JLM Blog |Episode 12: Decentralizing Real Estate Investing with an AppReal Estate News, Updates, and Tips
Multifamily Real Agency in San Diego
Podcast Episode by Jason Lee – Premiered September 23, 2021
What You’ll Learn in the Podcast:
● What the Pocket Properties app is and how it is trying to revolutionize investing through decentralized fractional investments.
● How the tax laws and the ability to leverage real estate make it a unique way to invest one’s money.
● Stanley’s first experience investing in real estate, which initially began syndication and then moved on to whole sales.
● An explanation of what whole selling really is, and why it’s important to know about.
● The joys of working in a real estate startup, where every day is very different than the last one.
● How Pocket Properties is making real estate investing available to the masses, and what the benefits of it are.
● How is investing through the app different than investing through a REIT?
● Advice for first time real estate investors& information on how to get involved or invest in the Pocket Properties app
Summary and Highlights:
This podcast details the experience of three entrepreneurs and real estate investors who began their own app called The Pocket Properties. Chris Rumper and Stanley Glover are co-founders of The Pocket Properties.
They formed their company at the end of 2020. Shortly thereafter, the app was initiated. The app allows users to purchase, sell, buy and trade fractional real estate shares. Users are able to do this for as little as $10. This undoubtedly makes real estate more accessible to the younger generation and those who otherwise wouldn’t find themselves in this industry. Marshall Singh is the CFO of the company. He is an investor with ample experience in stocks and different types of real estate.
When host Jason Lee asks his guests about their favorite part of the business and what they enjoy most they answered with…
Chris: He enjoys the surprising nature of his job. That every day is a new adventure and an opportunity to grow and learn. He said that building a startup has been interesting and exciting. He is passionate about shaping the industry of fractional real estate and bringing life to new ideas that no one has ever heard of before.
Stanley: He is happy that The Pocket Properties gives everyday people the opportunity to invest, especially marginalized communities. He recognizes the opportunity for generational wealth through real estate. He feels that real estate is a wise decision and sets his family up for success, giving them assets they can build on.
Marshall: He values his freedom in regards to time thanks to this business. His most valuable asset is his time and ability to spend it with his family. Real estate investing and his position at The Pocket Properties allows him to strategically leverage his time.
- Real estate investing can seem intimidating and portrayed as though it is reserved for the top 5%. However, that is not the case. Real estate investing should be accessible to everyone and not an exclusive club that only a few can get into.
- Networking is an essential component to succeeding in the business. You never know who you will meet that can propel your career forward.
- Focus on teamwork and leading your business with the team’s needs in mind. Work together to build something great and don’t be solely focused on yourself.
- The Pocket Properties is making real estate investing much more accessible and therefore giving a golden opportunity to many.
- The app allows you to purchase shares of passive rental properties with annual returns. If you decide to sell those shares you can also do that on their app’s platform.
- This app is different than other companies because The Pocket Properties allows users to mitigate their risk by investing in individual properties.
- Educating yourself on the industry and the process of buying/selling real estate is the single most important thing you can do to succeed.
- Having a large sum of money will not guarantee your success in real estate, education and knowledge will.
Episode 12: Decentralizing Real Estate Investing with an App
Watch the Podcast | Read the Transcript
Welcome to the multifamily millionaire podcast. The show that interviews, multimillionaire real estate investors and top producers in the real estate industry.
If you’re looking to create passive income and achieve financial freedom so that you can do what you want whenever you want, you’re in the right place. Our goal is to simplify and make real estate investing easy for you. For more information, you can find us at www.JLM.realestate.
Jason Lee: All right, everyone. So welcome to the multi-family millionaire podcast. Today, We have Marshall, Chris, and Stanley from their own capital group. And they’re here to bring some value to guys and tell you more about their company and how real estate can, you know, change your life. So how about you guys introduce yourselves Stanley, Marshall Chris, three of you in here.
Chris: Yeah. So my name’s Chris and yeah, like Jason was saying, I’m the CEO and co-founder of pocket properties and Stanley and I, we founded that earlier this year. Throne capital group is actually, you know, just to throw that up, throne capital group is our holdings company, but yeah, no, So we founded pocket properties towards the end of, of 2020, and yeah, we’re looking to make fractional real estate I think of the future. Stan, you want to kind of give a little run down of yourself.
