The Real Estate Law Podcast

Overcome Analysis Paralysis and 10x Your Time Freedom with Axel Meierhoefer

August 30, 2022 Jason Muth + Rory Gill Season 1 Episode 65
The Real Estate Law Podcast
Overcome Analysis Paralysis and 10x Your Time Freedom with Axel Meierhoefer
Show Notes Transcript

Another excellent conversation about financial independence and reclaiming your time. We're excited to host Axel Meierhoefer, Founder of Ideal Wealth Grower.

Axel is a PhD who is a multi-country veteran, having flown for a couple decades in the United States and German Air Forces. When Axel reached the officer level, he found himself moving around every few years, which meant that he was not usually a prime candidate for on-base housing. That caused Axel to look within the local communities for real estate to purchase. He ended up landing a property with a 7/1 ARM (which others thought he was nuts to utilize), which remains one of his best deals ever!

In 2005, Axel started his first company, focusing on consulting, employee skill development, and program management. As a business owner, he began thinking about applying profits towards retirement, and his research indicated that owning tangible assets would be the best way.

Now, Axel teaches people how to accelerate their pathways toward financial freedom!

On this episode, we discussed:

- How Axel transitioned from the German to US Air Force
- How a career in the military led to a career in financial coaching
- The influence of Arnold Schwarzenegger on Axel's discovering real estate investing
- Getting over analysis paralysis and taking the  first step toward passive income
- Why residential real estate investing is a good plan for your money
- How to earn money using investing with turnkey property providers
- Reaching your Time Freedom Point
- Why Axel is a proponent of tokenized real estate investing.
- Working with mentoring clients to buy their first investment properties, and others to build their existing portfolios
- Why to consider ARMs and Interest-only mortgages today.

Get in touch with Axel:
Ideal Wealth Grower website - https://idealwealthgrower.com/
Mindset Manual - https://idealwealthgrower.com/free/
Instagram - https://www.instagram.com/idealwealthgrower/
Facebook - https://www.facebook.com/idealwealthgrower/
LinkedIn - https://www.linkedin.com/company/ideal-wealth-grower/
YouTube - https://www.youtube.com/channel/UCvZRy6092XyFWW9bhCbIt4Q

Join Jason Muth and Attorney / Broker Rory Gill of NextHome Titletown and UrbanVillage Legal in Boston, Massachusetts for another episode of The Real Estate Law Podcast!

#realestatepodcast #nexthome #humansoverhouses #realestate #realestateinvesting #realestateinvestor #realestatelaw #timefreedom #financialindependence #tokenizedrealestate #financialfreedom #cashflow #investments #quityourjob #passiveincome
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Axel Meierhoefer:

Turnkey provider in my definition is an organization who basically has three main components to their business. They find properties in a market that is a well performing market to begin with, and buy these and renovate them with their own contractor slash renovation team. Then the middle component, the second component of that company is the marketing.

Announcer:

You found The Real Estate Law Podcast, because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom argument. If you're a real estate professional, or looking to build real estate expertise, then welcome to the conversation and Discover more at realestatelawpodcast.com

Jason Muth:

Welcome to another episode of The Real Estate Law Podcast. This is Jason Muth here along with Attorney Broker, Rory Gill from NextHome Titletown Real Estate, UrbanVillage Legal in Boston. Hey, Rory!

Rory Gill:

Jason. It's good to be here.

Jason Muth:

Yeah, we have an excellent guest today. We're going to be speaking to a actual PhD, who is also a veteran who has flown for a couple decades in multiple Air Forces. Did I get that right? Axel?

Axel Meierhoefer:

Yeah, totally. Very good.

Jason Muth:

Yeah. We are speaking with Axel Meierhoefer. How close was I?

Axel Meierhoefer:

Very close, yeah.

Jason Muth:

Very close. Okay, you know, I did take German until 10th grade. And I did not want to say that to you beforehand, because now you're gonna hold that against me and try to say some words to me.

Axel Meierhoefer:

We're even now. I was two minutes late, so you know, we're even.

Jason Muth:

We're trying something different. I'm outside today and the beautiful sun porch. So hopefully, we won't have too much background noise, but the weather was just too nice not to, so. I know, Axel, you're in sunny or territory than we are. Massachusetts gets, you know, not as much sun as places out west. So where are you today? And tell us a little bit about your background.

Axel Meierhoefer:

Yeah, I'm at our home office in the San Diego area. We got 295 days. And we have one of those today. So yeah, it's pretty good.

Jason Muth:

295. I think that's a couple hundred more than we normally get right, Rory?

Rory Gill:

That's why it's happening right now. We have a beautiful day. We have to be outside. We can't let it go to waste.

Axel Meierhoefer:

Yeah, absolutely.

Jason Muth:

So Axel is the founder of Ideal Wealth Grower. And we have a lot of great things to talk about today with Axel, including getting over analysis paralysis, and taking the first step toward passive income and reaching your time freedom point. How to earn your first turnkey property. And why residential real estate investing is a good plan for your money. I think those are things that a lot of our listeners are searching for this information for from us from other podcasts. There's a lot of it out there on the internet. I think that, you know, we feel more confident ourselves with our investment strategy than more of the stories that we hear. Hearing from an expert like yourself, Axel, I think is gonna be really beneficial to both us and other people who are real estate investors and looking to capture their time back, you know, because time is much more precious than money, in my opinion. So Axel, we'd love to hear about your background, and kind of how you found your way into into the work that you're doing, you know, helping people find their time back and their freedom through real estate.

