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Episode #9: Demystifying Real Estate Myths with Matthew Argersinger

In today's podcast, we are going back to the basics of real estate investing. So if you've thought about becoming a real estate investor but weren't sure where to start, this one's for you. 

In order to talk about the benefits of real estate investing, we turned to our colleague here at Millionacres, Matt Argersinger. Matt is the Lead Advisor of our Premium Service Real Estate Winners as well as the Lead Analyst on our Mogul service. To say he knows a lot about investing is a major understatement. He's been part of The Motley Fool since 2008 and he and his wife own rental properties in Washington DC as well as having commercial real estate investments and of course, like most of us on the team, he's a REIT and stock investor as well. 

In this episode, Millionacres Editor, Deidre Woollard sits down with Mogul Lead Advisor, Matthew Argersinger to discuss common myths and misconceptions about Real Estate investing.


Matt Argersinger: As investors, our mind is set on. We want to pay the lowest price and we want to sell or get the best price for whatever we're selling. You should never try to time the market because no one can, not even the great David Gardner at The Motley Fool can time the market. He has made plenty of bad investments as we all have, and he has never timed everything perfectly. No one ever has. With real estate and with life, I think you buy, you invest in assets that you have confidence in, that you know, that you feel like you're informed about, and that you have a good sense about the future. Not like you can see where the value is going to be six months or a year from now, but just do I feel confident in the market that I'm in? Do I feel like in five years, the value, the dollars that I put in here, I'm going to get a good return on them? [MUSIC]

Deidre Woollard: You are listening to the Millionacres podcast. Our mission at Millionacres is to educate and empower investors to make great decisions and achieve real estate investing success. We provide regular content and perspective for everyone from those just starting out to season pros with decades of experience. At Millionacres, we work every day to help you demystify real estate investing and build real wealth.

Hello, I'm Deidre Woollard, an editor at Millionacres. Thank you so much for tuning into the Millionacres podcast. In today's podcast, we are going back to the basics of real estate investing. If you thought about becoming a real estate investor but maybe you weren't sure where to start, this one's for you. In order to talk about benefits of real estate investing, I turn to my colleague here at Millionacres, Matt Argersinger. Matt is a lead advisor of our premium service real estate winners, as well as the leading analyst on our Mogul service, so to say he knows a lot about real estate investing is a major understatement. He's been part of the Motley Fool since 2008, and he and his wife own rental properties in Washington DC. They also have commercial real estate investments, and of course, like most of us on the team, he's an active REIT and stock investor as well. He's really the total package when it comes to real estate investing. Hey Matt, how are you?

Matt Argersinger: Thank you, Deidre. That was a wonderful introduction. Totally undeserved, but I'm thrilled to be here.

Deidre Woollard: Awesome. You and I have known each other for about a year, and I feel like I've only skimmed the surface of everything you know about real estate. But one thing I recently learned about you was the story of how you bought your first property. I was wondering if you could share that with the listeners.

Matt Argersinger: Sure. It goes back about, well, I guess, back to 2008. My wife, well, my fiance at the time, we were living in Capitol Hill in a rental in Washington DC. l actually just started working at The Motley Fool at the time and my wife was an engineer at the Navy Yard. We were falling in love with DC. We had each lived there for about four years, loved the Capitol Hill neighborhood and we were renters, but we were renting a really small studio in an old building. We're lucky enough to be saving some money. We thought, "Maybe we could actually buy a house." At first, we started to look outside of DC, because DC even at that time was a pretty extensive market, but we found a little bit of a hack. Well, a lot of the houses in DC, and especially in that Capitol Hill part of DC are very old. But they almost all come with what's called an English basement apartment, which is a rental unit below the main part of the house. Usually, the units are separated, and sometimes they're called in-law suites in other markets. But the idea was, could we buy a place, a town-house or a raw house that we really liked, and maybe we could rent out the basement part of it and help pay some of the mortgage. We started looking exclusively at those. They're not true duplexes, but at least they have an income property attached to them. So we looked at a bunch, we toured a bunch, and there were a bunch, of course, that were way out of our price range, but we actually found one near where we were renting. It was little bit dated but it did have an English basement apartment, and so we stretched our budget a little bit and we were able to buy the property. Then as we were figuring out how to rent the basement, my wife, luckily, one day, she was reading the newspaper and read about this new company called Air Bed and Breakfast, which of course, we know today as Airbnb. At the time, Airbnb had just entered DC, I remember even looking at the Airbnb website, there were three other rental properties in all of DC. Think about that, and today, there are hundreds, right? We saw that there was this really big demand for people coming into the city DC for short-term stays, and the house we got, it was lucky because it was a couple of blocks from Union Station, which, of course, is the main train station in DC. We started renting on Airbnb and the demand was just unbelievable. We really couldn't keep the place not rented. We had a little bit of early success and we're doing well. That fostered this real big interest in real estate, especially in the residential area at the time when we started to looking at similar properties in later years. Flash forward today, we've got four similar properties in the city and have been both part-time and long-term landlords this entire time.

