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Long-Term Buy-and-Hold Strategies

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Jonathan Cook: On today's episode of The Investing Revolution, we're going to talk about the long term buy and hold strategy. We're going to talk about who actually needs to be purchasing these type of investments where you can get them, and how that strategy can be your nest egg for the future and the perfect way for you to retire. This is the Investing Revolution, a podcast designed to help your real estate investment strategy. On this podcast, we'll teach you the actionable steps to take and pitfalls to avoid so that your real estate investing can thrive. Welcome to the investing revolution. I am Jonathan Cook, your host, and with me is my co-host, Christine Bennett. Hi. And we have a special guest in the studio today. Christina, how are you? I am.                                                                                     

Christine Bennett: Great. How's everybody doing? Thank you, guys for having me.

Jonathan Cook: Oh, we are so excited to have you here. This is super fun. We've had it. We've had a good day. It's been fun. Absolutely. We've been having a ball last night. We went and like had some nice dinner, had crying. Oh, my gosh. So we have brought our guest in here today to specifically talk about a investment strategy that, you know, really, really well. That's the long term buy and hold strategy, which I think we all know that's that's kind of most people's default strategy. If you don't have one, a lot of the time you fall into it long term, buy and hold. Sounds good. But let's I want to talk about what an ideal version of that is, how to intentionally find one. Because I think, Christine, I think we want to talk about a lot of people accidentally end up there and I want to talk about who really like thrives in that kind of investment because it's not for everybody. It's not I think a lot of people default to that on accident. But but I want to get into how to do it. How to do it right, where to do it. Does that does that make sense to you?

Cristina Porretto: Sounds good to me.

Jonathan Cook: Do you want to kind of take over how people accidentally end up there? Because I know we see it a ton.

Cristina Porretto: Sure. That's so you know, from when I started my career and I transitioned to property management, that was pretty much the majority of my clients were accidental landlords. I dealt with investors and I, you know, I felt like I was more connected to them because it was very, very numbers driven. But getting in front of an accidental landlord and having a conversation with them and doing an investment analysis for them, or take it a step further in our company, we will do a proforma for them. They don't realize a lot of times what they have. They don't realize, Oh, I have this percent cap rate. I had no idea. Oh, okay. Well, my cash flow number is actually really good. And I'm like, yeah, it is. Even though I had this maintenance expense. Yeah. And then you break down. Oh, okay. Well, this was my maintenance cost over the last two years and they realized, wow, that's a very small percentage of what I actually made on an annual basis. And and that's why I really, I think long term buy and hold is obviously not a new concept, but it is a very stable, lower risk investment strategy. And it also kind of it could go through any classification of property a lot of times. So that's why it's always been one of my favorite things in our industry.

Jonathan Cook: I think the strategy, the way that it it works and I want to dive into why it works. What are the benefits of this? And like it seems like a pretty vague term, but like let's actually talk about what it is like. It's not just buying a house and waiting. I mean, oddly enough, that's almost actually is I mean, that's I mean, it's not just that, but like that is like that is the easy concept of what this strategy is, right? You buy something that is. In a market that you believe in. And I think that's what makes this strategy seem less aggressive. It is what makes it less risky, but it also makes it easier for people that are a little bit more risk averse to like adopt this and say, you know what? This is an area that not only do I think it's a safe place to put my money, but like I believe in this market specifically because I think that's the underlying like driver for a real long term buy and hold strategy is you've recognized that this is a market that not only has a good strong appreciation because that's the end goal in a long term buy and hold strategy. It is the appreciation.

Jonathan Cook: The cash flow is not top of mind. The the you know, the actual cap rate is not top of mind for this. The reason that you bought this specific property is because I believe that this area is an area that is going to continue to improve in one way or another, whether that's economic drivers, whether that is a an influx of I.T. or different careers or oh, Google opened up here or whatever it might be. Right. It's something that is you know, I feel like in ten or 15 years, this property is probably going to do really well. I think this market is going to continue going up. There's more people moving to it. And I think that's what kind of in outlying terms, that's what people are looking for when they are after one of these properties. Is that what your experience typically is with that? Christina Is that what you hear from an investor that's like, look, I'm not a I'm not a risky guy, but like, I think Orlando is a cool place that's probably going to get better. Maybe I want to do this. Is that what you is that kind of the reading between the lines, what that seems like?

