Rolando Rosas 5:07
Harvard, too.
Dolf de Roos 5:07
Yeah, I believe so, yes. So it suddenly occurred to me that degrees isn’t a guarantee towards wealth. In fact, I could only find two things that the rich had in common, and one of them was, is that almost without exception, the rich either made their money or held their wealth in real estate. And I thought, if that’s all it is, then I can do that. I still didn’t know whether it was accurate, but I thought, I can have a crack at that. So off I went looking for a property. And I found a little old wooden Villa divided into two flats, as we called them, two little rentable apartments, and there was another Mostel motel style unit out the back, very basic and primitive, you know, concrete block construction. With two more units, I had four rental units, and I put an offer in on that, and then I had to go to the bank to get the money, because I didn’t have any money on my own. In fact, even for the down payment, I went to the four trading banks we had at the time and applied for the maximum student loan I could from each of them. And yes, they didn’t ask me whether I’d been to any of the other banks, because I probably would have been compelled to tell them yes. So that’s how I got my down payment together. And anyway, to keep the story short, eventually, one bank manager, certainly not the first said, You know what, I’ll take a chance on you. And I was devastated, because I wanted him to say, Wow, that’s a good deal. I wish I’d found it right, but he took a chance on me, and at the end of that first month, I’d collected rent, collected rent from my four tenants that was more than that month’s mortgage allocation and property taxes and insurance and a little sinking fund for maintenance. In other words, I’d made money and I hadn’t worked for it, yeah. So I thought I’ve got to do this again. So I did it again and again. It took four years to get an honors degree in engineering, and the university came to me and said, Dolf, it’s only one more year for a Master’s Why don’t you do that? And I said, because, and I couldn’t come up with an answer, so I said, Okay, and so I switched to doing that. And then halfway through, they came to me again and said, You’re doing so well, why don’t you switch to doing a PhD? And I said, Because. And again, I didn’t have a reason, so I did that. And the lesson in this part of it is, know why you’re doing what you’re doing, otherwise you end up leading other people’s lives, right? So I spent eight years at university, not the easiest, course around electrical engineering, and got my degree, the PhD. Think of my parents. They said degrees equates to wealth. You can imagine. They were proud as anything their little boy had gone all the way, right? And then I did go to two job interviews, and at the end of the second interview, I was offered a job at $32,000 which back then was a lot of money, but unfortunately for them, the week before, I netted $35,000 out of a single real estate deal. And I thought, why would anyone work for 40 hours a week, 50 weeks a year, for 32 lousy 1000 when in one week you can make 35 and take the rest of the year off and do another deal so it doesn’t take that job. And to this day, I’ve never had a job.
Rolando Rosas 8:05
Oh my God, well, that that’s just amazing, that you’re you’re getting the job interview, there’s money coming in. And if you’re thinking about that, you know, you’re a young person in your 20s or even 30s. Doesn’t matter, really, actually, what age. But if you’re coming out of university, and you’re looking at those proxies like, even today, $35,000 on a deal in today’s dollars is probably way more, right? I don’t know, probably half a million dollars or something like that, but it’s, it’s still a significant amount of money today. And so if you had to go back to and you say, Should I have just started my empire earlier, without University holding me back. Would you go back and say, hmm, I wish I’d had gone back and really gone 100% in on real estate back then. Or you was like, You know what university did serve me?
Dolf de Roos 8:51
I Yeah. Firstly, that’s a tricky question. We’ll never know what the outcome would have been, because we can’t go back in time, as far as we know yet, anyway. But I will add this, I don’t think it was a waste of time those eight years, because what you learn at university isn’t facts and figures. I mean, when you think about it, I got my bachelor’s degree before the PC was invented. It came out in 1980 and I got my bachelor’s in 1979 everything I was taught at engineering school has been made redundant by new technology, right? That’s just the march of time. So you don’t learn facts and figures, because that becomes useless within a few years. What you do learn, though, is creative ways of solving a problem. Now, some disciplines are better at teaching this than others, and I would say architecture and creative writing and sculpture and painting and engineering are all like that, because here’s the problem, find the solution. And the way that I’ve made money in real estate, and I’ve helped, you know, hundreds of 1000s of people all over the world become financially free, is by teaching them different ways of solving someone else’s problem. I don’t just buy a piece of real estate and it’s got. Return of, say, 5% and if you wait enough decades, eventually the rents will creep up and the property value will creep up, and you might do a right, no, I teach people how you can make, you know, a truckload of money on day one with everyone’s willing participation, not to the detriment of the tenants, not to the detriment of the seller. And when you see it in that light, real estate is a very specific form of an engineering problem. So I was given eight years of very good instruction as to how to solve problems it would be very lucrative to solve so
Rolando Rosas 10:32
University still holds its value in terms of providing you some of those soft skills. I mean, I went to university and, you know, I didn’t have any any money when I was in university, but I did gain valuable skills in talking, being in front of people, being around people that are totally different, how to be in an environment like that, how to react when things don’t go your way, being in a team setting. So there’s a lot of value in that. And one of the things you said really fascinates me is the problem solving aspect. You do get that at university. But I also love, oh, I was on your TikTok channel, and one of your more popular videos was about you solving a problem. You know, in the desert. You put a property out there with when you filled it with water, you had another example of you said, painting an H on a building on the hell and you put a helipad. You had a vacant property where you brought in a government tenant, and the value skyrocketed. You found a property that was worth something like $57,000 it just said, it’s ugly, right? You know, you agree it’s an ugly and it did. Was an ugly property, but you saw the value in that ugly property. The other one that I really blew my mind, although it wasn’t the most popular one, was fascinating because it entered into the psychology and mindset. Was how you saw an opportunity in a residential property that didn’t have a carport. You said most people would ignore that and just go on to the next property to invest. But you said, I see shining bright lights when I see no carport, no garage, nothing. And that you could simply put a carport or a very simple structure next to the house, and that immediately raises the property value. And so that problem solving. It’s almost like a mindset in finding the gems where there are no gems.