Axel Meierhoefer:

So you mentioned I work in the Air Force, when I got out of school, I originally wanted to fly for the airlines, but they didn't hire at the time. And several people said, Well, if you're that desperate to fly, why don't you join the military. And so I joined the Air Force and got pilot training and all that kind of stuff. And ultimately got really interested in the advancement of technology, because and I don't know how many people know this when you work in the Air Force, regardless whether it's the US Air Force, or the German air force, in this case, you're not just having the job to train to fly the plane. But you typically also have an additional specialization. And so my additional specialization was in electronic warfare. And that included, in a nutshell, how and what systems can be used to make somebody in a plane aware that there's a threat from the ground or from other planes trying to kind of shoot you down. And I was fascinated by that. And I wanted to learn more about it and actually asked, you know, how can I get more in depth, especially since the plane I was first introduced to learning to fly was literally just fresh out of the factory. And they said, Well, if you want to do more, that kind of stuff, you need to get into flight test. And so I kind of still in uniform work basically for the company that built the plane. And most of those electronic warfare components came from the United States. So which meant if you wanted to learn how to actually what's in them, how do they work, what did the engineers think, and then integrate them in the plane you had to go there? So I am together with my wife and my daughter, we came to the US quite a few times. Every time about like three to five weeks at a time to get training an introduction from these companies. And at some point, my wife said, you know, it would be nice if we could stay a little longer at a time and not just this relatively short sprints. And I looked into it, and was quite surprised to see that the United States Air Force and the German Air Force had an exchange program for decades and decades, I applied, long story about that, I'll spare you and got actually accepted, and then came over to become the assistant director of operations for the US Air Force fighter wing, and flew F-111s. And one thing in this whole why I'm telling the story about the military is mainly because anybody who meets somebody at the officer or staff officer level that I was at, you're basically moving around every two or three years. Which also means, especially when you get to a certain rank level, you are not the prime person to get base housing. So you typically have to look around in the community, okay, what are the housing options? Sometimes bases have, you know, some properties outside of the base where you can stay, sometimes they say, you should find something to rent, and sometimes it just makes more sense to find something to buy. So without really consciously thinking about it, a little bit of an introduction on how his real estate related to where you are, and what you can do came from that. And then in 2001, I retired from the Air Force, because you get to a point where your body is just not able to handle it anymore. And I became an executive in a software company in Santa Barbara. And in 2005, I basically started my own business. What I found is, what can I do, when I'm a business owner, to build something so that I have, you know, for lack of a better term, some retirement plan. Now, keep in mind, 2005 was only two or three years removed from the dot-com burst bubble burst in the stock market. So for me, that was like, don't want to really touch that. And I remembered the experience I just explained about real estate, kinda like dabbling, so to speak in the military. And started thinking, okay, I need to find out how this works, because I really didn't feel I knew enough about it. And so I, you know, I don't want to say I bought cassette tapes, but almost started learning about it, and then found a creative way, people called me completely crazy we were renting in Santa Barbara, which people understand because it it was even at the time already super expensive. And I thought, well, there must be a way that we can get into buying a house. And I basically, the only way I could figure out at the time was using an adjustable rate mortgage 7/1, which everybody said, You're crazy. It was the best deal I've ever done financially. And so yeah, and then kept talking about it. And as I got involved in more deals, more investments, and so forth, and so forth, people started saying, you know, one of these people who really dig into a particular topic, knowingly limiting kinda like almost on rails, the niche that you want to be at. And so that niche, like you said Jason, is basically residential real estate, investing anything up to fourplex, basically, unless it's a syndication that can happen. I really dug into that and told people stories about the 1031 Exchanges, and all that kind of stuff. And ultimately, people said, you know, I'm sure there are plenty of other people out there who would like to have access to this information not having to go through those 12 to 15 years that you went through. And I thought, okay, well, let's see it. I saw the website, and it kind of started growing from there.

Rory Gill:

Thank you for your service, first and foremost, but also for that, you know, that entire transitionary period you had from being from coming be in the service to becoming an expert in real estate investing. Were you largely self driven? Or were there external forces or other people kind of pushing you along the way?

Unknown:

Well, the thing that I thought was interesting, and there are a few little, you know, you could call them kinship type of things. And I'm still to this day amazed how we sometimes get influenced by stuff. So one of the things that happened, like I mentioned, the Santa Barbara area was okay, real estate and how do we do this creative financing and stuff like that, but I wonder who has or is doing something like that already? And like, what names do I know and for some reason, my brain said something about well, there are probably other quote unquote immigrants who went through a similar maybe not military meant similar. And then name because at the time it was big in the news was The Terminator. Okay, Schwarzenegger himself, right. And it made that kinship connection. Okay, Austrian, German, close enough, right, like, and I looked into it, and I found out why the guy made tons and tons of money in movies, and put most of it in real estate. He was at the time one of the largest residential real estate investors in the state of California. And I'm like, Okay, let me look into this a little more. Yeah. And, you know, if I catch the bug for something, then I'm trying to learn as much as I can and, you know, did courses and programs and learned more about it. And that's kinda like what triggered it.

Jason Muth:

Okay, this has to be the first time that we've had a guest on who's been influenced that much by Arnold Schwarzenegger. So I think it says a lot about the work. I mean, Schwarzenegger is great, obviously, with, you know, being such a great movie star, and he's spoken up a lot for human rights along the way.

Unknown:

Yeah. And sustainability, big time. I mean, I really appreciate him sticking to his beliefs and principles, regardless of political affiliation. So because I mean, I'm sure he's not very popular in the Republican Party, as a strong advocate for sustainability. But he's never wavered on that. And I really, I still to this day, admire that conviction,

Rory Gill:

I was asking, in large part, you know, your influences as you get started, because, you know, a lot of the work you do now is taking those people who have an interest in real estate, and who are really afraid to take that first plunge and get into the space. So hearing about, you know, how you made that pivot is just important for me to understand, you know, what it is you in turn do for do for your clients, and everybody that you're working with. You know, before we hop into specific questions with it, when you're working with somebody who's interested in the space, and you want to try to encourage them to get involved, how do you approach that that person, and how do you start working with them to give them the you're trying to give them the confidence to go ahead? Are you trying to give them the knowledge to go ahead? Or do the techniques? What's the primary driver to get into going from somebody on the sidelines to somebody who's a real estate investor?