Stan: Yeah, yeah. So of course my name’s Stan, I’m the CEO and co-founder of pocket properties. Basically what we are, we’re a fractional real estate platform that allows our users to purchase, buy, sell, and trade fractional shares of real estate for as low as $10. Really our goal is to democratize real estate, real estate investing similar to how Robinhood kind of democratized stock trading for millennials and Marshall, You want to introduce yourself?
Marshall: My name is Marshall. I’m an avid investor, I’ll say. I’m CFO and CBO for pocket properties and throne capital group. Been in investing for a really long time, anything from stocks to real estate to businesses. So I just kind of invest them through my life, I guess.
Jason Lee: Nice Marshall. And what was it that made you want to go into real estate?
Marshall: So I think looking at all the different investment tools that are out there, whether we talking about stocks, bonds, businesses real estate really offers the most passive way of making money. You know, so whether you’re in single family homes or multi-family homes, you’re definitely going to get some passive income. But the biggest thing is the tax incentives, tax incentives that are around real estate whether it’s, you know depreciating asset or 1031 exchange they literally allow you to leverage your money and get the most out of your money. And that’s something, you know, I really wanted to do buy back some of my time and obviously leverage my money to the max.
Whereas if I have to say a hundred thousand dollars, I can only buy a hundred thousand dollars’ worth of stocks, but if I have a hundred thousand dollars invested in real estate, I can leverage my money, you know, anywhere from 5 to 20 times. So I think it was just the way, the greatest way to make money and hold onto your money.
Jason Lee: Yeah, it’s a great answer. I like to think about iceberg, right? People just see cash, but below the iceberg, you see principle pay down, depreciation and appreciation, right. And there’s no other investment that has those four benefits. So it’s a great answer. This question’s for Stanley. What was your first experience in investing money through real estate?
Stan: So my first experience in investing in real estate some people don’t consider it investing, I do was getting into wholesaling. So Chris and I we’ve worked together for a long time on different ventures. And meanwhile, while I was, I would say my sophomore year of college, [03:54 inaudible] they go out and get a job, Chris and I came up, we were like, Hey, why don’t we try to get into some type of real estate investing. Just a little bit of background about us. We don’t come from a lot of money, you know, no one in our family’s done real estate investing. No one’s, you know, well off or any of that.
So we were looking at some of the other, you know, some of the alternative ways of real estate investing. Initially we started looking at real estate syndication, which is, you know, that’s a massive dive into the pool, especially just getting it into real estate. You know, we kind of saw there was a lot that went into it, you know, a lot of legal, a lot of filings and you still needed quite a bit of upfront capital in order to you know, in order to get intoit, you still had to pay lawyer fees. You still had to file with the SCC. There’s just a lot to get into it. So we ended up finding out about wholesaling and went around with a gentleman who wholesale in our area. In exchange for him, teaching us how to do it and kind of giving us like, you know, being a mentor to us, we put up banded signs and made cold calls on his behalf and, you know, did all the dirty work.
And that’s how we ended up getting into to real estate investing and kind of getting our feet wet was through, you know, finding someone, putting up signs for him, doing free work in exchange for knowledge, where we learned how to repair, you know, get kind of estimate repairs and, and learn how to comp out properties, all that different type of stuff. So that was really my first intro into real estate was through wholesaling.
Jason Lee: Nice. Wholesales is a way get into real estate for sure. But for those that don’t know what wholesaling is, can you dive into more about what it is.
Stan: Yeah, absolutely.So basically what wholesaling is, is say we acquire properties for a network of investors or in particular investor, essentially, we go out, we’ll find it, we’ll get that property under contract as if we were the purchaser of that property and then assign that contract to someone who actually has the capital to close on it. The great part about it is we dealt with a lot of properties that, you know, real estate agents wouldn’t touch with a 10 foot pole, you know, those abandoned properties with the roof falling in. Those are our specialties. That’s kind of where we thrive that within that market. And it’s a great way to, you know, get into real estate, and really understand from an investor viewpoint, you know, what makes the house a, you know, a viable asset versus, you know, a lot of people get into real estate through being a real estate agent or some other form, traditional form.