Christine Bennett: Yes, absolutely. So I am contacted by multiple investors and what they're willing to to do really depends on their goals long term. And so identifying their goals and then being able to guide them in the direction that is needed for them to accomplish those goals. So a lot of times we want not only I mean, everybody knows real estate is hyper localized, but having a market expert that can really identify what areas are becoming where appreciation is a little bit stronger than other areas, and then where the market rent has really exploded and has in metro Orlando and the surrounding areas. So on top of being able to do that, something else that I'm able to do because of my background in multifamily and property management is that we really drill down numbers on a granular level. So we understand the tax rate, we understand HOA dues, we understand if there's very specific HOA rules in terms of tenant occupied units within the community. We understand what vacancy rates look like, we understand maintenance and some people are very scared about maintenance. And what's the biggest ROI in terms of a property that you may have to put a little bit into it. So it's really establishing the trust, understanding that every property is different. And when you identify a property, you drill down the numbers based on that specific property and then identifying areas within your market that really have that are really have the longevity in terms of growth. And there's just a lot of exciting areas in Orlando. So I help identify those areas and then work with my investors to drill down the numbers. And then we feel confident placing an offer on a property in this really crazy market right now. So it can be done.

Jonathan Cook: And I think what you just said is a super interesting point about at least in in terms of this strategy. I think everybody's starved right now for inventory. Right. And and a lot of the investors that I've been working with for the past ten years, really, there was that cash flow model. The buyer model, it's super popular. Don't get me wrong. It's popular for a very specific reason. It is popular because I need to generate income, basically. Right. So that's not what the ideal ideal investor that's got a buy and hold long term kind of strategy is looking at there's different types of benefits. Yeah, the income might not be great, but like Christine, you want to talk about like some of the additional benefits other than just a maximized monthly cash flow looks like.

Cristina Porretto: So I think that's one of the reasons that the central Florida market has so many long term buying holds is because people didn't really go after it as OC. I want to I want to buy and hold it. They, they did it because OC I might move here one day. You know we it's the land of Mickey Mouse and I might move here or my kids are in college here and we just see that so often in that market. But the weird thing about our or that market is that we see it happen. Over and over again. So you look at like even 2007, 2009, 2010, it still was happening. It was you know, people were really focused on our market for that reason.

Jonathan Cook: Yeah. You know, the thing about what you were saying about people wanting to buy something and then maybe move back into it later because, you know, this is a cool place. This is a land of Mickey Mouse, right? Like what you said. That's like, yeah, I get that. That's like that's one of the reverse benefits of a buy and hold strategy. It's like, yeah, I'm not, I don't need this income, but it's a great tax shelter for these next ten, 15 years. Well, I'm I'm working and I'm making my income here and on Wall Street or whatever it might be. Right? Like, it's fine. I don't need this additional income, but it is a really nice, comfy place that I might want to retire to. And then if you buy it early and let it pay itself down, pay its principle down over that time of I've owned it for a long time. Then once you move down into it, maybe your principal is paid down super, super low.

Cristina Porretto: Oh yeah. And and the appreciation rates.

Jonathan Cook: For finance the difference out after ten years the difference in what that could be could be huge, right?

Christine Bennett: Yeah. Appreciation rates have skyrocketed in central Florida. So we're looking on average about over 25 to 30% in the central Florida area in the past 12 months. And then the market rents have exploded as well. So market rents are about 25% compared to where we were 12 months ago. And it's incredible. So, I mean, this past summer, you know, in central Florida, we're like, wow, this is a really hot market. How long can this last? And so what we're seeing and what's trending is that the appreciation rate is keep. It's just growing and growing. And I think the reason behind that is because central Florida, compared to other metro areas, has just been so undervalued and it's super affordable compared to most metro areas, especially with what we have to offer. Right. So not only is there major industry there, there's also obviously Disney World and there's just a tremendous amount of growth. And we're comprised of comprised of about five counties which extend all the way getting closer to the West Coast. And then you have East Coast, too. So we're close to beaches. There's just a lot going on and we're still reasonably priced compared to a Denver Northeast, even West Coast. So it's exciting to be able to help people do that.

