Cash Flow vs Appreciation: How Smart Investors Actually Build Wealth

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Show Summary

In this conversation, Remington Lyman, a real estate broker and investor, shares his journey from a corporate job to becoming a successful real estate professional. He discusses the dual role of being an investor and a broker, the advantages and disadvantages of having a real estate license, and insights into the Ohio market. Remington emphasizes the importance of cash flow versus appreciation in investment strategies and explores opportunities in commercial real estate, particularly in warehouse spaces. He also highlights the significance of renovation and value addition in creating wealth through real estate.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Reafco Real Estate’s Website
    • Remington Lyman on Instagram
    • Realtor Remington on Facebook
    • Remington Lyman on Tiktok
    • Remington Lyman on Youtube
    • Remington Lyman on LinkedIn
    • Remington Lyman’s Email Address: [email protected]

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Remington Lyman (00:00)
  cash flow is not necessarily king, in my opinion. You talk to five different investors, you’re to get five different opinions. But for me personally, I’m in it for the long run. And when I sell my property in 20, 30 years for

  Dylan Silver (00:10)
  Yeah.

  Remington Lyman (00:14)
  hopefully double the value I bought it at. If I turn a $200,000 investment into $400,000, that monthly, whatever the monthly profit would have been if you divide that $200,000 divided by however many years I had, it’s gonna dwarf whatever menial cash flow you got per door in a single family in the hood that you maybe cashflowed $100 that, okay, you cashflow $100 a month, and then you gotta replace the roof.

  you know, in 10 years, or you got to do a heavy turn because you had to evict a tenant that’s going to eat away at the cash flow. And I’m more of an appreciation investor.

  Dylan Silver (02:21)
  Hey folks, welcome back to the show. Today’s guest is Remington Lyman, an Ohio based real estate broker and investor with over a hundred doors in his portfolio. He leads Reafco Real Estate, a 40 agent brokerage focused on cash flowing investment properties across Ohio. You can find him on reafcorealestate.com. That’s R-E-A-F-Co, realestate.com or across social media, including Instagram, TikTok, Facebook, and LinkedIn. You can also check out

  his channel on YouTube. Remington, thanks for taking the time today.

  Remington Lyman (02:52)
  Yeah, thanks, Tom, for having me.

  Dylan Silver (02:54)
  I typically like to start the show by asking folks how they got into real estate, but you’re involved in two sides of the business, right? You’re an investor and you’re also a broker. And I’m aspiring to be that as well. At which point did you realize that you were going to get into investing? Was that before being involved in transactional real estate or after?

  Remington Lyman (03:15)
  Yeah, great question. So when I graduated college at The Ohio State University, I got a job at JP Morgan Chase in the private bank. And I quickly realized that the nine to five job was not going to accomplish my goals for wealth building. So I tried to find different ways I wanted to build a business. And I tried various different opportunities and I landed on purchasing a duplex.

  moving into one side and renting out the other side. And we call that a house hack. And that’s how I got into real estate shortly after college in 2017.

  Dylan Silver (03:49)
  started house hacking and you mentioned working in corporate, right? Did you at that point have any idea that you would be a broker one day? Was that on the goal board?

  Remington Lyman (04:01)
  Yes. So I originally got into it, not thinking that I would be a broker, but I really liked training my friends on how to cold call. So when they realized what I was doing, finding properties off market for my investors, cold calling, and then buying deals myself, they asked if they could join me and I just organically added licenses. So

  After two years, you need two years of experience to actually get your broker’s license. So after two years, I had brought a bunch of my friends on into the brokerage and it was already a brokerage that was only owned by one guy. It was individually owned. It wasn’t Keller Williams or Remax. So after two years, he was like, Hey, why don’t you just trip, become the broker. I’ll step back. And I’ve enjoyed it ever since. So now we’re up to 40 agents. We started in 2019 and now.

  I have a little over 40 agents, so it’s been growing pretty well. And last year we had 17 people cap, so 17 people made over 88,000 in commissions.

  Dylan Silver (05:46)
  When we talk about investing and being active as an agent, there is a school of thought that it’s easier to be an investor when you’re not encumbered by a real estate license. And before I became a realtor, I was almost in that group, I would say. I was a wholesaler and I figured what’s the need for real estate license. I’d like to talk a little bit about some of the advantages and disadvantages of being an investor with a license.

  What’s been some of the pros and then of course the cons being an investor with an active license?

  Remington Lyman (06:22)
  Yeah, so I think when people say that

  it’s not the best mindset because I think when they say, ⁓ you you’re at a disadvantage. The reason why you’re at disadvantage is because you have to treat people ethically. You have to tell people the value of their homes. can’t, we call it ⁓ equity stealing. You can’t call up a grandma and be like, hey, can I buy your home for a hundred thousand dollars when it’s worth two hundred thousand? And then you turn around and you make a hundred thousand dollar assignment fee.

