Rising Above Fear to Build the Real Estate Future You Want with Joseph Asamoah

[0:00] Welcome back to the REI agent. We are here with Joseph Asamoah, more commonly known as Dr. Joe. Dr. Joe, did I say it right? You did fantastic. I’ve heard it pronounced worse, so you’re good. You’ve got a dangerous one.

[0:19] It could be worse. It could be worse. And I hear what it sounds like an English accent to me and that your last name wouldn’t necessarily lead me to believe British. But what’s your background? Yeah, I was born in Ghana. That’s where Asamoah comes from. When I was five years old, my parents moved to England. So I lived in England since I was five. I came to the U.S. about 38 years ago. I’m still trying to work on my Paris Wimberg accent.

[0:49] Hopefully you wouldn’t have placed me from, I don’t know if we consider where I’m from, the South. But I’ve tried hard not to do it. After 40 years, I’m still working on it. So anyway, what’s it called? So I came here about 38 years ago. I bought my first house about two years after I came in Washington, D.C. I’m based in the Washington, D.C. area. And it was a complete disaster. Everything that could have gone wrong went wrong. It was the scenario from hell. But I got through that and learned a lot of lessons. Then I bought another one, bought another one, just kept on going until about 20, 22 years ago when I was able to transition from full-time employment to full-time real estate investor through passive income through my rental properties.

[1:32] I love it. And so we are definitely going to dive into your strategies for that because Washington, D.C., Northern Virginia, I’m sure the surrounding Maryland areas and stuff is one of the most expensive areas to buy in in the world, probably. I don’t know. It’s a very expensive area. And it is difficult. A lot of people that might be getting started in a market like that, typically if you are in more of the coasts areas, you’re going to be in more appreciation-heavy markets. And it can seem like a lot of the numbers that the gurus talk about, like the 1% rule, for example, seem absolutely impossible when you’re looking at an appreciation-heavy market. And so that is what you are doing all the time.

[2:20] And so I want to hear your strategies in doing that. But yeah, talk to me more about how you got started. So you had everything go wrong when you bought your first house. Was it one to live in? And then you decided that you wanted to keep doing it? No, I was like most people. I was awake at 2 o’clock in the morning. I was still awake. I turned on the TV and some guy, guru, you know the drill. You too can do this. Just give me your credit card. Anyway, I bought some guys’ course, went to some guys’ meeting, and I met some guy at the meeting. He said he’s got a house to sell in Washington. I didn’t know anything about real estate investing, nothing, zero. And at that time, I was just from the UK.

[3:05] I thought all Americans were honest. So he told me that there were some tenants in there. I asked him how the tenants were. Oh, they’re fantastic. They’re great.

[3:15] He was an American, so he had to be telling the truth. So I bought the house and found out that the tenant hadn’t paid him for three months. There was a $5,000 water bill. The house was going to sell at a tax sale, and the tenants weren’t paying the rent. So that was my entree to real estate investing. Yeah. But, you know, long story short, I was able to turn it around after six months of hell. But, I mean, we can smile about it now. But at the time, it was very difficult. But the thing is that life is full of lessons learned. And I did zero due diligence. I now obviously realize I had to do some due diligence. And I decided that I’ll move forward because I wanted to – I believe in real estate.

[3:56] And having done a lot of travel around the world, I realized that capital cities like we are here are very unique. If you can own real estate in capital cities throughout the world, it doesn’t matter whether it’s London, Rome, Paris. It’s all the same. Over time, it tends to be appreciated in value. Local economies tend to be a lot more stable. And, you know, cities – capital cities tend to be population magnets. Anyway, so I decided to hold on to it, turn it around, bought another one, bought another one, and the rest is history, as they say. So do you still own that first one? I still own that property. I bought it for – hey, I bought it. It’s in northwest Washington, D.C., okay? I bought it for $47,000.

[4:37] Wow. And when I bought it, okay, hold on, listen to this. People were telling me I was getting ripped off. I was paying too much. I was getting duped. Okay? And that’s the story of appreciated markets. It’s always expensive whenever you buy it. It’s always expensive. But 10 years fast forward, you wish that you bought it 10 years earlier. And so we’re in 2025. It’s expensive now. And I’m sure 10 years from now, we’ll be regretting why we didn’t buy it in 2025 when it was quote-unquote cheap. It’s just the way it works. The issue is how to get in, how to do it, how to get the cash flow because you can get the appreciation. You’re absolutely right. And you don’t know how many times as an agent I explain that to people.

