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SHOW NOTES FOR EPISODE 283: REAL ESTATE INVESTING FOR EVERYONE: A GUIDE TO CREATING FINANCIAL FREEDOM
Being raised by a single mom on welfare in Minnesota, Marty Stone was motivated to do more with his life, help his family and ultimately help others. In this podcast episode, real estate investor, adviser and best selling author Martin Stone shares his story of how real estate investing turned his life around, how he is living his retirement dreams and how anyone can do the same if they just understand a few key principles.
What You Will Learn
- The importance and value of having a good mentor
- How he got started with very little money
- 3 critical points for true real estate investing success
- The importance of creating a life plan and determining what brings you joy first before you start investing
- Why setting a financial goal doesn’t work
- What it means to invest for retirement instead of to save for retirement
- How “Apartment Hacking” can be your perfect retirement solution
- Why the myth of a “Free and Clear Home” can stifle your retirement years
- Two critical concepts that prove real estate investing is the most important investment you can make
About Our Guest
Martin Stone
Martin Stone (or Marty as he prefers being called), is a founder and one of the owners of Buckingham Investments. He has been a successful real estate broker and investor for over 40 years. Marty was very energetic in his youth so, besides brokering investments, he established management, development, syndication, and finance divisions within the company. At one point, he had 4 brokerage operations, managed over 1000 units, and, in the 1980’s, developed over 50 apartment buildings, commercial buildings, and single-family homes. A graduate of USC with a degree in finance, Marty also co-authored two highly successful books on real estate investing, Secure Your Financial Future Investing in Real Estate, and The Unofficial Guide to Real Estate Investing. And he has a new book that just came out through Dover Publications called Real Estate Investing for Everyone: A Guide to Creating Financial Freedom. Marty and his wife Lori have 3 sons, Aaron, Chris, and Adam and reside in Southern California.
More About Marty
- Oldest of four kids
- Raised by a single mom who never graduated high school
- His mom ran away from an orphanage at 15 because she was tired of being abused
- Marty’s father was kinda in the picture but didn’t make enough money to help out much
- Lived most of his life on welfare
- He got the crazy idea to move to California to get a college education he could afford
- His family wanted to go with him and moved to California as well
- Went to El Camino Junior College
- The state of Minnesota continued to pay welfare for a year while the family lived in California
- The first friend he made in California he calls a true “blessing”
- He met his friend, Bob, while working at Der Wienerschnitzel restaurant
- His Bob’s dad was a real estate investor who worked with a man named Jack Buckingham
- While Marty and Bob were in college (Marty transferred from Junior College to USC with 2 academic scholarships), they heard stories of how his friend’s dad was doing so great in real estate and they wanted to do the same
- Marty wanted to get a great job after college and invest heavily in real estate with his massive earnings
- When he graduated USC with a Bachelor’s degree in Finance, unfortunately, the economy was not good and he couldn’t find a job
- Bob’s dad went to his employer, Jack Buckingham, and asked if he could give a job to his son and Marty
Finding a Mentor
- Jack Buckingham became Marty’s mentor
- Jack taught him not only about real estate but about life and living life with a plan
- Marty also learned about analyzing information and understanding why real estate worked so well
- Jack was instrumental in teaching Marty everything he learned about real estate for the next 20 years
His New Book
- Marty just wrote Real Estate Investing for Everyone: A Guide to Creating Financial Freedom
- Been 20 years since he last wrote a book
- Tough real estate times hit
- Kids grew up
- And he just got caught up in life
- Finally decided to write the new book
- Wanted to pass the information on that has helped him and his clients achieve financial freedom
- The principles in the book are the same principals used in his company to help clients invest in real estate
- Principles and concepts that anyone can use
- Differs from his other books
- “The Unofficial Guide…” is more of a textbook
- The new book reflects his 40 plus years of experience
- Has includes special “Critical Concepts” for each chapter with additional details
- He also shared his own story of how he found financial independence coming from very meager beginnings (growing up on welfare)
- The book also includes his original first investment plan
- He shares all the things he has learned about real estate investing over the last 40 years
“Real Estate Investing for Everyone”
- The title wasn’t Marty’s idea but his publisher’s idea
- But it grew on him over time
- What “Everyone” said to Marty is that “If you have hundreds of thousands of dollars to invest, it’s real easy to become an investor. But if you have nothing, which is Marty’s story, it’s still possible creating the net worth you need for the life you’ve always dreamed.”
