Build a Portfolio You Love

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Most people will tell you that real estate investing is all about the brain—looking at numbers and making purely rational decisions. These same people will tell you that they love any property that makes them money. That may be one type of “love,” but there’s another type of love as well: truly loving the properties you own themselves. In this episode, Jeff discusses that there is great value and benefit in building a portfolio of properties you truly love.

Episode Transcript

I want to ask you a question you probably don’t get asked a lot in the real estate investing community. And that is this. How do you feel about the portfolio that you have? Now, there’s lots and lots of people who will say, well, well, how I feel about it has nothing to do with it. This is all about my brain. This is all about how I think about it. And I would say it’s a lot about your brain. And that’s great, but it doesn’t have to only be about your brain. And actually, the way you feel about your portfolio does indeed have a huge impact on lots of things. And I want to talk to you about those many things in this episode. So let’s keep the theme song. We’re gonna jump right into this. Welcome to racking up rentals, a show about how regular people, those of us without huge war chests of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting WE BUY HOUSES signs are just looking for, quote, motivated sellers to make lowball offers to. You see, we are people oriented deal makers, we sit down directly with sellers to work out Win Win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the thoughtful real estate entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio. Hey, thanks for joining me for another episode of racking up rentals show notes for this episode can be found at thoughtful rt e.com/e 156. Please do us a big favor by hitting that subscribe or follow button in your podcast app right now. I so appreciate that. It really helps fellow thoughtful real estate entrepreneurs to find this show. Onward with today’s episode. So recently, actually, just earlier this week, we had the first event the first meeting in a new coaching program that I’ve created, it’s called portfolio and its portfolio is the second level of the deals workshop. So when people enter the deals workshop, then they kind of graduate on to portfolio. And in portfolio, we really talked about scaling, a portfolio and a business and all the things that go into that entrepreneurial experience. And in this program the other day, we were kind of wrapping up our first call. And somebody in the program said and I’m just going to paraphrase this a little bit. They said, I’m becoming more aware of the idea that I could build a portfolio that I love. And I was just kind of stunned with how much I loved that expression. I was so glad to hear this person say that thanks. I don’t feel like this gets a lot of attention in our industry, even in the deals workshop and portfolio up to that moment. That’s not something that had come up a ton. But I loved hearing that. And then he kind of went on to say, you know, there’s this area in town, where all the nicest properties are kind of the highest end area. And I just I’m starting to think about like, well, what if I could own some of those properties. And I was just so happy to be having this conversation. And I thought I would take it here and make it a podcast episode too, because I don’t think this gets talked about nearly enough. So let’s just start with this. What does it even mean? To build a portfolio you love? You know, like, what is even the definition of that. And you know, like I said, many people would say, you know, well, any real estate I own, that’s making me money, or that’s helping me be financially independent, or it’s getting me towards financial independence is a portfolio I love. Anything I own, it’s getting me where I want to go is something I love. Okay, okay, I get that. And I believe in that as well. But there is a difference between I own real estate that’s getting me where I’m trying to go. And other than that, you know, whatever. But there’s a difference between that and I have this portfolio that’s given me where I’m trying to go and I absolutely love the properties that comprise this portfolio. So what does it actually mean to have a portfolio that you love? I would think, I think it does come down to a few things like this. The quality of the properties that comprise that portfolio, the quality of the actual physical structures. The curb appeal is a form of quality, the quality of the location, not just macro level, like it’s in a good town, but it’s in a good it’s a good story. Aiden’s even on in the right spot on that street, quality, micro location, it could be elements of timelessness, you know, architectural styles, and traits like front porches and things like that, that have been very appealing for a very long time. So it’s got kind of a timeless appeal. One of the words that we use a lot that I picked up on from my coach, Greg, and now I use it a lot with the other people that I work with, as well as in my own portfolio is the word romantic. And what romantic means is that when somebody is is experiencing the property, maybe they’re looking at it, to consider buying it, maybe they’re looking at it to consider renting it, maybe they are just walking by when they see it. They have an emotional reaction, right? They have some kind of a, an appeal to not just their brain, but their heart also that says, Oh, look at that place. It is absolutely beautiful. Or can you imagine living here and being able to walk to that Bistro? In three minutes? Or oh, my gosh, look at the fine, like dental molding? That’s up on, you know, above the front door? It’s absolutely gorgeous. So romantic qualities are things that often are traits that show up in properties that you love. Another one is high demand, right? Absolute high demand. Well, what is high demand, high demand is probably the single most important principle of real estate, you want to own stuff that other people want. I mean, I think it’s as simple as that. You want to own stuff that other people want, they either want to own it themselves, they want to use it themselves, it’s in a place where people want to be. And those are traits of, of portfolios that you love, because they’re made up of properties that you love. When you have a portfolio that you love, you’re proud of that portfolio, you have an emotional connection to it. And I’ll just tell you, when I first started real estate investing many years ago, I didn’t immediately have this opinion or this perspective. At all. I definitely had a perspective, just from my studies and reading