{"version":1,"type":"rich","provider_name":"Libsyn","provider_url":"https:\/\/www.libsyn.com","height":90,"width":600,"title":"531: How to Identify a Good Real Estate Deal","description":"I grew up with a very different perspective on personal finance and investing than most. My parents were immigrants, and when they arrived in this country, they didn\u2019t come with any preconceived notions of conventional financial wisdom. My father grew up dirt poor in India\u2014that\u2019s really poor and he had never even heard of investing as a kid. But he was blessed with a tremendous intellect and used it to rise from nothing to truly live the American dream. He came to the U.S. in the 1960s on an engineering scholarship and started working as a bridge engineer in Minnesota. When he finally began making a little money, he was confronted with the idea of investing for the first time.  Until then, life had always been hand-to-mouth. So he was approaching investing like an alien coming to this planet for the first time with an unbiased view on anything financial. With that perspective, the stock market didn\u2019t make sense to him. He wanted cash flow that would immediately improve his quality of life. Intuitively, it felt smarter to buy \u201cstreams of cash\u201d than to \u201cgamble\u201d on stocks. So with whatever money he could scrape together, he bought small rental properties. Nothing glamorous\u2014mostly low-income houses and duplexes in Minneapolis. But guess what? It worked. Before long, he started making real money and quit engineering altogether. The apple didn\u2019t fall far from the tree, I guess. Years later, I would also walk away from my career as a doctor to become a full-time investor. My father did really well. By the 1980s, he was having million-dollar years\u2014that\u2019s a lot now, but back then it was a lot more! But then came the \u201990s. Like many others in the dot-com era, he got in over his skis. It seemed like everyone was making easy money in the stock market, and he got greedy.  Unfortunately, he sold a large chunk of his real estate portfolio and went all in on tech. And of course, we all know how that story ended\u2014the bubble burst and so did his brokerage account. So there he was, in his 50s, starting over again after being obliterated by the dotcom bubble. He was terrified. But he knew what he had to do. He had to rebuild the same way he had built wealth the first time: cash-flowing real estate. Today, in his 80s, he\u2019s still at it. To be clear, his real estate career wasn\u2019t all smooth sailing either. This isn\u2019t a fairy tale. It\u2019s real life. For example, in the late \u201990s, Alan Greenspan suddenly cranked up interest rates, creating a situation not unlike what investors faced post-COVID when the Fed raised rates at record speed.  That hurt him, but each setback brought lessons, and he kept moving forward with an asset class that he trusted. Eventually, he recovered. We were always comfortable, and my dad made enough to pay for 3 kids' college tuition and medical school for me while still living comfortably, traveling, and enjoying his life. He\u2019ll be the first one to tell you that he only ever made money in real estate and that\u2019s what he believes in. Now, why am I telling you all this? I\u2019m telling you this story because it shaped the way I see investing. Unlike most, I grew up hearing that the stock market was risky and that real estate was the safer, smarter path\u2014pretty much the opposite of what everyone around me grew up with. And despite my own challenges from the post-COVID rate hikes, I can still say without hesitation that focusing on real estate has served me better than following the traditional investing playbook. Still, no one wins all the time. Every investor loses money sometimes. Surgeons have a saying: \u201cIf you haven\u2019t had a complication, you haven\u2019t done enough surgery.\u201d That\u2019s as true for the best surgeons in the world as it is for the best investors. So what do you do? Sitting on cash guarantees you\u2019ll lose purchasing power to inflation. Money markets barely keep up. For me, the answer is to keep investing with discipline. Real estate is my medium, and like my father, I learn from my mistakes and keep moving forward.  I still see it as the greatest wealth-building asset in the world\u2014just look at how many billionaire real estate investors there are. But wealth doesn\u2019t build blindly. Every project I invest in has to have underwriting I believe in. Beyond that, I pay close attention to macroeconomic shifts and form my own view on what comes next. Right now, I believe in the right markets, real estate has bottomed out. I think we\u2019re on the buyer\u2019s side of the cycle.  I also believe interest rates are headed lower\u2014both because the Fed has signaled it and because the Trump administration will do everything possible to keep them moving in that direction. And for real estate investors, investing in a descending interest rate environment is nothing short of a gift. So now I look at the deals in the right market. That involves underwriting and understanding what all those numbers mean. In this week\u2019s episode of Wealth Formula Podcast, my guest and I break down how you\u2014even as a passive investor\u2014can do your own due diligence. ","author_name":"Wealth Formula Podcast","author_url":"http:\/\/www.wealthformula.com\/","html":"