Dolf de Roos 12:27
You know, you’re absolutely right. And that last example is so pertinent because most people, when they look at a house, and as you suggested, it’s got no garage or no carport, they say, ah, that house isn’t that good. Where would the tenants leave their car? It would be in the sun and the shine and the snow and the sleet and the hail and everything, whereas I when I drive by, I see $10,000 in cash lying on the sidewalk, obviously, not literally, but that’s what I see. Because I know that I can build a carport. I used to build them myself. I guess I still could. But you know, why do it when I could find another deal and have someone else build it for but you can build a carport for $1,000 guys, it’s simply four posts, one in each corner, and then a roof with a bit of a slope. Why the slope? Well, in case it rains, that the war the rain won’t accumulate, right? And if you’re really cheap, you can get away with three posts because it still stands. In fact, sometimes we spend a bit more and make it a two poster so they’re cantilevered, so that you’ve got no posts up front. But $1,000 will buy you a carport. And anywhere in the world, in the Western world, you can get easily, $80 a month extra for a house if it’s got a carport, compared with an almost identical house without a car. Well, 80 a month for a year. That’s 960 call it $1,000 in other words, once you’ve bought this house, whatever you’ve paid for it, you can spend $1,000 cash and get $1,000 a year extra coming in. I call that 100% return on your money. And I don’t know any other investments, stocks, bonds, futures, options, certificates of deposits, treasury bills, you name it, Bitcoin, anything, where, once you’ve spent money to buy the investment, you can spend an extra $1,000 and get 100% return on that money, and as they say in the infomercials, but wait, it gets even more, and this is how it gets better. Let’s say we have the carport built, and let’s say it costs $1,000 but we don’t pay for it yet. And now, after the car puts there, we bring an appraiser back into the property. I think the appraiser with the extra $1,000 a year, even at a very high cap rate of 10% usually it’s lower, so it’ll be valued more, but it’ll add $10,000 to the value of the house easily, guys. So we then go back to the bank and say, Mr. Bank manager, I now have a new appraisal for 10,000 more. Will you lend me a modest 70% on that 10,000 Well, you know, they go to 80% for that requiring PMI or personal mortgage insurance, so 70% so now we’ve borrowed $7,000 from the bank. We use one. 1000 of that 7000 to pay for the carport so it’s covered, we now have $6,000 left in our pockets. And ask yourselves, is it taxable? Well, is it earned income? No, there’s no income tax. Sorry, did we sell anything? Nope, no. Sell. It’s tax free money. And people will say yes, but hang on a minute, we now have to pay interest on an extra $7,000 well we do, and let’s call it 10% which is not it’s only seven. So that would cost us $700 but we’re collecting an extra $1,000 ESS covered. So you have two options. You spend $1,000 cash and get 100% return, or you spend no cash at all, you put $6,000 of tax free money in your pocket, and now you’ve got $300 a year surplus index for inflation for the rest of your life. Why would you not do it? Because not only are you better off, but the bank’s better off, they’re making more money, and the tenant is better off, everyone wins.
Rolando Rosas 15:57
I love this story because it’s got so much to unpack. There’s so much in the, you know, you get a lot of information, probably too much information these days, because of the everything’s at your fingertips when it comes to real estate. And this is a very concrete way, even for a single individual, if they want to go in and, you know, like, like you said, you know, property that probably doesn’t cost much. It’s, it’s need, it needs something the investment is small, and a bank can lend you some of that money, and then you still end up ahead. It almost sounds too good to be true. And I saw a video where you, I gotta tell you, this is a genius move on your part. You said when you go into the bank, one of the things that you’ve done, I’d love to know if you still need to do this, but you go in with 10 proposals into the bank, and you pull out the one for that bank, and you say, oh, wait a minute, that’s not the one for you. It’s for the bank across the street. You pull out theirs, so now you’ve put the emphasis on them to get your business, talk about that mindset of when you’re going in, because now you’ve sold me on the idea. Hmm, I need to really look into this, but I don’t have any idea how to do this with the bank.
Dolf de Roos 17:18
Well, it’s an interesting point you raise. And again, it’s kind of a much bigger topic than just, you know, a simple answer can give, but at its essence, many people are scared of going to a bank to apply for a mortgage. You know, you often wonder, what’s the biggest fears people have in the world? And it’s the biggest fear in the world, the fear of some horrible, untimely death. No, the biggest fear in the world, ironically and bizarrely, is the fear of public speaking, and the second biggest fear in the world is applying for a loan. I’ve had over the years. So many friends and colleagues say, Hey, will you come with me? I said, Sure. What are we doing going fishing or something? They say, No, going to the bank, I need to apply for a mortgage, and they’re just scared to do it. So I twist around. This is another example of where you can educate yourself to change the circumstances. Most people apply for a loan. They think they go to a bank to get a loan. So we all know the difference between the lessee and the lessor. The lessor is the landlord. Lacy is the tenant, but we think we go to a bank to get a mortgage, so we’re the mortgagee, and the bank who gives us the mortgage is the mortgage or, well, that’s flat wrong. We as the people you know trying to buy the house, we’re the mortgage ors, and the bank is the mortgagee. And that’s why what we in America call a foreclosure sale. In many other parts of the world, it’s called a mortgagee sale, or a mortgagee in possession the bank is the mortgagee. How does that work? We want to buy a house, but don’t have the money. The bank has the money, and fortunately doesn’t want to buy the house. Why do I say fortunately? Because if they did want to buy it and they have the money, they’d buy all the houses and delete it, but they don’t want to buy them. So we go to the bank and say, Mr. Bank manager, if you’ll be so kind as to give me some money to enable me to buy the house, I will give you a pledge, a written pledge, where I faithfully promise to pay interest, and at some stage in the future, I’ll pay back the principal. That pledge is called the mortgage. So we are giving the bank the mortgage, and they give us the money. So when you think that, you might say, Well, how do I turn this into an advantage? I never ask a bank for a mortgage. I’m offering them a mortgage. I’m offering them an investment. And you’ve got to think, how do banks make money? They take depositors funds and pay a pathetically low interest rate on that currently about point 2% if you’re lucky, and we are lucky, because in Denmark, you have to pay the bank to put your money on deposit, because they have to keep it and make sure they don’t lose it or have it go up in a fire or something. So they don’t offer much in return. And then they take our deposits and lend them out in the market, business loans, 14% credit card loans, 21% or more, and real estate loans with the lowest interest rate, which shows, again, now the safest investment. So they. Want to make investments, we just have to make it easy for them. So I’ve got this entire process I’ll take people through where, instead of asking or begging or pleading for a mortgage, we offer them an investment. Hey, Mr. Bank manager, I’m offering you an investment. It’s secured by this property. In fact, in addition to offering you this investment, I’m going to offer you this property, the very property I’m buying is collateral to secure your investment. So now we keep on offering things. And when you have that attitude, when I go to a bank, I don’t go there trembling with my fingers crossing, I hope they’ll lend me some money so that I can buy a price. Say, No, this is a great deal. I wouldn’t buy it if it wasn’t a great deal. And I don’t mind where the money comes from. If it’s Bank A or bank B or Bank C. So to turn the psychology in my favor, you’re absolutely right. I’ll take eight or 10 copies of this one for each bank, and I’ll, I’ll boldly go in there and say, well, thank you for meeting with me. Here’s your copy. Oh, excuse me, that’s for the bank down to corner. And the look in their eyes is, first is, boy, this guy’s got a lot of guts, but certainly they think, Man, this must be a good investment. And true. As I sit here, I’ve had bank managers say to me, Dolf, if we commit to you right now to fund this property, will you commit to us not to go to those other banks to now in competition for my business? I love it.
Rolando Rosas 21:15
What. What a crazy idea. I mean, you flipped the script. I love that. And you’ve put the onus on them to earn your business. That’s, that’s what I find just fascinating about that tale. And, you know, I want you to to expand on something, because I think you’re, you’re on to something that a lot of people don’t talk about. And I did not know this, but I found out that you were an advisor to the Rich Dad, Poor Dad book that’s sold over 40 million copies and in 38 language I was blown away by that, because that book has been so successful, and it probably wouldn’t have been so without your assistance in advising to Robert on that book. Talk about that experience and why you think that’s resonated with so many people in so many countries.
