#52 - How to Build a Real Estate Portfolio w/ Ryan Corcoran
Oct 5 • 46:27
In this episode, I sit down with Ryan Corcoran.
Ryan is a real estate investor and a coach to aspiring real estate investors.
Ryan shares his journey on how he got started as a real estate investor and what advice he’d have for anyone looking to get started now.
In this episode we dive into:
How he got started
How to use other’s money when investing in real estate
Systems to scale your real estate portfolio
The risks with short term rental properties
Tax benefits to being a real estate investor
Tune in to hear us discuss these topics and more! Also, stay until the end to hear the most emotional money decision Ryan made and his one financial question for me.
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FULL UNEDITED TRANSCRIPT
[00:00:00] Justin Green, CFP®: thanks for coming on, Ryan.
[00:00:01] Ryan Corcoran: Ryan. Yeah, man. Thanks for having me. I'm looking forward to it.
[00:00:04] Justin Green, CFP®: Yeah, absolutely. Tell everyone where are you calling in from?
[00:00:06] Ryan Corcoran: from? I am in Rhode Island right now. Uh, we moved here about a year ago cuz my wife said Rhode Island is the best place in the world and here we are,
[00:00:15] Justin Green, CFP®: Very cool. Very cool. So Ryan and I are actually personal friends. Uh, Ryan, um, is the only person I know that can not work out for like six months, walk in the gym and look like he's been working out for the last 10 years. And so, um, very love hate relationship with Ryan, but great dude, uh, really knows his real estate.
Um, over the last couple years, you've really. Uh, you've been building quite the portfolio, so I've been impressed and excited to have you on to talk about real estate with the audience and, uh, learn more myself as well. You know, I have a basic understanding of investing in real estate, but you know, this is like a full time business for you, even though I, you pretend to be like a PA on the side as well.
I know. Um, just for like fun. That's like a hobby now, right?
[00:00:58] Ryan Corcoran: Dude, I haven't actually, I haven't s stepped into a hospital in, oh, it, 15 months maybe.
It's, it's been a while and I, I don't even, yeah, I haven't been there in a while. If I went back, I wouldn't know what the hell I'm doing, so.
[00:01:09] Justin Green, CFP®: Yeah, you're also the only guy I know that goes to PA school and then immediately is like, Yeah dude, I wanna build a real estate empire. Like you put in all the hard work that it took. Like I remember when you were studying for PA school, it was like all these late nights, early mornings, and then within like a month or two you were like building this real estate empire,
[00:01:28] Ryan Corcoran: Oh man. And for the record, I haven't missed a day working out in like five years.
[00:01:33] Justin Green, CFP®: Oh, okay.
[00:01:34] Ryan Corcoran: okay. Whatever you gotta tell yourself over there.
[00:01:38] Justin Green, CFP®: All right. So give us the background a little bit. So you are now building out a real estate portfolio. Um, how'd you get started in real estate?
[00:01:47] Ryan Corcoran: Yeah, so, um, just like the two minute synopsis, I guess. I went to school, like we talked about, I got my master's degree as a pa. Um, but after I graduated undergrad, I was looking around at all the PAs and medical professionals I saw and.
You know, man, like you go to school, you get your master's degree, you pay 160 grand to do this, and you make 120 grand a year after. And I'm not saying that's bad by any means, Right? That's that's middle class. Above middle class, right. But my idea for like life was not, is not work. 24 hour shifts, work overnights, you know, Always be strap cash strapped, right?
Like barely, you know, save it a couple thousand dollars. Like it's just, I don't know, for a lot, for a lot of people it's the right route. But for me, I was just like, Dude, I was miserable. I got to the point where I was, you know, doing 24 hour shifts and I'd walk into a patient's room and all I'd be thinking about was the next deal in the next real estate, you know, transaction.
Right. So I got to the point where it simply wasn't fair for me to be, um, you know, devoting my time to critically ill patients.
[00:02:49] Justin Green, CFP®: Yeah, for sure.
[00:02:50] Ryan Corcoran: sure. And so, yeah, so I graduated undergrad. I bought a duplex because I was, you know, I'm like, Oh, well I'm either gonna go rent or I'm gonna buy a house. Some. . And then I'm like, Well, if I rent, I, you know, it's, it's not, I could probably save some money when I rent, but if I buy this duplex, I could learn how to be a landlord, which is really what I wanted to do, is start investing in real estate.