Deidre Woollard: I feel like house hacking is one of the things that people sleep on. But I think in markets where it is expensive, people are more aware of it. When I lived in Los Angeles, I had a couple of friends who did that because LA usually has, you have a smaller house often or two houses on a lot so that's often a good way to do that as well. I feel like many people are stock investor before they buy property because they feel like they're not ready yet. Saving for a down payment is hard. Is that something you hear from people as well?

Matt Argersinger: I do hear that. I know there's the idea of, "I've got to save money for down payment and I can't really get into real estate investing until I buy a house." Even stepping back for a moment, I have never thought of buying the house that I live in as being a real estate investor. Even with that first property that my wife and I bought, it still felt like it was our house and we were just hacking it a little bit to help pay the mortgage. It didn't feel like I was a real estate investor until later on, because I just think there's a mentality around that. I mean if you think about it, roughly 60 percent of the households, maybe more than 60 percent of the households in the US own their house. But I certainly wouldn't call 60 percent of Americans real estate investors. I mean, people just own their own house. It's a roof over their head, it's a place where they can do things with their family, and they make decisions about that house, usually, not always compatible with being a real estate investor. But back to the original question, yeah, I certainly don't think you have to wait until you have tens of thousands of dollars for a down payment. You can put hundreds of dollars in a brokerage account and by a basket of REITs, Real Estate Investment Trust, which we'll talk about a little bit later. To me, someone who does the hack is actually taking a bigger step into the real estate investing world than someone who's waiting around for years, trying to save money to buy a house.

Deidre Woollard: Well, I feel like that's a really interesting thing too, is the idea of the basket of REITs. If you've ever heard some of the Motley Fool investors talk about a basket, so I was wondering maybe you could explain to people just a little bit an overview of what a basket really is.

Matt Argersinger: Sure. I think a basket approach is a great way to invest in the stock market, in real estate, and many other things. Real estate is perfect for this. If you look at the REIT market, the real estate investment trust market, you've got over 200 publicly traded REITs, and you've got apartment REITs, office REITs, self-storage REITs, retail REITs, REITs of all kinds. Why not buy, say, 5-10 REITs all in different property sectors? Buy an apartment/multi-family REIT, do a hospitality REIT, even though you're probably taking a little bit more risk these days than you normally would with hospitality, but I think it's important to have exposure to that. Just buy a piece of the real estate market in the United States by investing in specialized REITs. It's great, right way to do that. Of course, even if you step back a little further and just want a very broad index of real estate in the United States. You guys look at the Vanguard Real Estate ETF, for example, to tickers, VNQ. It's actually got a great track record going back about 15 years and you get really big exposure, big diversified exposure to the United States real estate market and it's cheap, easy, and of course nowadays, we know we can buy and sell stocks with zero commissions in most places and so it's an incredibly easy and efficient way to get started.

Deidre Woollard: It's also a way to baby step your way into commercial real estate, because one of the things that I feel is that people have that block about residential versus commercial. They understand residential, they see it on HGTV, they look at Zillow. They understand that side of the market. Commercial can feel really hard for people, so I know that you have commercial investments. How did you get started with that?

Matt Argersinger: Well, I was lucky, I had a friend, actually, we've been friends since high school and he got into commercial real estate investing fairly earlier on and his approach has mainly been to buy single tenant properties, single tenant triple lease properties, so think of your like a CVS or a Family Dollar store and the beauty of that type of messing, not to go down too big of a rabbit hole here is, you're the owner of the property, but you really don't have any other obligation on the property except the mortgage on the property. The tenant, in most cases, is going to handle all the maintenance costs, the taxes, insurance and so really all you're getting is a nice check every month and of course you pay your mortgage and you own this great cash-flowing property as long as you've got a great tenant who is on a nice long lease and etc. It's a great way to get involved and so I was able to partner with him on some investments and I love that type of investing. That's a little bit of a high barrier to get into. With commercial real estate, you don't have the same financing options in general as you do in the residential market where if you're a first-time home buyer, oftentimes, you can put very little down. Sometimes, even zero percent down. A fair veteran or two to three percent down if you're doing an FHA loan and so it's a little easier to get into the residential financing part of it. The commercial side, usually you've got to come to the plate with at least 30-35 percent down. Normally, the interest rates not as good. The financing terms can be shrunk. You're not really looking at 30-year fixed rate mortgages in the commercial market. It's more like a 10 or 15, maybe 20-year mortgages and so it is a little bit of a step-up, but I don't think people should be intimidated by the commercial real estate market. I know plenty of investors who don't even own their primary home, they actually rent a fancy apartment in the city yet they've got all these commercial real estate investments out there in the marketplace and so those guys don't even own their own but hey, they're investing in commercial real estate, so awesome market to get into, it is a little bit of a high barrier. There are some things you need to check off in terms of financing and legal things but it's a really lucrative market and I'm glad. We'll talk more about crowdfunding, I know later on, but it's becoming more democratized, so to speak, by the day.