But you know, you really don’t get to see the investor’s viewpoint. You don’t have an understanding of, you know, what needs to go into a house to make it worth $300,000. You know, this house originally was purchased for, you know, 25,000 and now it’s worth 300,000. You don’t understand the steps between that. So that’s kind of, you know, just a brief overview of wholesaling and why I found it very beneficial. Sorry to cut you off, Jason.
Jason Lee: No, no, you’re fine. It’s a great answer. I think being a wholesaler and being an agent or a broker is the best way to get into real estate because a lot of people that get into real estate have no capital up front, right? So I was lucky enough to, you know, to land a pretty good position being a commercial real estate
broker and learn from investors and eventually got my own capital to putting into real estate and looks like you’re kind of doing the same thing and starting your own company, which is great, and Marshall, if you don’t mind jumping in here, what is the upside you see investing in real estate, as opposed to other ways that one could invest their money and other assets such as stocks or bonds.
Marshall: Yeah. I mean, you know, some of the things that we already kind of touched on if you look at the, if you look at the tax code for a typical W2 employee, it’s probably not even a 10th of what, you know, the incentives and the deductions that are available for real estate investing. You know, some of the things that you touched on appreciating an asset, you know, mortgages pay down, you’re having appreciation of the actual, you know properties, you’re building equity this whole time. You’re also generating cash flow. And the best thing, you know which this is the light kind exchange, it’s 1031 exchange, nothing like that exists in a stock market. If I buy a stock and it goes up 10, 20, 100%, you know, for the most part, depending on how much money I make, I’m going to pay capital gain tax with something like real estate, I can go from property to property and defer my capital gain tax.
And you know, as long as I don’t sell that property at the end, I’m still making money. I’m still able to leverage my money to a certain extent. And the best thing, you know, honestly is you can do a cash out refinance. Once you have a property and you know, you’ve had it for a little bit and you actually have some equity built in, you can go to the bank and say, Hey, you know, I have this property I want to get some money out against it. You still own the property. But you’re able to pull cash out and go to your next project. You know, whether it’s stocks, bonds, even crypto, you know, or any other sort of investing, you don’t have that kind of power. So those are some of the, you know, the best reasons I would say to get into real estate.
Jason Lee: Yeah. That’s a great answer. I think the one thing that many investors don’t know about in real estate investing is the cash out refi. You kind of dive into it a little bit, but I really want to do a deep dive into it. Can you explain more about how someone could, you know, buy a property, and then eventually pull all their money out their existing capital out of the property?
Marshall: Yeah. So it’s called the BRRR method. It’s either B R R, or sometimes people like to add an extra R but basically, you know, like Stan said, you know, you buy a property at a discounted price. You know, you’re not going out with an
agent you’re going out, whether we’re working with wholesalers or individually finding a property that you’re getting at a discount. So you buy it, you repair it and you rent it out. And since it’s rented out, it’s seen as almost like an investment property to the bank. So once you’re able to, like I said, build up some equity, you can refinance and pull out. I think it’s about 75% to 80% of your actual you know, whatever the house is appraised for.
Take that money out. Like I said, you still own the asset, but you’re able to take that money and put it into your next project. And that’s where the last R comes in. You just repeat, you know, you rinse and repeat. You’re not going to make crazy gain on the cash flow side, but all the other things you’re making a lot of money and, you know, your net worth is going up and someone else is paying for all this essentially through the rent.
Jason Lee: Yeah. And just add one point, I mean the money you pull out of that property is tax deferred. So that’s a plus as well. It’s really good stuff. And going on to next question? What do you guys personally like best about what you do?
Chris: Personally about what we do, I would say the fact that every day is pretty different, you know, especially when you’re, when you’re building a, a startup and with what we’re building it’s, you know, and we’ve talked to our advisors about, is we’re moving from, you know, the standard entrepreneurial territory that Stan I’ve been dealing with in the past four years to more of an industrialist territory. So we’re really shaping, you know, what this industry of a fractional real estate is going to look like.