3 Critical Points for True Real Estate Success
- Money is a tool to pay for life needs and goals
- Real estate investing is a tool to earn the money to pay for your life, needs and goals
- Education and planning are the keys so you use while you are working toward the correct goals
- Theses are the key principles they teach their clients
Creating a Life Plan
- The most important thing is to put a plan together
- Start off sitting down in a quiet room somewhere with no distractions
- Then try to think about not what they need, but what they would like to have that would give them peace, serenity and joy in life
- Too many people chase dreams that have been given to them by other people – “I have to have a 3,000 square foot house with a pool, a BMW, join a country club or two, etc.”
- Have that talk with yourself, “the man in the mirror,” about what would really bring them joy and happiness in their life
- And maybe they do want those material things and that might bring them peace and joy, or maybe it’s just moving back to their hometown, getting a little cabin by a lake, with a fishing boat, and living a simple life with family, and serving others
- There’s the reality that many need to see – “No one is going to take care of me.”
- If people would put the time, planning and effort, that they used to put together at their jobs, for others, into making their own life plan, they could create an amazing future
- For the plan to be successful, it needs to start with goals that are near and dear to your heart – the emotional things that people don’t often think or talk about
- Just chasing a goal like “I want to have a million dollars in the bank” will not bring the things that really matter
- There are many unhappy people who have millions and millions of dollars
- Money is just a tool in life to get what you want in life
- Unless you really figure out what will bring you joy in your life, the money alone isn’t the answer – it’s just a tool
Living the Dream
- In his new book, he tries to share true life stories of clients he knows who have used real estate investing to help them find that kind of joy, peace and serenity
- For example, Keith has been retired for many years and while he is still young
- Spoke to Marty last week from Ecuador on a trip with his wife and daughter
- They had just gone to the Galapagos Islands
- Were having a great time on one of the many trips they take
- Real Estate is the thing that helped him to do these things and enjoy his life to the fullest
- When you first figure out what brings you joy in your life and then put together a plan that will bring you that, it will make a true difference
- The goal is not the $1 million, $10 million or $100 million — the goal is to get you enough money to be able live a life of joy and purpose
- Real estate investing can create the kind of passive income to get what you need to fulfill those goals and dreams in life
- Use real estate investing as a tool to get the passive income (another tool) to pay for what is really important in your life
About Jack Buckingham – Marty’s Mentor
- Brilliant and successful aerospace engineer
- Got tired of the corporate grind
- Found real estate investing and used it as the tool to retire early
- He got his real estate license initially as a way to handle his own real estate dealings
- People found out about what he had done through real estate investing and they asked if he could show them how he did it
- He said yes but first he had to educate them so they could understand what he was telling them
- Most real estate firms are in the “listing properties” business
- They do a tremendous amount of marketing to get people to list their properties for sale with them, which is very expensive
- Jack attracted people to his firm by “word of mouth”
- He educated people for free
- If the people liked what they heard, they would most often want to do business with Jack’s firm
- That’s how Buckingham Investments has worked since the beginning
- They share much of their own in-house research that they have compiled
Help for Old Dawg’s Interested in Real Estate Investing
- Too many people are “saving” for retirement and they hope that one day they will save enough money to last them through the rest of their life
- Marty’s book focuses more on “investing” for retirement
- He also shares tips for older people interested in starting real estate investing later in life
- Information on what type of properties to buy
- He has clients that are in their 80s and still living a great life
- If you invest in real estate, your cash flow should increase every year
- The earlier you start the better
- You also have the advantage of leaving a legacy to your family
Marty’s Investment Plan Re-do and “Apartment Hacking”
- 30 years ago, Marty was motivated to re-do his investment plan to work better for his retirement years
- The plan plots out how he thinks his investments would grow, what properties he would re-finance and what type to buy and/or trade -up
- Then, 20 years ago, his wife got breast cancer but, by the grace of God, survived, did well and is fine today
- But it made them really look at their lives and realize, that at any moment, either one of them could be gone
- Marty also had some friends that died at a young age
- He got to thinking, “If something happened to me, what would my wife do?”