Deidre Woollard: That, yeah, that's definitely true. I feel like with commercial, you often need to have a good partner or someone you know. For me in Los Angeles, I knew a lot of commercial brokers and a lot of them were also investors and so that's how I learned about it but from the outside, it can definitely be a challenge and I think that's one of the reasons that you see people understand residential more and that's the other reason too I think that people start thinking about house flipping and you and I have both have talked about house flipping before and one of the things that I'm seeing right now is just how tough it is to find a good flip. Not just in the high-priced markets, but really in every market. Do you ever get people asking you about how to flip a house? Is that something that people think is like the path to real estate investing riches?

Matt Argersinger: I don't know what it's a path to. It's a path to a lot of headaches and a lot of costs. I'm glad. I don't really get asked that question a lot. Actually, my wife and I have not really, we've not actually flipped to house. Every investment property we've invested, we still own today but I can see the allure from house flipping, and we talked about it. It's like, you see the HGTV show. You see is it the gains is down in Texas? You've seen this fantastic renovations and it looks like they do it in like two weeks and you see how much they bought it for and then a few items about what they spent and then the potential sale price and all of a sudden, boom, this person's made $50,000 - $60,000 in what seems like a microcosm of time. I think those flipping shows and household in general doesn't really capture, it doesn't tell a story about all the costs, all the time. The risk of having a bad contractor or subcontractor, the regulatory problems. One of the things, because it's boring, when these shows don't talk about is all the things you have to do like going to the county office to get a permit or having a couple inspections done. All those costs that get factored in. I'll tell a quick personal story here. One of the properties my wife and I owned, we own today, but at the time, we wanted to redo the front patio part of this house and to do that, we had to dig it out and the idea was going to put a nice new patio in with some nice, better steps down to the basement apartment because at the time, the stairs were warrant, it was becoming a little bit of a hazard and so we started taking this out and we eventually got a great contractor, a mason to come and design a new brick patio with new retaining walls and everything like that, and before we did it, of course, we marked all the electrical and water lines underneath the dirt so to make sure that, "Hey, don't dig too deep here because you might hit something." Well, what happens, of course, is one day, we get a call, my wife and I get a call at work and what happened, our mason contractor hit the power line. Now, he didn't actually hit or breakthrough electrical power line, but he broke the conduit around the line, and so of course, we're like, "Okay, well stop what you're doing. Let's get Pepco, the electric company, come out and take a look." Pepco comes out, looks at it and says, "Oh. Bad, bad move." All right, this is going to cost you $5,000 for us to come repair the conduit, which from my view, didn't seem like a big repair but they made the idea like we have to repair the whole line and we're going to be back about three or four months, so you can't do any work until then. So here it is, we're in the middle of the city on a busy street and we've got some massive hole in front of the house and I will show you photos at some point and we literally had to sit there the entire summer, while with this big hole waiting for Pepco to come and do the fix themselves because they had to do the fix and we had to pay them to do it, and so my thought was like, "Wow, I'm glad I'm not flipping this house or I'm glad I'm not in a situation where I have a renter moving in because this will be terrible and I'm losing a lot of money." So just imagine that what happened in a situation where you're flipping a house and that happens all the time and that's just one problem that could have happened or arise during the process of flipping a house. I think it's very dangerous. I know I've read articles, even professional flippers, right? Twenty to 30 percent of their flips, they either barely breakeven or lose money on. So imagine if you're a person who's never flipped the house before, you're going into a market, you might not understand. You don't know contractors, you've never worked with the county on permitting and you're thinking, "I'm going to go in there and I want to make $50,000 - $60,000 on his flip." Well, I think it's very hard and it's something I've never really attempted myself and good luck to those who do and I can understand why these days it's more competitive than ever because of just the allure of the dollar signs.

Deidre Woollard: Definitely, the permitting thing is so important too. I recently read a story about Wendy City Rehab, which is one of those HGTV shows and the woman who is the star of that show didn't really know all of the things that her contractor was doing and he had been building without permits and it ended up just being a huge mess. She was in on the loans with him too and so she was left holding the bag for all of these delays and repairs and now there's lawsuits. It's just such a mess.

Matt Argersinger: Right. Picking great contractors is so very hard and I think the people who do really well, the companies that do really well flipping houses have a army of a great contractors they've worked with for years. We're standing right behind them to attack a property and it's just so hard, it takes years to build those relationships and build a network of people you trust, and I feel unfortunately lot of home renovators and flippers go in, thinking, "Well, I'm going online, I'm going to Google, oh this guy's got a great review, so let me hire him and he'll do my bathroom renovation" and you just never know, right. It takes years.