So, you know, getting to wake up every day and, you know, think of new ideas that are going to shape what an industry looks like, pretty awesome. You know, it’s, it’s, it’s like having the responsibility of making the railroads. So that’s something I think we could, we all kind of agree that it’s a that’s probably the best part of what we do is, getting to create something that’s brand new that people haven’t seen or really experienced before.
Marshall: Yeah. And to kind of add on, I think the, you know, I’ve, like I said, I’ve gotten into business and, you know, ran businesses and been a pretty much a manager operator. I’ve also done, you know, a lot of other trading, but the time that I’m able to have through real estate investing, like I just had a daughter. The fact that I’m able to, you know, leverage my time and other people’s time so that I can be with her whenever I need to, you know, that’s the best part of you know, being able to be in this space and just be investing and making money off this.
Stan: Absolutely. And I’ll have to say, I mean, two things first off speaking to the pocket properties, our particular venture has given access to a lot of people to invest. You know, traditionally a lot of these markets have been closed off, especially to, you know, marginalized communities, people of color, all that different groups. So giving access to people and allowing them the same opportunities that have been afforded to other individuals, you know, over time is something that really, you know, motivates us and kind of pushes us forward on creating a new industry or evolving, you know, evolving from the traditional means of investing to a new, you know, a new style of investing a new method. So that’s one of the things that kind of really, that really motivates me as a person.
Then the other thing is creating, speaking to the real estate aspect and why I value real estate investing so much is the generational, you know, the generational wealth that you can build from having real estate assets, especially cash flowing, real estate assets, you know, essentially you pass down your job to your kids. You know, god forbid something happened to you for the most part, your assets will be able to take care of your family, keep everybody fed, or at least, you know, in worst case scenario, if they have to sell them, give them a nice chunk of change to where they can get their feet back you know, up under them from the event of, you know, a loss.
Jason Lee: Well, I mean, going back to your point about your app, I think it’s really cool how you’re making real estate more accessible to general public. Because just from being in this industry, I feel like it’s a very closed off space where most people don’t know about it, probably like 95% of the population don’t understand what real estate investing’s about. So how can someone, how does someone benefit from investing in your app? Like, do they get the same benefits as anyone that’s investing in a regular piece of property down the street from you? Or how does it work?
Chris: Yeah, so essentially they’re going to get similar benefits to investing in a property up the street. The returns are obviously going to be a little bit different, right? Just because, you know, access is you know, you do have to pay a little bit for access to the market, but I mean, as far as the actual returns go, you’re still getting anywhere between 3.5% to 9% annualized returns on each rental property. And these are completely passively managed property. So, you know, it’s as simple as buying a stock, you know, so it is like, you know, you take your $10, you put it on our platform. You it’s one, you know, it’s 1, 2, 3 easy it’s, you know, you don’t
have to go out to the property check to make sure these are livable conditions. You know, you’re not having to do any repairs on the plumbing or anything like that. It’s a completely passive experience. Also they’re able to cash in on the appreciation of those shares. So if they buy a share at $10 and they know that, you know, Hey, based on this area, I know this is a great investment area. Let me try and sell that share for $12 and 50 cents. Let me put those up on our market. You can have that order executed you know if someone else in our market goes to purchase those shares.
So it’s giving the ability for instant appreciation while also still giving access to those passive dividend, to those passive monthly dividend yields, to people who, you know, like you said, typically did not have access to these markets, you know, 95%, you know, in our findings, it’s what 90% of Americans right now are, they’re not able to invest in real estate. I can guarantee you that would change if, you know, if you could buy a share of real estate with very similar returns to, if I were to go out and actually purchase this property that would change overnight. I think that would change very quickly.
Jason Lee: Yeah. So, but how does your app, how does your app differ from the REIR, cause I know you can buy shares in the open market from a REIT, right? Like such as equity, residential, or those big other companies that are probably trade on NASDAQ. So how do you guys differ from those companies?