[5:18] And I never really attributed that also to an appreciating market, but I think you’re absolutely right on that. And it’s the best time to buy a house. The best time to plant a tree was 10 years ago, right? It’s kind of the same thing. And also, pretty much everybody feels like they overpay every time they buy. And then, yeah, you look – and when we’re in the midst of negotiations and we’re squabbling over maybe $5,000 differences or whatever, I’m thinking, okay, let’s look at the big picture here. Let’s think about when my parents bought their house 40 years ago. And it was like $30,000, whatever it was at the time. They were probably squabbling over $200. And it was a big deal to them at the time.

[6:00] Oh, yeah. Oh, yeah. I mean, I – There was – anyway, that house at $47,000. It’s now at $750,000. There you go. When I first bought it, I was getting $50 in cash flow. Now it’s $5,600. I’ve got home equity lines on the house, which I’ve used to buy more houses. So, yeah, that’s just the way it is. And it’s always – am I paying too much? You know, I recall a house. You know what? I don’t know if you know D.C. Logan Circle area in Washington. Very pretty nice. This guy had a house to sell for $126,000 he wanted. This was in the 90s. And I offered him $120,000. So we were haggling over $6,000. And I said, no deal, okay? That house is nearly worth $2 million today.

[6:52] Yep. I mean, that’s to your point, is that it’s always expensive at the time. But if you look at the bigger picture, and you let time do the heavy lifting, that’s the key. So you have to have systems in place, obviously, to be able to survive that length of time. You’ve got to be able to buy it right. You’ve got to have good tenants, tenants that pay you, take care of the rent, take care of the house, no drama, and stay a long time. That’s the key. And I’ll get to that during this discussion. That is the absolute key. If you can’t do that, then you won’t survive. Well, I mean, that is a natural segue into your strategy. Because I think for most people, they just can’t pencil it out. They can’t make the numbers work.

[7:32] I mean, part of why it’s like this too expensive is because they’re doing the analysis, and they’re not getting cash flow. So how are you buying in that kind of market and cash flowing? Okay. Okay. The key to my success has been the Section 8 program. Now, I know, you know, alarm bells goes off. Ding, ding, ding, ding, ding. Section 8. Yeah, there’s a stereotype associated with that program. You know, nonstop drama. You collect your rent with bulletproof vests. You get shot at, too. You know, all that stuff. Okay. Now, I’m not saying that’s not true. However, what I’ve realized, there’s a lot of good tenants who participate in that program, which at the end of the day are no different than you and I.

[8:15] They want to live in a decent house in a decent area and rent from a decent landlord. That’s what they want. Same thing that you and I want. The thing about the Section 8 program is that the rent that you get is based on two things and two things only. It’s based on the location of the property, the zip code, the neighborhood, and things like that, and the number of bedrooms in the property. So this is how I’m able to make it work. I typically, in Washington, D.C., most houses are three bedrooms. Three bed, one bath, and things like that. And so at three bedrooms, you get a certain rent. At four bedrooms, you get more rent. At five bedrooms, you get more. At six bedrooms, you get more of that.

[8:53] Okay. So if you’re savvy, if you pick the right property, you can turn a three into a four or into a five or into a six. If you understand how code works, what’s the legal bedroom, what the requirements for that are, and therefore you, Matty, can buy a house for, say, three bedrooms, and you’ll get, say, $3,000. I will add an extra bedroom and get $4,000 maybe. Another person can add two extra bedrooms and maybe get $5,000. And another person can add three bedrooms and possibly get, clearly, $6,000. Okay. That’s a high level. So now you can turn a negative cash flow into a break-even to a positive cash flow just by adding number of bedrooms with the same asset. Okay. That make sense? Yeah. Yeah, absolutely.

[9:41] That’s the gist of how you can cash flow in an expensive market like Washington, D.C. It’s just by using the Section 8 program. You can add bedrooms and therefore you can get more rent. Yeah. Yeah, absolutely. That makes a lot of sense. And so typically the Section 8 program then offers, what, 80% of the rent as a guarantee or what does that look like? The guarantee is based on the voucher, the family. It could be, you know, they could pay 10%, 20%, 25%, 0%, 5%. It just depends on their family size and their income. How much they pay is based on their income. So if their income goes down, then their portion of the rent goes down and the house authorities portion goes up to pick up the difference.

[10:29] And that’s also another thing which I like about the program is that it’s more recession resistant. You know, during these difficult times, I mean, I’ve been through six real estate cycles. So I have an idea how this stuff plays out. Yeah. And so during downturns, obviously people lose their jobs. They can’t pay their rent. And there’s nothing worse than having a great tenant who lost their job and can’t pay you. You know, you may not get paid. So with a Section 8 program, if their income goes down because they lost their job or whatever it is, then they can go to the housing authority to get an adjustment. So their portion goes down and the housing authority’s portion goes up to kind of counterbalance.