Jonathan Cook: Yeah, that makes a ton of sense because it's not just when I know being from the South. I mean, I grew up in Alabama, Birmingham, Alabama. So when I think of Florida, my brain thinks of the Gulf Coast. Sure. Where I grew up going down to all the time. And and my my parents own some investment properties down there and it's rental, but it's all that VRBO type of stuff. It's all that Airbnb type of stuff, which we know has been really popular since that kind of kicked off since those became available. I recognize that that's a popular strategy, but I don't think of Florida. I don't I guess I did not ever really think of that whole central Florida part where it's not just a beach community. Come on now. We've got industry. We've got stuff other than just tourism.

Christine Bennett: Right. Thinks of Orlando as a vacation destination. Right. So obviously it's appealing in terms of the short term market. But what's interesting is that we are in terms of.

Cristina Porretto: Growth.

Christine Bennett: And industry and development, we're just continuing and it's almost like exponential, right? Things are just exploding there. So with that and then market runs being so strong, even in this crazy limited inventory market where people are placing offers over asking, there's just a lot of interesting ways to make sure that you can maximize your profit and still have a relatively good cash flow. It's not huge. You know, we're not talking about 8%, 9% cap rates and still really be able to get your get into investing in a market that's still reasonable, even though the market is crazy. And I think Orlando is definitely one of those places.

Jonathan Cook: Can we talk for a second about over asking price offers? Sure. Because I think like.

Cristina Porretto: Well, especially as it relates to buy and hold.

Jonathan Cook: Yes, right. That's exactly what I mean.

Cristina Porretto: What the reasons why we would do that in certain markets. And I think Christina can speak to that because she's she's literally boots on the ground, you know, competing with 20, 30 offers and.

Christine Bennett: Yeah, it's crazy.

Jonathan Cook: Yeah. So let's talk about why. You can still make an offer over asking price on a long term buy and hold because that strategy is not about timing the market. It's the Warren Buffett quote, it's time in the market. Right. Hey, you know what? If I'm if I'm not looking to liquidate this or if I'm not needing the cash flow and so my mortgage numbers are going to be off and I don't have to spread this down to I need these 15 extra cents or whatever the math is saying. So like your cap rate doesn't even really change that much if you're making a 10,000 over asking price offer. I mean, it might affect a little bit, but we're not looking at a 17% cap rate like some of these cash flow properties are. It's it's a little bit more digestible to say it's worth it, right.

Christine Bennett: I mean, when you're thinking long term versus short term, you know, in a market that, in my opinion, is still not necessarily undervalued but kind of ramping up to to catch other metro areas, there's still such a it's still such a place to invest and ultimately get a deal, if you will, if you're looking long term. So, for example, if there's 30 offers, 20 offers, obviously, you want to identify the pain points for the seller. So you're able to strategize, be strategic about your offer. And I would never, ever, ever recommend waiving any kind of appraisal contingencies or anything like that. But you can be really strategic how you structure your offer in the event that you are paying 10,000 over asking or over appraised value, which I think is the more important term to really understand the.

Jonathan Cook: Gap difference.

Christine Bennett: Right? Correct. Yeah. So unless you're paying cash, the lender is going to order an appraisal, right? And so the appraised value is what matters. And so if you guarantee that you're going to pay X amount, you can already factor that into your numbers. Right? So we're willing to pay 10,000 over the appraised value and we can factor that into our numbers and we cap it at that point. So there's ways to be very strategic in terms of the way that you create your offer, that you're really not bleeding. But at the same time, because there are multiple offers and Orlando is such a popular place to invest right now, there's ways to do it that still make sense in terms of investment standpoint.

Jonathan Cook: Yeah, and I think one of the beauty, one of the beautiful aspects of this strategy is we're talking we're not talking about risky markets like we're not talking about a risky area that like, oh, man, I don't know if this is going to do it right. I hope it doesn't, because the point is not. The point is just different. Like the whole concept of this. This strategy really works with a nice area that you believe in. I mean, that's the thing, right? And so you have other benefits than just cash flow and appreciation, like the tax shelter aspect of this. And we kind of blew past it. But I really want to dive down into like if you have an investment that you are planning to keep for 15 or 20 years, your principal reduction is going to be good, whatever. If your mortgage is 30 years and you plan to actually hold this property for the full 30 years of this mortgage, like let's talk about the tax benefits. Can we talk about depreciation a little bit? Christine, you want to talk about depreciation and how that can break down for an investor that's really doing the strategy well.