Deidre Woollard: It's true. I have, both of my uncles are to some extent, flippers, but mostly investors, but they also are licensed general contractors, so they don't have to worry about that.

Matt Argersinger: There you go.

Deidre Woollard: The other trend besides house flipping is the BRRRR, which is very popular. It's buy, renovate, rent, refinance, and repeat. That's become a very popular strategy, but there are similar pros and cons there too, right?

Matt Argersinger: Right. I have to admit, this must be a new trendy thing and I'm always way behind when it comes to new trendy things. I wasn't really aware of this acronym, but yeah, I get it. I see what's going on here. The idea of go into a project, get very short-term financing, get in there, buy it, renovate it, rent it out, and then once it's stabilized, you've got a tenant and the place's renovated, refinance it, get out of that high-cost short-term debt, get into a long-term debt, extract the equity from it, and then roll that equity into another property and do the BRRRR again. If it all works out, it's easy to see that years down the road, you kept flipping this equity over and over again until now you got million dollars equity and a dozen properties and life's good. I think the real hang up here is similar to flipping. It's, well, if I'm essentially buying a short-term flip on a credit card, essentially, very high short-term debt, what happens if I bust my electric conduit under my ground when I'm trying to renovate the backyard or the front yard, and all of a sudden, I have unforeseen consequences of cost and time and headaches, and all my carrying costs are really killing any of the equity that I was hoping to build in the renovation. Again, it goes back to the idea of it's a risky strategy. If you can execute it, and I think it's one of those types of strategies that can work really well in a more homogeneous type market where maybe all the houses in the neighborhood were built around the same time, and you know the market very well and it's easy to go from one house to the next because you know what to expect. The age of the systems and utilities are all relatively same. The age of the roof is the same. You've got the same weather patterns around, then it's easy to jump from one to the next. But again, I would say my wife and I have done the BRRRR, but it's been very much long-term timescale and I think you've got to factor in a lot more time, I think. There's no such thing as a get rich quick schemes. This isn't quite feel like get rich scheme, because I know there are books and articles written about this strategy and it's probably worked for a lot of people, but it's one of those ones that you just have to really conscious of your time and the cost that go into it.

Deidre Woollard: I like that idea of going slowly too. I think that sometimes you see people want to amass a portfolio as quickly as possible. But really, you pointed out something really important, which is that every house has its own foibles, every house has its own individual. You never know really what you're going to get. All of us have gone through the inspection process and you learn everything you think you know about the house, and then a few months later, you find out something that the inspector didn't catch, or trees starts doing something weird. There's just so many things that can happen.

Matt Argersinger: The only surprise in home renovation is if there are no surprises, because there are always things you don't see when you first do an inspection or you first see a place until you start taking down walls. It sounds cliché, but there are always these hidden things, you never know until you actually get into it.

Deidre Woollard: Well, the other wildcard, especially this year, but in general, tends to be how to time the market. This year has just been for residential real estate has been just so, it's just wacky to me how fast prices have accelerated. They were up almost 15 percent last month existing median home price, which is not sustainable at all. I don't know about you, but I'm hearing people go, "Should I be selling? Is it time?" People want to time the market. I believe that's not true. You don't time the market, you time your life. How do you get people out of that mindset of just watching prices and getting so frantic about it?

Matt Argersinger: I love that what you said there about time your life. I think that especially in real estate because you're talking huge amounts of money and huge assets, and in a lot of cases, people's biggest single investments or biggest financial thing they have in their life is their house or maybe a rental property or two. But as investors, our mind is set on we want to pay the lowest price and we want to sell or get the best price for whatever we're selling and we see it in the stock market too. I doubt there were many people rushing to buy stocks. I hope people did, but there weren't probably many people are rushing to buy stocks last March when everything was falling apart. We're just started learning how this pandemic was playing out and how businesses were going to be shutdown and airplanes are going to stop flying. It was chaotic and it felt dangerous and still feels dangerous today. But now, of course, in hindsight, we see this dramatic rise in the stock market. We've seen a dramatic rise in the real estate market with the prices, and part of that might be because interest rates, again, have keep hitting new lows, which doesn't seem possible at this point, but they keep doing it. I can't explain it. But you should never try to time the market because no one can. Not even the great David Gardner at The Motley Fool can time the market. He's made plenty of bad investments as we all have, and he's never timed everything perfectly. No one ever has. So with real estate and with life, I think you invest in assets that you have confidence in, that you know, that you feel like you're informed about, and that you have a good sense about the future. Not like you can see where the value is going to be six months or a year from now, but just do I feel confident in the market that I'm in? Do I feel like in five years, the value, the dollars that I put in here, I'm going to get a good return on them? Does not have to be a fantastic return. Am I going to get a good return Generally, if you really sit down and think about it, you can probably make smart decisions like that. So no matter what the prices today, where do I think this thing can be five years from now? If I have somewhat good confidence there, then I shouldn't really worry if I'm overpaying or if I need to sell and go somewhere else. I think you said it right. It's more about what you want to do with your life and how you see your life in the next five years versus if I sell exactly today, am I going to make the most dollars I can possibly make?

