Old Dawg’s REI Network Podcast

Old Dawg’s REI Network Podcast

By Kristin McCaseyOn May 20, 2022March 10, 2023

From Hollywood to Freedomhood With Real Estate Investing was hosted by Bill Manassero. The Old Dawg’s REI Network was founded by Bill Manassero — a real estate investor who is using his business to create ample cash flow for his retirement, help support his nonprofit mission in Haiti and to create a legacy for his children.

One of the top benefits of real estate investing is that it can give you freedom of choice. In today’s podcast, award-winning Hollywood post-production producer Joe DiSanto shares how he was able to semi-retire through real estate investing and launch Play Louder, a website that provides valuable real estate investing info, personal finance tips and ways to boost your net worth.

What You Will Learn

Why real estate is the best investment for anyone’s portfolio
How a small business gives you an edge in planning the type of retirement you want
Why the house you own should be considered an investment
The advantages of investing in commercial triple net properties
How real estate, part-time consulting and side hustles allowed him to work part-time with a full-time income
Why DOING THE MATH is the single most important skill for a successful real estate investor

Real Estate Investing

He liked real estate, especially rental properties, because it made sense and he could control most of what was going on
He first bought his own house in 2004
- He does consider the home you live in as an investment
He bought 3 single family residences
He bought a dozen rental properties
He bought 2 commercial buildings where he did large scale renovations
- They also house his businesses
He did one land deal
He knows a lot about buying, selling and doing property renovations
He considers himself an “art and math” guy
He really dug into the finances of real estate to understand how it works
As he got into the commercial side of real estate, where the price tag is much higher, it became even more important to understand the math
The income he has generated from real estate has allowed him to retire earlier in life
It also grew his net worth

Semi-Retirement

He is actually semi-retired
He cashed out of his businesses with his partners
- But they are keeping him on retainer (as CFO) to continue doing the finances on the business from his home
Other friends he knows that own businesses in Los Angeles also asked him to help them out
- He now has 6 clients he does monthly retainer work for as well
Then, he started a blog to share the knowledge he has on personal finance
- He generates additional income from coaching individuals on personal finances
- He also sells courses on how to become financially independent, real estate investing analysis, benefits of incorporating yourself, etc.
One of his part-time businesses is coaching people with their finances
- He sees that not too many people do the math on their investments, especially real estate
  - They don’t know the IRR on their property
  - Or the percentage of return they’re making on their invested capital
His family has since moved from L.A. to Florida where they live on the beach and he can work as much or as little as he wants
He has a retirement portfolio that is growing and will eventually support him for the rest of his life without working at all
If it wasn’t for his real estate investing, he would have never have been able to get to this point!

Investments

Even though real estate provides most of his income, it is not his only investment
It is very important that you do the math on your real estate investments, as well as any other investments you have, and fully understand the return you are getting
You should also know how your real estate investments are doing relative to other investments that don’t take as much time
Most forms of real estate are not entirely passive – some are extremely active
He, personally, has done the analysis on his own rental properties and has found that they perform significantly better than his other investments and with less risk
Real estate is a less volatile vehicle and has benefits (tax benefits, write-offs, etc.) beyond stocks and other traditional investments
- It’s essentially a small business
- It produces 40% of his income and the rest is through his part-time work
For his retirement nest egg, as he moves closer to retirement age, he is looking for:
- Income, security and capital preservation
It’s mostly real estate (75%) – he may reduce it to 50% and look at other market investments
He is looking at possibly investing in syndications
- There is a lot more information available today to understand and evaluate
- And with crowd funding, with platforms like Fund Res and Crowd Street, you have more availability to get into syndication type deals
- He believes, investing in syndications is perhaps the most passive form of real estate investing
- REITs may be a bit more passive
- If you’re retired and want cash flow, commercial syndication might be your best bet
- Syndication also beats turn-key single family rental properties in terms of cash flow

Markets

When he first started investing, he was in California and rental laws don’t support landlords, properties are too expensive and he couldn’t find anything that really cash flowed
So, he started buying turn-key properties in:
- Austin – 2 properties
- Kansa City – 3 properties
- Memphis – 3 properties
- Right before he moved to Florida
  - He sold the Kansas City and 2 of his Memphis properties
  - And he bought a couple of Florida properties that he could manage himself
    - He wanted to boost his return by self-managing
    - In Florida:
      - He bought more expensive A class type properties
      - He sought better tenants that would take better care of the houses and, thus, less work/expense on his part
      - He gets better cash flow
      - Tenants are better
      - Tenants complain less
      - Tenants better maintain the property
      - Plus, he doesn’t pay management