books and stuff like that, that said, hey, if the numbers work, that’s cool with me, I don’t need pride of ownership. But when I started working with Greg and I started seeing things from a different perspective, my perspective has shifted greatly. I mean, we’re talking like 180 degrees, to the point where I really appreciate having a portfolio that I absolutely love that is not just full of utilitarian properties, but we have properties that I have an emotional connection to, and that I can see the users renters, potential buyers of my properties also have that emotional connection to so what is the benefit of having a portfolio that you love and building a portfolio? You love? Well, you know, as I’ve mentioned, most people would say, real estate is about your brain, you know, it’s not about your heart, it’s about the numbers and the analysis, and emotion when you use your heart emotion will actually get you hurt. And of course, I definitely realized that to some extent. And I believe that to some extent, right, if we if we go into a multi $100,000 decision, just thinking with our hearts, we are likely to make a decision we might regret later, it’s obviously going to be a balance of those things. But when somebody says real estate is not about your brain, it’s just about your heart, I would respond to them and say, Tell that to the people who are looking for a place to live. When somebody walks up to your four Plex, let’s say and is considering making an application to rent it. It is impossible that their hearts does not play a role in their decision making process. It’s impossible because they are humans and they have heads they have hearts. And it is impossible that their heart doesn’t at least cast a vote now they may choose to use their head more and that’s fine. But we can’t pretend that somebody’s feeling about a property doesn’t impact their decision making process because it absolutely does. And the same thing goes for buyers right I mean, why do we spend time talking about topics like curb appeal and staging and you know, baking cookies during the open house and using a language in our ads to talk about, you know how this family room is great for kids to play in and things like that. It’s it’s to appeal to somebody’s heart. The another benefit of having a portfolio that you love is that quality real estate and again, I think quality is one of the hallmarks of a portfolio you love. Quality real estate is so safer, quality real estate in quality locations with, you know, beautiful traits and curb appeal and those types of things has more consistent demand, it is less to sort of use a economic term. It’s less elastic, right? It’s the demand for it does not expand and contract greatly based on the economy. The quality real estate is the stuff that is always at the top of everybody’s list. And so why is that important? Or why? Why is that the case, because quality real estate is not a commodity. There is really kind of two categories of real estate, you know, there’s commodity real estate, which is utilitarian. And then there’s romantic real estate, let’s just take a second to distinguish between these two things. Commodity real estate is real estate that is functional, and really not too much more than that, it serves a purpose, which is to give someone a place to live and to use the bathroom and to cook their food and stuff like that, to stay safe to have that roof over their head, but it doesn’t deliver them any value. Emotionally. Commodity real estate is very interchangeable with other pieces of real estate, right? So if you were to go out to, you know, the suburbs, and you find an apartment complex, where there’s, let’s say, 75 units, and all of those 75 units are basically the same. And there’s another apartment complex next door with another 75 units that are all basically the same. What you have is a series of commodities. Now that doesn’t mean people don’t want to live there. Yeah, I mean, they probably absolutely do. But here’s what commoditization does, it makes people extremely price focused. Because there’s no if there’s no real qualitative difference from one unit to the next, the main driver that people are left with to make their decisions on is price because they’ll think Well, I can have essentially the same place next door, but for 150 bucks a month less, and people will make decisions based on money. That way, right? Think about commoditization in a different category. And this might help paint this picture for you. Right, I like to think about bleach, when I think of commodities, you go into Target to get some bleach because you need to do some laundry, and you’re kind of looking at the bleach Algon these all kind of look the same, I really have no idea, they’re all just gonna make stuff, whites all the packaging even kind of looks the same, which ones on sale, great, I’ll grab that one. Because there’s no emotional connection to it. There’s no qualitative connection, really, to something like bleach, you’re really it’s just a functional utilitarian product. So you’re going to pick the cheapest one, well, it’s okay to have properties that have some commodity element to them. But ultimately, when you have properties that are, let’s say, in higher demand locations, where the property next door is not identical to this unit, because they’re just each one of a kind. And there’s an emotional connection, and a sense of curb appeal and those architectural details and the ability to walk to that bistro in three minutes. That is not a commodity product. And the problem with commodities is that people can compare them on an apples to apples basis. But when you have a unique one of a kind, cool unit or a whole property, in a great high demand area, it doesn’t matter that the the building next door has got a unit of the same square footage for a lower price because people aren’t making the decision based on price. They’re making the decision based on how they feel about the property and the emotional thing that they get from actually being a part of it. So let me ask you this question, because I think this is an interesting thing that popped into my mind when my portfolio member the other day mentioned this idea of loving properties, or building a portfolio of properties that you love. Who do you have to become in order to build a portfolio you love? Here’s what I mean by this. A lot of us and I would say me included, although we’re constantly working on this, we have a self image, right? And for a lot of us, maybe this is you maybe it’s not. But for a lot of us that self image says I’m a small time real estate investor, I’m proud to be a real estate investor. I’m proud to own some properties, for sure. But I’m not the big fish in town. I’m not the big