YouTube friends what's going on it's Richard founder of short-term rental
University and Airbnb super host today I want to talk to you a little bit about
what I look at before I make a real estate transaction I think this might be
helpful for some of you that are either getting started or looking to expand but
if you don't know what other people look at then are you doing too much or too
little so the first thing I want to talk to you about it has absolutely nothing
to do with real estate but will circle back to real estate in the world of
finance which is where I started my career there's two types of people
there's the equity people and then there's the fixed income or bond people
and they tend to be very different kinds of people you see the equity people
really like stories they like to understand what Elon Musk is doing for
Tesla and then the fixed income people they're all about crunching numbers and
it must tie out mathematically and they don't really care about the story in
fact they don't even want to know the story they just want to do the math and
so these are two different camps of people very smart people I knew both
people at Wharton and it's just a personality thing so the question to
start with is what kind of person are you
are you a really quantitative person and you want to know all the facts and
figures and the numbers or are you more qualitative which is storytelling it's
important to know that because if you're really into storytelling you're just
never going to be very good at the quantitative and vice-versa so try and
figure out what you care about and how you make decisions so let's talk a
little bit about me when I was at Wharton Business School
the highest brain power people the individuals and the most prestigious
jobs were all fixed income it was like rocket science and math and finance and
so on and so everybody sort of wanted to do fixed income myself included and I
ended up doing some fixed income and I did some derivatives option trading and
so on but at the end of the day I'm much more of a qualitative storytelling kind
of guy and in fact I've never owned a single bond
I don't like bonds I haven't like bonds I don't think I'll ever like bonds but I
love equities I've made a lot of money trading stocks and so I'm a storytelling
kind of guy and so for real estate I started off trying to be very
methodical and quantitative my very first few real estate investments I
really crunched all the numbers I've looked online there's tons of
spreadsheets I entered it all in and I tried
different calculators and different spreadsheets and I tried to make the
decision based on what the numbers told me and at the end of the day because I'm
not that guy no matter what the numbers told me I didn't really care that much
what I really wanted to do was formulate a thesis why this property why this
location why this market what do I think it's gonna happen and that's just the
way my mind works so my history my progression has been
from purely quantitative looking at the numbers trying to make decisions and
deals and much more into the qualitative I'm not saying that that's the right way
for you to do it but I'm just giving you an example of how I did it so today when
I look at real estate transactions and I've done three in Jackson Hole in the
last six months and I'm looking at many more including multifamily
for me it's all about the story now I do in fact check the numbers and I make
sure that they make sense but I do it really quickly almost
back-of-the-envelope gut feel how much is the monthly payment what are the
taxes what are the costs to carry and the utilities and the expenses and
things like that and then what do I think I'll make how many nights at what
price point and what seasonality and I can do that really really quickly and as
long as I get within ballpark meaning like it's not a huge negative number
then I just take a look at the risk assessment and say how much do I like it
and how much do I believe in the future growth and appreciation of the property
because that solves a lot of things and then there's additional flexibility in
the way of tax deferrals and tax incentives in investing in short-term
rental properties and that's just gravy that's like the cherry on top so here's
the takeaway the most important thing that you can get from this video is to
figure out what kind of decision-maker you are and how you make decisions when
they're really big and filled with risk buying real estate could be one of the
most expensive investments that you've ever made and so I can understand that
the nervousness the anxiety the double checking the triple checking maybe even
panic but I'm here to assure you that it's really not necessary you don't have
to over complicate it we as humans we tend to try and make really big
important decisions really complex and so we spend a lot of time and we
struggle and we wrestle and it's not necessary
minimize the decision-making but instead try and find a way that you can make it
so you're comfortable because the main thing here is to get started and to take
action whether you're expanding or growing or just getting your feet wet
don't get paralyzed because you don't have all the answers there is risk you
can't have all the answers no model no fixed income no rocket scientist nobody
can tell you what the outcome is you have to take the risk
so if make the decision based on the way that you like to think and I'm here to
encourage you I think you can do it so get started so I know this is gonna
sound really minimalist and people are gonna think like it's nonsense and how
can you buy so much property and so on and so forth that way I've been doing it
for decades I have a gut feel but I want to encourage you to start to do that
same sort of process that you don't get slowed up either so go ahead and leave a
comment below tell me what you look at what metrics what your gut feel is
whatever share with us I'd really appreciate that and most importantly
please like the video and subscribe if you haven't I'd really appreciate that
too so with that have a great day