  That’s when you equity steal from a grandma and that’s extremely unethical. So yeah, if that’s a reason why it’s harder for you to real estate invest, I don’t think you’re a very good person to begin with and shouldn’t be in the business.

  Dylan Silver (07:00)
  Yeah, mean, hey, that’s a solid response. think there’s a lot of folks who would say that these are two separate games to play and you’ve got the investment world and then you’ve got the world of brokerage, the world of being an agent. And as a newer agent myself, when I was going to real estate school and then my first couple of months licensed, I realized that you have investors and ⁓ agents who stick with working with investors. And then you’ve got

  agents who stick with retail buyers. But really, there’s more overlap in the two than people would ordinarily be aware of. One of the things that I’ve seen recently as someone licensed in Texas, for instance, is like DSCR loans are now available for not just investors, but also for people who may be retail buyers. And I’ve been curious to see how that’s matriculated.

  In your market in Ohio, for instance, I know that there’s a lot of activity in Ohio. I’ve had many guests talk to me about the Cleveland market. Are there any specific markets that you’re active in or that your investors buy in in Ohio?

  Remington Lyman (08:05)
  Yeah, so we are based in central Ohio, think Columbus, Ohio, but we do a lot of transactions in northern Ohio. A lot of times we’ll get investors that they’re in LA or they’re in New York City and they want to invest in cheap cash flowing properties. And while Columbus, Ohio is cheap, northern Ohio is significantly cheaper than Columbus with similar rents. So we’ll actually pivot them to northern Ohio.

  and we do a lot of transactions there as well. So we also do a lot of transactions in Dayton, Ohio that’s in between Columbus and in between Cincinnati. That’s got the Air Force base out there. So there’s a lot of major cities in Ohio and fortunately we’re right in the middle. So we’re a two hour drive from pretty much every corner of Ohio. So yeah, it’s all cheaper than LA. So.

  Dylan Silver (08:57)
  Yeah, when you have people who are selling, you know, $1.6 million single family homes that in other markets might be considered, you know, just above ⁓ average, that certainly translates well to places like Ohio. I’ve heard some investors who are out there tell me that there’s more deals to be had on market that you can still find deals that pencil on market. Is that generally true in your experience? Or are all the deals on market generally?

  ⁓ going to be something that would be for an end buyer, not necessarily an investor.

  Remington Lyman (10:03)
  Yeah, I, I sometimes get clients who call me up and they’re like, Remington, only want off market deals. And I think they’re really just lazy and they’re misguided. I, every deal is a deal, whether it’s on market, off market, whether it’s your friend, family, or random person. It’s, it’s having on market deals. Doesn’t make them worse. There’s more people looking at them. So yeah, sure. Sometimes off market deals can be good deals because the general market’s not doing them.

  but I have a lot of off market deals. see a lot of off market deals that are priced above market. So I don’t think it really matters, but working with an agent like myself, like Reafco, like ⁓ you want to find an agent that’s also finding off market deals that way you have access to both worlds. When I first started real estate investing, I would go into JP Morgan. I would start my work day a little bit early. I would get in early so I could leave a little bit early and beat rush hour. And then I would

  go home and I would cold call people off of the auditor and I would call landlords and I developed off market opportunities. finding a realtor that has access to that is critical for an investor.

  Dylan Silver (11:13)
  Yeah, I when we talk about off market opportunities, I think there’s a lot of people that are are in the space. And then with the rise of wholesale, seems like anyone can get into this space. But then also, too, that that might mean that people like you mentioned might be getting a property under an assignable contract. And it’s above where would pencil at. So just because it’s off market doesn’t mean that it’s necessarily better. When you’re looking at cash flow investment opportunities, are these mostly

  One segment of real estate are these duplexes, triplexes, quadplexes, are these larger multi-unit properties, single family, is there one segment that you focus on?

  Remington Lyman (11:50)
  So me personally, on my personal portfolio, when I first started off, I didn’t really care about cash flow. I would purchase house access. So I was mostly just putting low down payments. I was buying in very good neighborhoods. And so a lot of times if you were a traditional investor, they wouldn’t really cash flow. And most of they didn’t cash flow for me because I was taking on so much debt. I was getting 95 to 97 % loan to value. So pretty much the bank was financing the entire property.

  When I got laid off of my job and went full-time into real estate, I started focusing a little bit more on cash flow. I still wanted appreciation. And, you know, over the years, I’ve kind of realized that

  cash flow is not necessarily king, in my opinion. You talk to five different investors, you’re to get five different opinions. But for me personally, I’m in it for the long run. And when I sell my property in 20, 30 years for

  Dylan Silver (12:41)
  Yeah.