Unknown:

Well, what I'm finding my full one finding people are getting in touch with people depends a little bit on how outreach so I'm hoping that a lot of people who listen to us today will potentially be intrigued to say, Hey, maybe I want to tap into this and learn more. So any kind of outreach and talking about the topic. The other area, great place that I found from pretty early on is Bigger Pockets. And because of the fact that the forums on Bigger Pockets give people the opportunity to ask questions. And like I mentioned, this is kind of how the story about my getting here is connected is as somebody who has always been educating others in how to learn to fly how to become an electronic warfare expert and how to do real estate. For me, I'm more in see myself more and always did in the role of when somebody posts a question in the forums to give my view and my advice to extent possible, and how I would go about and answer that question in those forums. And I have to say, a lot of people ultimately, when I ended my my answer or my suggestion with if you want to talk more about it, just shoot me an email or get in touch. A lot of people did that, which I attest to, okay, maybe it resonated in some way. The point on the other hand, is how to get people involved is there is in my experience now over the last few years, this media-driven misconception that you need to live luckily, in an area that supports reasonable numbers in the context of real estate, where you can say, okay, I can still find a property somewhere between 100 and 200,000. I can still get into a new build project below 300 or 400,000, especially when you look at the median price development that we have seen in the last few years. And when you look at the country as a whole including including parts of Canada, so if you go like West Coast, including Vancouver or east coast, including Toronto, there are lots of areas where any of those numbers are comic, I mean Boston, obviously is one of them too, right? So when I then respond or talk about, well if you live somewhere where you either have to live because that's your passion or your job or your family or whatever keeps you there, or like in my case, I live here because I want to live here and have these 295 days of sunshine. But it also means here we're not at 406,000, like the median for the country but at about 760 or so for median. So when you look at this from an investment lens and you say okay, if I typically do a down payment 20% my money 80% from the bank, and you have 760 as the number you have to run around with 160,000 plus cash. Well how many people do you know that do that? Right so that hard to say okay, I want to do it I think it's a good thing and I mean, we have the best accelerator, I don't know how you guys think about it, but when bonds crash, stocks crash, crypto crash everything crashes, I always say we're the last man standing right like could be an unimportant because we're the the only area that is still growing people still make good cash flow is to have good investments don't have to worry about value depression or anything like that. But the point is more - my message is, regardless where you live, and especially if you live somewhere in those higher priced areas does not mean you cannot invest in real estate for good performance. And this whole journey to the time freedom point is investing in right performing properties to shorten the time or the journey to your time freedom point. And that obviously doesn't work in Boston, or in San Diego, Santa Barbara, unless you have an unbelievable job that gives you 50 grand a year in free money or something like that.

Jason Muth:

The way I've seen it in those expensive markets, and by the way, I don't blame you for not wanting to leave San Diego, I mean, like I've been out it's such a beautiful, beautiful area. But it's expensive. You know, it's expensive here in the northeast, as well. As expensive as it is, though, you know, I have a little bit of a different mindset toward it. I mean, the numbers are bigger, but it means that the leverage works better. And I feel as though as if you make the right decisions, and you put a bigger percentage into a deal. That's a big, you know, a big property value a million dollars or something like that, you know, when a million dollars goes up by 25%. That's a quarter million right there, you know, when 300,000 ours goes up by 25%. You know, that's $70,000 right there. Did I do that math, right? Three said no $75,000. It's just the numbers are bigger, like, and they're only so if you make the right decisions and make the right bets, you know, I think that the numbers could accelerate a lot more quickly in some of the more expensive markets. But to your point, it is tough to getin . And it just is I mean, that's

Unknown:

I agree. But the thing about it is one thing, why... percentages in this context leads to nominal results, right? And what I'm finding is, you're totally right, if you say okay, if I can get a million dollar property and had to put 200,000 down, the nominal result, as you just described is higher. The point that I'm finding in most of our clients life reality is they don't have $200,000. And it looks like an insurmountable mountain to climb to ever get to the amount of money needed to do the first step. So what I'm trying to get closer to them as to say, Okay, well, if I can do the 200,000. But over time, I can do 10 times 20, or 10 times 30,000, right, which would mean okay, I can get $150,000 property pretty much right now. Because I have 30,000, I can get to 30,000 rather quickly. And then I can make a plan who how I get to 30,000, another 30,000 In the next 15 to 18 months and get my second property and then get my and obviously if you do this for a while, then you also gain equity in the properties you did. You can do HELOCs and all kinds of other creative ways. But the point is, and I put this in kind of my application, if you want to call it that, this analysis paralysis component is to some extent informed by, well, if I look around what the properties are in my area, and let's just say, Jason, they are a million dollars, then if I look at what I need to do to satisfy the bank, I need to come around with about 200,000. I don't have that. So I'm out. When I'm saying no, you're not out. You can live in Boston, because that's where your job is. And you can invest, for example, in Ohio, or you can invest in Alabama, you can invest in other places across the country. But the trick then becomes is how do you build the trust? Because when you can be there because it's too far away. I mean, most of my investments are somewhere in the middle of the country, and typically at least 1,000 miles away, oftentimes more, but then it becomes a matter of how can I institute some approach that allows me to trust the people who work on my behalf and still have good performance? Again, you know, some people get inundated with all kinds of rumors, and I fear, you know, rumors and myths is one thing and I want to be a role model to say, Well, let's look at the reality. Let's look at the properties that I have bought myself who I bought them from how did I buy them? And I'm the living example because I, by the way, was one of those people who didn't have a $200,000 savings account either. I'm not saying Jason the numbers aren't right, you're totally right. But the number of people who can start at that point is just smaller in my experience.

Rory Gill:

If I understand the strategy correctly, you know, it's the idea that, you know, even if you live in a place, it's incredibly expensive. There is some place you know, I don't know how true it is these days, I've always heard the the line that you know, regardless of where you live, if you go for two hour drive, you'll find someplace that where you can afford to enter the market. But even if that's no longer true, and we're looking at you know interstate investments for this strategy, the core components in this building a team of people around you that can help serve the homes. Is that right?