Cristina Porretto: So I think the most important thing is to know that it's there and then knowing that whether you, however you stumbled upon this property or you intentionally purchased it, knowing that you have the opportunity to take some depreciation during that period of time and sitting down and making sure that you have a plan for the next three years, five years, ten years, 15 years, just knowing that this is what we're going to do with it and knowing how to allocate the funds because you're going to take some deductions like, hey, you know, I'm, I'm probably going to do an AC in year two, right? Or I'm going to do it right now because I can take this tax deduction immediately and just planning.

Christine Bennett: Yeah. Speaking to Christine's point is that the smaller profit margins buy and hold the tax benefits really offset that. And so it's another way to kind of play into the long term strategy, just knowing that the tax benefits really do offset some of the smaller cap rates. And you're like, hey, listen, there are so many write offs. This is wonderful, right? So that's just another another point to investing, especially in this particular market and buy and holds in general.

Jonathan Cook: And and I think that is a really good measuring stick for who should be buying these properties. Right. Like if if I make 35,000 a year and I really realize that like real estate investing is a good way to earn me some money is like, is this my ideal strategy? Of course it is not. We talk about and we have talked about trying to set up what your strategy is. And I know that there are investors out there going, well, I don't know which which strategy I should take. Right. I don't know is cash flow. What I need is is monthly income a thing that I need extra of? Guess what, if you make tons of monthly income, if you're the opposite of this 35,000 a month person, if you're making hundreds of thousands of dollars a year with your if you're a doctor or a lawyer or you work in an I.T and you're building, you know, software over on the West Coast, you've got tons of income. Sure. Well, you need a shelter for that income, first of all. And buying a cash flowing property actually is going to hurt you in some capacity because guess what? Now you have more income that you need to shelter from the taxes. So who needs to buy this property? It's the guy that's sitting there trying to think of what strategy he wants to have.

Jonathan Cook: Like, you know, it all sounds good. I want to grow my money. Well, growing your money in a year, if you already have a ton of money, it's not a great thing for your income taxes. But if you can shelter that income in a property that you can kind of set one of these and forget about it. Right. You look, I'm going to buy in Orlando or I'm going to buy in Atlanta. I'm going to buy in these areas that like, there's it's it's this is an area that is only going to get better because there's plenty of economic drivers, there's plenty of industry. Like we're not concerned about a major swing. It's not on the edge of a C class, maybe going to jump to a B. I'm not worried about it gentrifying. I'm not worried about that. I'm not hedging my bets on. Oh, I hope this does. Well, this is like, look, we already know that's that's fine. Good school system, good this, good that. All the things. I just need to not pay 50% of my income in taxes. How do I do that? Put it here.

Cristina Porretto: So I know that I keep rolling this back in to people who stumble on these properties. And I think it's important, especially in our central Florida market, you brought up short term earlier. We find we've had a lot of changes that have happened in our central Florida market. The regulatory environment has changed. And we have people who. Who originally purchased the property with the intention of having a super cash flowing short term rental property. And now they're like, Oh my gosh, they're in a panic. I have to sell it. This is no longer what I need to do with it. And you sit down and have a conversation with them and say, okay, you could sell it and eat the cap gains. However, here's the other alternative Let's take this property that you can't now do a short term rental on. And let's let's change this. And we see that all the time in our market.

Christine Bennett: Yeah, you have to pivot, especially with the pandemic that happened because the short term market, you know, rentals were kind of like they just stopped, you know, it was just a really. Pump the brakes. Stop.

Jonathan Cook: It was abrupt.

