November 15, 2023

JF3359: How to Seek Advice, and Cut the Noise | Passive Investor Tips ft. Travis Watts




Passive Investor Tips is a weekly series hosted by full-time passive investor and Best Ever Show host, Travis Watts. In each bite-sized episode, Travis breaks down passive investor topics, simplifying the philosophy and mindset while providing tactical, valuable information on how to be a passive investor.

In this installment of Passive Investor Tips, Travis Watts discusses three strategies to gain a broader perspective in real estate investment. He focuses on foundational aspects beneficial to both beginners and experienced investors, emphasizing principles and life lessons vital in the field of real estate.

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Quick disclaimer, the views and opinions expressed in this podcast are provided for informational purposes only and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to

Travis Watts:
If these individuals haven't actually executed on what it is you want to achieve, and they haven't been successful in doing that, then seeking this type of advice can actually set you back.

Welcome to the best ever show, the world's longest running daily commercial real estate podcast. Our hosts interview commercial real estate experts every day to get you the best advice ever with none of the fluffy stuff.

Travis Watts:
Welcome back best ever listeners to another episode of passive investor tips. I'm your host, Travis Watts. In today's episode, what we're talking about is how to seek advice and cut the noise.

Disclaimers, as always, never financial advice, not telling you or anyone else what to do with your money. Please seek licensed financial advice.

With that top of mind, let's go ahead and get started. So a lot of investors, myself included, especially early on, are in the pursuit of obtaining knowledge and advice to become the best investor that they can be. And in today's episode, what I wanna share with you are three things that have helped me tremendously in seeing the bigger picture and helping build a solid foundation for investing.

Starting with number one, tune out the noise. Listen to almost nobody and tune into almost nothing that you see in terms of the mass media and the headlines. Now listen, I know that sounds counterintuitive, but let me explain. You don't just wanna take advice from anyone or everyone. Okay, it's common for a lot of people to want to go to their spouse or their parents or friends or colleagues to seek advice because that's most comfortable you already know and trust these individuals The problem is if these individuals haven't actually executed on what it is you want to achieve and they haven't been successful in doing that then seeking this type of advice can actually set you back.

So a couple quick examples...I remember in 2009 when I was looking to become a homeowner. I asked my friends and family, do you think I should buy a home right now?

The overwhelming majority said, no, absolutely not. The market's in shambles. We're losing money in our home. It's a terrible investment. Just rent. Well, I went against the grain. I decided to become a homeowner. I bought a house in 2009. I got a roommate. I got a government credit for being a first time home buyer. I bought it at about a 40% discount. And I gotta say, truthfully, that was probably one of the best investments and best things I could have done for myself at that moment in time.

But if I had looked out to the mass media and asked people around me, should I do it? The answer would have been clearly no. Another quick example, when I was 17 or 18, I went to my grandfather. All I knew about my grandfather was he had nice cars, big house with my grandma, and he was in the stock market. And I said, how do I become a successful investor? And he told me, a Roth IRA. That's your ticket to freedom, a Roth IRA.

And if I had taken that advice to heart, opened one up when I was 18, maxed it out, whatever, and you know, didn't hit the phase out limits later in life, I wouldn't have had financial freedom until at least age 59 and a half or else I would be penalized.

So just to be clear on this, the advice was not good or bad. No one had ill intentions of me becoming successful. They were telling me their best advice. But what I failed to do is to really look at my own goals and objectives and what I wanted to achieve. And if I were to had broken that down, it was really about building diversified passive income streams so that I could achieve early retirement and life.

So again, a Roth wouldn't have gotten me there. Renting probably would have set me back and not opened the door to all the possibilities in real estate.

And that brings me to number two, which is surveys and case studies. If you don't want to seek out one or two individuals who have accomplished what it is you want to accomplish successfully and make them your mentors, you'd rather have a wide scale survey of what generally people think. Surveys and this type of data can be excellent sources of information, okay, but you wanna make sure that there's hundreds if not thousands of people being surveyed so that you can get an unbiased and clear indication. And in those kinds of numbers, the answer will shine through.