Unknown:

Or connect with somebody who already has a team. So this point, I want to just respond real quick to this. If you drive two hours, you find something that you can invest in from a pure price perspective, which I think is probably true, still even true today. The issue is, and I said this earlier, and I really hammer this all the time also, with with our clients is finding a place that you can afford does not guarantee performance. So it's not good enough to say, Okay, well, I live in a place where every house is a million dollars. But if I drive two and a half hours, I can find houses for 200-220,000, something like that, well, if they're 220,000, house is almost impossible to rent for a good lease rate. It's not performing. So if we really want to get to the time freedom point and say, Okay, you put out a number 5,000-6,000, whatever, per month in passive income, that is the performance that needs to be part of it. It's not just the price or the property, but how well does it perform. So you're right, Rory, you can either create a team or you can tap into a team. And so what for the most part, what we are doing and what I'm showing and teaching and helping our clients with is to invest with turnkey providers, because they did exactly what you just said they already built a team.

Jason Muth:

So when you say turnkey provider, are you saying large corporations?

Unknown:

No, a turnkey provider in my definition is an organization who basically has three main components to their business. They find properties in a market that is a well performing market to begin with, and buy these and renovate them with their own contractor slash renovation team. Then the middle component, or second component of that company is the marketing and sales team that advertises those properties, whether they're for cash or for financing, and so forth, and basically make it available, typically outside of MLS. So you have to have a relationship to be aware of that. And then the third component, and this is important, in my view, and this is what we are very, very focused on compared to other definitions of turnkey. The third component is the fully developed property management component. So if you think about it, the same company finds a property, renovate it, hands it over to marketing and sales, who sells it to you, me, Rory, and then also does the management of that property on our behalf. Now, obviously, why am I so adamant about it is if you know, that the property 123 Main Street in Cincinnati, Ohio, that you are currently renovating - let's say Rory were the renovation team director and Jason, you are the director of property management - imagine what you would do to him if he does a shitty job job on the renovation. Right? So knowing that you would not like that and allow that it's an automatic, it's more like a human nature kind of thing to know if my own organization is hurt by any kind of oversight or not really well done on renovation, on the performance. And and especially I'm in the middle. I mean, I don't know if you guys have it on your Zoom as well. But I'm sitting in the middle. If you were those two components, I would say, Guys, when you want me to buy this property, I want at least a one year guarantee that Rory did a good job. So Jason has to do nothing else and collect rent. Right? And so obviously, that dynamic is way, way under estimated. And that's basically what I'm trying what I've done is first myself when like we said, you know, when I started my business, I first dug into found all of their status myself for years. And then when people convinced me to do Ideal Wealth Grower. Now I'm offering these existing relationships and how this works to others. But it's really important to find partner organizations that have the three components.

Rory Gill:

I noticed that you know, what you're talking about everything comes down to kind of the concept of the time freedom point. Can you tell us what that means? Before we go too far into the conversation, and kind of keep dropping the term? What is the time freedom point?

Unknown:

Well, basically, the time freedom point starts out with saying, What is your current level of living expenses. And I always encourage people to say, don't just look at the net, exactly what you pay for, but also include a little bit for if you'd like travel, or if you have a hobby or some passion or so forth, add that in. Let's just say that we're 4,200 bucks a month. Right? So that's then the number or the goal from today's perspective, of passive income that we would need to accomplish through real estate investing, so that you gain the freedom to decide what you want to do with your time. If you love your job, you might say I keep doing it. If you feel that it's too stressful, you might say maybe I can dial it back to half time. Or if you say, Well, it's kind of worn itself out, I would love to do fill in blank of any passion or hobby, whatever you want to do, okay, then you can do this because you have the freedom to know that the passive income is covering your life expenses. So now then it becomes a matter of how do I get there? Well, you know how far in the future on the calendar is, and this is a very individual thing. So let me just give an example. If you say, Okay, I find this property in Cincinnati that we just mentioned earlier, and that gives me $300 a month cash flow, free cash flow, after everything else is paid. My turnkey provider property management, my reserves my mortgage insurance, property tech - $300 left at the end of the month. Now you'll see okay, 4,200 is what I wanted. Well, if I want to do 4,200, I think I need something like 14 properties. Then say, okay, if we don't have Jason's friend with the 200,000 in the back pocket, how many years does it take to get 14 properties? This is just the beginning viewpoint, right? Assuming each property would give us $300 a month, if we were just to plainly look at this 14 properties, let's say we can get one per year will be 14 years. So that's the plan. Now we look at how can we make it faster. Now number one, nobody would basically keep the rent from property one through property 14 forever at the same amount. And you guys know this, your audience knows this, the cost typically doesn't increase significantly. Property taxes might go up a little insurance might go up a little your mortgage is pretty much fixed. So as you increase the rent a little bit, that is almost 100%, increasing your cash flow. So two, three years in, that $300 is probably become $400. Now, not just for that one property, but for the other ones, too. So what we're finding is, when you say the starting position is 14 properties at $300 a month, you probably end up somewhere around about 10-ish, 10i11, maybe 9, not all of them will be 300, some maybe 350, some might be 280, or so forth. But then they also keep increasing over time. But then also we have inflation like right now we're feeling this, so the 4200 that would cover it now in 10 years from now need to probably be six thousand. And that's basically the journey and anything somebody can do like I'm, for example, teaching people in our community now to do what I call cashflow parking and tokenized real estate because it's super liquid, but you get cash on cash return between seven and a half and 10%. So most people who go in on this journey towards the time freedom point are not saying I need these $300 and shouldn't need these $300 they should keep accumulating so we can faster and faster by these properties. But the best place to have them accumulate in my opinion, and again, you know, heroes last man standing is right now if you could put your cash flow in real estate and tokenize real estate on the platforms that we recommend it's 50 bucks per token, right. So if you have 300 bucks coming in the first month after your purchase, you have five tokens, and you can do this every month, and then you have your second house and it might be 10 tokens, or 12 tokens or whatever. That way your cash flow is actually earning money as well from other smaller real estate investments. And over time, like I said, even though it looked like 14 years for 14 properties is probably more like 10 properties and eight or nine years,

Rory Gill:

That's a pretty dramatic difference from the idea that you have to save up $200,000 before we can even enter the market and to start to realize those appreciations all the way down to $50. So we have a range of different investing styles and everything and you're making pretty fairly compelling case to start the process now and not necessarily commit yourself to a strategy where you have to save up that much liquid cash, because by the time you do the properties, that $200,000 goal might be even higher with inflation and appreciation and you've missed out on years of potential growth. So I do you think that's a pretty compelling case there. With the tokenized, when you're working with your clients, are you working with them to to chop up that goal and are you steering them toward tokenized real estates toward individual investments? What do you favor with your clients these days?