Christine Bennett: Yeah, it was abrupt. But what that helped people do is kind of understand and navigate how to pivot right. And so the way to pivot, especially with just what Christine was saying, is that the rules have gotten so strict in terms of short term rentals. There are some counties that don't even allow it. Right. So you have to know and work with an agent, a property management company that can navigate you in the right way. I am sure we have all worked with clients because I do have a background in property management, new business development where they're like, Hey, I bought this property. I was going to do X, X, Y, Z with it, but my agent or this person, they led me in this direction and now I'm here and we have to put out a lot of fires because of that, you know, and that's probably one of the most challenging parts of property management, in my opinion, is pivoting from what their expectation was initially to what the reality of the situation is. And so there's just I mean, if you can avoid that in general as best but there's, you know, there's a lot of interesting ways that you can go from short term and then go to long term and have it make sense.

Cristina Porretto: Yeah. And a lot of times people are they don't realize what they have. So we talked about the tax shelter. We talked about the appreciation. We talked about, you know, the risk level in something like that is or should be could be the set it and forget it, you know, and perhaps they're disappointed initially, but when they realize, okay, well this isn't my cashflow strategy property, this is my long term buy and hold. Here are the advantages to that. Here are the advantages in this market to that.

Jonathan Cook: So I think that's I mean, I know that I've had that conversation with clients because they were disappointed in something or I mean, that's one thing. But I think in the past two years or so, we've probably all experienced that. That investor that was like, Well, I bought this as a long term buy and hold, but man, you know, the appreciation has been crazy and everybody's selling so fast. Like, Should I go ahead and sell this? Is that actually my best decision? And I'm like, What are you going to do with that capital gains that you just got? Didn't you originally buy this as a tax shelter? Right. And I know it sounds sexy when you see that you've appreciated 100%.

Christine Bennett: Yeah. You can take out.

Jonathan Cook: Oh, my.

Christine Bennett: God. I mean, you can make 50 grand, if not more, in one year. That's very tempting. Oh, easily. Yeah, very, very tempting.

Jonathan Cook: And I get the temptation there. But like, this is my warning for you. Long term buy and hold investors. It's like you've made a lot of appreciation. Congratulations. That's wonderful. If you sell it today, yeah, you're probably going to make a mint. What do you do with it? Now, the purpose of this type of investment is to retire on. Right? Are you ready to retire? Are you done right? Is this enough money for you to be done with or are you about to get yourself into a situation where now my strategy has to change even again? Now this is not going to you're going to lose a lot of that capital gains in taxes. That's a real worry.

Cristina Porretto: So I think I think we would all kind of agree the long term buy and hold strategy is tried and proven. And it's one of those long term wealth building tools.

Jonathan Cook: So long is long term. How about that?

Cristina Porretto: Well, and that's a subjective question. That's where you have to know what the plan is. And you want to connect yourself with a good agent, you know, good management company, etc.. The the issue that I think is.

Christine Bennett: Well, what's difficult right now is that people want to identify, you know, appreciation at 25% is not going to continue forever. Right. Of course, people want to understand, hey, listen, you know what I mean? What's going to happen in ten years and five years and three years? I think, you know, buy and hold. I think we're some investors get ahead of themselves is that they get nervous of what the what's going to happen in three years. Right. If there's been so much appreciation and then it dips. Oh, my God, you know, what am I going to do? But if your position is buying and holding, you know, the models have shown long term over at least ten to maybe 15 years. That's a proven strategy to build wealth. And so we can't panic. Like if you see, oh my gosh, I can sell right now and make 75 grand. And then in three years, maybe you can't not we can't dictate the market. The market is the way the market is right now. So it may make some people nervous to invest right now, but long term, it's a proven model to build wealth.

Cristina Porretto: Here's the other part that I kind of lost my brain fart. Pardon? Not so with long term buy and hold, there's a very big difference between cashing out and taking this lump sum of equity, eating the cap gains versus net worth, right? So $1.2 million is a lot different than 15 properties. I mean, you're really building wealth over a longer period of time.

Jonathan Cook: Well.

Christine Bennett: Yes, actually leverage that money.

Cristina Porretto: Yes, exactly.

Jonathan Cook: Okay. Yes, that's what we're talking about here. This is one of the benefits of the long term buy and hold strategy is don't get rid of it. Oh, my God. Don't ever get rid of it. Don't leverage it. Right. Leverage the whole difference that you have into it. If you decide that now you need cash flow.

Christine Bennett: Can I make a point? Yes, but cash out refi interest rate is way better than than taxes.