Right. And so, you know, I, a lot of people say, Oh, you shouldn't rent or you shouldn't buy a house. And we could talk about this later, but, um, I chose, uh, to buy the house route, um, thinking I was actually gonna live in it, never actually lived in. Fix it up, sold it and walked away with a check, uh, the size of a PA salary.
And I was like, Okay, hold on a minute. I'm not even done PA school. I just made what I'm gonna make my first year outta PA school. There's something to this. Right? And so a duplex led to a plex, which led to a five unit, which led to a 10 unit. And now, you know, now we're here. We've got 200 units. We develop real estate.
We, we have a flipping business. We wholesale, we, we do a little bit of, a little bit of everything.
[00:03:47] Justin Green, CFP®: Yeah, you're, you know, you're an individual. You're unique in the sense of a lot of people when they buy that first real estate that is intended to be a primary home, Right? They're not doing it to invest, which, if I remember correctly, that's what you did. They get very emotionally tied into like, they see their kids growing up here, they see their marriage growing here, and like, so they become very emotionally tied to that primary home.
And I remember when you did that and then you like sold it. Not that long after. I was just like, Wow. Most people can't do that. Like they can't let go of that. This is our first home. We're gonna grow family here. Like type of emotion.
[00:04:23] Ryan Corcoran: Well, to, to flip that a little bit, if you saw the location of the s duplex, , you wouldn't know, wanted to raise a family there. Uh, so that was number one, right? It's a multi-family property. It's a multi-family property. It was on a main road.
I mean, you know, one unit on top of the other, uh, old, old property needed a lot of work. So when I went into it, it was, I'm gonna live here super cheap and I'm just gonna save a bunch of. But what, what actually happened was I bought it, I rehabbed both units and I got them rented and I was making like $800 a month in cash flow in PA school.
And that was like really eye opening for me because it paid for my food, it paid for my gas like that. That literally, that two family paid for me to live for for a year. And then when I sold it, and like I said, I walked away with a check the size of my PA salary. I'm like, Okay, well what if I did this? A hundred times, right?
Millions of dollars can just poof. Right? I mean, obviously it's a business, right? You can't just, it's not that easy. Um, but, but that got, but that got my wheel spinning. Um, and so I do live in a single family house now, and if I tried to move back into a multi-family house, my wife would literally kill me.
Um, I, I would be divorced before that happened again. Uh, but if you ask her, So here's the funny. When we were doing it, we, we actually lived in the three family after the two family, and we fixed it up and Kristen was on the floor peeling up flooring, painting, you know, we were putting lights in, we're doing everything right, doing everything ourselves.
And if you ask her to do it again, she'd say no. But if you ask her, if she regrets any of it, she would be, she would say, I would do that over and over and over again. Because that one decision, you know, we saved up like 40 grand in like five months. And when we sold that three family, we walked away with another a hundred thousand dollars check.
Right? And so, She, her, her vision of real estate opened up at that point and once she was on board with it, I was able to just drastically scale. So,
[00:06:13] Justin Green, CFP®: um, didn't you own a, uh, a single family in Lunberg as well? That was the one I was referring to. So you only lived in that one for a little bit, and then you were like, ah, we're gonna move to Rhode Island?
[00:06:22] Ryan Corcoran: So yeah, that one we flipped as well.
We, we lived in it, we fixed it up and then, um, yeah, actually Kristen got a new job. That's why we
[00:06:29] Justin Green, CFP®: Oh, okay. Gotcha.
[00:06:30] Ryan Corcoran: yeah, so we, we sold that one and moved down to Rhode.
[00:06:33] Justin Green, CFP®: Okay. Gotcha. That makes a little bit more sense. Gotcha. So, um, alright, so you kinda talk about getting started, but like, where did you get the money from to get started?
[00:06:43] Ryan Corcoran: All right.
I had no money and so, um, here's the big, huge like misconception in real estate that number one, it's two misconceptions. You don't need real, you don't need money to buy real estate, which is a lie. You do need money, but, um, you don't need a ton of money. Okay? So I had $5,000 in my name, not enough to buy a property at all.
