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Show Summary
In this conversation, Joel Wright discusses the complexities of market cycles, emphasizing that not all markets behave the same way. He categorizes different regions based on their market behaviors, highlighting the stability of some areas compared to the volatility of others.
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Investor Fuel Show Transcript:
Joel Wright (00:00)
Yeah, some of the challenges that we’ve seen is just like buying your first investment property. It’s ⁓ getting over that fear and anxiety and distrust and uncertainty, the not knowing. ⁓ A lot of people have that, I had it.Mike and I were just talking about this the other day that when he bought his first property, he wanted to, he calls it sharing the fear. So he was afraid to buy his first property. This was like in 1979. So he called up his best friend and said, hey, we’re gonna buy a property. You’re gonna put this much money down and this is how much money I’m gonna put down and we’re gonna buy this property. And they did. And they still invest together today. And I don’t think there’s anything wrong with that.
to do it, go find somebody else that you feel comfortable with.
Kristen (02:21)
Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with Joel Wright, who is a real estate agent and an investor out of Sacramento. He helps investors secure properties in other markets. So we’re going to talk a lot about out of state investing and kind of the challenges and the ways to navigate that. So thanks for being here, Joel.Joel Wright (02:38)
Absolutely, thanks for having me on.Kristen (02:40)
So you have such a really, you have a really unique angle with investing, which I think is so interesting. But I would love to get to the beginning and figure out, you know, how did you get into this industry? What made you fall in love with it?Joel Wright (02:51)
That’s a great question, Kristen. I didn’t know I was in love with the industry until I got into it. I know that sounds stupid, but my grandfather was a builder. I had an uncle that was a builder, another one that was a developer, another one that was a property manager. All of my family on my mother’s side was into real estate, and I never thought about it until…I was out of college, just got my master’s degree about six months before, just wandering aimlessly, and my dad took me out to lunch and said, hey, why don’t you consider real estate? all of a sudden, yeah, duh, he was an estate planning attorney, he helped.
Kristen (03:25)
Yeah.Joel Wright (03:32)
real estate syndications get put together and purchase sales and all kinds of stuff. And so I’ve been surrounded by real estate all my life and I never thought about going into real estate once. Anyway, that was the start of it.Kristen (03:43)
Yeah.feel like some people, when you’re surrounded by it, you’re almost repelled from it.
Joel Wright (03:51)
Well, I never even thought about it. It just never occurred to me to go into real estate. I didn’t see that there was an avenue and then, you when he mentioned it, it’s like, yeah, I could do, I could go into sales. That’s so obvious.Kristen (04:06)
Yeah,so then you’ve been doing, you you’ve been getting into sales and you’ve been doing that and then you’ve kind of carved out this really cool lane for yourself. How did that all come about? How have you kind of developed that business?
Joel Wright (05:05)
Yeah, let me go back to the very beginning. So when I started in real estate back in 2000, I wanted two things. I wanted to be the best at what I did, and I wanted to work with real estate investors as a professional. And so I really wanted to understand that real estate niche of…what makes real estate, and by this I mean residential real estate tick. And I didn’t, I read all the books the first few years, et cetera, and I thought, okay, this kind of makes sense, and just gathered knowledge, more knowledge, and more knowledge, et cetera. then talking about helping other people invest in real estate, what happened in 2005 was that our market here in Sacramento, it turned, peaked out.
started going down. August of 2005, we were at 392,000 median sales price and that was as high as it had ever gone and then it started going down from there. So we went down, we started going down before the rest of the markets and because I work with residential investors, well from 2004, I really didn’t feel comfortable recommending to my investors that they buy in Sacramento because there was no cash flow. You’d have to put 50 % down to have any cash flow but then your ROI
on your 50 % is just nominal to nothing. And then after it started going down, I went, well, how long is this gonna happen? How long is this gonna take before it turns back up? And so that’s an indeterminate amount of time. The previous cycle was 90 to 97, so that was, be seven years. Okay, well now how do I make a living? Because about half my clients were investors. So I thought, oh, well, other places make more sense than here.