Dolf de Roos 22:10
Well, firstly, all credit to Robert and what he did, you know, he hit on this notion that at school, they don’t teach us anything about financial literacy. And even in this day and age, and we’re talking decades after Robert came out with that book, you know, my own daughter, she’s 23 now, she just went through the whole educational system, from kindergarten and lower school and middle school and high school and university. Not one hour was devoted to financial literacy or financial freedom. They were taught things that you can look up on Google Now, like all the main rivers of Canada and the mountain ranges around the world and the oceans of the I mean, why do we still teach that stuff? And you know, our teachers are known to be not very wealthy. They’re struggling to make ends meet, and we are using those teachers to teach the new generation. Well, they just teach what they know, which is how to earn enough skills to get a job to make buy on and maybe you need a set. So I find that all kind of obnoxious. So he struck on this notion that if you want to become financially independent, you have to do things differently. And so this was early days. Gosh, I became the rich dads advisor in real estate. In fact, I wrote the book in the Rich Dad’s Advisor series, and there were five of us. There was one on sales and marketing, and one on intellectual property, and one on corporate structuring, and then real estate, and one more. And you know it, I think it resonated with the world. People realized there was a different way of doing things, a better way of doing things. And
Rolando Rosas 23:41
I’ve heard Robert talk about what you just said, which is, once you get a loan, the bank is on the hook, but more importantly, you’re not paying taxes on on that. And because the word loan and debt are very scary to a lot of folks, they’re very reticent to take that approach that you just mentioned about, I guess, knowledge, empowering yourself, and then taking action on that right?
Dolf de Roos 24:10
Go ahead. Sorry, no, saying that’s why we have to reframe that as well. One of my favorite notions is that when you owe the bank $50,000 you’ve got a problem. But when you owe the bank $50 million they have a problem, and very interesting things happen when you owe the bank $50 million they will call you and say, Hey, how’d you like to go to lunch next Wednesday? And you like going to lunch? So you’re about to say yes, but you’re also smart, and you say, Hang on a minute. We went to lunch last week and you paid, and before you can say so, you probably expect me to pay this time. Guess what? They say it’s on us again, as usual. So here’s the question for you guys, when you owe the bank $50 million why do they want to take you to lunch and pay for it? They want to hand you more money. Here’s the other thing on board you. Still alive. They know that you do say and listen, whenever you borrow money, you must do this one thing, just pay the bill on time, pay the monthly whatever it is, principal and interest, because they they’ll get another lump of money coming in 50 million or 100 million, and instead of lending it at random to people they don’t know, they would much rather give you some more money because you’ve always paid the loan on time.
Rolando Rosas 25:24
That is, that is, that is an important thing of being paying it on time. And what do you think about what’s happening right now? Because that gets into a, I would say, a very important aspect of of modern life in America, certainly in the much of a bunch of other countries where life has changed, properties values have been changing because more folks are now sitting at home working about 20 to 25% depending on who you listen to, of folks are permanently working from home, either one day a week or five days a week. So the need for that occupancy, for the for the bodies that were sitting inside an office, that’s changed, and now those bodies are sitting elsewhere. They’re working elsewhere. And how, where do you see this going? I mean, you, you’re involved deeply in that. So let’s just say that $50 million the bank was willing to loan out previously. Are they changing their mindset because of all of this shifting in work or not?
Dolf de Roos 26:28
Oh yes, they’re changing where they place it. The propensity on the part of banks and insurance companies to lend money to buy commercial real estate has gone way down. They’re very reluctant to do so. In fact, there are hundreds of billions of dollars of commercial loans that may not roll over and they may may default on their loans. But at the same time, the demand for residential has gone up, even during the pandemic. All over the West world, the prices of residential properties went up for the very reason you express more people were working from home, their work environment was their home environment. It became more important. So things evolve, but we’ve got to embrace change. Because just as a reminder, and I don’t know this from personal experience, I’m old, but not that old. When cars started to replace horse drawn carriages in New York City, people were writing letters to the editor of complaint, saying that all the young boys who used to scoop up the horse manure would be put out of work, and that was unfair. And guess what happened? They were put out of work. And is it unfair? There’s no right answer to there’s no answer to it. It’s not a fair question. It just is change, and we get change all the time. So as people work from home, some many, not all, but many like it and prefer it. So the demand for office space is going down, but already the market’s absorbing a lot of that. Many offices, as you’re probably aware, being converted to apartment buildings and some floors to pickleball courts and malls are being replaced and by all kinds of fancy things, outdoor restaurant areas, and so it’s evolving, and you’ve got to stay one step ahead,
Rolando Rosas 28:05
and if you had a magic wand with that. So just to button that up, if you had a magic wand, because, you know, there’s a lot of empty commercial real estate space, or much emptier than it was five years ago. What’s the solution? And you’ve said some but if you had a magic wand, because some of this involves regulators, some of this obviously involves the bank. There’s a lot of folks involved, a lot of parties involved. What would you say is the way to go with a lot of these empty spaces?
Dolf de Roos 28:33
Well, I can’t wave a magic wand and change things. All I can do is participate in the market as it is so again, to try and use reverse engineering or counter cyclical thinking or whatever, most people will only consider buying commercial space that is occupied that is tenanted, because why would they buy it if it’s vacant, right? And I do it the other way around, I’m not interested in tenanted commercial space because they’re going to ask market cap rates for meaning returns that are about at market and in the US at the moment, for a lot of commercial space, I know it varies, guys, a, Grade B, Grade C, grade whether you’re on Wall Street in New York or some backwaters of little rinky dink town in the middle of nowhere, it makes a big difference. But on average, you’re getting about 6% return, which is what mortgage money. I can’t make that work. However, there’s a big difference between commercial real estate and residential real estate, and I’ll take, hopefully, 30 seconds to explain it, and then you’ll understand, educate school us with residential property, the value of a house is based on comps. In other words, if a three bedroom, two bathroom home that’s on two floors and it’s 12 years old, and it’s on a piece of land that this big, and it’s that old, and it’s in this condition, if it’s sold for $358,000 then you can bet your bottom dollar that a similar house also three bedrooms, three bathroom, two storeys, same age, safe condition, same size, land around the corner, up the street, down the road, it will sell for about the same amount. That’s why we’re. They appraise residential properties, they look at comps or comparables. That contrasts with commercial real estate. The formula with commercial real estate is that the value of a commercial building equals the rental income divided by the cap rate. What is cap rate? It’s short for capitalization rate. It means the rate at which we capitalize the rental to arrive at the value. In other words, if we double the rent, we double the value, and every bank will agree with that, because it depends how much that property can generate. So instead of looking for fully tenant and properties that I’ll buy at a lousy 6% I look for vacant properties. Now I don’t buy them vacant because what if I buy them and I can’t find a tenant, then I’m stuck. I still have to pay property tax and insurance, and I’m not getting any income. But between finding a vacant property and trying to buy it, I’ll find a tenant. There’s no law against that. There’s no law that says you have to own it before you can ask someone if they’re interested in a certain amount of space. And so what I’ll do is I’ll find a tenant, and then the building is worth a lot more to me than it is to other people. And an example you may have read about since I’m impressed with how much you guys have read already, and I came across a funeral parlor. Now I don’t need to explain to you what happens inside a funeral parlor. They stick hollow tubes inside corpses and drain one fluid and replace it with another right? Things like that’s kind of ghastly. So it had been vacant for three years. No one knew what to do with it. There was talk in the town about turning it into a restaurant, but that didn’t go down well, except for with the vegetarian crowd, you get the picture. So no one had been vacant, and the price kept on dropping. So I didn’t buy it, but what I did do is I employed someone to phone every funeral director going further and further away from this location, and she was on the phone for two days before she found someone who said, Oh my gosh, I’ve always wanted to operate in that area. And that’s when she put me on the phone, and I said, well, listen, there’s a vacant funeral parlor for sale. If you want to buy it. Go ahead. Why did I let him buy it from underneath me? Because I knew that in all probability, he either didn’t have the money or the inclination to buy real estate, and that’s exactly what he said. Said, I don’t buy real estate. I know how to run funerals. I need someone to buy it for me. And I said, Well, go and have a look. If you like it and want to sign up for a lease, I’ll consider buying it. So he went off and had a look, and he called me. Said, Oh, it’s perfect. It’s ideal. I said, well, here I’ve got a suggested lease agreement. He said, Not so fast off. I’ll only do it if you give me a long term lease. Well, that’s exactly what I want as a commercial landlord. So anyway, he signed up on a lease was subject to me buying it. He would become the tenant, and if I didn’t manage to buy it, I didn’t know him anything. And so the building was worth double to me. What it was the seller. The seller still sold. He couldn’t sell it to anyone else. I was the first one in three years to buy it, the 10. He didn’t
Rolando Rosas 32:53
know you had somebody lined up, though. The seller didn’t. He didn’t, no,
Dolf de Roos 32:58
and I went to the bank. And the banks usually take the lesser of the purchase price or the registered appraisal. But I said to the bank, listen, I know I’m only paying a pittance for it, but that was while it was empty. I’ve now got a tenant, and their appraiser agreed. In fact, they funded that building all but the last $10,000 so he only had $10,000 tied up in that property. They can’t do that with residential, with residential, you generally get 80% max as a loan, so on a half million dollar property, which is getting close to the median price of call it 400,000 median, 80% of $400 320 you need to come up with 80,000 cash. You know, people can only buy one or two houses before they’ve run out of cash. Well, some come by any, um, but with commercial men, you can walk away from a commercial deal and put money in your pocket. Wow, and the seller’s happy.