Deidre Woollard: I think that the converse of that is absolutely true, is you get people who want to, in-stock, they want to buy the dip, they want to buy when it's low. In real estate, one of the things that's been happening as that idea that people look at old houses that are really, really cheap in small markets and they see a house for $30,000 or $40,000, they get really excited about buying that particular house without thinking about, well, it's priced that way because the market is priced that way in that particular area. Just because it may seem like a great deal to you if you're coming from a high-priced market, it may not actually be something that you are going to make a lot of money on. It really depends on so many factors. You want to think about a property the same way you think about investing in stock. You really want to know the property the way you might know a company before investing.

Matt Argersinger: Right. Again, not to overusing our cliché, but real estate is very local. I think you said it perfectly, which is, what do I understand about the market? Does this market that I'm going to buy this rental property in, does it have certain natural tailwinds? Is the population growing over time? Is it near a university maybe that's growing, that's going to have demand for rental properties? Just so many factors that you need more variables to factor in when you are looking at real estate in specific markets. If you feel like you know the market well enough, and things are trending in the right direction, that might be a place to put down some capital.

Deidre Woollard: Excellent, I think this is a really great place to take a quick break. We hope you are enjoying this and every episode of the Millionacres Podcast. If you have a moment, we'd love to hear from you. Please visit, and tell us what you think of the podcast so far, what kind of content and guests you'd like to hear, and what else we can do to help you smarter, happier, and richer through real estate. [MUSIC] I'm here with Matt Argersinger, lead analyst on our Real Estate Winners and Mogul products. Matt, we talked a lot in the first segment about active investing. I don't really consider any type of investing fully active or fully passive, I think every investment is a little hybrid of both. But let's talk more about some indirect investing options. Let's start off with REITs. We'd mentioned REITs a little bit earlier. We've got a REITs 101 podcast that we did before with Matt Frankel, but let's do a quick review about why investors should like REITs so much.

Matt Argersinger: REITs have been around since the '60s, they were commissioned by congress, actually, to really enable individual investors to invest in institutional's quality scale real estate. I tend to think of REITs as mutual funds real estate but there are some specific things to know about REITs and I won't really go into that because you've got the Real Estate 101 podcast, and Matt Frankel is probably the smartest guy in the world when it comes to REITs that I know. To be a REIT, a company has to derive 75 percent of its income from real estate activities. That could be rental income, that could be rental securities, getting interest from mortgage securities and things like that, or from the sale of properties. Then it also needs to pay out 90 percent of its taxable income to shareholders as dividends. But of course, the beauty of real estate is depreciation plays a huge role in the taxable income of real estate. Even though a property might be generating good rental income, and then when you subtract the operating expenses, your utilities, your maintenance, your taxes, insurance, it's still generating a nice cash flow, but then you can layer depreciation on top of that because the IRS, the government, I'd say it lets you appreciate the value of that real estate over a select number of years. So right there you slash, even though it's a non-cash expense, that expense slashes the taxable income by quite a lot. What you find is that most REITs actually pay out much more of the 90 percent of taxable income to shareholders because of that depreciation deduction. REITs is a fantastic way for individual investors to, again, own a large portfolio of really institutional quality real estate. When I say institutional quality real estate, I'm not talking about the residential property down the street, I'm talking about huge class A, class B office buildings, class A apartment buildings, big industrial properties, properties that otherwise, on a direct basis, you could invest in, either because you still have the money to do it and it's such an institutionally owned market anyway. But you can get access through REITs and it's very cost-effective. I own in my personal portfolio, I've probably lost count by now, but probably at least 25, 30 REITs across all my brokerage portfolios. Essentially, anytime Matt Frankel, by the way, comes along and tells me I should look by the street, I pretty much do because, again, he's a smart guy and he's followed the REIT market a lot longer than I have. One thing about REITs that maybe allow us and just don't know, is just the historical performance of REITs has been outstanding. There's studies that measure the returns of REITs going back to the early '70s. But even if you look at the last 20 years, REITs have outperformed the S&P 500 by about double. What's even more amazing about that as you, of course, remember the 2007, 2008, 2009 financial crisis, which was to a certain step real estate-driven. Even through that, REITs have outperformed the broader stock market and done so with a lot less volatility and risk. I think it's fantastic vehicle to investment in real estate. I can't offer personal advice, but I think in general, anyone should look to have, especially if you're an income-oriented investor, maybe 25, 30 percent in your stock portfolio should be in REITs.