- They had three young kids
- His wife is a registered nurse and she could work if she needed to but he didn’t want the burden to fall on her
- To insure that his family would be well taken care of, he created a plan
- He would buy an apartment with an “owner’s unit”
- As time went on, the property would be performing well
- If he passed away:
- His wife could sell their home and put the money in the bank
- Then she could move into the “owner’s unit” in the apartment building and live there rent free, plus she would have a nice income from the tenants’ monthly rents and she wouldn’t have to work
- Plus she would have a substantial amount in the bank from their home sale
The Retirement Years
- They both had successful careers and did well
- As the years went by and their kids grew up and moved out, Marty and his wife reassessed their lives
- Although they both loved their jobs, they decided to slow down and dedicate more of their lives to doing the things that really brought them joy, without having to worry about their careers
- They bought a little cabin up in the mountains where they could escape, kick back, enjoy life and walk in the woods
- Then, with all the kids gone, they realized they didn’t need the big house any more
- So, they sold their personal home and moved into the owner’s unit in their apartment building – he saw that as one of the best decisions he ever made
- One of the best things you can do to simplify your life is to find an apartment building in a nice area that has a unit you would feel comfortable in, buy it and retire there. You could live for free and live off the positive cash flow
The Myth of the Free and Clear House
- Many people work really hard, scrimp and save to pay the mortgage off of their house
- The day their mortgage is paid off they celebrate that they are free – but they aren’t!
- Their home, for most people, is their largest single asset
- The house is still negative cash flow
- They still have to pay:
- Tax
- Insurance
- Maintenance
- A condo is no different than a house because you have home owner association (HOA) fees
- They could have upwards of $1,000,000 tied up in a property that costs them money to own
- Whereas, if they took that money, bought a multifamily property, with a unit they can live in, they could live rent free and get a nice cash flow on top of that – after expenses, including property management
- Could put the property in the name of an LLC and no one would know who the owner was and wouldn’t bother them
- They could live there rent free, travel and do what they want
- Have property manager increase rent each year of the property
- 2 of his 3 kids have duplexes where they “house hack” – live in one unit and rent to a tenant in the other – they live rent free
Number One Critical Concept!
- Key reason you want to invest in real estate is that it never goes out of business
- The stock market goes up and down and you have no control of it
- His company has tracked 50 years of data in his area and has seen that recessions in real estate come (like clockwork) every 10-12 years
- He has a chart from a guy back east that charted the same thing and it is exactly the same
- And even though there are cycles, the only people who lose money are the people who, for some reason, have to sell – everyone else keeps earning cash flow
- The S&P 500 started over 50 years ago
- They claim to represent 75% of the largest corporations in the U.S.
- Only 86 (or 17%) of the original 500 companies survived
- The rest of the companies went out of business
- Real estate never goes out of business
- Number Two Critical Concept – It’s not the property you buy that makes you wealthy – it’s buying a property that does!
- Many people don’t buy now because they think they can get a better deal
- They are missing the point that appreciation works to your advantage for the long run
Appreciation – the Big Lie
- The third chapter of his book
- Somewhere back in time, economists came up with the term “appreciation” for real estate (the term to represent a property increasing in value)
- Because real estate goes up and down in value, it scares some people away – thy think that they will get stuck
- Real estate increases in value each year because of inflation and demand
- Inflation is just the loss of our purchasing power of the U.S. dollar
- The cost of gasoline in the 1960s was $.18 per gallon – today it is $3.00 (on average)
- That’s 1,567% inflation
- In 1950, a scoop of ice cream was $.05. Today it’s $2.50. That’s 4,900% inflation
- That’s just a loss of purchasing power
- check out www.usinflationcalculator.com to see what something will be worth in the future
- Demand
- In some areas with limited vacant land and/or a growing economy prices can go even higher than inflation rates
- In parts of the US, you can buy a nice 3 bedroom 2 Bath home for $100,000. In California, the exact same house would go for $1,200,000
How to Reach Marty
To Get Marty’s New Book
- To get Marty’s book and a FREE downloadable Real Estate Investment Planning Guide (PDF) , plus a 20% discount coupon, click here before February 14: https://www.doverpublications.com/realestateinvesting
- To order the book on amazon, click here: https://amzn.to/2Bwfntw
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