Greg Kurzner recently did a podcast with Cleve Gaddis on his show GoGaddis Real Estate Radio, talking about investing in real estate. You can listen here:
Audio Transcript:
Cleve Gaddis
Welcome back to go get us real estate radio right here on AM 920 The Answer. I appreciate with you sticking with us through the break. In this segment: why is investing in real estate smart now and why has it generally been smart over time? Also, are there different ways you can invest smartly in real estate? And what are some of those rookie mistakes and gotchas that if you’re going to invest in real estate, you need to avoid? You’re listening to GoGaddis Real Estate Radio right here on AM 920.
If you want to connect with us, the easiest way to do it is to go to GoGaddisRadio.com . You can ask questions, make comments, you can push back, share ideas, ask for your neighborhood to be featured in our neighborhood spotlight and subscribe to our podcast. We would love you to do that. If you want to subscribe to the podcast, just search for Cleve Gaddis. That’s, C L E V E G A D D I S. This segment of the show is brought to you by the law firm of O’Kelley and Sorohan.
They are a full service law firm with 21 offices throughout metro Atlanta. They specialize in residential real estate closings, including home purchases, refinance closings, corporate relocation and real estate contract review and title insurance matters. They can be reached by calling 770-497-1880.
Without further ado, let me introduce a very special guest and a good friend of mine, Greg Kurzner. Greg is with Resideum LLC, Property Pro Services and Atlantic ERA Realty right here in Metro Atlanta.
Greg, welcome.
Greg Kurzner
Hey, thank you very much for having me. Really appreciate being on the show, and it’s great to see you again.
Cleve Gaddis
Yeah, man, absolutely. And he says great to see you because he and I are actually doing this, believe it or not, over Zoom. So he’s looking at me and I’m looking at him, even though we’re piping him into the soundboard and and recording it to be broadcast all over Atlanta. So real quickly, you might be wondering, OK, well, why would Cleve have somebody else who’s a real estate professional in metro Atlanta on his show?
And the truth is, I have a lot of respect for Greg. Greg, and I’ve done a lot of deals together over the years. He was a big REO agent in Atlanta at one time, sold a ton of real estate owned properties, sold foreclosures for banks from 2008 to 2012. Don’t everybody be hating on him because somebody had to do that during that process. Any way, I’ve always loved the way he’s done business. And over the last few years, he’s kind of moved himself over into more of the investment side of real estate.
So, Greg, I’m hoping that you can help us understand why is real estate investing good now? Because, man, the market sure is hot. And why is it generally a good thing to do over time? And we’re talking specifically about investing in residential rental, real estate, is that correct?
Greg Kurzner
It is, definitely. And, you know, so when you’re at cocktail parties or whatever and you know how this is real estate agents, we gather a crowd because everybody’s interested in real estate. And so especially the investment side, because whether or not you’re involved in it, you know, you live in a house, you know what a house is all about.
Cleve Gaddis
That’s right.
Greg Kurzner
And you’ve got options to invest in. And it’s stocks. It’s bonds or it’s real estate.
And, you know, and so people are always asking me, why should I invest in real estate versus, you know, buying Apple or Facebook or something. And to me what I really do focus on is that, you know, real estate is is it’s something that provides income and appreciation, which is hard to get with stock. Stocks to go up, but they don’t throw off a lot of cash or bonds.
You get cash, but they don’t go up in value much. So that’s one of the big benefits that you find with residential real estate. And the other thing that’s that’s nice is a lot of tax advantages. And you can you can depreciate it. You can take passive income and passive losses. So there’s a lot that really is attractive about real estate.
Cleve Gaddis
So would you mind…
Greg Kurzner
And everybody knows.
Cleve Gaddis
Would you mind, Greg? So a couple of things and tell me if you agree with this. Somebody mentioned to me one time that residential real estate can be insured so you can go to State Farm or Liberty Mutual or any company like that and they’ll write an insurance policy for you.
So if your place burns down, they will actually rebuild it for you. And they said, well, can you do that if you buy Apple stock? And I thought, no, you can’t. I mean, if so, if Apple went to heck in a handbasket, my investment would go away and there’s nobody to protect me. So I think that’s very interesting. What do you think about that concept that you can actually insure the properties that you’re investing in from a real estate standpoint?
