Hello, Sam Pompeo here with Ideal SoCal Homes, coming to you today from my lovely and comfortable office here in Calabasas, California. In any event, today I’d like to talk briefly about investing in real property. Investing in real property, for sure, is the most proven track record to long-term success. It’s a vehicle that is tried and true, time and time again. Those that have acquired great wealth, most of them have done it investing in real property, other than the dot-commers but, if you want to build long-term wealth, real property investing is the way to do it.
Some people are a little scared about investing in real property because they don’t really understand it. I’ve been selling real estate for 29 years. I’ve been investing in real property for 29 years. I’ve bought and sold apartment buildings, a 5-unit, a 10-unit, a 12-unit, a gas station, a restaurant, all sorts of different things. Investing in real property really comes down to this. Which vehicle are you most comfortable with? There are those, like myself, that are most comfortable in residential income. I’ll call it ‘mom and pop,’ a 2-unit, a 4-unit, and 5-unit, maybe up to 10 units.
You get beyond that, and it becomes something that you can’t really manage yourself unless it’s your job all day every day, so then you have to outsource to a property management company, and it’s kind of the next level. The first level of real estate investing, for average people, is like a duplex or a 4-unit, something like that. It’s a great vehicle. It produces passive income. If managed properly, you can have mailbox money every month. It won’t be a huge amount but, over time, the tenants pay the debt down, the real property goes up in value, and you collect a small amount of rent monthly. That’s a winner. It’s an absolute winner.
As you move into more commercial property, I would say that that’s more for the seasoned investors, and I’ve certainly done so. Like I say, I have sold gas stations, restaurants, large apartment buildings, small boutique hotels, so I certainly know the ins and outs of investing. Most of the time, small investors will try to purchase something that has a decent return.
They like to call it a return on investment, or an ROI. All that means is, if you spent a million dollars, how quickly would you recover that million dollars? That would be your return on investment. If you recovered $100,000 by way of rent a year, you would recover your million dollars in ten years. That would be a 10% return on investment. That’s phenomenal. If you find a 10% ROI, buy it, and buy 10 of them if you can because that doesn’t really exist any more. That was just an example. ROI is something that is kind of a data point you might use in investing.
People look at the gross rents. The trouble with gross rents is, a lot of times here in Los Angeles, because of the LA Housing Authority, rents are held down because of rent stabilization, so you can only move them a certain percentage every year. Knowing which buildings are rent control, which buildings are not rent control, how much you can move rent, and when are all concepts that I’m incredibly familiar with, and I’d love to share my experiences with you in more detail.
Investing in real property, it’s a winner. I recommend you do it if you have a few dollars laying around and some good credit. Maybe rally a couple of friends, and you put a little syndication deal together and we’ll do it that way. In any event, if you’d love to pick my brain more, I’d love for you to do so. Hey, in fact, you can go to my website, idealsocalhomes. There you can download my book, Go Ask Sam. The book’s free. Go to my website and get the book. In it, I touch briefly on investing. I basically have the answer to tons of questions that people have asked me over the years, but that was really just a shameless plug.
If you’d like to chat more, I would love to talk with you. Call me. My number’s at the bottom. Be well for now, and make it a productive day. Okay, bye.