Kristen (06:35)
Yeah.Joel Wright (06:42)
Not everyone is like in California. And so I started looking and started tracking other markets. I went to Washington State, Oregon, and Utah. And I ultimately ended up referring clients to a couple other states. And I went to several more states than that, looking at markets once I kind of ran the numbers. And then I…Kristen (06:44)
Great.Joel Wright (07:07)
to clients out of state and then started investing myself in 2007 in Michigan, which ⁓ not very opportune time considering it collapsed immediately after that. So I took a big spanking and a very educational group of bludgeonings. Now, that was the first cycle. This cycle I found my partnerKristen (07:18)
Right.Joel Wright (07:35)
Not too long after that, Mike Gobi, and so he and I, he’d been working with investors since 1980 and working with REOs a lot. And so we joined forces in about 2017, 2018, and by 2019 we were like, yeah, we gotta take investors outside of California again because once again, it’s too high, it doesn’t make any sense. So that’s kind of the long form of how I got towhat we do now, which is just helping investors buy across the country in a few markets where we think that the returns and risk is lower.
Kristen (08:11)
Yeah, well more than a few markets. You guys work with 800 cities, right? Yeah, that’s…Joel Wright (08:15)
Yeah, well those are the ones we track. So we don’trefer to all of them. Right now we only have four cities, really four cities that we feel comfortable with in two different marketplaces. And ⁓ I’m not gonna tell you this.
Kristen (08:28)
Okay, what are those four cities? Okay, okay.I can’t say all this off. Yeah, so how do you go about identifying a good market? What makes a market special?
Joel Wright (08:35)
That’s when our clients get to learn. Yeah. Great question though.Yeah, that’s a really, really, really good question. And that took me more than, it took me about 20 years to figure out. Because I bought my first property out of state in 2004. I bought in Idaho. And the reason I bought there was because I sold the property. I had money, but I knew it didn’t make sense for me to buy in Sacramento.
And so I did an exchange and I just followed my uncle who was taking, he was taking all his properties and he went up to Idaho. And I realized,
oh, there’s so many cities, yeah, I can analyze property, but it’s kind of hard to analyze a market, so how do I do that?
And I just followed my uncle because I didn’t know the answer to that question. So in 2006, seven, eight, I was doing a lot of analysis on that, and then the market collapsed, and then back in 2017, 18, I started again, and really analyzing, but I was thinking about it and always looking at other,
because I had property out of state. My family had property out of state. My parents took their property out of state. ⁓ And so basically it runs into three different criteria. This is after 20 years of our analyzing markets and trying to figure out, what makes sense and what makes you money and what doesn’t make you money. ⁓ The first one is cash flow. That is how much money you do make on property.
Second one is livability, and that ties directly into if you have tenants that are not taking care your property and are not paying their bills, then that’ll kill you as much or more than anything else. And the third one is friction. And so that could be weather friction, it could be governmental friction. I mean, those two are think the biggest. That is laws, you here in California we have rent control now.
which doesn’t affect so much the income of rents, but it definitely affects the ability to evict a tenant. And if you end up during COVID, you couldn’t evict a tenant. And some people had tenants that didn’t pay for two years.
Kristen (11:15)
Right.Yeah, California is definitely more tenant friendly state, one of the most tenant friendly states. ⁓ But I think it’s interesting because I think a lot of people, especially people starting out, they hear these generalities of the market’s good, the market’s bad, but it really is regional. And I would love for you to kind of talk about that and the fact that maybe in some states it isn’t a good market, but in other ones it is.
Joel Wright (11:27)
Yeah. Yeah.Yes, yes, okay, that’s a great question. I have a great example. So the reason I went out of state is because I sold a little single family home, two bedroom, one bath in California in 2004. I took the money out and I bought a fourplex in Idaho, a brand new fourplex. And I bought it for about 250,000. They’re worth over 600,000, so I wish I’d kept it. But then we went through the downturn because then we peaked in 2005, we went down and in Sacramento market.
that we started going up in January of 2012. Well, I sold that duplex, I’m sorry, that fourplex in December of 2011, so the month before we bottomed out here in the Sacramento market. Now, over that time, my property in Idaho went up from 250,000 to 283,000. That’s what I sold it for. Now, properties in the Sacramento market went down
68 % from the peak to the bottom. The top to the trough, it went down on average, the median price went down 68%, which is huge. So the 200, I don’t remember what I sold it for, but let’s say 200,000, it went down to like 60,000. And that’s when it really clued into me, markets are not the same, because I thought everywhere was very cyclical.