Greg Kurzner
Well, I absolutely think that it’s a safety net that people need to have because of the investment side of it. But the other thing that you talked about was, is that it’s it’s stable, right. So there’s not a lot of scary things. You can lose a lot of money, you know, the whole GameStop thing that’s occurred. But with real estate, it’s very stable. So if you put a tenant in a property, you know, you’ve locked in a return for at least a year and things don’t move that quickly.
So from that perspective, it’s not as risky as, you know, gambling on the stock market in many, many cases. And the thing is, your exits are very strong. So everyone knows you can either sell the home to an owner occupant if you don’t want to rent it anymore, or you can turn to an investor and sell it that way. So it’s just a known entity that doesn’t–people don’t have the learning curve about stock p e ratios and stuff because they know real estate.
They know.
Cleve Gaddis
That’s exactly right. If you’ve just joined us, you’re listening to GoGaddis Real Estate Radio right here on AM 920. I’m Cleve Gaddis, your host. And I’ve got Greg Kerzner with Resideum LLC, Property Pro Services and Atlantic ERA Realty on the line with us. And we are talking about why investing in real estate is smart now and also generally over time. Why it is a smart thing and one of the things you mentioned a few minutes ago, Greg, was the fact that you could depreciate, depreciate an asset.
And and by the way, you also mentioned and I want to put a pin in this to come back to it, that, you know, it’s a fairly stable investment because most people who have not invested in residential real estate, my guess is, Greg, they don’t think about it being stable. They think I’m going to invest in residential real estate and I’m going to get the worst tenant who has ever existed on the face of this earth. And I’m going to have problems.
And I think your opinion is that is not what typically happens. And I would agree with you. But talk real quickly about depreciation and the benefits of depreciation when it comes to investing in residential real estate.
Greg Kurzner
Well, this is one of the best benefits there is. So if you think about it, you can depreciate a residential asset completely over twenty seven and a half years now, not the land, but the structure itself.
Cleve Gaddis
Right.
Greg Kurzner
So if let’s say you buy a piece of property and the building itself is two hundred and seventy five thousand dollars in value.
Cleve Gaddis
Right.
Greg Kurzner
You can literally depreciate ten thousand dollars a year and let’s say you get a thousand dollars a month in rent, you collect twelve thousand, but you’re only showing the government you you made two thousand because you protect that 10 that’s in your pocket, but it isn’t being reported as taxable income. So that’s right there are huge benefit of depreciation.
Cleve Gaddis
And it is what the IRS encourages you to do. In fact, if you don’t do it, they’ll actually go back and forth depreciation on you, meaning they make you depreciate that asset. So it’s so cool to think about it. You make ten thousand, you make twelve thousand an income, but you only report 2000 to the government because you’re taking a non-cash expense of 10000 dollars. So, by the way, that is huge.
Now, I have a lot of people say, well, you’re going to pay the piper someday because when you sell it, you’re going to pay recaputure tax. So you’re going to pay twenty five percent of the amount of the depreciation. But let’s just say that old Greg and old Cleve want to invest in properties and we really don’t have any intentions of doing anything with those. We might actually let our kids inherit those at some point in time. Well, when that happens, any tax consequences on all of our gains goes away, because the way the tax laws are written right now, it’ll go to our children at a stepped up basis.
I don’t know if that’s what you plan to do or not, but I’m not so worried about the tax consequences on all the depreciation.
Greg Kurzner
I agree, I think that you worry about that when and if it ever happens, and until then, just take the money.
Cleve Gaddis
That’s right.
Greg Kurzner
You know, reality is it’s a blessing. So take it.
Cleve Gaddis
That’s exactly…
Greg Kurzner
There are other ways you can do 1031 exchanges and you can continue to keep rolling all of those gains if you want to. So it’s really only about when you need to recapture that money. And, you know, at that point you’ll pay.
Cleve Gaddis
Absolutely. You’re listening to GoGaddis Real Estate Radio right here on AM 920 The Answer. I’m Cleve Gaddis. I’m a real estate broker right here in metro Atlanta. And I’ve got Greg Kurzner of Resideum LLC, Property Pro Services and Atlantic ERA Realty on the line with me. Greg, if somebody wanted to reach out and talk to you about getting into the world of real estate investing or investing in a fund or something like that, how could they reach you?