[11:12] So, you know, so the bulk of your rent is pretty much guaranteed and it’s stable. I’ve never in the last 35 years of this program, there’s never been a month, never, where I wasn’t paid. There you go. Case in point right there. I have a couple of follow-up questions about the program. First of all, I have heard they do inspections. Is it every year? Is it before the tenant moves in? What does that look like? And I’ve heard that’s a hassle. So can you debunk that? So, yeah. So before the sequence is that you have a house to rent, you put it out for a market, and you select somebody who has a voucher. Once you select somebody who has a voucher, you submit paperwork to the housing authority, to the local housing authority.

[12:00] So where you are, there’s a housing authority that has jurisdiction over Harrisonburg, for example. There’s a housing authority. It’s a federal program. So there’s a housing authority everywhere that has jurisdiction in your local area. They’re the ones who set the rents. Okay. So the rents in your area may be different than the rents in my area. So it’s local-based. And so we’re in an expensive market here in Washington. So the rents here are higher than maybe where you are. Sure. So it’s nothing unusual to get $4,000, $5,000, $6,000 in rent from the housing authority around here. So you submit the paperwork to the housing authority, and they verify that you are who you say you are, and the paperwork is correct, and you are the owner, blah, blah, blah, and your bank account information.

[12:46] And then they schedule an inspection once you agree on the rent. And the inspector comes in and makes sure that a house meets what they call housing quality standards, which is primarily health and safety. But once you understand what they’re looking for, then you just, you know, I mean, the key is they tell you what they’re going to be, or you can research to find out what they’re going to look for. So it’s just like a homework. You’re doing a test tomorrow. You know, the teacher gives you the questions. If she gives you the questions, there’s a good chance you’re going to pass. So they tell you what they’re going to look for. So as a savvy investor, you’ll pre-check those things. And therefore, when the inspector comes, you’re more likely to pass.

[13:25] And that’s just in the application process? Yeah, that’s the move-in. And once they moved in, every – well, it depends on the jurisdiction. In Washington, it’s every two years. Some jurisdictions, every one year, when they come back to do – to make sure their house still passes housing quality standards, as they call it. But the thing is this, Matty. I know you probably don’t believe this, but my longest tenant is 28 years. Wow. I have 20-year tenants, 18-year tenants, 15-year tenants. You know, rents are $4,000, $5,000, $6,000. Okay? That is impossible with market renters. No market renter is going to stay – pay $3,000, $4,000, $5,000 for 15 years. They’re going to say, this is crazy. Let’s go buy out of the house.

[14:10] Right. And so you’re going to have that turnover. And whereas in the Section 8 program, the tenants portion may be, I don’t know, let’s say $500 and the rent is $5,000. So that $4,500 is guaranteed every month. And that $500, you collect from the tenants. And I’m just going to ask you a simple question. If you were living in a $5,000 neighborhood and you’re paying $500, Matty, Matty, sorry, how long would you stay there? Yeah. Yeah. I mean, it makes a lot of sense why you’d be incentivized to not move, not lose that opportunity. So as an investor, the key to your success is to minimize turnover because turnover is very expensive. You know, you’ve got to paint the place again. You’ve got to clean it again.

[14:54] You’ve got to, you know, da, da, da, da. And so on. So it can wipe out a lot of your cash flow if you can’t control that turnover. And so you’ve got to have stable tenants. And my thing is that there’s a, you know, a lot of these families, they want stability. And if you, you know, if you have the right product, you can appeal to them and they’ll stay. But obviously you have to make sure they’re happy. And there’s a service, which I do, to make sure that they’re happy in their home as well. Well, and then, okay, so what about with these annual, biannual, whatever inspections, if the tenant is, you know, causing the problem to make it not habitable or whatever their terms are, what happens then?

[15:38] Like if they come in, they say, like, this needs to be fixed, this stuff needs to be fixed. They did it. Sure. Yeah. The thing is that, you know, as a landlord, I think anybody would say most of your problems are 80%, 90% of your problems. Because you just got the wrong person in your house. Right. Okay. Whether it’s sectioned or not, it’s just that you got the wrong person. Yeah. For sure. So the key to avoid that is to screen. Yeah. And therefore, the question is how thorough is your screening process? You know, mine is very, very thorough. I mean, I go to people’s homes to see how they keep it before I, you know, before I rent to them. That’s part of my process. So if you, and you have, I have a very high bar standard.

[16:18] So if you get the right people in your house, they are thankful that you’re giving them the opportunity to live in a nice area. They’re going to pay their rent because this is a dream come true. They’re going to be pleasant to deal with because they know that the alternative is to go back to a crappy house in a crappy neighborhood and rent from a crappy slumlord. That’s the alternative. They want to stay there and they’ll do what they, they’re not going to jeopardize their voucher, you know, because they know they’ve got, you know, it’s a dream come true. So it depends on the quality of your tenant, you know, because if you have a quality of the tenant, they’re going to take care of your home and they’re going to treat it like it’s their home.