When you're. So what did I do? I, I went out and asked people for money and I said, If you lend me, um, you know the capital on this, I'll pay you back over the course of the, the lifetime of the loan with cash flow. And so I was able to convince my uncle to lend me $110,000 and I was able to convince my parents to lend me $10,000.
So I combined those two. I bought the property, I spent every dime of my $5,000, and then I started collecting rent. And then when I sold it, I paid them all back off and then I was left. Yeah, whatever, an $80,000 check on the first duplex. And so from that model of borrowing other people's capital, buying, first of all, buying a really good deal and combining other people's capital, you're able to force appreciation in a property.
And then you can, when you sell it, you know you pay back the balloons and then you're left with equity.
[00:07:49] Justin Green, CFP®: All right, so I'm gonna push back a little bit cause I think people listening are probably gonna be like, I don't have an uncle with $110,000. So where, where would you go? Where would you go if you don't have family members? Um, to help out there?
[00:08:04] Ryan Corcoran: So I don't care who you are.
Every single person who's watching this knows somebody with money. Uh, it, I literally, I don't care who you are. You, you know, somebody, it could be 20 grand. It doesn't have to be a hundred thousand dollars because if you think about it, you could go to a bank and get 80. Of a, of a property in a mor in a mortgage, right?
So they're putting up 80% of the, the cost. If you're buying a, say you're buying a, I don't know, $500,000 home or let, let's just something less, It could be, let's say it's $200,000, right? Someone's putting up 160 grand of it, you need to come up with 40,000, right? So you don't have to come up with 120. So everyone has somebody that they know who has money.
Um, and so your job as a real estate investor is to find really good deals and combine that with capital. Now, it can be your own capital, it could be somebody else's capital. It doesn't have to be a family member. It could be friends, it could be coworkers, it could be a boss, it could be, you know, people you meet.
I will say that my uncle has invested one other deal with. But I've raised, like, dude, I've raised probably 6 million and he's done uh, 200,000 of it. So, you know, a lot of people say, Oh, you're lucky to have your uncle. I for, I was very fortunate, but if he wasn't there, I still would've been able to get it done cuz I would've found the money some somewhere else.
[00:09:19] Justin Green, CFP®: So after that, you started kind of, you know, you talk about the money you raised, you, you went, you went bigger, right? No more duplexes, no more,
[00:09:27] Ryan Corcoran: more duplex. No more TriFlex. No, because, Because, yeah, because like I said, I wanted to build a business out of this, right? This was where I was number one. It was where my cash flow was coming in. I was gonna live off of this.
And so you can buy duplexes and plexes all day long. But here's the problem. When you have a tenant that leaves, it takes about a month to turn it over, right? So your margins are very small. So let's say you make, I dunno, $600 a month on a three family. As soon as one unit is. That income is completely wiped out and now you're negative.
So now you're coming outta your pocket to pay for that unit while it's being turned over. Not to mention you have to paint. Stay there. Yeah.
[00:10:03] Justin Green, CFP®: Yeah, let's stay there because I think that's something that a lot of people miss. So it real estate's one of those topics where I feel like people think it's the easiest thing in the world. You know, just buy a house, rent it out, and like it just comes, money comes, right? And I always have to bring 'em back to earth in the sense of like what you just said is like, No, you gotta do the math here, because it just takes one month of not renting that out.
Two, change the numbers. Now that's a very conservative, Now what happens if you can't run it out for two months or three months? Like, do you have the cash flow to one even like float this mortgage, You know, stuff like that. So I think that's a really good point you make there is that you really have to do the math because if the margins aren't very high, you need to be prepared for the possibility of 1, 2, 3 months of, uh, unoccupied living.
[00:10:53] Ryan Corcoran: Correct. And so I will say that I haven't really had a vacancy longer than a month. And, and because when you buy a property, you wanna make sure that it's in a, a good location. Right. And so if you're buying a property in a half decent location where you have demand, as soon as the rental is out, you've got, I mean, we are flooded, consistently flooded with, with renters.
Right. And so, but I, I certainly agree with you. I mean, you have to be able to weather a little bit of a storm and. That's why I started, I got away from duplexes and Plexus and I started doing eight units, 10 units, uh, 36 units, stuff like that. Because if, even if five units are gone, it's still, it'll still cover.