Unknown:

Well, I favor the benefit of leverage is basically the answer in a nutshell. The difference between a tokenized real estate investment as I call it, cashflow parking, and the investments that you're actually favored to be the main drivers of the journey is leverage, right? If I take that, like right now, for example, we are helping our clients to get into properties in Memphis. Brand new builds It's called an infill bidding for $160,000 per house like the lot with the house brand new build finish this year, next year $160,000. So you need about $32,000 in downpayment, right? Now, when that house, and I think that was the point that you were making JC when that house appreciates by 5%, which is pretty modest I would say, for a brand new house. So that's basically around $7,500. But on my 31,000, or something like that, that's about 30%, or something, maybe even more than 30% appreciation, like cash on cash return on my money. In tokenized, real estate, everything is cash, right? So whether you buy a $50 token, if you take that same house, and the platform operator buys that $160,000 house in Memphis, they buy it for cash, then they take the $160,000 and break it into $50 increments and say, Hey, Jason, how many of those tokens do you want, Rory how many, Axel how many or fill in the blanks, and we can all have up to 10% maximum of the tokens in the property. But we pay cash, and they paid cash. So that whole aspect of leverage is gone. Now, still, the property is the same kind of property, it collects the same kind of rent, we participate in the rent, we participate in the K-1 and the depreciation all of that. But it's similar or more akin to a cash purchase without leverage versus a leveraged purchase. And I mean, it's very obvious, the 5% to 30% ratio, in some cases, even more, is obviously better performing and more desirable. But then again, most houses cost more than 50 bucks. So it's a balancing act. And that's why I say for the actual purchase and performance of your money, you want the leverage deal. But when it comes to when I get cash flow out of it, which is basically a left over part of the tenants money, you want that to perform better than what any savings account in any bank would give you. And you don't want to speculate with it either. That's why I say keep it in real estate.

Jason Muth:

So you know, you mentioned earlier, we've seen bonds, stocks, crypto, everything crashing real estate, we're, we're the ones still at the top of the hill, because things continue going up and up and up. If you own a number of properties, you know, we're still feeling confident. What's in the crystal ball? Like, is this kind of the direction where you're still advising your clients because of the volatility elsewhere? Like, do you obviously everyone has a prediction for where things are going - I'm not asking for you to say where interest rates are going to be whatever. But just as a whole, you know, is there still confidence in your mind in investing in the real estate world? And do you think this will allow people to weather the volatility of the other financial markets pretty well?

Axel Meierhoefer:

Well, the short answer would be yes. A little bit more in Depth, one thing that I've become very fascinated about and reading and educating myself more and more and more, maybe because I'm believing that I know quite a bit about real estate, but now I tried to understand the macro economic environment that is kind of guiding. So to your point, I believe that the price side of real estateon the broader scale, if you're not looking at any kind of specific special circumstance or particular area was particular circumstance on the broader scale, I believe we are far far away from filling in this massive hole on lack of supply that has basically developed between 2010 and 2020. And with with the whole financial crisis, from my perspective, builders, and the banks through their regulations and stuff like that created at least a 10 million unit hole of units of real estate or houses and apartments and condos that are needed in the market. And that's not even taking into consideration the population growth. But it will be probably more like 12 million or something like that if you added that in. And even though with the boom that we have been seeing in price appreciation, there's obviously been a big trigger to build more and start new developments. It's still an enormous mountain to climb and now when you see okay, well how about now? Right but now we have the problem that people, and you have to keep in mind most of these new developments are being built for owner occupied owner occupants, now they run into the problem with the Fed increasing rates as they have been and seem to be continuing to do for the rest of the year at least. Mortgage rates are at a level that the typical owner occupant is more and more in the bind of qualifying. So there is most likely in my crystal ball, a hesitation to start brand new projects this year and maybe even next year, regardless how long it takes to get the permit just because you don't really know how many potential owner occupants would qualify at 6 and 7% mortgage interest rates. Which is, in a sense, a good opportunity for us, because any inventory that comes on the market and builders who had thought they had it already sold, and people have to basically jump off the contracts because they can't afford it anymore. Those builders will be looking for you and me and anybody else to say this, there may be an investor who would buy this property and then rent it out. Because I believe we are always in this balancing act. And right now, with the environment that we are already in and probably going to be in for longer, I would say about next two and a half, three years, there will be much more demand on rent, and less demand on purchase, except for investors who we love tenants, especially good tenants and good deals. So long story short, I believe that we won't see the same price appreciation as we have seen in the last two or three years. But in my approach with the time freedom point, the things we discussed before, appreciation is basically the icing on the cake anyway. We are buying these properties for the long term to generate the cash flow, not because we are trying to sell them in five or six or seven years. So if it appreciates really rapidly, then we would be much more - I would advise my client much more likely to get a home equity line of credit to tap into the equity and buy another property then sell the one just because it got more valuable. Because remember, cash flow performance is the aim of the game. Right? So that's, that's basically how I see it. So price appreciation, I don't think it's going to stay as high just because we're kind of getting to the to a plateau. Demand for for rentable units, I believe will go up. Rents have not really anywhere caught up to the price appreciation. So I believe rents themselves will continue to go up, which to some extent will result in more cash flow. But you could counter argue, well, how does this mean more cash flow when interest rates have been going up like this. And so one of the things that I'm advising our clients is, because, well, let's say this way, I'm advising them to look for more creative financing options, like interest only, or adjustable rate mortgages. And I can tell you why I'm saying this, I'm saying this, I'm looking right now, and anybody can go on national nationaldebt.org and see that we are at 30 trillion plus dollars in national debt. Now, last year, the government paid about not quite $600 billion in interest at an interest rate at between zero and 0.5%. We are already approaching two and according to the Fed, they want to go to three. That's basically saying that's kinda like where Treasuries are going to be. So with some, if you're generous, you could say that six times as much, I don't even want to go there. But it probably means that we're gonna look at something like a trillion dollars of interest on the debt. How long do you think we're gonna be able to sustain that politically? I think that's total suicide. So yes, I understand that they want to catch inflation and do something. But when we look at this macro economic thing that we call the economy, I don't think it's sustainable for very long, that's why I'm saying from today, two and a half, maybe three years, and then at the very latest, the Fed has to come back to something more reasonable. Not for us, for investors and home owners and for being able as government to serve our debt and not collapse the whole place. And because of that, you know, then things will be cash flowing a little better again, but in the meantime, if you say, Okay, I got a interest only loan on my mortgage and don't pay any principal for three years. Why not? Right? And that helps you with your cash flow and benefit from the, from the higher rents that you can get.