And I'll give you a couple of quick examples. Years ago, I read a millionaire survey. I think it was conducted by the Dave Ramsey team, teaching people financial independence, get out of debt and how to become a millionaire. And they surveyed over 10,000 millionaires living in the United States. And they asked them all kinds of questions and they looked at all kinds of data points.

And I got to tell you, I learned a lot from it. I got a lot more clear on my strategy and what I was gonna do to move forward. And it was very invaluable because they surveyed 10,000 people who were millionaire status living in the country that I live in. So I could just mimic a lot of this stuff.

Another example is when I started to look into multifamily apartments and shift gears from single family homes. I wanted to be sure that was truly an asset class that I believed in wholeheartedly. So I found a survey conducted by Harvard University about how multifamily apartments performed in the Great Recession, 2008 to 2010. It's probably 70 pages in length, so much data. By the time I was done reading that, I felt a lot better about what I was trying to do, what I was wanting to achieve, and the reasons for doing so.

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Travis Watts:
And that leads me to the third point, which is be adaptable, something that's so underrated and so critical to being an investor. We have to recognize that markets have cycles, okay? And the cycles can be independent of one another. That means while one thing is running up in price, another is falling in price, you gotta pay attention to the macro economics. Interest rates are gonna go up and down, stocks are gonna go up and down. So be prepared to pivot if needed. Even though you have a strong belief in a particular asset type, doesn't mean you should just chase it forever because times change, the economy changes and you may need to be adaptable in order to pivot.

A couple examples. In 1984, this is where interest rates were peaking and investors could literally go to the bank and put their money in a CD, a certificate of deposit and get a double digit cash flow yield, over 10% in many cases. So a lot of people flocked that direction and did just that. But two years later, by 1986, mid-year, the rates had fallen, and now these CDs were yielding about 5.6%. So nearly half of what the investor was earning just two years prior.

So imagine that was your only strategy and your only knowledge of investing is, oh, when I have money, I go to the bank and I buy a CD, that's it. Well, when yields come down, especially in more recent years before these rate hikes, CDs were yielding under 1%. So not exactly a great investment strategy. 

But for those who are adaptable, what happens when interest rates come significantly down? It usually stimulates the real estate market. So the pivot could have been and was for a lot of investors to take money from the bank now and go put it into real estate as we saw a very rapid rise over the next decade in real estate prices.

Last example, I had made a pivot in my career many years ago to work for one of the largest brokerage firms here in the U.S. and I solely made that decision because A, I had the real estate cash flow to back me up so it wasn't an income thing, it was a knowledge pursuit. I wanted to learn more than single family homes and more than just real estate. I had to know what else was out there so that I could be more unbiased and I could stack the odds in my favor.

And I got to tell you, going through that process taught me a tremendous amount. And I had a better understanding of risk. I had more options available at my disposal as an investor. And there were a few strategies that I learned about and picked up at that time that I still use today as the stock market goes in cycles.

As many of you know, I'm not a big stock investor, but I do have some in stocks through a brokerage account and it's been invaluable to have strategies that can work in an up market a down market in a sideways market. So that's just one more example of being adaptable and being able to pivot when markets change.

So with all that, I hope that was valuable. You're listening to passive investor tips and I'm your host Travis Watts. Please like share subscribe share these episodes with anyone you think could find value truly appreciate it. Helps out the podcast and the channel reach more people like you, more investors. So until the next episode, truly appreciate you being here. Have a best ever week, everyone. We'll talk to you soon.

Hi, best ever listeners, Joe Fairless here again. And one last thing before you go, would you like to receive a short weekly email with proven tips from experienced investors, free tools and resources and a roundup of the week's most relevant news and best ever content? Well, if so, join the community of nearly 15,000 commercial real estate passive and active investors who receive the Best Ever newsletter. Just go to forward slash access and you'll get the very next one. I hope you enjoyed this episode and as always, thank you for listening and have a best ever day.

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