Greg Kurzner
Well, the best way to reach us is you can go to our website, which is resideumbuyshouse.com. You can also reach me. My email address is Greg@kurznergroup.com. But, you know, again, if they just Google me, it’s easy to find me and there’s lots of ways to gather me. So certainly that’s that’s a terrific thing where you can reach out to you and you can get a hold of me.
Cleve Gaddis
Wonder. And would you be willing to answer questions for them, no matter whether somebody was working with you or not, if they wanted to take the time to reach out, would you help them?
Greg Kurzner
Oh, absolutely. We work with institutional groups, with individual investors. That’s what we do. The ERA site is our brokerage company, the Property Pro Services. I’m a licensed general contractor, so we do the renovation remodeling for our properties and then Resideum is our fix and flip fund. So we’ve kind of vertically integrated all of that. And we would consider ourselves maybe no one else would, but we would consider ourselves to be literal experts with regard to investing in residential real estate from the residential, the renovation side, as well as the brokerage and the acquisition side.
Cleve Gaddis
Wonderful. We’ve got about three minutes left in the segment, and I’d like to turn our attention to the different ways someone might be able to invest smartly in real estate. And then if you had just one or two, maybe rookie mistakes or gotchas, things that you learned the hard way, my friend, that you might, might help other people learn to avoid. Let’s talk about those.
Greg Kurzner
Yeah. So the one thing about real estate that’s different than stocks and bonds is that it’s active, meaning that you do have to have some involvement in it. And the other thing is, is that it does have a fairly high barrier of entry. You can’t just buy a piece of real estate for two or three thousand dollars.
Cleve Gaddis
That’s correct.
Greg Kurzner
So those are the two challenges that people have to face, that they’re going to have to have some capital to invest and they are going to have to have active involvement in it.
So that’s a consideration when investing in real estate. But certainly the returns and the benefits, I think personally outweigh everything.
Hang on one second. My car just wants to turn itself off.
Cleve Gaddis
It’s OK.
Greg Kurzner
But, you know, there’s there’s a lot of ways to invest. One is, is that you can find a real estate broker. You can even go to groups, to websites like Roofstock and others, and they can invest in properties. You can find and do the research that way. They even have now fractional investments where, you know, if you don’t have one hundred thousand dollars to invest, but maybe five.
Cleve Gaddis
Yeah.
Greg Kurzner
You can go and buy a fractional share of a single home. So it’s not like you’re just putting in money in a REIT stock, but you you do own a fractional share of an investment. That’s kind of new thing that’s coming. And it’s interesting.
Cleve Gaddis
That’s huge. Maybe maybe we’ll have you back on and talk about that separately. We’ve got just about a minute left and this information is so great. I know if people are listening, they are just absolutely intrigued by what you’re talking about. Give us a couple of rookie mistakes in the last 60 seconds here that people might need to avoid if they are investing in real estate.
Greg Kurzner
Yeah, so the first one is don’t don’t let a don’t let money burn a hole in your pocket. You have to be judicious. You have to use a model and you have to use restraint, because when you decide you want to do this, then you want to buy something. And the biggest mistake I see people make is overpaying for or underestimating the costs of an investment. You really got to have counseling and understand to make a good decision. And that decision doesn’t happen.
They’re not everywhere. You have to really pick and choose. The other thing is they always say it’s easier to make, you know, a million dollars in real estate by starting with two million. So my attitude is, please, please, please reach out to Cleve Gaddis, reach out to other real estate professionals, other renovation professionals. Property managers are critical in rental real estate. So you must must do that. Don’t try and do those things on your own to start with and then, you know, pay the share that it costs to get that professional help.
Once you feel like you’ve got it, then you can do it on your own.
Cleve Gaddis
Greg, thank you so much for taking your time. We’re going to have you back sometime in the next few weeks. We’re going to continue this discussion because I love it. In the next segment. We want you to stay tuned. In our neighborhood spotlight, we’ve got Neely Farm in Peachtree Corners. We’re going to talk about what’s happened to home prices during the prior six recessions. The best color granite to use on your countertops today and then the states with the largest home price appreciation in 2020.
Stick with us.
We’ll be back.