Dave Kelly 33:50
I love that. No, Dave, go ahead and with a commercial so if it’s a if you’re renting out a residential space, generally, those are 12 months, you know, 12 month lease agreement with a commercial space. What, you know, you said that you were trying, you went in with the intention of a long term lease agreement. What is a long term lease agreement in that world?
Dolf de Roos 34:12
Okay? Well, that changes depending on the industry, and it has changed over time. So, you know, 30 years ago, a typical lease length in the City of London, which is the inner part of London, around fleets free was 25 years. That was the norm. Well, that’s been shortened, and it depends on the industry. A convenience store tends to have a shorter lease than a medical facility. Medical practitioners don’t want to move around much, partially because transporting a CT scan machine or an MRI machine costs a lot, and they’re freight they just want to leave them there, and their client base doesn’t like change, yeah, um, but in the case of this funeral director, I would have been happy with a five year lease. But one of my golden rules in the book real estate riches, one of eight golden rules, is never be the first to name a figure you. So instead of saying, Hey, would you sign up for five years, I said to him, when he said, I want a long term lease, I said, Well, how long would you want? And he said, I’ll only do it if you give me 10 years with a right of renewal for another 10 years. So essentially a 20 year lease. And I said, Man, you’ve got it. I mean, that was way more than I was hoping for sure.
Dave Kelly 35:19
So.
Rolando Rosas 35:20
So the lesson here is, if you do some work, some problem solving, because that’s a really smart move on your part, you’re like, Hmm, there’s a gold mine there, but only if I can get a tenant. How do I get a tenant? Maybe look for somebody in the area that has a business. And you went two steps beyond that, because you knew the potential tenant didn’t want to buy. So you’re like, oh, you know what? I will work something out, and I’ll be the landlord, and you come in, genius move, because most people wouldn’t go those three steps beyond the initial purchase price. And like, I’m stuck with the property now, like you don’t want to manage that, you don’t want to run the business. You just want to get the tenant, get a body in the seat. So to speak.
Dolf de Roos 36:07
So to speak, it’s a bad choice of words when we’re talking about a funeral parlance.
Rolando Rosas 36:15
You know, you invoked your eight golden rules, and I looked at that it’s toward the back of your book, and you have some really good ones you already mentioned, the the counter cyclical. I want to read that passage because there’s in the very first paragraph there to me, it summarizes one word that we virtually have no muscle memory for today. So it says it takes a lot of fortitude to go against the grain and yet to do well in property, you have to cultivate the stamina to do just that, to buy when everybody else is selling and to bide your time when everyone else is buying. To me, that summarizes one word, patience and we have virtually no muscle memory or any reinforcement. Today in art, no matter what country you’re in, any modern country, everything is the opposite. Quick, fast, do it now. Get it done, right? You’re saying Be patient. Young Jedi, patience is your friend. Is your ally. I love that.
Dolf de Roos 37:19
Yep, you’re absolutely right. I couldn’t have said it better be patient.
Rolando Rosas 37:22
How do you get that to be your friend? How did you understand that? Because nobody talks about that in our world today.
Dolf de Roos 37:31
Well, I’ll go one step further, and I’ll say doing well in real estate is becoming easier because we are living in a society where attention spans are getting shorter, not longer. We have social media where people scroll and as we’re told when we’re creating posts for social media, if you don’t get their attention in three seconds nowadays, then they’ll scroll on to the next thing. So attention spans are getting shorter and shorter, and people don’t think if I could summarize it with one thing, I would say that we have lost the ability to think. And I find it almost sad to talk about it. And it’s not just me trying to pontificate about some theory. I don’t know why. I think it’s all because of the money culture. And I know we’re talking about a show how to make money out of real estate. So I realize there’s a an embedded contradiction in terms there, almost, but at the same time, we’re so focused the money TV is no longer about making really interesting stories or compelling stories. TV scriptwriters are tasked with the task of creating a show that is so compelling to watch that people will sit through the advertisements, because their revenue model is selling advertising space. So if you can make a show with more murders and with more who did what to whom, and sleeping around with the wrong people and all that sort of stuff, that’s what entices people, and we’re getting their attention with more brutal ways. The number of murders you can watch any night on TV is horrific, and you know, I see it in the statistics. That’s all conjecture, you might say. And people might think, well, that’s my opinion. But here’s a statistic that is undeniable. 20 years ago, there were 46,000 bookstores in the United States, and now we’re down at around 6000 people are not buying as many books as they did. I know they might say, well, some buy them electronically. But even when you add those numbers in, the readership has gone down now. Wherever you go, at airports, lunch times, even during work times, people are scrolling between Instagram and Tiktok and Twitter and Facebook and all the others, they’re just consuming. And when you consume one of, oh, this might be interesting. Oh, that’s very good. That’s interesting. Or I learned from that. Oh, I wonder if that’s true. What you’re doing is you’re training your brain to absorb information but not process it. We’re not thinking about it. Is this true? Is this valid? Or how can I benefit from this? Or. More interestingly, how can I bet and benefit other people by doing something I’m not my primary motive is in how to make money out of this game. If I can solve other people’s problems, you’d be surprised how much money they’re willing to throw at you.
Rolando Rosas 40:15
You sound like Gary V he says something very similar, and I’ve heard a few other folks mention that you solve the problem, people willing to throw money at you for
Dolf de Roos 40:26
it. But it’s so true. It’s so true, and it’s so interesting. I was just in the United Kingdom. I had a client there who wanted me to come over. He was struggling with getting a toehold in the commercial real estate market, and we looked at this one office building, and it was vacant, and it was by a main road, and it had good car parking outside, and they had it on the market for sale. And I said, okay, and why do you think you haven’t got a tenant? Well, we’re not sure. We think maybe the head height is too short, or the ratio of window space to cubicles, where people, I mean, they had all these spangled theories about why it wasn’t renting. And I took them outside, and I said, Is there anything about the visual appeal from the street that might put people off? And they said, No, nothing. I said, then tell me, why don’t you have either a for lease or for rent sign on the building, big letters spanning the building. No one knows it’s available. And they looked at each other as they’ve just been hit by a concrete post, and said, Oh my God, we never thought of that.