shot. You know, I’m not the big player. I’m kind of you know, under the radar. Heck, even in this podcast, we talk about quietly building, you know, wealth and quietly becoming the wealthiest person on the block. So if you see yourself as kind of a stealth wealth kind of person, do you see yourself then naturally as the kind of person who can go build a portfolio you love, have the best properties in town? Maybe but also maybe not. So one of the things you might I need to work on that I know I have worked on I continue to work on I work on this with my clients, my coach works on it with me is seeing ourself in a bigger light. When you see yourself in a big enough light that you are the kind of person who is, you know of the stature and the financial stability and whatnot to own the best properties in town, then you can own the best properties in town. But if you see yourself as a minnow, as a little fish, you won’t even seem like a possibility for you to even and won’t even cross your mind that you can go buy the most beautiful properties in town, because you don’t see yourself in that way. So I would ask you, how do you see yourself right now? Do you see yourself as that kind of person who can own the best properties in your town? And if not, who do you need to become in order to be that person. When you have a portfolio you love, you also stay engaged in it. As an entrepreneur, one of the most important things that we we have to do is make sure that we stay interested. Entrepreneurs are famous for having new ideas and wanting to pursue those as soon as we get bored with our current ones. Well, if you have a portfolio of properties that you have no emotional connection to, then it’s easier for you to fall out of engagement with those. But it’s more valuable for you to stay engaged with these properties. You know, I now live about three hours away from the majority of my properties, I get back to my town, Portland frequently. And one of my favorite things, because most of my properties are kind of clustered within, you know, a mile radius, I love to park in one place in front of one of the properties. And just for about half an hour, I just take a walk. And I walk by all my properties. And I love the experience of being in the neighborhoods on the streets that my properties live in and seeing each one from the street perspective walking by and appreciating these properties that are all, honestly ones that I am very proud to own. They comprise a portfolio that I love. And I’m able to stay engaged with that portfolio, because those are properties that I love. And I’m going to wrap this up with one quick rant that also came to my mind when my portfolio member brought this up the other day was probably the most common question that real estate investors ask when they meet each other is how many doors do you have? That question drives me? Absolutely. Bananas. I think it’s it’s an insanely stupid metric, in my opinion, because how many doors a person is an owner or a part owner of has no reflection on the quality of that portfolio? I mean, let me ask you this. How do you reconcile when two people are talking, talking and one says, I own 400 units? And the other one says I own six units? Well, immediately you think to yourself out? Well, one is drastically more successful than the other one. But what if, upon further discovery, you realize that the person who owns 400 units, owns 400, utilitarian, only commodity units, with six partners in the middle of nowhere. And a town no one’s ever heard of, and the other person owns six units in Manhattan. How do you reconcile those two things? Now I’m not here to tell you one is better than the other. But I am here to tell you that how many doors do you have? Is not a question that represents anything meaningful? A better question would be in my opinion, and this is very non conventional. Right? So just what you’ve come to expect from me. But how much do you love your portfolio? What if you could measure it by? How much do you love your portfolio, if it factored in the qualitative elements as well? If it factored in, the way you feel about the way tenants feel about it, how non commoditized your portfolio is, how rare those properties are, versus just the number out of context that doesn’t say anything about the quality of the other person’s property portfolio. Those are my thoughts for you today on building a portfolio you love. Let me make it clear in no uncertain terms. I hope you go build a portfolio you love. Now if you build a portfolio that It has some utilitarian stuff on the path to building a portfolio you love. That’s awesome. That’s not to say that you can never buy a generic nondescript, you know, utilitarian, only four Plex or 10, Plex or 20 units. But it’s important to know that those are different than ultimately building a portfolio of of like trophies that you keep in a trophy case, right? It’s not about the ego of look at all my trophies, but there are certain properties that are worth putting behind glass doors in a trophy case, and there’s certain ones that are not both of them can play a valuable role in your overall efforts and the path and the journey that you’re on. But just know that if you’re following my school of thought, the ultimate goal is to have more properties in the trophy case that you love, and you have a portfolio that you absolutely love. That is it for today’s episode of racking up rentals. Again, show notes for this one can be found at thoughtful rt e.com/e 156. Since I’ve already asked you to subscribe to the show, if you could take just a second to rate and review the show on the platform. You listen, I would be so so grateful for that because that really helps show those platforms that people are listening and care and that they liked the show. If we’ve earned a five star rating, I hope that that is what you would be so kind as to give us Thank you. Did you know also that we have a Facebook group for thoughtful real estate entrepreneurs. It’s called rental portfolio wealth builders and we’d love to have you join us there you can just search for rental portfolio wealth builders in Facebook, or we’ve created a little shortcut for you can just type group dot thoughtful rt e.com into your browser and you will go right there. Thanks to the magic of the internet. If you liked this episode, please take a quick screenshot of it and post it to Instagram and tag us we’re at thoughtful real estate. So I’ll see you in the next episode. Until then, this is Jeff from the thoughtful real estate entrepreneur signing off. Thanks for listening to racking up rentals where we build long term wealth by being a win win deal makers. Remember solve the person to unlock the deal and solve the financing to unlock the profits.