What is the perfect investment? According to Paul Moore, the answer is multifamily apartments, or more broadly commercial real estate. The reason Paul loves multifamily is the ability to invest in income-producing assets with leverage and unbeatable tax advantages. Paul is the principal of Wellings Capital and host of the “How to Lose Money” podcast. As a regular contributor for BiggerPockets, Paul is well-regarded for his multifamily and self-storage knowledge. In today’s episode, we dig in on value-add strategies for multifamily and self-storage, overcoming setbacks and tips to invest in a hot market.
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Key Insights
- Author of “The Perfect Investment” and host the “How to Lose Money” podcast
- Went from $1.5MM in the bank to $2.5 MM in debt 10 years later
- If you lose money, dive right back in. You’ve already paid the tuition, so you may as well get the value of the class
- When determining whether to quit or keep going, first decide if you are on the right path
- Residential real estate is based on comps, commercial properties are based on math – Net Operating Income / Cap Rate = Value
- Jeff Bezos took out all the lights at the top of the vending machines at Amazon facilities to save money and boost value
- If you save just $1 in one unit per month, at a 6% cap rate, it can create $200 of value
- Mobile home value add idea: create parking/storage for cars and RVs
- Bonus depreciation allows you to save even more money on taxes
- Cost segregation allows you to separate all components of a commercial property and accelerate the 15 year
- QREP = Qualified Real Estate Professional
- Baby boomers are the fastest growing group of renters, also the smallest group
- International investors are looking to exchange currency, IRA investors, institutional investors from the coasts
- Moved to self-storage as many international investors
- Red flags: Nurus (new gurus) teaching people that it’s okay to be highly leveraged at 90% LTV (loan to value)
- Self-storage is overheated, just like multifamily, but mom and pop owners leave meat on the bones
- Freddie Mac had 0.4% foreclosure rate during the recession
- Opportunities for Self-Storage Value-Adds: truck rentals, late fees, admin fees, website/marketing, add retail items (locks, boxes, tape, etc)
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Bull’s Eye Tips:
Resources:
The Perfect Investment by Paul Moore
Apparent Failure:
Wireless internet and oil wells taught him to stay in his lane and focus
Most Recommended Book:
The One Thing by Gary Keller and Jay Papasan
Most Recommended Digital/Mobile Resource:
Hubspot
Daily Habit:
Morning meditations and journaling
Wish I Knew Starting Out:
The power of commercial real estate to generate income and create wealth
Wish I Knew 12 Months Ago:
The power of storytelling
Advice for Smart, Driven College Students:
Go find a mentor
Current Curiosity:
The next decade
Best Place to Grab a Bite in Lynchburg:
Mission BBQ
Connect with Paul:
Website: wellingscapital.com
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