⁓ And a lot of people throughout the United States, their markets been very stable. ⁓ For a long time, I identified the markets as hockey sticks and the markets seemed, well, okay. So a lot of the Texas markets are hockey sticks, that is they went straight and then spiked. A lot of the central states were just kind of straight leveling up. ⁓ Kind of the New England, they’d go up, they’d stair step, up and then flat and then up and then flat and up and flat. And then you have the sand states.
like California, Arizona, Nevada, Florida, which were very much up and down. And, you know, through the cycles, some of them changed, but most of them kind of stayed the same, except that now sort of all of them are going up and none of them really going down. So all those cycles have shifted.
Kristen (13:40)
Mm-hmm.Yeah, I think that’s a great example. I think there’s a lot of information being thrown at people with the current market and a lot of people have some trepidation getting into it. So I think it’s really interesting how you’re kind of…
offering this third option maybe where it’s like just look at other markets, know, invest out of state. What would be some of maybe the challenges that you’ve seen from people doing remote investing and kind of ways to overcome that or things just to, you know, keep in mind as you’re looking into this?
Joel Wright (14:12)
Yeah.Yeah, some of the challenges that we’ve seen is just like buying your first investment property. It’s ⁓ getting over that fear and anxiety and distrust and uncertainty, the not knowing. ⁓ A lot of people have that, I had it.
Mike and I were just talking about this the other day that when he bought his first property, he wanted to, he calls it sharing the fear. So he was afraid to buy his first property. This was like in 1979. So he called up his best friend and said, hey, we’re gonna buy a property. You’re gonna put this much money down and this is how much money I’m gonna put down and we’re gonna buy this property. And they did. And they still invest together today. And I don’t think there’s anything wrong with that.
to do it, go find somebody else that you feel comfortable with.
Kristen (15:54)
Yeah.Joel Wright (15:54)
⁓Not necessarily somebody, you want somebody who brings something else to the table, something that you don’t, whether it’s confidence, whether it’s experience, whether it’s capital, whether it’s being able to finance the properties. ⁓ I have seen fathers and sons go invest in a property. I saw one just six months ago here in California where father and son got together and the son manages it and…
father, you know, they went in, fixed it up, they’re doing a, he lives in it and rents out the rooms. So the son manages it and the father paid the down payment.
Kristen (16:29)
Yeah, sharingthe fear, I like that. Because that is helpful for some people to kind of just have someone to be in it with.
Joel Wright (16:32)
Yeah.Yeah, over the years, almost all of my investments up until just the last few years, and I’ve been doing this 25 years, I’ve shared the fear with other people.
Kristen (16:47)
Yeah,absolutely. And talk about how you work with investors, kind of what the model is. help people. It’s kind of, you give out referrals. You’re really with them, helping them kind of identify this market. How do you work with people?
Joel Wright (17:02)
Yeah, so we spent a couple of years identifying markets and figuring out which ones we believe are gonna be the best ones. So working with investors, ⁓ we sit down with the investor. I always send it to Mike, my job is the numbers.Mike’s job is to work with the people, so end up having a conference call with Mike and just talking about their situation, like what works, what doesn’t work, and where they’re at, and what they want to do, and why they want to do it. And then if it fits, if it makes sense.
Then we end up referring them out to one of our markets to an agent that’s in that market that we’ve already qualified that they already know what is a good investment within that marketplace. They’re just not throwing mud at the wall to see what sticks. We’ve already looked at the markets. We track 800 different cities throughout the United States, 268 metropolitan areas. And we’re doing that to find out what’s going on with them and, you
what their crime is, their, you we take a lot of data from the census. How many people are there there? And how can we categorize these areas and compare them all against each other? And they’re all different. And so that’s a really cool thing. That’s why it is so difficult because all these markets are so different. Some of them were, you know, like Northeast is a lot of it was built in the 1800s and early 1900s. And then,
Kristen (18:07)
Yeah.Joel Wright (18:28)
You have the Rust Belt in Michigan where I invested for a while. That’s a completely different animal from the South, from Florida, from Texas, from Arizona, from Hawaii. All these markets are different. We found what we think is a make sense investment and that’s really buy a good property in a good market that’s in good condition. Have a good tenant and a good property manager and then don’t screw it up yourself.Kristen (18:43)
Yeah.Yeah, exactly. The last part is the important part. Don’t screw it up yourself. Do you ever work with people who are interested in flipping or do you think that short term, long term is the best way to go about it?