Jonathan Cook: Yeah, yeah.

Cristina Porretto: Yes, yes.

Christine Bennett: You know, you can leverage that money, do a cash out refi. I'm not a mortgage expert. I'm not saying that I am, but it's just a very smart strategy. And a lot of investors that I've work with use that strategy to leverage and to then grow their portfolio.

Jonathan Cook: So and I think a lot of people have adopted like this 1031 exchange model of it as well. And that's a good idea for tax shelters if the market wasn't continuing to also be more expensive. So great, you took out your 1031 exchange. Fantastic. Where are you going to go? Put it right. Right now. That's not honestly doable in a lot of cases. Like you can't take the same even with the gains and everything, you can't go plop it back in a new version of this because prices are skyrocketing. And what you're saying is I to go about everybody being worried like, oh, everything's climbing up. It's 2007 again, right? It's going to crash. Right. There is a major difference between what I think the worry there comes from a lack of understanding why 2008, 2009 happened because it wasn't just that prices got high. It was predatory. Lending was a major issue there. There aren't that many.

Christine Bennett: You know.

Jonathan Cook: Seven year arms anymore, balloon.

Christine Bennett: Payment. There was a collapse.

Jonathan Cook: It was absolutely there was a collapse because people now have to pay what they had borrowed. Oh, no.

Cristina Porretto: And couldn't have afforded to begin with. I mean, that's the elephant in the room. And they were.

Christine Bennett: So upside down.

Cristina Porretto: Yes. Then see, that's the thing. In general, long term, buy and hold real estate is generally aside from 2008, it's generally less volatile. I mean, that's the beauty of the long term buy and hold is that banks are willing to leverage these properties because it's it's a lot less risky than stock market or a business idea or something like that.

Christine Bennett: Interest rates are still so reasonable compared to what they have been in the past. And so I think the influx with the amount of not only just investors but people in the market looking to purchase investment properties or first time buyers or whatnot is because the interest rates have been so low. And although they're climbing up and there's different ways to get you know, there's different there's different ways I'm not going to really go into it too much to be creative with your mortgage lender where you're not paying just investment prices in terms of your interest rate. You want to speak to a professional about that, but the interest rates being so low is also offset if you do have to pay a little bit over asking, if you really look at the math in the numbers, a higher interest rate is going to be a higher mortgage payment nine out of ten times. So if you're going to pay five, 10,000 over, asking for the interest rate is really low. It does work into the ratios and the numbers and your cash flow.

Jonathan Cook: So yeah, absolutely. And kind of tying that in to everybody worrying about the crash. Sure, whatever. If that's going to happen again, which I don't think it will, it's not going to be a crash again, but we can talk about that later. Specifically, one of the things that we saw previously is there was a massive amount of inventory write. That's why that that's part of one of the things that made it crash right this minute. There is very little inventory which comes back to that's why people are offering over asking price because there is not another option for you if you've been out there trying to get these cash flowing properties because you think that that's a cool investment strategy. It is. But if you have the money to. It's by one of these long term buy and holds to buy something that's a little bit pricier because that's usually what these are going to be. You might spend a little bit more money. It changes your buying model instead of from I've got to buy this under market. I've got to I've got to skim and and make sure that I'm getting a good deal. If this strategy is what you've adopted, the buying price is less of a concern. If you are concerned in your market with I can't compete with any of these, I can't make my numbers work. Right. This type of strategy is if your market's blowing up, we'll adopt this strategy. This is the strategy that's going to actually make it through that because, hey, can can I pay more than asking price? Yeah. Does it still fit your model? Yeah. How do we make that work? This is how.

Cristina Porretto: Yeah. So I think there's another really cool element that I know all three of us are aware of it because we're in the industry. But the idea of renting versus owning has become very unique. The idea of renting and having your needs met is not going away. In fact, you know, my generation, my daughter, they may not want to own properties. It's very, very common. You know, this this idea that you can work from home, be slightly more nomadic. Live in Austin for two years, live in California for a few years, live in the Midwest. This is a real thing now. So the need for being able to be fluid and move creates an opportunity for these long term buy and hold investors because there's always going to be tenants, there's always going to be residents. And the better we improve the resident experience. That's shameless plug. That's what we want to do. But we're going to see more and more of that.