Chris: Yeah, so like with a REIT you’re buying into a portfolio of properties or mortgages or whatever, and those are going to be paying, you know, they’re typically paying out, I would say like a good REIT, you’re going to get maybe a 5% yield. That’s a great REIT and that’s annual and you get paid out quarterly. With these, you’re investing in a specific property. So you’re actually able to mitigate your risk in the sense that, you know, granted you control how diverse you want to be. If you’re looking at a particular property and you think, Hey, this is going to be a good investment. You can make that investment. It’s not like I have to invest in the entire portfolio of properties. So that’s where you get a little bit more control. We’re giving people a lot more control, but also those monthly dividend yields where it’s something that’s a lot more rapid.
And then traditionally with a, I mean, I’ve owned more than a few REITS. I would say maybe 25% of them go up over time. Like, I mean, the REITs for the most part, they’re not the safest investment. It’s not like investing in real estate. If we’re being honest, like, you know, anybody who’s invested in a unless the REIT is a fund or something like, you know, [16:48 inaudible] investing in a REIT through a brokerage is not the same thing investing in real estate. You’re not capturing that same appreciation.
You know, anybody who’s purchased a REIT through a brokerage knows that the appreciation is not even close to the actual real estate markets.
Jason Lee: Anyone want to add on to that answer?
Marshall: Yeah. I mean, I would definitely say, you know, like Chris is talking about the diversification, the control of your own asset where you want to spend the money and the dividend deals in general, we’re still obviously working on, you know, getting it where you can have a lot of the tax benefits that we talked about, but you’re not going to get in a traditional REIT you know, REITs, I think are required to pay 90% of their profits in dividends.
We’re not capping that, you know, we’re allowing for whatever profits that we’re making to be passed on to our consumers, our members, cause at the end of the day, we want to give them access and we want to get them cash flowing assets, cause that’s where you get into real estate. You want the tax benefits and you want the cash flowing assets at the end of the day.
Jason Lee: Yeah. And piggybacking off that answer and try not to be biased here, but what would your advice be to someone who has a million dollars that they’d like to put into real estate right now, but never done so, before maybe outside of owning their home, what would you say to them?
Marshall: Yeah, I mean, I would say number one you know, go buy some books, go sign up for some mentorships, learn as much as you, you can about the space because the number one thing in any, you know, field is education. Having a million dollars doesn’t mean that you’re going to make money off the property. But if you spend a percentage of that, you know, get some mentorships, read about the space, learn mistakes that other people have made. You’ll put yourself in a much better position. I know there’s great mentorship programs out there.
And I don’t have to say a one because you know, there’s so many out there and they offer really, really great value, you know, get your knowledge up and then as your knowledge goes up, if you have a million dollars, you have the capital to get into pretty much, well you want to get into single family, multifamily, commercial, you know, you can get into all of that, but you’ll avoid a lot of mistakes by first learning about it and having a mentor to kind of walk you through all that, you know, that’s how I got started. And I still invest a lot of money into mentorship programs every
single year. You know, it kind of keeps me on my toes, gets me networking. Cause that’s what real estate is the knowledge, the network. And then obviously, you know, buying and selling the property at the end of the day.
Chris: And not that I think Marshall’s answer was incorrect, but also, I mean, pocket properties is a great place to spend a million dollars. You know, if you’re looking at it, getting into real estate, investing in a completely passive manner, I mean it’s a perfect way to spend a million dollars. But I mean Marshall’s answer definitely not wrong.
Jason Lee: Yeah. A little biased, but yeah, I mean I’ll take it. It’s a good answer. Thanks Marshall. And then for anyone that’s wondering Chris, what has been your worst experience in real estate and how did you learn from that experience?
Chris: Worst experience in real estate, to be honest with you, we’ve had, well, so that’s the thing with real estate. I mean you know, they’re all learning experiences and when you take it from an entrepreneurial mindset, it’s hard defining the worst, right. You know, a loss is just a lesson. I’ll say we’ve had times where we’ve gone back and forth for, you know, with different buyers. There was a Stan, I’m going to talk about the land deal with one of the many land deals, land is a different beast, but essentially with land, we went back and forth with about four different property owners trying to get each of these parcels under contract in order to sell these to a buyer before realizing that, you know, this thing is just not worth our time. You know, if we’re getting into wholesaling, wholesaling land is a difficult thing and understanding that, you know, it’s better to go deep into a marketing strategy before going wide into a marketing strategy, understanding that people like vanilla ice cream stick to something very similar, you know you don’t need to bring them land if they’re buying houses, look for houses, you know, so things like that, I wouldn’t say that was an experience that took a lot of time.