  Remington Lyman (12:46)
  hopefully double the value I bought it at. If I turn a $200,000 investment into $400,000, that monthly, whatever the monthly profit would have been if you divide that $200,000 divided by however many years I had, it’s gonna dwarf whatever menial cash flow you got per door in a single family in the hood that you maybe cashflowed $100 that, okay, you cashflow $100 a month, and then you gotta replace the roof.

  you know, in 10 years, or you got to do a heavy turn because you had to evict a tenant that’s going to eat away at the cash flow. And I’m more of an appreciation investor.

  Now I’m more into commercial real estate because I’ve got over a hundred doors in residential. I want bigger deals. I want to be able to purchase, you know, a million or higher deals. I’m focusing on warehouse, retail, office, ⁓ mixed use buildings that I can purchase at a high dollar price.

  I can stabilize and then can cost segregate. So I’m in a high earning income bracket, which means I’m gonna get taxed a lot. So I want write-offs as much write-offs as possible. And if you cost segregate your properties, you can bonus depreciate and you can take more of a write-off in year one instead of depreciating over 28 years. You see a lot of doctors do that strategy as well.

  Dylan Silver (14:01)
  Yeah, I I spoke just today with with a tax strategist who specializes in 100 % bonus appreciation for his clients. When we’re talking about the commercial space, you mentioned, you know, warehouse, for instance, right now, you know, because of the rise of, you know, online purchasing, there’s really a huge need for warehouse space. And it’s not just online purchasing, there’s a litany of businesses. ⁓ Shoot, I had a

  a Bitcoin mining company come on the show and talk about the need for ⁓ warehouse space in that segment of real estate. When you’re looking at acquiring warehouses specifically, are these typically older warehouses? Is there some level of distress in them or is the seller at some point just saying, hey, it’s time for me to sell?

  Remington Lyman (15:32)
  Yeah, when I purchase, typically try to find properties that need a lot of renovation. I do all the renovations with my own crews. I do all the management myself. So I have a competitive advantage over an out-of-state investor that needs more of a turnkey property or needs to rely on a general contractor. So I try to leverage that competitive advantage and purchase properties that need a lot of renovations. Also in five years,

  When my five one arm, is what I typically get on a commercial loan is up, I can typically refinance it and pull a of money out because I have stabilized it. I’ve increased the rents, et cetera.

  Dylan Silver (16:09)
  Now, when we talk about increasing rents in something like the warehouse space, is this a matter of finding ⁓ higher quality tenants? Is this a matter of annual rent increases? And then also, too, what can you really do to value add on a warehouse?

  Remington Lyman (16:27)
  Yeah. I mean, I try to buy, again, I try to buy things that, ⁓ try not to swear on this podcast. I try to buy things that are in disrepair. So the last property I bought, it was a warehouse for maybe $700,000. I put half a million into it. I did a complete renovation, put fire suppression in there, gutted it, painted it. I mean, it’s 24,000 square foot warehouse. So just painting, costs a lot of money. I put all new roofs in there, flat roofs.

  Dylan Silver (16:52)
  Right.

  Remington Lyman (16:54)
  So I mean, you can spend a lot of money pretty quickly. And then yeah, you get a triple net lease tenant. That way you don’t have to pay any property taxes, any maintenance, et cetera. And I signed a 10 year lease on it. So two five, two five year terms. ⁓ And so yeah, I mean, you just find a pretty, a property that in a lot of disrepair, if you have a good crew and can stabilize the property well, ⁓ you can add a lot of value.

  And that’s how you create wealth. And furthermore, you can get commercial banks to fund the renovation costs. And I’m not talking hard money, like 12 % interest, six month loan, like legit commercial local banks. Typically I’ll focus on like a local regional bank to get a good construction loan. And if you get into government financing, you can get into HUD financing and you got experience. Typically you have to partner with a non-for-profit to get the experience.

  first time around, but there’s crazy terms that the government will back. Like I’m talking 40 year amortization, three or more year interest only payments, construction costs, non-guarantee. So not, sorry, non-recourse, but yeah, people got to start off somewhere, right? So a lot of, most of my clients start off with one to four unit rental properties and then.

  I’ve been doing it for nine years. Once they get to year five, six, seven, they can start to tap into more of these strategies I’m talking about.

  Dylan Silver (18:22)
  Now we are coming up on time here. Where can folks go if they’re interested in reaching out to you or your team or any new projects that you guys are working on?

  Remington Lyman (18:31)
  Yeah, I’m on LinkedIn, Facebook, TikTok, and Instagram. So most of my handles are realtor underscore Remington. ⁓ Email me at remington at reafco.com and I can drop my contact information in the link. But yeah, I appreciate the opportunity Dylan.

  Dylan Silver (18:51)
  Remington, thanks for your time today. Thanks for coming on.