Rory Gill:

And I mean, that's, I mean, it's excellent insight. And, you know, I, I salute you for putting some predictions out there because I know when I've made predictions in the past, I've often been wrong, but I, every, every, every few years, a new type of opportunity comes out. The way would invest in 2010, when there was a different set of opportunities in the wake of the financial crisis is not necessarily a strategy that works today. And by the time people perfect a strategy, write books, get them published and get them out to the world. The the opportunity often is is past. So I think, you know, when you're working with your clients, there's a bit of agility out there and a bit of a willingness to have to change strategies as we go through. But the, the fundamentals seem to be the same and that is you want to get into real estate, real estate is fundamentally a good long term investment. Subject to, it's not immune from the rest of the market, but in many ways, it's, it survives the rest of the market. And, and that's, you know, that's the value I think you add to your clients. You know, before we

Axel Meierhoefer:

Exactly if I if I may comment on that for a minute. One thing that I find interesting is a little bit of a vignette that a guy by the name of Michael Saylor recently said in an interview. He was asked you know, what, what are good investments in your in your view and he's for people who know the space know, he is one of the most adamant supporters of Bitcoin. But they say well, you know, Bitcoin one thing, but how about other things, and he basically made a strong case why value assets, the place to be, which is where residential real Well, I think that a lot of the institutional investors are estate for its but what I wanted to into what you were describing, Rory, as a quick comment. If you pick any location, if you like a place here, where I live, or a place in Boston, or a place like in this case, Michael Saylor spoke about a nice house by the water in Miami. That house, let's say it was built in 1975, beautiful house. And at the time, it costs $180,000 The thing that the house gives you and me and anybody out there, the space to live, enjoy ourselves by the water in Miami in the nice weather is a certain kind of service, so to speak, if you want to look at that, and it used to cost you $180,000. Now it costs you probably $1.1 million. But the house is not different, right? And so what that really points towards is the reason it costs $1.1 million, not because the service that the house brings to any occupant or anybody who goes to it is different, it's just the money isn't worth as much anymore. And that's really the same thing that applies to all our investment properties, right? So if we have inflation, which actually means the value of the money that we're using to go buy a watermelon and stuff like that is decreasing rapidly at right now 8.6%. So if you buy a property and you say, Okay, it's not in down in Miami by the beach, but it's somewhere in Cincinnati that performs well and gives the service to our tenants for $1,200 $1,500 a month. Well, if the money keeps losing its value, then obviously the price of this thing has to increase because it's so provides the same service as before. And that's one of the big differences that people I believe, hopefully you can can benefit from understanding is, it's not that the price of the house or the value of the house increased in the sense of it is somehow giving us better living or better, more square footage or anything like that, it's the value of the money that we give for it is going down. And that is going to continue and I don't know how inflation will look like next year and two years from now, but it's not going to be 2%. finding their way to real estate as well, which is causing even more of a of a tightening for people that are looking to buy their first homes because they're competing against larger corporations. You know, it's everyone sees inflation at these high numbers, they're all looking for ways to park their money and watching it grow and beat inflation or at least keep up with it. And you know, that's that's causing even more of a of a bind, because hey, those watermelons are going up in price. Yeah, exactly.

Jason Muth:

When I go to the Wholesale Club, you know, like, I think my basket of stuff is like 30 or 40 bucks more than it was just a few months ago. It's just kind of how it is.

Axel Meierhoefer:

Yeah, absolutely. Well the thing I want to actually support a little bit because sometimes the institutional investors are basically put into like the doodoo corner or something like that. I'm always trying to ask people think about what money are they using, they didn't just go to the money tree and pick a couple of bills and then say, well, let's see where we can invest it. Typically it's money that comes in because of 401k's or IRAs or 539, or whatever other plans people are doing to try to accumulate wealth or accumulate money for a certain purpose, be retirement, college, whatever. So I always say well, if you gave this to an institutional investor, wouldn't you want them to look out for putting your money on your behalf somewhere where it performs where? And if you currently look and say, Okay, well, in the past for 11 years, the place to go was the stock market. But, you know, it's like, musical chairs, it ends at some point, right? And so now they have to look and I think saw the writing on the wall for a few years already that this is not going to continue forever. And now they're looking in places, where can we put the money of our clients and have to have it perform where. Right? I, I find oftentimes the description that we see in the media about certain things and what's happening in markets, extremely short change, and they never really put any reasoning in it. They just put the headline as as horrible as possible to attract people's attention. But when you really look behind it and say, Okay, you're putting, oh, I don't know, 500 bucks a month in your 401k, wouldn't you want your institutional investor to put it into place that appreciates really? Well, I would say so. Yeah.