Joel Wright (19:01)
Yeah.⁓ We only do long-term and the reason is anybody can flip in any market You know, they have to have the right skill set it and so if they can find the properties then they can flip They don’t they don’t need our help and so we we don’t help people out with that because really our focus is trying to reduce the risk and
Kristen (19:22)
Yeah.Joel Wright (19:31)
Get them as prepared as possible for the long-term hold. We look at investment as a 10 plus year hold, 10 to 20 years. And so those are the properties that we want them to have. It’s something that’s gonna be a good long-term hold. They’re not gonna have to worry about in a year, two years, three years, five years. Yeah.Kristen (19:38)
Got it.Yeah, I mean,
it’s really great working with you because you’re tracking all of these cities, 800 cities. You’ve identified what you see are the gold cities. And then you help people find a realtor as well who can help them. I feel like that’s… There’s just so much of that admin that prevents people from even wanting to do it. Like doing all the research themselves, finding somebody who’s valuable to help them out with all this. ⁓
know any property management companies and stuff like that? Do you help people with that?
Joel Wright (20:20)
Oh, we alwaysfind in any market we go into, if we don’t have a good property manager and a good real estate agent, then we don’t even go in the market. We don’t even go in the market. It’s so valuable because you can have a good market, but if you end up with the wrong property in the wrong neighborhood, it doesn’t matter. So you have to have the right property and the right neighborhood and the right market. And it’s all three of those together. And so you have to have the real estate agent to be able to help.
Kristen (20:28)
Wow, I mean that’s still valuable too.⁓ Absolutely.
Joel Wright (20:48)
choose that, but then if you don’t have a good property manager, and I’ve had some real doozies, so yeah, I’ve been scarred and gone through the whipping post, been to the whipping post and back, and I lost a property because of property managers. You know, I blame them, it was obviously my fault, because I didn’t know, but I didn’t know what I didn’t know, and that’s how you learn what you don’t know. So yeah, you have to have a good property manager, because that’s the person who’s gonna manage it for 10 years.Kristen (20:52)
Yeah.I
Joel Wright (21:14)
And sometimes the property manager goes bad. And I don’t mean that they’re bad people. I have a friend who had, he has lots of properties and he had half his properties in one city with a property manager. And the property manager retired and let his kids take over. And his kids didn’t do nearly the job that he was doing. He was doing a great job and they were not. And just they didn’t have the same experience. They just kind of took over and went, oh yeah, that’s how we do it. Well, there are good ways to do it and there are not good ways toSo that’s super important.
Kristen (21:42)
Right, yeah,you take out so much of the guesswork for people. ⁓ Well, this has been awesome. mean, this has been really interesting to hear how you’re working with people and offering this other option for people, you know, when there’s a lot of uncertainty about the market or I guess, you know, just trepidation in general. ⁓ Tell everyone where to find you, how to work with you and kind of what types of people you’re looking to work with.
Joel Wright (22:06)
We’re looking, you know, the type of people that we’re looking to work with are really mom-and-pop investors. Just good salt-of-the-earth people, people who have some capital, they have some cash, they have some credit to be able to buy something. They want to invest in one of the greatest investments there is on earth, which is long-term residential real estate. And the way to connect with us is GOBBIWRIGHT.COM It’s Mike’s last name and my last name, G-O-B-B-I.W R I G H T dot com and You can connect us with us there. We have our emails and our phone numbers on the website Just go look at about us ⁓ And that that’s the best book so
Kristen (22:46)
That’s awesome. Well, I really encourageeveryone to check Joel out and his business. I feel like it’s a really good opportunity for people to expand their portfolio and really get into some markets that maybe you wouldn’t have thought of. So thanks so much for being here, Joel.
Joel Wright (23:02)
Yeah, thank you.Really appreciate you taking time.
Kristen (23:05)
And thank you everybody for listening. Hope you learned a lot, got some inspiration for your own business and we’ll see you back next time. Bye.