Dave Kelly 41:32
Genius put a for sale sign on it. No one knows it’s available.
Dolf de Roos 41:37
It’s not genius. It’s to me, that’s common sense. Now, will I hit my head against a brick wall because they didn’t think of that? No, I celebrate it because it gave my client a chance to find a tenant before they even found a buyer for the building, and with a tenant, the value doubles or trebles. So there are opportunities. Then, instead of lamenting the way the world is and complaining about it, figure out what we can do to enjoy it.
Rolando Rosas 42:03
You know, I love that philosophy. I really love that philosophy because there’s, there’s, there’s something you’ve, you know, it’s almost as if you’ve read what my notes. Because this leads into one of the other things that, you know, people have changed their patterns of where they live. We’re talking a little bit about this earlier, and according to the Stanford professor Nick bloom, he had a study he did recently where they found that the super commuters, super commuters so 75 miles away from city centers like New York, DC, where I live, Phoenix, Houston, others, that super commute of 75 miles or more is up 30% do we have that Ori to show Dolf, and with that 30% that rise in the Super commuter, I would imagine that the places where they are going to Live, because you know, if you go further, 75 miles from DC and you go west you’re going to hit West Virginia. And West Virginia is not a booming town, and there’s just a lot of little things. If somebody’s seeing that information, and in seeing this is where the trend is going, probably for the next few years. What do you say to those folks that are the smart investors and maybe thinking, I’m going to take your advice. I’m going to look for the new opportunities, the new trends where, where would you say is the smart money when you’re looking at this new super commuter and where they live?
Dolf de Roos 43:38
So it’s an interesting point. I’ve never thought of this. I haven’t seen this stat. So thank you for sharing it. You know, I’m going to ponder it. I’d want to make sure the trend is real. We’ve seen many trends in the past, and I can give you an example. Very recently, there’s been a massive uptick in the use of Airbnbs. And the theory was, with the pandemic coming on board, we need to do. Fortunately, this phrase is becoming part of our memory instead of reality, but we had to be socially distant. I know they didn’t put it away. You had to conform to social distancing. And so a hotel was the antithesis of that, because you had a fouriern reception area with lots of people milling around, whereas when you got an Airbnb, it had electronic entry. You didn’t even have to meet the host. You could go in there, do your thing, and when you’re ready to leave, you leave. And so it was socially distant. So they went up in popularity a lot, and people responded to that by buying them big time. They saw the money being made, 4050, 60% return per annum. So so many people jumped in on it. I don’t know the stats for other cities, but I know in Phoenix, from 2022 to 2023 the number of Airbnb rooms available went up by a massive 23% now that would have been great if the demand had, you know, kept going at that pace, but suddenly people got turned off. The idea of an Airbnb, because there was a laundry list of things you had to do in the end, remove all the sheets from the bed, wash them, one pair of sheets per cycle, and do all the dishes, mow the lawns, repair the roof, not quite but it was a whole long list. And people thought, you know what we miss those hotel days, you just leave the hotel room and whatever you’ve left there, you left there. Hopefully it’s not too bad, but it was just simpler. So demand went down, and all of a sudden, Airbnbs became less popular, so they sort of went through a bit of a rise and fall. So I don’t know whether this trend about Super commuting is going to stay there for the long term. Certainly I wouldn’t sell an entire portfolio and put it all into something 70 miles west of DC in the hope that it is a good trend, but I would take it into account Absolutely. And here’s the thing, and I’m pleased you brought this up, because I always maintain that for me. Anyway, I listen guys, full disclosure, there are people who invest in the share market or stock market or in futures or options who’ve made more money in a day than I will in five lifetimes, I acknowledge that, you know, George Soros has made more money currency trading in a day than I ever will make, and look at Warren Buffett. So I acknowledge all of that. But having said that, I don’t see how I can beat the average in the share market or mutual funds or anything like that. Every mutual fund manager wants to beat the average. Half of them do and half of them don’t. That’s how we get the average guys. And when a mutual fund manager advertiser says, Hey, we beat the average for the last four years straight, I know that they didn’t beat the average five years ago, or they would have said five years straight. So I personally don’t know how I can beat the average on the stock market. If I’d listened to all my friends, and they’re absolutely insider scoop dishes of advice, I would have been broke by now, whereas I’ve got 18 separate ways of beating the average in real estate, and you might have just added one to them, which is buy in an up and coming place. That’s super commuting distance from a main center, right?
Rolando Rosas 47:00
I’ll be sending you the royalty invoice so we get
Dave Kelly 47:04
So Dolf. Dolf, we had, we interviewed Amina Moreau. You know, we were just talking about Airbnbs a moment ago. Amina is the co founder of a company called Radius, and it’s that she’s Portland based, or suburb safe. Suburbs of Portland, they provide flexible on demand, suburban workplaces. And it actually came from B during the pandemic. Airbnb owners basically, instead of renting, instead of renting out their space to have people live in there for a couple of days. And like you said, when they’re done, you have to do the you have to clean everything, all the sheets, all the better, all these different things. So instead of doing that, Radius offers these spaces where it’s not overnight state, so it’s a co working space, and they’re on the outskirts of these busy metros. So like I said, She’s, they’re, they’re, uh, Portland based. But she talks about how a lot of businesses in the center of Portland are not resigning lease agreements because they’re embracing work from home, work from anywhere. They’re embracing this new culture, but they they don’t want to put people in their homes and seclude them. They still see a ton of value in bringing people together, so they use radius flexible workspaces on the outskirts of the cities, where they can still gather a team of people for a period of time. Um, are you seeing in some of these metropolitan spaces here, specifically in the US, that companies aren’t resigning these long term lease agreements?
Dolf de Roos 48:53
Yes and no, I’m not trying to hedge my bets, but I don’t think the situation you described in Portland explains 95% of what is going on in that situation. I think to a certain extent, that’s true, and without being unduly unfair towards Portland, I’ve got friends in Portland who would admonish me for even suggesting this, but Portland does have a massive drug problem at the moment, and the streets in downtown Portland have become extraordinarily unsafe. So I think part of the reason why people don’t want to renew leases and office buildings in downtown Portland, or why workers who would normally work in those buildings don’t want to go there, is not so much to do with this new trend towards working from home. But let’s not quite do it from home. Let’s do it from a shared work so it’s because they don’t want to be in that dangerous area. Another city is San Francisco. I love San Francisco. I lived there for years. But you know that downtown Market Street, Nordstrom has gone. All the big anchor tenants have gone, and the two big hotels on Union Square, there’s the Park Hotel and the Renaissance Park. They’re owned by the same company. They had a mortgage of 785 million, and they had. Handed the keys back to the lender because no one wants to be there, and it’s because of the homelessness and the drugs and the violence and all that sort of thing. So I think that’s played a role in Portland. Having said that shared workspaces, there are three major players in the US. One of them has just shut down. They couldn’t make it work. That’s given better opportunities we work. You’re talking about we
Rolando Rosas 50:22
work the I’m
Dolf de Roos 50:23
not they the ones that shut down. I’m not sure which one was. It
Speaker 1 50:26
was big, and they had all the prime real estate in beautiful, beautiful, beautiful office spaces with with everything bars and drinks and everything you could you’d think foosball tables and
Dave Kelly 50:39
but the difference between WeWork, WeWork was still they were centrally located in these cities.