[16:55] Right. And, and there’s other things that you can do to avoid some of those problems that you talked about. Yeah. Which leads me to, have you had to evict? And what’s that process? Is it harder with the Section 8 program? My last eviction was 12 years ago. Wow. Yeah. I mean, I don’t do, I don’t have to evict, you know, because I’m very thorough on the screening. Right. And, but yeah, if you have to evict somebody, I mean, obviously you have to go by the local laws. Yeah. So if you’re in Washington, D.C., you got to follow Washington, D.C. laws. Yeah. But because they’re a voucher holder, you have to notify the housing authority. But the good thing is that if they get evicted, they lose their voucher.

[17:35] Okay. So there’s an incentive not to lose the voucher. Yeah. And so you have more leverage. And the housing authority has mediation services to hopefully try and resolve issues. But again, if you screenwrite, you avoid a lot of the headache. You know, I think, was it Warren Buffett? No, it was Charlie Munger, I think, who said this one. He doesn’t solve problems. He avoids problems. Yeah. No, absolutely. Absolutely. And I guess that also kind of leads me to another question is, do you have, is there like a stronger, how should I say this? Like with fair housing laws and everything, is there any oversight with your screening process from the fair housing authority or from the housing authority?

[18:19] No, I mean, obviously you’ve got to comply with equal housing laws, the fair housing laws and things like that. But typically I contact the current landlord, previous landlords to find out their rental history. Yeah. Income credit is, you know, it’s not a big deal because most of the rent is paid for by the federal government, which has got AAA credit. And sure. You know, you can do a background search, a check on them, again, depending on the jurisdiction you’re in. And then I make a home visit. You know, a home visit is, you know, I do it to everybody. That’s the important thing. It’s a key thing is that you do it across the board. You don’t just say, well, because you have a voucher, I’m going to do it for your house.

[19:00] If you don’t have a voucher, I’m not going to do it. I mean, you do it across the board for everybody. And you have policies in place which are applied across the board. So, you know, I don’t, you know, I’m very fair about it. I let people know this is what I’m going to do right from when they first call me. This is the process. Right. So there’s no surprises. And if they don’t want me to come to their home, obviously they’re not going to come to see the house. Right. And also I think what I found is that if you make people aware that this is your thorough screening process, you know, the people who are kind of borderline, iffy, they’re not going to go through you. They’re just going to move on to the next one.

[19:34] So they kind of self-screen themselves out. That makes a lot of sense. Yes. And what you said is the key there is that you’re doing everything the same for everybody. And I mean, ideally, you just kind of have like this checklist that you go through. And like you said, you’re explaining to them at the beginning. And if you’re a licensee, like, you know, a lot of the listeners and myself are, it’s definitely extra. You want to be extra careful with that. So, I mean, it sounds like you self-manage. Is that correct? Yeah, I self-manage because, again, no disrespect to anybody, but I just haven’t found anybody that will do the level of thoroughness that I will do. I mean, I don’t know a property management company that goes to people’s houses.

[20:15] Every Mother’s Day, I send all my tenants bouquets of flowers. Every Christmas, we send them Christmas presents. When the kids get A’s at school, I give them $50. I know you won’t believe this one. I mean, we got a time share in Mass Nutton, just not too far from where you are. We give all our tenants free three-day, two-night vacations at Mass Nutton. What?

[20:44] You do things differently. I like this. Right. So, no management company is going to do that. No. Now, you’re going to say, well, why are you doing this? And the reason why I’m doing it, and all this stuff I’ve just explained, costs about $200. Okay. Bouquet blouse, $30, $40, $20. Well, ours is about $200. And the thing is that I know that Matthias has got a house near me. And he’s looking for the same type of tenant that I have. Okay. The top quality tenant, the one that pays the rent on time. So, I know there’s people like Matthias and other landlords hovering around trying to poach my tenants. Okay. I’m not delusional. Okay. There’s a competition for the top quality tenants. Everybody wants them.

[21:27] So, I have to differentiate myself in such a way that I create a firewall between my tenants and you. Okay. So, they’re not going to, they don’t want to leave me because I’m doing all these things. And I’m also taking care of the house. I’m treating them with respect and courtesy. So, you know, if they’re happy, then there’s less chance they’re going to move to somebody else. If they’re not happy, then there’s a chance that you could sneak in and poach them. And my thing is I don’t want turnover. Each turnover costs two to three months lost income after all is said and done. So, if your rent is $3,000, each turnover is going to cost you $6,000, $9,000. So, I’m okay with spending $200 to save $6,000.