So that’s where I can say it was maybe the worst as someone who’s been in sales, you know, the time you spend, you know, that’s very important, but at the end of the day, I wouldn’t define it as worse. I would just say it was a lesson that we took, then you learn to, you know, really be did with situations. Be very honest with yourself. Does this make sense? You know, would you recommend that, you know, your cousin, brother, sister, somebody else make this same move, would you recommend this to somebody else? If not, don’t do it like, you know, just be brutally honest with yourself, save yourself that time. I would say that was just, that was one of those experiences where, you know, you definitely learn.
Jason Lee: Yeah. I mean, it’s a great way to look at it, right. I think a lot of people I talk to who are looking to get into real estate are terrified of making a mistake, but I feel like the biggest lessons I’ve ever learned and probably you guys too have been through my biggest mistakes. So I think, if people aren’t just, you know, so afraid of making a mistake and just learn that, you know, if you make a mistake, it’s not a failure, it’s a lesson learned.
So I think the way you answer that, it just shows that you have a great mindset about how to, you know, succeed in the business. So it’s good stuff, Chris, and this kind of question for everyone in what order you want to answer it. But what’s the best piece of advice you’ve ever received from mentor or from a family member or friend, Anyone.
Marshall: Well, I was going to say the best piece of advice that I ever got is, you know, invest in real estate, or invest in land. They’re not making more, that’s it.
Stan: It I’ll say the best piece of advice I’ve got was network. Never know who you’re going to talk to. And you know, you never know who you’re going to run into by talking. And you know, networking has been one of the biggest blessings that I’ve had so far and connecting, especially like Marshall says when you’re looking for individuals to learn from, networking is a very great [22:46 inaudible].
Chris: Then I would tell you, it’s actually, this is advice that actually came from one of our team members back down the road, but it’s be the leader that people, that your team needs you to be, not the leader that you want to be, you know, focus on your team’s needs.
Jason Lee: It’s really good. Well thank you guys for coming on to this show today. It’s been a great podcast so far. I think anyone that listened to this learned a lot from it. So where can our audience go learn more about you and more about what you’re doing.
Chris: Yeah. Jason, thanks for the opportunity for having us on and yeah, if you want to learn more about, about pocket properties, please check us out at www.pocketpropertiesapp.com. You sign up, you get a free share when you sign up. So you literally, you’re paying, you get a piece of real estate, you’re getting a piece of land. So definitely go check us out, plug in your email real quick www.pocketpropertiesapp.com.
Marshall: And then we’re also on Insta at pocket properties. So if you want to look us up on Insta on Twitter, we’re pretty much everywhere. LinkedIn, you can just search pocket properties and we’ll be there.
Stan: Gotcha. And of course you can find everyone on LinkedIn. If you go to the pocket properties page, we’re all listed, you know, feel free to reach out, shoot us you know, don’t be shy, shoot us a private message If you have any questions or you just want to talk about, you know, talk about whatever, shoot one of us a message and we’d be happy to, you know, respond.
Chris: And just to piggyback, we are, Because I know Jason does have a big network of investors out there. And we are looking to partner with some real estate investors moving forward on our first few properties as well. So we’ve got a tokenization agreement in place and a fractionalization agreement in place. So if you’d like to be one of the first investors to tokenize your properties, reach out. The benefits are pretty awesome. We’ve got them listed on our site as well, too. But yeah, not to take over Stanley’s out close there.
Stan: You’re good, Chris, you’re good. Like I said, feel free to reach out. If you have any questions or, you know, want to learn more about pocket properties or what we do shoot us the email, shoot us a message on LinkedIn. We’re very transparent and you know, we’d love to talk about the project.
Jason Lee: I’ll make sure to give you guys a follow myself and thanks so much for being on the show today and I’ll catch you guys soon.
Thank you for joining us on the multifamily millionaire podcast. The show that interviews multimillionaire real estate investors and top producers in the real estate industry. We’re here to help you create passive income and achieve financial freedom so that you can do what you want whenever you want. We’ll catch you next time on the multifamily millionaire.
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