Christine Bennett: Right and understanding and predicting how things are changing, you know, not just in society, but just how nomadic, to your point, people have become now that we can all work from home. It's also created part of the inventory shortage that we see because people are like, Hey, if I don't actually have to go to an office and I can live closer to the beach or wherever, closer to my family. Plus, we have multigenerational living now, which is another interesting factor. But yeah, to your point, I completely agree that things are shifting.

Jonathan Cook: Well, as things are shifting and and people are basically what we're talking about here is people moving out of these big cities. Right? Right. People moving out of New York. People moving out in LA. True. Because they don't have to live in some 500 square foot apartment for $7,000 a month.

Christine Bennett: They don't have to commute anymore. So I live there.

Jonathan Cook: Yeah.

Christine Bennett: The appeal went away a little bit.

Jonathan Cook: So can we talk about if they're moving out of certain areas, what are they are they moving into? Can you give some insight into that, into the Orlando market? Are there are there some good little pockets right now right down there where like we're our listener can give you a call and say, hey, Christina, you talked about these cool markets. Help me find one. What are those.

Cristina Porretto: Areas?

Christine Bennett: Right. So there's a few areas. You know, Orlando or central Florida, the Orlando the greater Orlando area is comprised of five counties. So we have Lake County, Orange County, Polk County, Seminole County, Osceola and Osceola. Yeah, Osceola being very important. So we're comprised of five counties. It's huge. I mean, Central Florida is huge, but there's so much going on. So traditionally everybody thinks of the attractions, right? So of course we have that and I can build off of the attractions. There's just so much growth that's happening. Also, there's really cool industry happening. So we have Lake Nona, which has something called Medical City. Medical City is one of the most high tech places in terms of what they're offering. We have numerous children's hospital, really, really cool industry, very cutting edge industry. And so that market in particular is very expensive, right. But there's communities or towns that are adjacent to those to that particular area that I find to be very interesting. And we're finding a lot of value there and appreciation and the market rents are so high because the proximity to these really cool areas. So in addition to Lake Nona, which there's a couple of areas next to it, there's Saint Cloud, which is often our QC road. Like I'm really getting very specific, but that particular area in terms of the market rent has grown I would say probably over 25% for sure. And then on the other side there's Boggy Creek, which is close to the airport. The airport is now building something called Terminal C. It's this beautiful new terminal near Lake Nona Boggy Creek Road. And it's just exploding out there because of the proximity to Lake as well. And there's a lot of other markets too.

Cristina Porretto: There are definitely pockets. And what's interesting you brought specifically Saint Cloud. Saint Cloud used to be an absolute secondary market. Oh, for sure. And now we've seen appreciation of over 20%. Yeah, this is an opportunity for a long term buy and hold. Absolutely. It's not going away. Yeah.

Jonathan Cook: So what's driving that outside of just have prices are going up. Well what is the industry.

Christine Bennett: So the industry is so Disney decided to take a lot of the California people that work there. I don't know specifically what they do, but if I'm not mistaken, 3 to 5000 people are moving out of California to Lake Nona and the adjacent areas. So you're going to have a lot of people looking for places to rent because they don't maybe they don't want to live there forever, you know. So that's a driving force for sure. Then you have the the medical technology there and medical city, which is a super, super interesting place. So you have a lot of doctors, nurses, people that are looking for rentals. They don't want to be there forever. Maybe they're completing their residency, maybe they're doing an internship.

Jonathan Cook: And those are higher paying positions as.

Christine Bennett: Well. Anyway, the most important factor is that you want to hire a qualified tenant. And I mean, that speaks to that. You know, you want somebody who's going to pay the rent on time and take care of the properties. That's why the vetting process is so important. But when you have that kind of industry there and so many people moving to the area, it really does create a high demand for for rentals and nice rentals at that OC.

Jonathan Cook: I mean, you're seeing the same type of stuff.

Cristina Porretto: Down there and absolutely. So I think that Central Florida and I only Christine is here to talk about Central Florida, but even, you know, the Atlanta metros, these these areas for the long term buy and hold, they're just not going away. People are still attracted to the southeast. People are still coming here. And I think. Paying a little bit more for it. Maybe isn't the worst idea, you know.