[22:09] Yeah. It’s a business decision. And it’s, I think, again, Charlie Munger calls it and Warren Burford calls it, I build a moat between me and my competition. Yeah. I mean, that makes a lot of sense. Now, anybody that’s a bean counter in the list listening here, it’s probably scratching their head because you’re talking. Yes, sure. You’re finding opportunities where you can increase the rent to make the numbers work. But, again, we’re an appreciation-heavy market. You had told me, I think, off-air, I don’t think you said this, on-air, that the average rundown house that you’d be buying would be probably about $500,000, right? Mm-hmm. Mm-hmm. And so, now you’re also increasing the expenses here with these extra things, which your logic makes complete sense.

[22:58] But can you walk us through, like, if you were to go through a process of acquiring a new rental, what that would look like and some example numbers of how you’d make it all work? Sure, yeah. Okay. I’ll give you an example. One of my clients just did one. Yes. Last week. Okay. So, he bought a house about six months ago in Washington. I think he paid $525,000 for that house. He spent, I think, around, let’s just keep it round numbers, $250,000. Let’s say he bought it for $500,000. Let’s keep it in round numbers. And he spent $250,000 on the renovation to turn it from a three to a, he’s turned it into a six-bedroom. Okay. And what kind of house is this? This is a single-family townhouse? This one, the one that he got was a detached.

[23:40] Typically, it’s either a semi-detached or a detached in order to get the extra bedrooms. Bedrooms are usually made up either in the basement because you can turn the rec room area into additional living area as long as you’ve got, sort of bedrooms, as long as you’ve got the ceiling height. I mean, there are code requirements for a bedroom in terms of the eyes, egress, closets, you know, things like that. So anyway, he turned it into a six-bedroom. He spent $250,000 on it. Okay. So let’s just say, for argument’s sake, he’s in it now for $800,000, you know, including expenses. Okay. And so he got an acquisition loan, you know, from a hard money to purchase it and also to get the, what do you call it, the rehab.

[24:24] He pulled in private money and also his personal money for the delta between what the hard money people will give and what he needs to actually acquire it and then rehab it. Okay. So he got personal funds and private funds to turn it around and then end up with $800,000 after all he’s said and done. You follow me so far? Yep. Okay. So now he’s in the process right now refinancing that to a permanent loan. The house was appraised at $1.1 million. Not a bad position. And he’s in it for $800,000. His goal is to refinance. Let’s just say that, you know, let’s say he can’t get it all. He can get $750,000 out of it. So he’s in it now for $50,000, but he’s got a $750,000 loan. Okay. Which means that he’s got, let’s say, $250,000 equity on day one.

[25:11] I think when he did know, he’s got a loan. He’s doing the refi right now. I think he’s at 6.1%, I think. That’s what he’s getting. He’s got a DSCR loan. And he’s been quoted at 6.1%. I don’t know the exact numbers, but he’s going to get a little bit of money cash flow. Not a lot, but it’s not a cash flow play. He’s got equity on day one. You know, the asset is paid for itself. That’s the important thing. And he’s in a good area in Washington, D.C. He’s got a tenant who wants to stay. His rent is $6,950. Wow. Yeah. That’s the approved rent, $6,950. So he’s going to, you know, you do the number. I don’t have my calculator in front of me. But he’s going to get some little cash flow there. And then he’s just, he’s got equity.

[25:59] He’s going to ride it. I mean, the thing is, he’s got a tenant who wants to stay there forever. So now, turnover cost is going to be next to nothing. And all he wants to do is just to keep that asset for 10, 15 years. Right. Right. Because it’s going to go up. It’s going to go up. Yeah. So he’s going for the appreciation play with the asset taking care of its expenses to pay for itself. And so that’s essentially how it works. Well, then, does Section 8 build in rent increases at all? Yeah. How does that work? Yeah. You can request a rent increase annually. Okay. And that’s just an assessment? There’s a process to request rent increases, yes. Does that go off of the other rents in the area or does that go off of like cost of living increases?

[26:40] And what’s the formula? Yeah. They have a process. You got a request on. They do a market analysis, market study, and they do some comparables to make sure it’s reasonable. And they may approve it. If they do, they’ll agree on a certain amount. They may refuse it. It just depends. You have to petition and then see what happens. Okay. Well, so the first observation is that is a cash-intensive operation. Yes. So to start off, I mean, you’re going to need – they probably needed, what, like 20% of that 800 or so to kind of make the deal work. I mean, that’s often – it depends on the hard money situation, right? Yeah. But you’re going to need money. But, again, if you don’t have the money, okay, there are sources where you can get the money.