And so, um, now fortunately, if you buy a three unit and you're making $600 a month, after like three months, you've got enough money in the bank to cover a vacancy for a month or two, which is the idea, right? You can never live off of this is, let's just talk about this because there's a huge, like, Oh, I'm gonna live off of passive income for my cash flow and. Dude, if someone says that they're full of shit, like they just, there's no frigging way that you're living off of cash flow from a rental property. It's not gonna happen. Because what happens if a roof roof goes $15,000, that's your entire year of cash flow gone. What happens if three of them go right now you've got 45 grand to come up with to, It's just, it's impossible.
So you have to have something else to support your real estate investing.
[00:12:13] Justin Green, CFP®: Yeah. No, I really like that point because I also think a lot of times people. and I wanna actually, I'm curious, how do you find like the right area to buy in? Like what are some of the things you look at but, um, cuz I, I think sometimes people, they just go for like the cheapest, which usually means one, it's probably in like poor shape or two, it's probably not in a nice neighborhood.
So, you know, you might get tenants that destroy the place or it might just need a lot of repairs. And that's like gonna be like a, a a, a bucket with a hole in it, right? You're just gonna be leaking money. And so how do you like take the time to figure out if it's the right area, Like what the demand, like renter demand is?
Like, are there any resources you'd recommend there?
[00:12:52] Ryan Corcoran: Yeah. So first thing you need to, if you're gonna invest in real estate, make sure that the area you're investing in has a growing population. Um, what that tells you is that typically those jobs coming in, typically the education is pretty good.
It's, it's a relatively safer area. Um, people wanna live there, right? And so that's, that's really probably the most important demographic I would look at. Um, and in terms of buying the cheapest property, So those actually, if you're starting, it may not be a terrible move to buy the cheapest one because it's gonna cash flow a lot, right?
So if you, if you're trying to replace a job or you're trying to generate more income, not a bad route, but you gotta remember that those properties don't appreciate like a property in a B or an eight class area do. And the real wealth in real estate is when you. Hold a property over time. It's not just buying a property and then sell it right away.
It's buying a property, holding it for five, 10 years and watching it double in, triple in value. And that appreciation is where you become extremely wealthy. It's not the cash flow. The cash flow keeps you above the water as it's growing and growing. Appreciation.
[00:13:53] Justin Green, CFP®: Yeah, that makes sense. So you're more focused on appreciation and then just kind of flipping them
[00:13:58] Ryan Corcoran: It's, it's bo, it's, it's both, right?
So I won't buy a property if it doesn't cash flow because then I'm coming outta my pocket every month, right? That doesn't make sense, right? Um, and so also if I'm raising money, I need to make sure that the deal is gonna make enough cash flow to pay the investor every month, right? But I don't want to invest in a D area or an F area.
And what I mean by that is, you know, we have a class B, class C and D, right? So D is like the hood
[00:14:22] Justin Green, CFP®: who's rating those.
[00:14:24] Ryan Corcoran: It's, it's like a subjective opinion really. Like for example, like summer, like downtown Cambridge, let's go. That would be an A class area, a B class area might be, oh, I don't know. Um, uh, some area in CHUs for Massachusetts, right, where it's not that close to Boston, but still relatively expensive value is probably gonna increase pretty much quite often.
C I don't know if people know Massachusetts, but be like areas of Fitchburg. Right? But d is also Fitchburg. Uh, and so yeah, so that you, I try to stay in the B area.
[00:14:56] Justin Green, CFP®: Gotcha. Okay, that makes sense. I once heard someone talk about, uh, he was a real estate investor and he was, he looks at U-Haul data. So he looks at U-Haul data to see where people are moving into, like the trends of, And I think, uh, when I had listened to this, he was talking about like, uh, a lot of people had moved from Cali to.
Um, so you could like see U-Haul data and I'm not really sure where you get that from, but you could see that there was a lot of U-Haul being rented that were getting dropped off in Austin, Texas, which showed that like there was, you know, an incoming population. Yeah. I thought, I was like, Wow, that's like genius.
I
[00:15:31] Ryan Corcoran: Yeah. That's super interesting. Yeah. That's super interesting.
[00:15:34] Justin Green, CFP®: I don't know where you get that data, but it was, he was a, I can't remember who it was, but he was a big real estate guy and uh, I just thought, yeah. I was like, Dude, that's, that's genius because, you know, where else do you really get, like, how do you know people are moving in?