Deidre Woollard: I would agree with that, but I'm not quite there yet. That's one of my goals with my portfolio, is to bring in more REITs. I've been really inspired by Matt Frankel too and just learning about different REITs, thinking about different ones in healthcare and industrial and all the different categories. The other way to get access to commercial real estate aside from direct investing is real estate crowdfunding. That's one of the reasons I was so excited to become part of Millionacres, is I really feel like the potential for real estate crowdfunding is pretty much limitless. You think about REITs, REITs started in 1960 and we've watched, you just see how much REITs have become part of the fabric of real estate investing, and all the wealth that they've generated for people over time has been tremendous. Real estate crowdfunding is just in its very, very beginnings and I feel like we've only just touched the surface. I know you've been talking to a variety of developers lately about crowdfunding from the developer side. How do you explain it to them when you're talking about it?

Matt Argersinger: Yeah. It's really interesting because if you think about major developers who are trying to raise money to do big projects, let's say build a new luxury apartment building or renovate or maybe convert an old office building into a luxury apartment building in a city. We're talking tens of millions, if not hundreds of millions of dollars that need to be sourced in order to take on those endeavors. For all of modern history, the only way you got access to that kind of capital on the equity side, it's friends and family, it's institutional, it's private equity. They're looking to source large amounts of dollars from big institutional sources, money managers, banks, name it. What's really happened, just literally in the last 10 years is because of regulatory changes, because of technology changes, the individual investor now is really able to access this market and it's because now developers have gotten more confident with the idea that, okay, well, it's now legal, first of all, but now, it's also easier and more capital-efficient for me to actually engage with individual retail investors if I'm looking to raise capital as well. By the way, even just looking at the accredited base of investors in the US, because in most cases, you still have to be accredited investor, they're hundreds of thousands of investors and billions of dollars of capital that is probably either looking to get into real estate or doesn't even know that they can get into real estate. For developers, it's exciting because they can tap into a new source of equity for their projects, and in a lot of cases, maybe they can connect with investors and have a long-term relationship with these investors and have a ready permanent source of capital. They're not always having to go out there and do roadshows or make presentations to institutional investors who either will enact more fees or want to take more of the profits away for a project, not that I don't think retail investors can't profit as much, but it's just a whole new market. One thing is, you and I worked together on this with our Millionacres team, it's just we're connecting retail investors with these institutional opportunities. For a long time, it just wasn't possible to do that. Now it is and there are many crowdfunding platforms out there. I'm excited to say that we have ours as well, that we're developing, but they're out there, they're possible now, and I'm excited about the idea of retail investors getting into institutional style real estate. I've said it before, it just feels like we're in that early to mid-90s moment that it was for the stock market when all of a sudden, with a few clicks of the button, you could buy a stock online at a very affordable commission rate. We're not quite there with real estate, but we're getting there. I feel like in maybe 5, 6, 7 years, it's going to feel like how the stock market started to evolve in the early to mid-90s. That's pretty exciting given that real estate, by any measure, is multiples of the size of the stock market.

Deidre Woollard: Yeah. Totally, and I just want to remind listeners that we do have a full episode on crowdfunding that we did a few weeks ago with Jason Hall who wrote some of our crowdfunding reviews that goes into accreditation and the difference between the types of crowdfunding. There's regulation A, which is basically for all of us, for all investors, but has less access to individual projects and then the accredited investing, there's a certain income threshold there. Just reminding people of that in case you're curious, that is something else to look at. One of my missions as part of Millionacres and really in general is to get people started thinking about real estate at a younger age. I've noticed that people only start to think about it once they're ready to settle down, they're ready to have kids, they want to buy that house that we talked about earlier, and obviously, that's not where you have to start your real estate investing journey. Matt, I want to know, what advice would you give to 25-year-old you?