[27:24] Again, there’s private money out there. Yeah. You know, there’s personal monies that need to be – you know, you can leverage. There’s home equity lines if you have access to that. I mean, there’s ways to fund these. But we’re in an expensive market, so that’s just the way it is. Right. You know, and – but the goal is to, at the end of the refi, is to try to recoup most of your expenses. Sure. And therefore, you can recycle the funds again. It’s a classic burst strategy, I suppose. It’s amazing, and it’s a great strategy, and it works really well with, like, the strategy you’re talking about here with adding those extra bedrooms. I’m sure that increased the value as well for the appraisal. So, I mean, so is there a possibility of doing this kind of thing with also, like, a house hack?

[28:10] Like, if you were wanting to start, if you were – you don’t really have a ton of money to begin with, but maybe you are able to get a construction loan on top of, you know, an FHA or something where it’s lower down payment. Is that something that you’ve seen people do as well? I mean, I started off – my second house I bought was a house hack. Yeah. I mean, I was doing house hacking before house hacking was coined up. Yeah. I just – I mean, I was working. I had a job. My thing was I had to drive my housing costs down. Yeah. And the housing costs, if you can’t contain that, it’s very hard to save money. And so what do I have to do to drive my housing costs down? So I rented the room out. You know, the house I bought had an apartment in the basement, so I rented that out.

[28:56] And therefore – so, yeah. So I did that strategy. You can start off with that strategy. Yes, it’s a short-term inconvenience because you’re living with people. But as long as you’re focused on the long-term picture and as long – I mean, I was able to save – I was able to live in that house for free. And therefore, the money I would have paid for the mortgage I used to save to then buy my next houses and so forth. Yeah. I mean, if you could successfully do what you’re talking about but also live in the house. Yeah. You cut your expenses, your living expenses. You’re getting hopefully a break-even at least. Yeah. With including, you know, the construction costs in there. And then whenever you’re able to save up for the next property, you probably built an equity.

[29:37] You probably can get an equity line of credit to help you with the next purchase as well, right? Yeah. And then it kind of – that’s where it kind of starts snowballing. And so if you are able – you know, me with three little kids and a wife, we’re not in the position to do that kind of thing anymore. But when we first got married, it would have been a great time to do something to that extent. I understand. You know, again, I’m always a thinker of the bigger picture. I take a long-term view. You know, the first house I bought, I was making $50 and getting hell from these tenants for $50. I mean, most people would say, what the hell are you doing? Right. Why are you buying this? You know, but I knew that in the – you know, 5, 10, 15, 20 years from now, that asset is going to be worth money a lot more.

[30:21] And so I just stuck tight, you know, hung in there, turned it around and kept going. I mean, you know, it’s – I take a long-term view as opposed to a short-term. Yeah. Because buying whole doesn’t make sense in the short-term view, especially when you compare it like flipping, where you can get some quick cash. Right. I mean, $500 versus $50,000. I mean, it’s not sexy. Yeah. So, but if you take a long-term view, especially if you’re in an appreciating market, you know, you let time do the heavy lifting. And you can get the benefits of cash flow and tax benefits and things like that. Yeah. I talked – I just interviewed somebody out of Tacoma, Washington, just out of Seattle. And they were talking about how, you know, their market, I think, doubles every 10 years or something to that extent.

[31:06] And how she thinks that even if you’re not, you know, wanting to be a full-time investor or whatever, not dedicated to it, just trying to pick up five houses in your portfolio just to – I mean, if you need to have those managed by somebody else, just have them for, you know, most of your life. And then when you go to retire, like that’s going to be a huge asset for you. I mean, that’s going to – you can base your whole retirement off of that. I do want to ask you as well because a lot of investors will talk about return on equity. And that would be definitely the downfall in this kind of – or that would be considered a negative maybe in this type of strategy. So you would be having a lot of property that has tons of equity.

[31:50] And especially when you’re starting, like the one that you just described, they have a good amount of equity in that property. But that – the return on that equity is not super strong, which we’ve all agreed is not necessarily the only path forward. But how do you view return on equity? Is that something you even factor in at this point? Yeah. I mean, I have a lot of properties where, you know, some of them are – there’s no debt. They’ve paid off free and clear, you know. So, I mean, when I was starting off, you know, it was important that I leverage as much as possible. So I would try to get a maximum loan as possible. And if there was equity in the property, I would then get a home equity line established on the asset.