Like that's a really good, like one that people wouldn't think of.
[00:15:50] Ryan Corcoran: Yeah.
Yeah. That's great. . That's very interesting.
[00:15:54] Justin Green, CFP®: If you were a beginner though, where, where do you think you would focus? Like if you could go back. Well one, is there any regrets on how you started getting into real estate? Uh, is there anything you would do differently?
[00:16:05] Ryan Corcoran: Um, I am very fortunate that I started the way I did, but I also, if I were to start over, I would think a lot bigger, a lot faster, you know, instead of getting, you know, stuck on the two families and, and three families and you know, even like five units. I know it seems like a lot to a lot of people, but real estate is massive, right?
Like you can buy a thousand unit apartment complex, right? So I, I would just think a little bit bigger. I probably would've shaved a few years off of my investing if I, um, had sped it up a little bit and, and thought a little bit bigger, a little sooner. Um, but, you know, I don't regret anything cuz I learned how to do everything myself.
I learned how to manage everything myself. Um, now obviously I don't do any of that. You can't possibly do that with that with 200 units, but, um, but yeah, it taught me each level on the way. Uh, but I just think that if I were to do it over again instead of trying to buy, you know, a three family, I would try to. Maybe partner up I'd, honestly, what I would do is I'd partner up earlier because once I started partnering with people, my, my net worth, my income, my scalability, everything just like eight x in, like, like that. Um, and so, but if you're gonna get into real estate, you gotta understand that it's a full-time job all the time.
And so, There's no such thing as sitting back and just collecting a check unless you, unless, unless you take your capital money, your money, and you're investing it into some sort of deal where you are a passive investor. And so that is a good route for somebody who wants to invest in real estate, who doesn't want to deal with it.
I, on the other hand, like the active side of it, because I can manipulate real estate, I can control real estate. I literally can control how much money I make from it. I can get creative as I want to. Um, Make more money from it and live, live a, you know, an abundant life through that. Um, and not use much of my own capital, which is another plus.
[00:17:53] Justin Green, CFP®: We're gonna dive into a couple different things you just said. First I wanna know, do you think that, I'm trying to word this so you can answer it without feeling like egotistical. Do you think that. Everyone can be really good at like the active side of invest, um, investing in real estate, or do you feel like you've got an edge that some people don't?
When it comes to the real estate invest, like you said, you can kind of manipulate the market to do kind of things you want it to do. Do you feel like anyone can learn how to do that?
[00:18:22] Ryan Corcoran: how to. A hundred percent. Dude, I am just a normal dude. Like you've known me for a while. I have nothing really special about me. I what? I literally what? Like I, I'm just an average dude, right? And so anybody can do it.
It just, it takes a lot of resilience and you need to be able to, essentially you need to be, it's like any entrepreneurial adventure. You need to be able to do a lot of. For a lot of years before you start seeing any result. And so a lot of people look and say like, Dude, you're 28 years old. How the hell are you in the position you're in like that?
I'm like, Dude, I started when I was 21. I've been doing this for seven years. Like it's been a, it's been a while. Like it's, it's been a long time and I've learned a ton of stuff doing it, but at the same time, I think anybody can do it. You just have to have a ver you have to also have to have very high risk tolerance.
You have to be able to, you know, borrow money and be in so much debt that you can never pay off. Like the amount of debt I'm in, I would have to. Millions and millions of dollars per like month to pay it off. Right. And it's not gonna happen. Uh, and so, but, but that debt makes me money. And that's what a lot of people can't wrap their head around
[00:19:23] Justin Green, CFP®: The, uh, so I wanna shift this a little bit. So you said it's a full-time business and, and why I got so focused on that is the audience tuning in are also business owners. They have their health and fitness business, but a lot of times they're talking about also investing in real estate. And so I want to talk about like, what are some ideas for a business owner who was building a different business, does not have the.
[00:19:48] Ryan Corcoran: that do. Mm-hmm.
[00:19:50] Justin Green, CFP®: To invest in real estate. Now obviously your bias and I'll bias, you'd probably be like, you know, build a real estate business. It's more lucrative. But anyways, so let's assume they are super passionate and love what they're doing with the business on the health and fitness side, and they wanna invest in real estate to supplement it.
