In this episode of the Alchemist Nation Real Estate Podcast, I talk to Richard Cohn who has run one of the oldest real estate investor associations in New England for 17 years. I wanted to know how he got started in real estate and also in investing in himself. He says that one thing that came up for him was, there is an entrepreneurial drive in so many people that get in the real estate field and he is very sure that I have had a similar experience. He remembers selling gum in 8th grade to other kids in class, remembers saving money from his summer jobs to buy stocks. He recalls at 12 years old and his father who owned a house at the time explaining to him that there was a mortgage on the house but within 15 years, that mortgage would be fully paid off and he thought to himself how amazing was it for his father to own that house and would be $30K at the time. In 1978, he got a job at the New Port navy base which paid him enough money that he had some money leftover and he purchased his 4 unit apartment house in 1978 located in Newport, Rhode Island.
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I ask Richard what drove him to the multifamily niche when other people would have jumped into single families or townhouses or condos or even something smaller. He says he has no clear answer on that but his approach at the time was to grab them and make some money on them. People that time really knew what he was looking for and that focus really gave him confidence which is a challenge faced by a lot of real estate investors today where the prices are high and other concerns. With focus, it allows you to have a great deal of confidence to move forward.
I further ask Richard what made his transition from real estate investing to real estate education and training. He says that it has always been his ambition to have enough money to choose either to work or not but by 1986 he had 36 units and 6 buildings. The property he described to me earlier with the landlord where he had provided seller financing and he had turned around, sold it to somebody else, and carried that mortgage which allowed him to quit his job and go full time. That is related to something a lot of people face right now because now is the time to jump in with both boots and nothing made sense. For every deal he was looking at, prices were still very high in 1986/87 which is the equivalent of what people are going through right now. He started coasting for a couple of years, looking for deals and that led him to teach real estate, teaching people how to get their real estate license, so he became a pre-licensed instructor. Being a pre-licensed instructor opened two opportunities for him, first was he enjoyed the heck out of teaching, and secondly, he learned so much information from teaching, the mistakes and the things he actually didn’t know which led him down paths for example he became interested in tax liens and started investing in them. He also became interested in mortgages, notes, and seller financing and went down the road of buying mortgages, so these were almost niches that were intellectual to him that didn’t have to do with tenants and toilets but they really appealed to him.
I also ask Richard if he still manages his single families or he has someone managing them. He says that he stills does it by himself, fortunately, with single families, you get the right people in there, you get a good neighborhood, they send their kids to a local school, fill the garage with all their stuff and they stay there for 20 years. That’s his model that he began in 2012 during the downturn where he started focusing on single families. For those of you who don’t know the biggest problem of operating rental property is turnover.
I wanted to know according to Richard what should people be looking for and investing in right now as far as real estate goes. He says that this has 3 parts to it and I said nobody can predict the future but we love to hear predictions about the future and in fact, read them on a daily. 1) He thinks specialization builds wealth and diversification protects wealth and for someone starting out, the best way to protect yourself is by specializing. 2) The other thing in mind something if you’re a landlord or a long-term hold person, you have to first understand cashflow. Don’t buy a property if it doesn’t cash flow thinking that it will cash flow in the future and the value will increase in the future too because you can’t predict the future, so it has to be a solid deal right now. 3) For those who are rehabbers or flippers, the profit is there when you buy not when you sell, you have to make darn sure when that you’re getting a good price.
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