Dolf de Roos 50:48
Often, not always. There were some on peripheries. But maybe this, this new model, would work. I think what happened is everyone relished working from home. Your commute to the office was the three yards down the corridor from your bedroom to your kitchen table. But what they weren’t counting on is that their spouses also work from home. The kids were studying from home. The parrot, the dog and the cat were still needing attention, and they didn’t get much done. So what was this beautiful fantasy in the beginning became a nightmare. So then they think, well, instead of going back to the office, is there a compromise? And maybe these shared Workspaces are a compromise. I think there’s this potential for them. I actually think jobs are going to go by the wayside more and more, and we’ve just got to get ready for it, just like those boys who used to scoop horse manure, and we’ve got to be aware of it. And you know, to give you an outlandish example, I want to talk about cars and taxis in particular. In Phoenix, for four years now we’ve had Waymo, which is a driverless taxi service. And guys, if you haven’t tried it, you should try it. It’s the weirdest sensation when you order one of these things that pulls up, you open, unlock the doors on your app. They you climb in, they say, Hey, Dolf, we’re not going anywhere until you do up your seatbelt. Okay, I get it, and you do up your seatbelt, and then it starts driving you to a destination. No drive. It’s a weirdest sensation, and but the biggest cost component of taxis and Uber and Lyft is the labor component. And I have had so many people say, Oh, but Dolf, I’d never trust my life to a computer. Well, when you think that 94% of accidents in the US are caused by human error and not mechanical failure. My theory is that if we have universal driverless cars, we’ll get rid of 94% of the horrific 36,000 some deaths we have on the road every year in America from road accidents. And so I think it’s inevitable. So that’s going to put armies of taxi drivers and Uber drivers and Lyft and all the other brands around the world out of work. Um, but just like those boys we talked about the horse manure scoopers, they ended up doing other things. They designed the systems and the robots and the computers and the servers and the everything else that goes with it.
Rolando Rosas 52:59
I’m sorry, go ahead. No, we’ve
Dolf de Roos 53:01
just got to stay ahead of the trend. That’s all we have to do. And
Rolando Rosas 53:04
you know already, when you jump on a plane, almost the entire entire trip is done by computers like get you from point A to point B. There’s a little bit of navigation done by the pilot, either landing or taking off, right, but most of the work, right? Virtual, virtually all computers flying the airplane. You’re not in control at all at that point. Neither is the pilot. It’s just punching the coordinates, and it’s doing all the adjustments on its own.
Dolf de Roos 53:33
And you know where the pilots don’t take don’t let the computers take off for land. Tell me the computers can do it already. They want to keep, yeah, they want to keep the pilots trained so that if there’s a system failure, the humans can actually land that thing. But other than that, the takeoffs and landings would be smoother if they were all controlled by computer, because they have instantaneous response to air movement and side drift and you name it. And it’s just to keep them trained a bit so that they’re not completely useless.
Rolando Rosas 54:01
Well, the US Air Force is that same way. The the guys that are in control of the drones, they’re on underground facility in Nevada for the most part, 1000s of miles away from where the drones and the drones will take off and land on their own. They’re just there looking at the screens make sure things don’t go wrong. So that’s already happening today, and I can see that happening in more in more cities where taxis now are completely driverless. The technology is there, and I want to ask you about that, because AI plays a role in driverless cars, and AI is not going to stay away from real estate AI because of what it can do. Match your home, look at prices, see your preferences, figure things out faster than a human can input them into a computer. What do you think the role of AI is going to be when it comes to the market of Real Estate?
Dolf de Roos 55:01
I agree with you. I love technology. I love AI, but it’s working to the detriment of my ability to beat the average. And I can be specific about that, even 30 or 40 years ago, when you did something on the stock market, you wanted to buy a share of Hewlett Packard or Microsoft, it was computerized, even if they were old mainframe computers, and they’re all linked around the world, and everyone essentially paid the same price. Whereas the thing that made it so easy to make a ton of money in real estate is that it wasn’t computerized. It wasn’t automated. And even real estate agents, if there was a listing by a real estate agent, he’d compare the price of of his existing listings with what you want to sell and come up with. But he didn’t compare it nationwide, because there was no interlocked database of nationwide properties. Now it’s becoming more and more automated, so some of the best deals that I can do these days are when there’s a so called for sale by owner. We sometimes call it a Fizbo, because what happens? You know, why would someone want to sell it on his own instead of going through an experienced real estate firm? Well, they probably think, I’m paraphrasing, but why should I let some snooty knows, 21 year old real estate agent make 6% on my property when he hasn’t even lived on this planet for nearly as long as I’ve I was here when I bought this in 1978 for 132. He hasn’t got a clue what it’s worth. I do so he thinks he’s doing better than the agent could do when he’s so out of touch. So half the time, when a for sale by owner property goes on the market, the owner’s got unrealistically high expectations of what it’s worth, and it doesn’t sell. And the other half, he hasn’t got a clue what it’s worth, and he lets it go for 100,000 or 200,000 too little. And if you’re smart and you’re on it, and you see the For Sale By Owner sign, then you can snag a good deal. Happens every day of the week. Doesn’t happen in the stock market, doesn’t happen with futures and options and anything else. So that’s why I always say, instead of taking the same route that you normally take to work, drive the same car along the same road, and you end up gossiping with the same people at the same water cooler, about the same people do things differently every day. Take a different route to work, or if you’re late, same route, but take a different route home, and look for those for sale by owner signs. Or maybe you’ll find a property that looks abandoned. The grass is tall. There’s litter up against the fence line. The windows are all dirty. And you know, if you say out loud, who owns this building, no one will ask you, but knock on the doors of the neighbors. Read up on the state website of all the APNs and property numbers, and, you know, find out who’s do the skip trace search, and you might come across them as a, no, I’m keeping it for three generations. Bug off. But he might say, Oh, my God, that was bequeathed to me six months ago. I don’t know what to do. I just want to get rid of it. Wow. And you’ve got to be in the you’ve got to be active, you’ve got to watch less TV, you’ve got to consume less social media. In fact, I always say to people, if you want to really do one in life, take your TV and toss it out the window. Now I like saving money, so if you want to save some money, open the window first, but get rid of the TV anyway, because really the TV rots your brain. Are there some good programs? Yes, of course. Do I have a TV? Yes, I do, and I watch the odd movie on it. But don’t come into the habit of getting home and turning around and flicking through your 600 channels saying there’s got to be something worth watching, because there will be. And you know, 60 years will go by and you’ll have watched a lot of TV and not bought any real estate or done anything else.
Rolando Rosas 58:34
I love that because it almost sounds like your eighth rule in your book. You know that a deal, a deal of a decade is really comes along once a week, but it ties in very well to something I would love for you to break down, which is your 110 three, one rule, because if you put down the Netflix, which I love, by the way, Netflix, if you’re watching, I love you. I don’t know if I’m throwing it, throwing it out the window just yet. But you talk about how you got to do some homework, you got to go out there, go look at properties, but I want you to fill in. Fill it in. Tell us what that rule is.