And rather than build a real estate business, what are some ideas for them and how they could get started to maybe create a small portfolio that does just exist alongside. You know, the, the fitness business they're building.
[00:20:19] Ryan Corcoran: the, Okay, number one, if you've already got capital, you have a leg up, right? So if you're building a business and it's generating revenue and you wanna park that somewhere to make.
To get a return on your money. But what I would do is try to find somebody who is investing in real estate and say, Here's 30 grand, here's 40 grand, let's buy a deal together. Um, and you, you run it and I'll, you know, I'll put, I'll give my, put my money into it, right? So that's one way you can start scaling.
Um, the second way is, you know, to buy a, a three family or a five family. It's not gonna be that much time. Like get, like honestly, man, you don't get that many phone calls about toilets. You don't get that many phone calls about headaches, right? And the, what I would say is hire a property management company, right?
So when you're analyzing a real estate deal, hire a property management company and budget that five to 10%, um, on your net profit, on your gross profit. That goes to the property management company. They handle everything. You know, you have to stay on top of them. So you like, that's why it's not passive.
You still have to manage somebody no matter what in real estate. You, even if you have a property manager, everything's taken care of. You have to stay on top of that property manager. Otherwise, things didn't get outta control. Right? They don't own the property. You do, and so you, you really have to stay on top of them and make sure things are, are running correctly.
Um, but honestly, a handful of properties for somebody who's, who's doing a fulltime job or another business is really not that far outta reach. And I was doing it right. I was working a pa as a PA full-time, and I had, I had a hundred units when I working a full-time. But again, partnerships allowed me to do that.
[00:21:46] Justin Green, CFP®: would you stay local or would you are like, is, do you have any thoughts on that? Like, stay, not in your level, but if you were someone doing, you know, small.
[00:21:55] Ryan Corcoran: were
[00:21:55] Justin Green, CFP®: You know, you look in local, you look in nationwide, you look in destination areas for like Airbnb, short term rentals. We can get that, get into that as well.
[00:22:04] Ryan Corcoran: So let's, so let me just, So what I focus on really is long term rentals, flips and development projects. Okay.
And so I don't really do short term rentals and I don't really get engaged in like retail and office buildings and all that kind of stuff. Um, Maybe down the road I will, but when I started, I was hyper local. I started in my own town, and then I bought another one in that same town. Right. And I, it, it was an advantage for me because I was five minutes away at all times.
However, it it, it brings you into bad habits. And I'm gonna, what I mean by that is you buy a property that's three hours away and something goes wrong. You can't go there. So you're forced to build a system to take care of that. Okay. And so like, yeah, so you have to have a property manager, you have to have a system that, you know, gets the tenant's record and, and sends it back to the property management company.
You have to get a report from them, you have to have a contractor, you have to have everybody in place there cuz you can't be there. And so what that allows you to do is now that one building runs so pristine because you can't be there to fix things. That you can take that model and buy another one and just hand that building to the same.
And now you've got a model that you can scale. And so I don't say invest local because it's better. I think investing local, maybe the first one's a good idea. But if you do go far away, know that you are gonna be much more, um, you're gonna be much more systemized and, and things are gonna run a lot better.
[00:23:31] Justin Green, CFP®: Yeah, it's gonna force you to, Yeah, it's gonna like force you to have that system in place, um, that you might not, you might not put in place if it's local. That's a, that's interesting. I never thought about that, but, Uh, cause I think a lot of people are concerned. Usually if it's too far away of like, well then I have to get a property management company and, you know, I have to figure out who's gonna like, go repair things if something goes wrong.
And um, you know, my in-laws have places down in, in Florida, one's a long term rental, one's a short term. And, um, So I've seen some of the things that pop up and, you know, there are some challenges being that far away. I mean, uh, like you said, like you have to, you have to stay on top of the property management.
The cleaners, like for the short term rental, the cleaning companies are, are like always coming and going. Like, you have to make sure they actually showed up. Like, that can be a pain. Why'd you decide to not, uh, to not do any short term rentals? Just no money in it. Too much, too much management.
[00:24:26] Ryan Corcoran: There's actually so, Well, number one, there's a lot of management, but I'm not really not worried about that because you can hire a company to do that. Um, and a lot if you haven't catch, if you haven't caught on yet. I like to, whenever I do something, I try to pull myself out of it and hire someone to do the job that I was doing, um, to allow me to keep growing.