Your Home as an Investment

Joe definitely feels your home is an investment, even though he knows that most real estate investors don’t see that
- If you don’t own a house, you’ll be renting anyway
- When you own a house, you’re just like a renter except that you just happen to own the house that you rent
  - As the owner of the home, you can calculate your ROI and you get great tax benefits
  - He was able to tap into the home’s equity to start a business
Joe applied the same idea to his business
- When they needed space to expand he thought, why not just buy the building, like I did with my home
- The found a place in West Los Angeles, near Bundy & Olympic right before he Great Recession
- You buy the building as an LLC, a separate business
- And your business is the leased tenant
- They did an SBA loan so they only needed 51% occupancy
- They also subleased the space
- They stayed there 8 years but needed more space
- He later found a cheaper warehouse space and converted it to office space
  - He calls it a development deal
  - They spent quite a bit to get it from warehouse into office space
  - They tripled their cash investment and put the remainder into the new building
  - And his company still in that building
  - That accounts for a big chunk of his current income and he is only a 25% owner in the building

The Role of Personal Finance

He moved to Tampa, FL area
- When they left California initially, they moved to Austin and were going to fix up one of their rentals to live there
- But they didn’t like Austin, TX
- They wanted a small town with a Main Street and near the ocean and found Donedin, near Clear Water, FL
- They moved there and really love it
- They also love that Florida has no state income tax
When people hire him to do the finances for their business, he reminds them that you first own that business for your own personal benefit
- If you aren’t doing your own personal finances and treating those like a business, you’re very likely going to shortchange yourself
  - That’s where tax planning and tax efficiency comes in
  - Joe, after selling some of his properties and moving to Florida, he now only pays federal taxes
    - As a result, he is keeping way more of profit from those properties
    - He’s making the Compound Annual Growth Rate for those originally invested funds that much higher
      - Betting the stock market and other traditional investments
  - Tax planning and knowing how taxes impact your real estate investments is critical if you are going to be a serious investor

Biggest Mistake

When they bought their first commercial building for their business, they did a renovation
They closed on the building in March 2008
Lehman Brothers did the loan
- They didn’t fund it for 3 days and no one knew why
- He had his lawyers on it
- They thought it was weird
- 3 months later Lehman Brothers went belly up
They went into the renovation and their contractor goes belly up
- Because they were working based on future work
- And then all their future work dried up
- They had used the money Joe gave them to fund other jobs
- Then, the subs on Joe’s project stopped coming because they weren’t being paid
  - He had paid $75,000 that did not make it to hid sub-contractors
What Joe Learned: He should have used a Construction Escrow Company to manage his construction funds
- Yes, it would cost more up front but it would have protected him
That was a big hit but his construction financing also ended up falling through

Biggest Success

Buying his house and buying the building to house his business
Theses things were critical to his future success
He thinks, when he spends money, how can he maximize those funds for some sort of good return
How do I get more from my money
He thought, I have all theses computers, systems and talented people, what can we do to squeeze more value out of this money I spent
- It caused them to do “side-projects” to produce more revenue, value-add, marketing or something to boost worth
  - They started to produce their own content
    - Resulted in an Emmy-winning TV show for HBO
    - Created a comedy entertainment website that his interns could use to create content
He’s always looking at a way to piggyback on money he is already spending or something he is already doing to maximize his return

Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

He is looking at a lot of the same things as our target group
- He’s looking at his nest egg
- He’s looking at his net worth
The most important thing he can recommend is to DO THE MATH!
- Don’t shortchange yourself by not doing quality math
- He has a FREE real estate spreadsheet on his website that can help you
He recommends that you not invest in single family homes unless you are willing to put in the time and effort
- Plus, he adds, it may be difficult in today’s economy to find something that cash flows with the jacked up prices
He thinks that investing in Multifamily syndications or Triple Net Commercial properties syndications (higher quality tenants) makes more sense

Current Business

His goal: To work his way to having as much freedom of choice as possible
He loves working
But he doesn’t want to work as much as he used to
He wants to enjoy his family and son
You want to have as many choices as possible
That’s why his website presents things like affiliate marketing, etc

Rap-It-Up

Favorite real estate book: Loopholes of Real Estate by Garret Sutton
Favorite business book: Good to Great by Jim Collins and Icon (Steve Jobs)
Most valuable web site for success (other than your own): The Real Wealth Network (for market research)
Favorite app: Slack
Favorite quote: “Luck is merely preparation meeting opportunity.”
If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to re-launch your real estate investing business? The question scared him too much to seriously answer!

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