diversified. You need to be more diversified across operators, classes and geography to reduce risk
- Maintain Liquidity. Do not invest everything you have. You’ll always need cash. There are always emergencies. It’s legal to flip shares
- On Networking
- If you have the time, attend meetings, find a group or more you like and keep going to the same meetings
- As people meet and get to know you, trust will develop over time
- If you have the time, attend meetings, find a group or more you like and keep going to the same meetings
Goals for the Next 5, 10, 20 Years
- Continue doing what he is doing
- Boost income to three times the cost of living
- Grow net worth
- Build up his “cash flow snowball” bigger and bigger no he will never have to return to the corporate world
- Remain “cash flow focused” for the short and long term
- Get more diversified over time
Rap it Up
- Favorite real estate books and business books: Rich Dad Poor Dad and Cash Flow Quadrant by Robert Kiyo saki
- Most valuable websites for success: ZeroHedge.com (a bit depressing but good data) and CalculatedRiskBlog.com (more optimistic)
- Favorite app: Waze but not any more because he still uses a Blackberry
- Favorite quote: “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.” –
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Go back to the corporate world. Invest wisely in passive and diversified real estate cash flow- no stocks and bonds! Build a sizable investment portfolio with an emphasis on cash flow and eventually be able to replace my corporate income and leave the corporate world.
How to Reach Jeremy
IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher, GooglePlay, iHeartRADIO and Spotify and Subscribe, Rate & Review our podcast. This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.
Check out our other podcasts at olddawgsreinetwork.com.
Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.
Episode Sponsor: Meno Studio – menostudio777@gmail.com