Dolf de Roos 59:12
Well, a couple of mixed meta things you brought up there. So firstly, let’s talk about the deal of the decade comes along about once a week. Here’s the thing, if you say no, the deal of the decade, by definition, comes along every 10 years. So when one of your listeners hears that the three of us did a phenomenal real estate deal, they’re going to think, well, that’s this decades deal done. So let’s wait another 9.9 years before even starting to look and their belief that the deal of the decade comes along exactly every 10 years will be validated by the evidence that they’ve seen accumulate. Whereas if, like us, you truly believe that the deal of the decade does come along about once a week, then you’ll be looking for them because you believe it. And when you look for them, you’ll find them, and you’ll buy them, and then it will be validated. So it’s that old thing, whatever you believe is your reality. If you believe you can, you can, and if you believe you can’t, you’re also right. So let’s talk about the 100, 10, three, one rule. Many people think, well, if it’s that easy to offer, you know, I’ve looked at four properties and I didn’t find a good deal. Well, let me put a a what’s the word? A cap on that. Let me put a reality check in there. You have to look at 100 properties to find 10 that are even worthy of putting an offer in on.
Rolando Rosas 1:00:25
The 10. So you’re telling me, and how do I do that? Do I go on the internet? Do I go out like you said, look for the high grass, you know, the kind of abandoned ish look?
Dolf de Roos 1:00:37
I don’t know if you’re doing this from home or from some office, but if you’re going to drive home later today, take a different route from your normal route and see if you see any new for sale signs, or for sale by owner signs, or any abandoned properties. Now, will you find one today by doing that? No. Will you find one this week? No. But if you do that and a dozen other things that I’ll tell you, you’re going to find a property, you will. You absolutely will. So you’ve got to look at 100 using all kinds of options. Online, offline, with friends, without friends, in laws, outlaws. Doesn’t matter. Just look at 100 and then you’ll find 10 worthy of putting an offer in on when you put offers in on 10 properties, will you have all 10 accepted? No. In fact, if you did have all 10 accepted, I would tell you that you’re offering too much, you know, offer something less. So let’s say only three offers get accepted. All right, so we get three offers. Can we buy those three? No, we don’t have the cash to buy them. We need to get them financed. So we apply for financing. And despite my optimism and having 10 copies and maybe only one gets financed. So now we’ve looked at 100 properties to buy one. And by the way, if that one doesn’t work, then you have to look at another 100. And Will it always be exactly 100? No, some people find a good deal after 16 properties, and some need to look at 150 but on average, it’s about 100 properties. And here’s the thing, most people say, Oh, I can do that. They got all excited, right? And that weekend, they go out and look at 12 properties. And the next weekend, they look at another 13. And then they get out they calculate, and they’re saying, Hmm, 12 and 25 I’m a quarter of the way there, right? And the weekend after that, well, it’s the football game on, and they promised the buddies they’d watch that. And the weekend after that, cousin Mary’s getting married, and they can’t No Joe at the medic winning. And the weekend after that, it’s raining, and Dolf never said anything about looking in the rain. And then they say, You know what this whole nonsense? 100, 10, three, one. What a load of belly who hasn’t worked for me and never worked for my neighbor either, and they don’t believe it, whereas here’s proof that it works. I ran a mentoring program years ago, not offering it, so it’s not a pitch for it, but I had about 12 students in it, and at the end of our first monthly meeting, I said, Listen, 100, 10 three, one want you all to look at 100 properties in the duration of this mentoring program. Well, one participant, her name was Margaret, the poor thing, she thought. I said, I want you to look at 100 properties each month. So when we met for the second month’s meeting, and she realized that she’d looked at 100 properties, but that that wasn’t the requirement for that month, that she had a whole year to that she had a look in her eyes if she could kill me. But something happened inside, and she said, You know what? Damn it. I looked at 100 this first month. I can look at 100 this coming month as well. And I’m sure you know how the story ends. At the end of the day, Margaret bought more properties than all the other people combined because it’s a numbers game, guys, it’s just a numbers game.
Rolando Rosas 1:03:37
Wow, wow. Big props to Margaret, wherever she is. That’s, that’s, that’s amazing that she, she actually took it upon herself to look at that many properties. But I would imagine she got new muscle memory. Things started coming quicker. Like, I’m looking for this, not that this, if I see this, I’m going to say this. And you know, you start building some new skills that you didn’t have. If it would have taken you a year to get to that 100 mark. You’re just doing it faster in a month or two,
Dolf de Roos 1:04:05
right? Exactly. Wow.
Dave Kelly 1:04:07
And I would, I would think, in in this market, residential, commercial space, the the demand is higher than the supply. So to go and check out 100 properties in a short period, you know, in a month, it must be extremely difficult. Add that on to the highest interest rates that we’ve had in the US in quite some time. Who’s Who’s the winner here? Like, how do you, how do you stay in front of that where supply is low, interest rates are high, who’s winning? Who’s winning in that scenario?
Dolf de Roos 1:04:43
Well, you know, some people who’ve owned a property for a while and they realize prices are high now, they might think they’re winning by selling now, but I’ve had people who thought they won by selling in 2004 when their home had a value of 350,000 and they only paid 98,000 for. It, you know, 20 years before. And then when 2008 hit the big GFC, and things went down, they were really happy. But now that home that they sold for whatever it was, 350 so it’s worth 800,000 it’s just it’s gone crazy, you know. And I live in Phoenix at the moment, with the GFC, we had the biggest downturn of real estate in the country, mainly because we had the biggest rise leading up to it. At one stage, we had 90,000 homes in foreclosure simultaneously. And so lots of people were saying, I bet you’re regretting you’re in real estate now. Dolf, well, no, I didn’t. And even though lots of people lost their homes, those people still had to live somewhere. So even though house prices dropped drastically, rentals didn’t drop by much more than about 10% and eventually, over time, not only did values come up to where they were, but now they’ve far exceeded it. So the triggers, and it’s another golden rule, never sell. I did modify the rule from never sell to sell themselves, a bit of a tongue twister, but there are extenuating circumstances under which it might be okay to sell, but in general, people who sell tend to live long enough to regret it. Oh my gosh, if only I’d hang on to it right?
Rolando Rosas 1:06:12
And is that because of the appreciation and the equity you build, or because you get to raise rents and income comes up as well, if you’re holding that property for a longer time?
Dolf de Roos 1:06:23
Both, it’s a combination of three things. One is when you buy a home and you have a mortgage, then eventually the tenants pay the mortgage down, and so you’re increasing your equity. The second thing is that the cost of goods goes up. It becomes more expensive to buy lumber, more expensive to buy wiring, and so that causes it to go up. But there’s a third one that most people don’t realize, and that’s just the depreciation of the currency itself. It takes more dollars to buy a bottle of milk now than it did five years ago, let alone 50 years ago. It’s not that milk is worth more. It hasn’t become a more hard to get commodity. We have more people now in the country, so we have more cows, and they produce more milk. It’s that the value of money has gone down. And when you combine those three, we benefit. Why do we benefit more than any other investor in any other class? Because in general, there are a few exceptions. But in general, you can’t borrow money from the bank to buy Bitcoin or gold or silver, platinum or futures or options, right? So there’s no leverage. So to have $100,000 in Bitcoin, you need 100,000 cash, but that same 100,000 cash can buy you a million dollar property. So when it goes up incrementally by 3% a year, some good years, 5% but let’s say it doubles to 2 million, and let’s say you had an interest only loan. You went from 1 million to 2 million on your 100,000 investment. You made a you that’s leverage. You got 10 times the return that the person who put 100,000 cash into bitcoin got, if it had doubled leverage,
Rolando Rosas 1:07:59
and if you wanted to tap that leverage, so let’s say you get, you get to a valuation that’s higher, that’s $2 million you could take that and go to a bank and say, have collateral against that and buy other properties.