Jason Muth:

I mean, we could probably go on and on about these macro economic conditions that are causing a lot of the micro economic issues that people are having, and I appreciate all of your insights, Axel, I do want to get to the final questions that we have. And then you could tell everyone how they can find you, ask lots of great questions work with you. I do also want to mention, earlier on the episode, you said something about the forums in Bigger Pockets. And you know, I also want to underscore that. I think the Bigger Pockets has allowed a lot of us, myself included, to work toward becoming the real estate investors that we never knew that we were. All because of the amazing information that's out there, the willingness for people like yourself to answer questions, and to say, Hey, if you have more questions, just reach out to me. I've said this many times in this podcast that like this is, you know, it's not a zero sum game, like you don't have to lose for me to win, like we could both win together, lots of people can win at this game. And I think people are very willing to give information out, because there's so many different ways that people can invest in real estate. And, you know, I know Bigger Pockets has been there for quite some time. I think my, I just looked at my profile, I think I opened it up seven years ago at this point, I mean, you know, and starting to communicate with people. But you know, seven years later, it is still a really important place. And I always direct people there, if they are just looking at me and I start talking about real estate. And they don't know me as that, or they do know me that is that they don't know what I'm doing, you know, as an investor on the side of, you know, when I was working full time, and they're like, Well, where are you learning all this stuff? And I just say just start at Bigger Pockets, like, and you go down this rabbit hole. And next thing you know, you know, they're as excited about it, as you and I are.

Axel Meierhoefer:

Yeah, I totally agree with that. And the reason I mentioned the forums is mainly because you can ask you a specific question, you can describe your specific circumstance. And if your audience is wondering, Okay, so couldn't you put this in an online learning program, people charge people five grand and have them learn it themselves? My answer is where you can put some fundamental information out there. And there are plenty of people who do that. But in my experience, and I've really worked with a lot of people and keep working with a lot of people, and I have not so far really seen one case that was even close to the next case, right? Because of the age or the history or the savings or the horror stories, or whatever it is. And so having a place in a community, where you can say, here is my circumstance, who has any kind of advice. And if you like what you're here to say, Well, okay, maybe this person is a little deeper than just this answer. And I want to I just like you said, Jason, I totally agree. That's the beauty of this thing. And that's, I think, what kept growing and kept it so vibrant.

Jason Muth:

Yeah. Well, you know, we certainly appreciate all of your insights also, and, you know, the forums on BiggerPockets is somewhere that I want to invest time in right after this podcast. It just kind of gets me thinking about it again. So I want to jump back in that, you know, sometimes, you know, life gets in the way, but it's, it's such a wealth of information. And I know people are listening to this podcast are probably BiggerPockets fans as well. It's where a lot of us got our interest. Why don't we get into the final couple questions that we ask all of our guests just to get to know you a little bit better. And then we'll allow you to let everyone know where they can get a hold of you. And we'll put all this stuff in the show notes, all the links to your website, social media profiles, everything. First of all, first question, if you can get on stage for a half an hour and talk about any subject in the world with zero preparation. What would that be?

Axel Meierhoefer:

Yeah, what I would love to do in hopes of inspiring people to join me or help me is to point out that we have all the technology necessary to make our investment properties environmentally friendly. Right? We can't we know what pipes it takes to collect the water. We know what options there are to put solar panels on them. We know that we can put a battery pack in the garage and charge our electric car, even if you don't have it yet it can be there and run our house. And on and on and on. Right? There's so much amazing sustainability technology out there. And I would love to advocate for that if I get like a TED talk on stage and stuff like that.

Jason Muth:

Yeah. That's a great, great idea. We have not heard anyone talk about sustainability to that, to that extent, have we Rory?

Rory Gill:

No, not yet. I mean, I think it's, for a lot of people, it's a secondary thought when it should really be at the forefront of our of what we're thinking. But you know, the people we've spoken to eat, however, we arrive at the conclusion talk about in terms of cost savings, but I think adding it to our, you know, core mission, just sustainability when we, I don't want to go off on a tangent here. But when we just look around at our own neighborhoods, and the way we've built and, you know, the way this country has been built over the past few decades, you can see some glaring inefficiencies. And you know, we can't solve it overnight. But if we put sustainability at the forefront of our investing, we can make a difference.

Axel Meierhoefer:

There are triggers, right? Like, I mean, right now we see only one facet of it that are the gas prices at the pump. But if you were living in Europe, for example, and you see gas prices, food prices, the literally natural gas for heating, and all that kind of stuff is like doubled since the war started, because there was such a huge dependency on supplies from Russia and Ukraine. And over there, they're now trying to scramble to find alternatives. Well, I, my message would be from that stage, like you said, Jason, let's not wait until we're in desperate times, let's use the available technology and get our stuff done. So that we don't ever have to say, Well, can I actually buy food? Or can I pay my electric bill? Because I have no solar panels on the roof? Right?

Jason Muth:

Well, I will say Rory, all the construction trucks that we see in our neighborhood right now for the builders, it says Building Green right there on the truck. So hopefully, we've been working with some good sustainable builders here. That would make you proud, Axel.

Axel Meierhoefer:

Yeah, thank you.

Jason Muth:

Second question we have for you tell us something that happened early on in your life or career that impacts the way that you're working today?

Axel Meierhoefer:

Well, one, a couple of things. But the one that I would want to point out is I learned very early on from school and then also into the military, and maybe a little bit because of the sense of my ancestors in Germany, that people are good. And I adopted from that you don't need to earn anything you can when you engage with me, I assume that I'm assuming regardless where you come from, how you look, what color of your skin, what kind of habits or background or whatever, I assume you are good, and you want the best for yourself and for other people. Which means as long as you just barely or more than barely meet that expectation, we already got from day one. You don't need to prove 100 things before I say okay, Rory, now I can finally trust you, that will never happen. And that was a very important lesson. Because throughout my career in all these different places, cultures and circumstances, it has always served me well to look for the good and get confirmation, the good is really there.