[32:32] So I can tap into that home equity line to leverage it, to buy more stuff, okay? So, you know, so yes, if you’ve got equity, it’s dead unless you can leverage it. But I think it depends on what stage or what phase of the real estate life cycle you’re at. You know, when I was starting out, it’s all about, you know, acquiring the portfolio and building the portfolio and doing what you’ve got to do to get that. But as you get more into it, like now, I’m more into preserving and protecting the cash flow and preserving and protecting the asset, you know, and doing – you know, and that’s why, again, preserving the cash flow, especially through market cycles. Market cycles are ugly if you’re on the wrong side of them, you know.

[33:19] A lot of people get wiped out during those things. Strategies – it’s easy to make money when the good times are coming on. You know, everyone’s making money. You think you’re a genius and so on. But when the tide turns, you really find out if your strategy is sustainable. And that’s when you really find out who’s swimming naked is when the tide comes out and so on. So what I’m saying to you is that what I’ve shared with you at this meeting, it’s time tested, okay? It works regardless of the cycle. It doesn’t matter if the tenant loses their jobs. It doesn’t matter if the market crashes. It doesn’t matter. The important thing is that you keep the assets. You have good tenants who are protecting that investment.

[33:59] And therefore, you can realize the power of real estate, which is appreciation, tax benefits, cash flow, equity bill, all that stuff you can do if you can survive during that 5, 10, 15, 20-year period. That’s the key. You’ve got to survive it. And you can’t survive that thing unless you’ve got some good tenants. And because I don’t know about you, tenants from hell are not good. And they’ll drive you crazy. And they’ll turn you to exit this business. So you’ve got to be able to get good tenants who pay you, take care of your property, pleasant to deal with, and want to stay a long time. And it’s hard to find market renters who want to stay a long time when the rents are $3,000, $4,000, $5,000.

[34:41] Because at some point, they’re going to say, this is crazy. Let’s go buy our own house. Yeah. I mean, that’s just how it is. It is what it is. So what I’ve shared today is more of a strategy that, again, everything I’ve shared is what I do. It works. Yeah. Yeah. And you have to develop relationships with the housing authority because that’s a bureaucracy and so on. But it’s a strategy that has helped me survive and helped me have tenants 15, 20 years long. Yeah. I would say that one of the key things that you touched on there is the factor of risk. And I think that the more equity you have, the longer you own a property, the better off you are in a risk situation. You have less risk because the rents have increased.

[35:33] The amount you owe has gone down and the amount of the value has gone up. So there’s just a lot more opportunity there. And I think mathematically, if you were to calculate the return on equity in all your positions, it’s maybe not the mathematically most advantageous route. But like you said, you’re safe. You’re good. You’re covered. And I think there’s a lot to that. And I think also one of the things I’ve thought about is if you’re always completely leveraged out, that means you probably have more property. You’re spread more thin, right? You got more toilets. You’ve got more roofs. You’ve got more HVACs that need to be repaired. And at the end of the day, I think there is a balance there where if you’re getting a similar amount of income and you have less property because of it that’s performing well with higher equity, there’s nothing wrong with that.

[36:33] And I think right now in my positions to refinance and to try to get something else or to sell and buy something else, I am going to be way more tight with my numbers. And interest rates are going to be way higher. And I don’t think it’s always about the return on equity. I think there is a risk factor that isn’t usually calculated that makes a lot of sense to factor in. Yeah, I mean, it’s a complicated thing. And I mean, I just believe in real estate, you know, way of appreciating market. So we go through cycles. I mean, it goes up and down, up and down and things like that. But the overall projection is always usually up, you know. And so if you believe that, I mean, it’s a fundamental belief.

[37:19] If you don’t believe it, then obviously, you know, there’s no point. But if you believe that, you’re in a market where that happens because not all markets follow that trend. But if you’re in a market that does follow that trend, then the issue is you’ve got to buy. Because at some point, you’re going to be priced out, you know, and you’re going to be regretting why you didn’t buy it 10 years before and so on. So it’s the issue is how can I, given where I am, given my financial position, given my risk tolerance, given my comfort level, how can I get in? Okay. And, you know, and then you, you know, you surround yourself with people who are doing that in your market and they’ll tell you how to get in because they’re doing it.

[38:00] And then they’ll tell you these are the landmines on this journey. And hopefully you can avoid those landmines, stepping on those landmines so you won’t get blown up. And therefore you can survive that 5, 10, 15, 20 years that we’ve talked about. And therefore you can realize the power of real estate. You know, you’ve got to be able to survive. You’ve got to be able to get to the finish line. And that’s the part that most people don’t talk about. And that’s the key. It’s, you know, you’ve got to have durable systems. You’ve got to have ways to select tenants, screen tenants, manage tenants, manage the property and make sure the numbers make sense. And so, which we didn’t really touch upon, but that’s a whole other discussion.