Matt Argersinger: Oh,my gosh. What was 25-year-old me even doing? Was he even conscious? I guess there's two things I would advise the 25-year-old who's interested in getting into real estate. I mean, a, buy some REITs, buy some good-quality REITs, listen to Matt Frankel. Just buy and hold a basket of really strong REITs, maybe reinvest the dividends in those REITs, so your position in the company grows as the dividend grows, and that's exciting to watch. You can learn so much by engaging it at the stock level. For someone who's a little more serious about getting into the real estate market, it's going to depend a lot on where you live. I think, for example, I'd say a 25-year-old living in some place like Austin, Texas or national Tennessee or maybe Greenville, South Carolina, there's just so many tailwinds to those markets. I feel like you can really take advantage and maybe look at a duplex situation or look at a house hacking situation where you could buy a house, rent out one of the rooms, rent out even a couch, as Lobby would do. Because you're playing with a little bit of a loaded deck, in the sense that, the populations in those places are growing, the employment is growing, there's lot of companies moving there, especially away from some of the traditional price in New York, San Francisco office markets. There's a lot of company and population migration and capital migration too in a lot of those places. But even if you're not fortunate enough to live in a Sunbelt market where there's a lot of natural tailwinds, I would just look for opportunities. You don't want to ruin your beer money or your weekend money or anything like that, but if there's any way you can save some money, build up a little bit of a cash, maybe even partner with a friend and see if there's anything out there in your local market. You might have to go out farther if you're in the city, but there's probably some duplex opportunities. There's probably some long-term, I hate to use the word, flip, but long-term flip, long-term renovation to rent-to-own type situations, and take a look at the market. I think there's boundless opportunities for someone with the right mentality, long-term mindset. Those are things at the Motley Fool we've talked about for decades. But we're talking about those in Millionacres as well. Real estate is just an asset class you want approach with the long-term mindset, and if you have it and you're fortunate enough to be 25 years old, I think the opportunities are abundant.

Deidre Woollard: The flip side of that is, we recently wrote a piece on Millionacres, I think Maurie Backman wrote about, is it ever too late to invest in real estate? Right, of course, never.

Matt Argersinger: Absolutely not. Never.

Deidre Woollard: But it may be a different look than if you're 25, the way that you're going to invest is different. The same way it would be with the stock market, your attitude towards risk changes. You may not want to be a direct landlord without a property manager in place and do all of the work yourself. What do you tell people who are older and think, ''Well, I am not sure I want to do that because it's too much work''?

Matt Argersinger: The sweat equity thing sounds so much better when you're in your 20s versus, say, when you're in your 40s or 50s. But I would say, one thing we talked about earlier in the show, was just about the direct commercial investing, looking at triple-net properties, single-tenant triple-net properties. There's just a lot out there. I think if you're someone who doesn't want to do a lot of work, doesn't want to be thinking about it all the time, but loves getting checks in the mail every month, then being a direct ''landlord'' in the commercial real estate market can be much more appealing, especially if you're someone with some pretty big capital aside and you're just looking to convert that into a nice stream of cash flow or income for the next several years. Lots of opportunities out there. I think Crowdfunding is one, if you're lucky enough to be an accredited investor. You can really tap into the private equity side of real estate. Again, we talked about buying a basket of REITs, if you're 25 year old. Maybe if you're 45 year old or 55 year old, you can buy a basket of crowdfunded commercial real estate deals and build a basket out like that, and buy opportunities of all kinds. Buy development, buy a cash-flowing property, buy a value-add renovation, just the whole spectrum of risks that you can take in the commercial side. The fact that we have Crowdfunding and the platforms out there to do that, it's incredible to have access to that. Look into it, there are always opportunities no matter where you are in life. I think you said it perfectly earlier, Deidre, is don't time the investment, just time your life and where you are, what you want to do and what you want to focus on. What matters to you is how you should be investing.

Deidre Woollard: Exactly. Especially with some of these crowdfunded deals, one of the things that I noticed from looking at the Mogul investments is that they'll have like a five-year hold or a three-year hold or something like that. For older investors who can put that money in and be patient, there can be a nice little payday at the end, which is always a good thing. I always hate having to mention COVID-19, but this is the year in which we have to talk about it all the time. Because of COVID-19, it hasn't been the best year for real estate investing on the commercial side in certain sectors. Obviously, you mentioned hospitality earlier, that's a huge one. Retail was hit early, it's starting to bounce back. Senior housing is still tough. Student housing to some extent is tough. You're an investor, what did this year teach you and what do you want to take from it as a positive?