Jason Muth:

I kind of subscribe to the same mindset. I mean, like in the northeast, we don't always trust everybody, you know, you kind of have to, you have to earn the trust a little bit. But I go into every conversation thinking like this person is a good person until otherwise proven. And the final question we have for you is tell somebody that you're listening to or watching or reading these days.

Axel Meierhoefer:

Yeah, I've just finished one. I'm about halfway through the other one, two books and I'm actually become a pretty big fan of audible, I'm listening more than I'm actually having physically the book. The first one and they are in that sequence. I'm not saying you have to read them in that sequence, but I would say it's probably had for the first is called The Bitcoin Standard. And the second one is called The Fiat Standard. And just so people will say why why would I want to read a book about a book about Bitcoin? What I found so fascinating, I didn't know this until I read them is that they're really in two volumes, basically, describing the history and the workings of money. And it's, you know, if you read how fiat money impacts our food, supply, our technology supply our science and stuff in a concise way I was blown away. So if somebody wants to learn a little bit about the history and the workings of money, I would definitely recommend those two.

Jason Muth:

Do the books go into the gold standard also, like the fiat money book?

Axel Meierhoefer:

Yeah, yeah. Basically start out with seashells and little trinkets and stuff. And then they go to the Roman gold and silver coins. And why do coins have these little rivlets at the side? Do you guys know that?

Rory Gill:

I don't. I do not.

Axel Meierhoefer:

Actually, when the emperors were trying to find ways to get some of the gold or silver that was originally put in the coins back, they came up with a scheme to shave off the pieces. And if you have enough in circulation, you can basically make new coins without having to mine new silver or gold.

Jason Muth:

Right. It's like It's like the package of cereal that was 18 ounces that's now 17 ounces, basically a little bit more for that.

Axel Meierhoefer:

No, exactly right. And then they started adding nickel and started adding bronze and stuff like that. So there is a long history of - what was money? How was money used? How was it manipulated? And and the shocking thing is, it's basically about a 10,000 year history, and the manipulation hasn't stopped now. realness, right? Like, I mean, sorry, Jason. But one of the things why I'm recommending stuff like that is, I have found for myself, if you raise your level of understanding and awareness, you're just playing in a totally different league, right? So I mean, you hear stuff in the in the financial news, or even generally news CNN or whatever. And you have the awareness and how these things fit together. How does money work? What does the Fed mean, when they say they need to increase interest rates to try to fight inflation? You know, why am I saying the house in Miami is still the same service, same square footage, nothing changed, but it's now 100 times as expensive. Right? So that's those things are beautiful described in those two books.

Jason Muth:

It definitely adds a different dimension to understanding the news that we see that we don't think impacts us. And then when you talk to a mortgage broker, you realize it does impact you, you know, it kind of adds it adds a different dimension to that understanding.

Axel Meierhoefer:

And you might ask yourself, Okay, how am I going to carry my $200,000 worth 10 kilo gold? Around? Right. And that's why the Excel?

Jason Muth:

Yeah, I could barely lift it up, right. Yeah. Right.

Axel Meierhoefer:

And that's, that's where the place where Bitcoin comes in, right? Like where they say, Okay, you mentioned but digitally wouldn't be so heavy.

Jason Muth:

Yeah, well, I have to go count that 200 grand or so, you know, recount it today, that's my activity for the rest of the day. But tell everybody where they can get a hold of you. If they'd like to learn more or work with you. I know, idealwealthgrower.com is probably an easy way to get ahold of you. But you know, tell us what's what's the preferred manner?

Axel Meierhoefer:

Yeah, the best way I mean idea about grower.com gets you to the website. But if you just go on Google, Yahoo, or any of the search, and you put in idea wealth grower as a search term, in three words, one word, whatever, you will find us pretty much across across all the different social media sites, and each one of those has a way to get in touch and we will respond. So website or any social media place under idea where to go and you get us.

Jason Muth:

Great. And we'll link it up in the show notes. As I mentioned, Rory, what a great financial education that we just had over this past period of time.

Rory Gill:

Well, let's let's take this in this run with it and just keep learning more and more. Well, that's

Jason Muth:

I haven't started I have my my $200,000 gold bar right here. I can't really run with that. But so, Rory, where can people get a hold of you? If they want to get a hold of you?

Rory Gill:

People can find me at my real estate brokerage. NextHome Titletown Real Estate nexthometitletown.com or at my law practice UrbanVillage Legal - urbanvillagelegal.com.

Jason Muth:

Awesome. Axel, thank you so much for being part of The Real Estate Law Podcast, we were looking forward to this conversation and certainly delivered. So you know, we really appreciate your insights. And we'll have to circle back with you down the line in different economic times, whether it's better or worse, we don't know where it's going. So we'd love to get your take on it in the future as well.

Axel Meierhoefer:

Yeah, that's awesome. Thanks for having me. And I see you at your time frame point.

Jason Muth:

Yeah. And thank you for listening. If you've enjoyed this episode, we'd love it if you would give us a quick rating, or leave a comment. You might be listening on YouTube, or on Spotify, or any of the places where podcasts exist because we are in all of them. So if you want to be a guest in the podcast, reach out to me directly. You can find me Jason@nexthometitletown.com. And that's it. It's been another great episode of The Real Estate Law Podcast. So Axel. Rory, thank you so much for all of your insights and for your time today. And thank you for listening. We'll see you next time.

Announcer:

This has been The Real Estate Law Podcast because real estate is more than just pretty pictures. yours and law goes well beyond the paperwork and courtroom arguments. were powered by next home Titletown greater Boston's progressive real estate brokerage. More at nexthometitletown.comnd UrbanVillage Legal, Massachusetts real estate Council serving savvy property owners, lenders and investors. More at UrbanVillagelegal.com. Today's conversation was not legal advice, but we hope you found it entertaining and informative. Discover more at the real estate law podcast.com Thank you for listening