Jonathan Cook: Just to get your foot in the door. Yeah. And that's I think that's a good place to kind of like advice that I want to give the investor that is buying these long term buy and holds. I think the best advice that we can give kind of wrap all this because it's so much information, it's it's so many benefits for doing that that might have swayed someone to go, Oh, yeah, you know what? I really didn't like the idea of a cash flowing product because I make I make plenty of income. I don't need a cash flowing property. So maybe this is the strategy that actually works. And if you're building your strategy, if you're if you're I want to invest in real estate, what is my goal? What is my strategy? Because a lot of times people don't know. They know that it's a good idea. They know that it's good for honestly, it's good for everybody. But what not every strategy is good for everybody. So the the piece that I want to leave to our listener here is, all right, this isn't going to fit everybody's model.

Jonathan Cook: Of course it's not. It's definitely not. But if you live in a house that you bought, that's probably a longer term buy and hold strategy. You might have one of these accidentally, even though it might not be the strategy for your next purchase. The person that needs to buy this type of investment, this is what you are. You are someone that has enough actual monthly income that, realistically speaking, you don't need anymore. Annual income is not your actual goal out of this because you're paying enough taxes at it as it is, right? Yeah. But you need a safe, reliable place to sit your income that's not going to be eaten away by taxes. And you know what? Maybe if it becomes a much bigger lump of money down the road, that's even better for you. You want this needs to be your retirement goal. That's why it's a long term project. The investment in here is you're not going to realize it in 1 to 2 to 5 to 6, seven, eight years. It's going to be 15 years or above.

Cristina Porretto: Right. This is the tangible nest egg. That's what this.

Christine Bennett: Edible. It really is.

Jonathan Cook: And I think if that is what we leave people as, when when we're trying to describe what these these different strategies are that I like and you said it earlier, it's like I want to give somebody a mental picture of what this is. Right? I want you to be able to visualize it. A nest egg, a physical actual nest egg. That's what this is.

Christine Bennett: One as.

Cristina Porretto: Well.

Jonathan Cook: It is something that you know what, I want to have a property that's worth a ton of money down on the road. If you're buying some little small cash flow in property, that's probably never going to be worth a bajillion dollars or something crazy. But this is where you go. Okay, I can visualize this. This is what it is. If you're trying to think what it is, it's this is where I'm going to sit it. This is my nest. Let's let it sit there and mature.

Christine Bennett: Got to marinate, got married.

Jonathan Cook: You know, that's this. That is this.

Christine Bennett: Yeah.

Jonathan Cook: Strategy in a nutshell.

Christine Bennett: Do you want to make sure that people understand when we say cash flow, though, doesn't mean that you're in the red all the time, but it's not you're not betting that this is going to provide you income necessarily to live off of. Right. But it's still you want you don't want to be in the red every month. Obviously, that would not make sense, although that can happen with maintenance.

Jonathan Cook: But it can make sense.

Cristina Porretto: That it can't. It can't.

Jonathan Cook: There are strategies that read every month.

Christine Bennett: But long term, if somebody else is paying your mortgage, if you're using if you're leveraging the property, paying a certain percent down, someone else is paying your mortgage. And then you have somebody else taking care of the property, a great property management company. You have a good paying tenant while the house or the home property appreciates in value. Long term is just a great strategy.

Jonathan Cook: And I think that's that's really this that's what this is. If you want to know what this is, that's it. Like, how does this strategy work? How does long term buy and hold work? What is it really? I think we've answered those questions pretty well, guys.

Cristina Porretto: I hope we simplify it. It's very attainable. I hope we made it really easy.

Jonathan Cook: Yeah, I think that that's what I want everyone to realize. This is an easy strategy to do. It is it's a good place to put it. Yeah, it absolutely is. I want to thank you so much for for being here today. I know you traveled quite a bit. So did you. But you travel here anyway, so you don't count.

Cristina Porretto: You don't see the other half of my business. 

Jonathan Cook: Yeah, yeah, yeah. But hey, thank you so much for joining us today. Thank you for being a part of this. Please like and subscribe. Hit the bell notifications. Make sure you come back and see us on the next step. So thank you.

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