Matt Argersinger: Yeah. I think when we look back, COVID-19 is going to be that everything we thought was happening in the real estate market just got pushed forward a bunch of years. When we think about the rising work-from-home trend, let's go there. If you think about it, especially in the tech world, that was already happening to a certain extent. People were gaining more flexibility about their work life and their office life, and what they could do, and COVID-19 just said, "Hey, we're just going to accelerate those trends at an unprecedented degree and even render some of those things permanent that were probably either going to be part-time or maybe we're going to take more years to play out," and COVID-19 just crashed the party and said, ''No, let's do it now.'' But I think the lasting effects on certain sectors, you mentioned hospitality, retail, senior housing is one where I think there are a lot of families who may never again feel comfortable about having their loved ones in a care facility. Of course, sometimes, there's no alternative to it and people are going to have to do that, but there's going be some definite changes to, I think, people's feelings about that, people's feelings about travel. At the same time, I want to make sure we're positive here because that's how you asked it. There are some really interesting innovations that have come out as well. It's something you've even written about, Deidre, but if you look at the industrial side of commercial real estate and what that's done. E-commerce was already a trend, people were already buying more of their stuff online. But what happened with COVID-19 is all of a sudden, we wanted all of it, not just the consumer goods and stuff that we'd order online before, but restaurant delivery. Not just restaurant delivery, four-star restaurant delivery, and fresh food, fresh vegetables and fruit the same day. The effect that that's had on the need for things like cold storage on the industrial side and just quick turn logistics facilities really within primary and secondary markets. I keep reading about development projects around the country that were earmarked for a certain type of property. It was going to be a retail establishment, it was going to be something, and also that's all converted to warehousing and fulfillment. That's just the capital that's flowing into that market has just been unprecedented. COVID-19 has really reshaped the medium to long-term, I think, breakup of real estate market in this country. Some of it might be frightening and we're probably going to miss some of those things that we thought we always took for granted, going into the office. That's probably not going to happen on such a full-time basis anymore. More shopping is going to happen online. Then ultimately, what does that mean for the experience side of retail, or just the event side of retail? I got a feeling, human beings are going to want to get together and go to concerts and go out to eat and go to bowling alleys, and maybe even go see a movie again. Who's going to take the risk to create those things? What lenders out there are going to be willing to lend money confidently in those areas? There's so many things that still need to be played out. But you can see how the world's shaping up already. 2021, again, going to the New Year, depending on what the health situation looks like, it's going to dictate a lot about what happens to real estate.

Deidre Woollard: Speaking of 2021, what sector do you find most fascinating? I'll start with one that I find really fascinating, and that is cloud kitchens. I was recently reading about DoorDash and what they're doing with helping restaurants that have closed. Pivot to cloud kitchens, you've got some of the leading stocks, like Chili's has a cloud kitchen, Outback Steakhouse, they have a cloud brand for chicken tenders of all things. That's one trend that I'm seeing. What other trends in real estate are you seeing that you think are going to grow in 2021?

Matt Argersinger: Well, it sounds boring, but what I've observed so far, and I'm really fascinated to see how it plays out, it's just the revitalization of the suburban office park, maybe. Companies moving out of the core of cities or not feeling like they have to have these massive employee centers in central locations. The idea that maybe I could have a dozen satellite offices in a region of the country or in multiple parts of the country. I think there might be a big demand for that. I think there's going to be a trend towards, when you think about all the people, especially in the tech side of California, who are now presented with the idea of living anywhere they want, and these are people that make quite a bit of money, and they're going to small or medium-sized towns for cost of living but also just lifestyle reasons, but they still desire an office environment. The idea of up sitting in front of Zoom all day doesn't really cut it in terms of creativity, collaboration. I just think there is going to be a huge resurgence, not on a maybe massive scale, but certainly in select markets, there's going to be quite a bit of, I think, suburban office development. Maybe more of like the co-working trend which you thought died a year ago, it was the right model, it just took COVID-19 maybe to actually clearly show that that could be the future of office. It's going to come there a little faster than we thought.

Deidre Woollard: Interesting, I like that. As we wrap up, we've talked about a lot of big ideas. What's the one thing that you would tell a real estate investor who's just starting to do today, just one quick little action item?

Matt Argersinger: Probably little too broad, but I would say, just go in with a long-term mindset. Real estate is not a get rich scheme. It certainly isn't. In fact, it's probably one of those asset classes where it's really a marathon and not a sprint. No matter how they do it, whether it's REITs, or the commercial side, or being a landlord, always take the long-term view of where you think the asset can be, where you think you can take the asset, how the market's going to shape up over many years, and are you going to feel confident in that investment, in five years as you do today, are you going to feel as confident. I just think there's such a draw to some of the numbers that you can get real estate, especially with the leverage that you can get in real estate. I think being willing to be patient and having that long-term mindset that has served equity stock investors so well, should be applied to real estate. It's not a flip and get rich scheme as some of the TV shows, which actually I think it's fantastic asset class, you make lots of money. Most of the world's billionaires are there because of real estate, but it's taken many years, decades and even multi-generations for them to get there. That's how you have to think about it.

Deidre Woollard: Excellent, that's a perfect place to end things. Well, thank you for your time today. I can't wait till we could actually have these conversations in person in the office again.

Matt Argersinger: Same, Deidre. It was great. Thanks for having me on. Great pleasure.

Deidre Woollard: Just a reminder to listeners, you can learn more about real estate winners and the other premium services on the Millionacres website. Thank you for tuning into The Millionacres Podcast. I hope you liked today's show. If you enjoyed this episode, please consider subscribing through your favorite podcast provider. If you have any questions, please feel free to drop us a line at Stay well and stay invested. People on this program may have an interest in the deals, offerings, or services they discussed, and Millionacres or the Motley Fool may have a formal recommendation for or against. Always consult a certified tax professional before acting on tax advice, and do not buy or sell assets based solely on what you hear.