Dolf de Roos 1:08:12
Of course, that’s the other big difference. When your stock portfolio doubles in value, for you to benefit from that increase, you have to sell it. It seems counterintuitive to me, but when your property doubles in value from 1 million to 2 million, notwithstanding the fact that you border with 100,000 cash, you don’t have to sell it. You can just refinance. You go back to the bank and say, Hey, Mr. Bank manager, remember me You doubted it was worth a million bucks because Annie just got that tenant. Well, now your very conservative bank appraiser has appraised it at 2 million. Will you lend me some more money? And instead of scouting so who do you think we are stupid? He’ll say, Well, yeah, of course. Well, that’s pretty good. Of course, we’ll lend you more. And again, it’s tax free money
Rolando Rosas 1:08:54
that it just it to me. You know, it’s new information, right? It’s not information that you hear about just like we were talking about earlier there. I went to college. There was no course on personal finances, on how to balance a checkbook, how to how to think about buying and holding real estate or anything like that. And it’s just like, I’m having one of those moments in my brain where it’s just like it’s, it’s, I understand it. I know logically what you’re saying. I just don’t understand there’s an emotional component. I’m sure that when you talk to other people, when you’re talking about this, especially investing, because you’re hearing different things, right, right? Nearly hearing different things, sometimes they contradict, but I logically get what you’re saying. It’s just like processing that information to be like, I won’t know why I have this emotional reaction to this.
Dolf de Roos 1:09:51
Because we’re taught, we’re brought up under this notion that if it sounds too good to be true, it probably is Yes. And you. Here’s my version of that, if it sounds too good to be true, it probably is. But don’t assume that therefore it must be still check it out, because every once in a while, you’ll come across something that sounds too good to be true, and it just is really good. And if you don’t check it out because you dismissed it, then you’ll miss out. In fact, if you don’t investigate a deal that looks as though it might be offering 17% return, because that would be too good to be true. If you dismiss that deal, then by definition, you’re going to limit yourself to those deals of mediocrity where the returns are so stupendously low that they’re probably real deals. How boring is that?
Rolando Rosas 1:10:42
You know, love that. I love it. I love it. Get going do due diligence. I’m taking a different route from work back to home or over to the shopping center if it’s still there. And I’m gonna keep eyes open and check it out. Wonderful advice. So Dolf, there’s something we’d like to do with our guests before we end. We’d love this little portion of our podcast where we do a rapid fire segment. There’s no right and wrong answer. It’s your answer. And we’d love to call this the rapid fire segment. You’re ready to play rapid-fire with us?
Dolf de Roos 1:11:18
I am. Now, yes.
Rolando Rosas 1:11:20
All right, Orey hit the rapid fire segment. All right, your answer is your answer, Dave and I will alternate. And whatever hits your brain, that’s what it is. Okay? Walmart versus Amazon?
Dolf de Roos 1:11:41
Amazon
Dave Kelly 1:11:43
favorite social media platform,
Dolf de Roos 1:11:46
Rolando Rosas 1:11:48
favorite piece of tech
Dolf de Roos 1:11:52
Ultimately the computer. There’s so much you can do with it.
Dave Kelly 1:11:56
All right, first thing you reach for in the morning
Dolf de Roos 1:12:00
oh my phone.
Rolando Rosas 1:12:02
You’re in good company there.
Dolf de Roos 1:12:04
I think everyone does these days
Rolando Rosas 1:12:06
This may be a hard one since, since you’re an author yourself, but I’m going to ask it anyway, Game Changing book.
Dolf de Roos 1:12:13
Oh my gosh, there are so many. I know you want a rapid-fire answer. You can get the essence of someone’s life by reading a biography or autobiography for $30 in three hours. And people don’t do it. Game Changing book, Doctor Zhivago by Boris Pasternak 1958 read it. Okay.
Dave Kelly 1:12:33
Boom. And lastly, a person you admire.
Dolf de Roos 1:12:38
Oh, so many guys I admire, so many person I admire. Oh, gosh, can I just one? Go ahead.
Rolando Rosas 1:12:50
You want more? Go ahead. Give us a few then.
Dolf de Roos 1:12:53
Did so Maxwell Maltz, who realized, you know, who read the book Psycho Cybernetics, mind bending, reality. Check at David Schwartz, Napoleon Hill, all of those great authors. We can learn so much from them. The thing to do is to not critique people. We’re always looking for reasons to critique people. Take the good and just ignore the rest. You can learn something from everyone, guys, everyone on this planet can do something better than we can, better than you can. Everyone what they do better than you varies person to person, but everyone on this planet can do something better than you can, and at the same time, you can do something better than everyone else on this planet. So the trick is not to find out everyone’s deficiencies and what they’re not good at. Who cares. Find out what you can learn from them. Be open. Have your curiosity on full beam. Be willing to learn. Instead of saying that doesn’t sound like you say, Hmm, how might that work? Becomes fascinated by magic. Life is magic to me. I love magic tricks. I love card tricks, especially ones that are mind bending and stupendously impossible or seem to be.
Rolando Rosas 1:14:05
Do you have a favorite magician? Do you have a magician you like or?
Dolf de Roos 1:14:09
Oh, I’ve been to them all. David Copperfield puts on a spectacular show. There are some on the internet where it’s just amazing. I like trying to figure them out and analyze that main like you should be curious about life. Get up in the morning say, Holy Smoke. We are so lucky. We woke up and we’ve got a whole 20 hours to do what we want, all right, maybe 16 or 17 hours. And as I said before, if you can’t put your head down on your pillow at night and say, Wow, what a ride today, and I’m looking forward to tomorrow, then change what you’re doing. So many people are miserable with their lives and they won’t lift a finger to change them.
Dave Kelly 1:14:45
So true. That’s pretty true, no. And
Rolando Rosas 1:14:47
we want to add to that, because that was beautiful. That was absolutely beautiful.
Dolf de Roos 1:14:52
Thank you. I
Rolando Rosas 1:14:53
want to thank you very much Dolf for coming in. Dolf de Roos on the podcast today. Oh. Hold on a second. I want to do something proper. Dolf de Roos joining us today on the podcast. Thank you so much for offering words of wisdom to live by, to strive for and to really think on and ponder, because you’ve blown my brains figuratively here with some of this information. So thank you for checking in with us today.
Dolf de Roos 1:15:23
Rolando and David, thank you so much for having me. It’s been an absolute pleasure, and no, it’s been fun. Thank you.
Rolando Rosas 1:15:29
I’ve thoroughly enjoyed it. And if you want to join Dolf in a live event, he’s got a live event going on August 8, where he will be there sharing some of his most valuable knowledge, and then we have that on screen. Dolflive.com. Dave, it’s definitely going to be the place to be if you want to learn more about how to get this done. If this podcast has resonated with you, with Dolf being in it, providing words of wisdom, I would invite you to go ahead and hit that subscribe and like button, because that allows this program to come to more people the algorithm, so just push it out even more. So I want to thank you in advance for doing that, and if you would like to support this channel so we can bring you other guests just like Dolf, go ahead and check out the links in the description, because if you’re a business and you have complex technology issues. That’s exactly what we do in our day jobs. We help businesses solve complex technology issues. Go ahead and check out those links in the description. Would be glad to help you out. So Dave, we’ve had a lot to say today. We’ve had a wonderful guest, and we want to bid you that good day and we’ll see you next time you.
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