[38:39] The operation side and, you know, and so on. But, you know, but yeah, it can work. Yeah. No, I mean, it’s been a, it’s, this has been a really good conversation because I think it is, is definitely something that people need to, to hear. And, you know, going somewhat against the grain with buying in an expensive market, somewhat against the grain with an appreciation focus instead of, you know, the, the, the, just the return on equity. Side of things. And then the section eight bit that, you know, a lot of people might have fear of. So it’s been great. There’s been a million gold nuggets that have come in this episode already. But Dr. Joe, what do you got for us as far as the golden nugget? Golden nugget.

[39:19] Well, if I had to do it again, three things. One. Well, okay. Cover golden nugget. First of all, I’ve shared one strategy. Every week, obviously, Matthias, you have people sharing other strategies. I think the first thing is people should look at themselves. You know, what’s their comfort level? You know, their goals, their outlooks, you know, and, you know, what are they comfortable with? What strategy resonates with them first? It could be house hacking. It could be flipping. I’ve talked about buying holes. So what resonates with you given where you are? That’s the one. Number two would then be to learn the basics of that strategy. You got to pick one. Don’t go this week. I’m doing house hacking.

[39:54] Next week, I’m doing flicks and flips. Next week, you got to pick one and avoid that shiny object kind of thing. Pick one, learn the basics of that strategy. And then I would say identify, find people who are successfully, that’s important, successfully doing that strategy that you want to do. There’s a lot of people doing it, but there’s not a whole lot of people doing it successfully, especially over two or three cycles. Okay. Because you can be successful during a hot cycle, but it could be turned on you during a down cycle. So you want to find people who are successfully doing what it is that you’re doing, and they’ve done it through a couple of cycles at least. And then you incentivize them to work with you.

[40:31] And at some point, you got to pull the trigger and buy. I mean, you can’t read your way to financial independence. You can’t TikTok your way through. At some point, you got to buy a house. Right. You know, you got to buy it. You got to execute. You got to pull the trigger at some point and then get on with it. I mean, that would be my suggestion. I love it. If that makes sense. No, it’s absolutely true. And I think, yes, a lot of times people will chase that next shiny object as an excuse, honestly, because they’re scared to actually pull the trigger and do the hard work. But perfect. What about a book? Do you have a fundamental book you think everybody should read or maybe just one you currently really enjoy?

[41:07] I mean, one of my all-time books, believe it or not, is The Millionaire Real Estate Investor by Gary Keller. I mean, I’ve had that thing for over 20. It’s a good book. It’s about 20-something years old. But it’s very thorough. It’s very solid. And I think it’s a very timely. That’s a real estate type book. The other one, other books, I just like people to, I listen to a lot of podcasts. You know, and one part I really like is one by founders, founders by Gary Senra, I think. I think David Senra. Dave Senra. That’s a really good one. What it is, is that he has, he reads a lot of books and of entrepreneurs over the history. And you kind of learn what they did, what they, you know, lessons learned from that, these biographies.

[41:58] Because there’s a lot of wisdom learning from people in the past, in history. It’s kind of a joke. It’s kind of like a shortcut, right? Like you, instead of having to read the biography yourself. Exactly. Yeah, yeah. That’s why I listen to it. I haven’t listened to it yet. Yeah. That’s why I learned a lot of this, you know, Buffett and, what’s it called, Mungo’s strategies, you know, through the club. I mean, it’s, and, you know, here’s things from, you know, anyway, all these famous people in history, you just learn from them. And hopefully you can apply some of those things to today’s world. I love it. I love it. Dr. Joe, are you on social media? Do you have a website? Where can people find you if they want to learn more from you?

[42:39] Uh, I’m on Instagram and Facebook. Uh, it’s Dr. Dr. Joe, J-O-E, my last name, Asamoah, A-S-A-M-O-A-H. It’s at Dr. Joe Asamoah. That’s my Instagram and Facebook. I have a weekly, um, live stream, uh, on, um, on YouTube. It’s free. Just talk about real estate. Uh, I used to pick a topic and I call it wealth Wednesdays where I dive into a particular topic on real estate investing. Uh, I try, I mean, I’m going into helping people and sharing my 35 years worth of experiences. And, uh, so you can always catch me there. Uh, but yeah, I mean, I’m in the DC area. So if you’re in the DC area, give me a shout out and I’ll, you know, we can connect and see what we can do. If I can help you out, I mean, we’ll have to do so.

[43:23] I’ll have to buy you lunch or dinner sometime when I’m in the area again. Dr. Joe, it’s been a pleasure and an honor. Thank you so much for being on the show. Thanks, Matias. Appreciate it. Thanks for listening to the REI agent. If you enjoyed this episode, hit subscribe to catch new shows every week. Visit REIAgent.com for more content. Until next time, keep building the life you want. All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.