But the other reason I didn't do short term rental was, There's a lot of regulation on Shortterm rental right now. Like you hear about it all the time, like towns aren't allowing you to do it. Hawaii, like three of the islands in Hawaii, just , no more shortterm rental. So if you own a short term rental, Yeah, if you own a short term rent, I mean like there's some areas that are designated for it, but some of them, They were just pulled.
And so now you own a property that you bought for a short term rental that now you can't rent. Right? Um,
[00:25:08] Justin Green, CFP®: that's interesting.
[00:25:09] Ryan Corcoran: now there are ways around that. Like you can rent it for more than 30 days, which isn't technically a short term rental, and now it's a month long rental, which probably you can probably make more money.
And so I'm really a firm believer that if you're an entrepreneur and you, you buy something and, and someone flips a switch on. You'll find a way to make it work just because that's what we do. That's what we do every day. Um, but those are the reasons I haven't done that yet. And, and I like the long term rentals because number one, I barely pay any taxes.
Like, and I don't wanna, I don't want people to think that I'm ripping the system off. Right.
[00:25:38] Justin Green, CFP®: This is NOT tax advice.
[00:25:40] Ryan Corcoran: no, I am not a cpa. I am not an advisor. But, you know, let's just give an example. If I have a million dollar property and it makes me a hundred thousand dollars, Let's that's, that's extreme. Let's say it makes me 30 grand a year.
Okay. And I can write that off, that building, that million dollar building
[00:25:54] Justin Green, CFP®: Clarify, 30 grand a year in cash flow.
[00:25:58] Ryan Corcoran: in net? Yeah, in net profit.
[00:26:00] Justin Green, CFP®: Gotcha. Okay,
[00:26:01] Ryan Corcoran: make 30 grand a year on a 10 unit property, let's say, and I have 37 years to write that off, cuz it's commercial size property, right? So what that means is they take that million dollars, they break it down into divide it by 37 and whatever that number is, that's how much I get to depreciate off of the building. Let's just use for shits and giggles that they allow me to do, I don't know, $40,000 a year. I can, I can write off, right? So that 35, that 30 grand I just made, I'm not paying any income tax on that because my depreciation covered that entire amount of income. Okay? So now you start, you can start snowball on this where you make a couple hundred thousand dollars a month, you're not paying any tax.
Now you get slammed with taxes when you start flipping property and wholesaling property. And the day I sell that property, I'll get hit with taxes. But, um, but yeah, it's a huge tax advantage to own long term rentals. So
[00:26:51] Justin Green, CFP®: Yeah, that's um, Because they recapture that depreciation upon sale, right? Yeah. That a lot of people get caught off guard by that. I'm not gonna pretend like I have a, a, a, a really advanced knowledge base on that. I know the basics around real estate and taxes. Um, but I haven't gone that, that in depth in it.
Uh, but I do know that's one thing that catches people off guard is that depreciation recapture when they sell an asset. Um, so that's good to mention, but there are a lot of tax benefits to, So the way that, the way the tax code works, right, is it's set up to incentivize you to do certain things. People don't realize that, but that's what the tax code is doing.
If the government wants you to do something, they will put tax incentives in there to incentivize you to do it. And so owning real estate is incentivized you. Even just with primary real estate, you know, uh, mortgage interest, deductions, et cetera, property tax deductions. Um, and then if you actually own like investing in real estate, there's a lot of tax benefits.
And then same with business owners. You know, outside of real estate, there's a lot of tax benefits there cuz the government wants you to own real estate. They want you to own businesses, they want you to do all these things. So they're gonna make the tax code your friend to allow you to do that, even though
[00:28:07] Ryan Corcoran: And yeah. And
[00:28:08] Justin Green, CFP®: about taxes,
[00:28:09] Ryan Corcoran: And why do they, why do they want you to do that? Because every time you buy a piece of real estate, in, in my world, every time I buy a piece of real estate, I have now created jobs. I have now given somebody a place to live.
Um, and so those are the two major things that are driving economy, right? More jobs, housing. And so what they allow you to do, and this is crazy, You can buy a property and do what's called a cost segregation study. And I know we're getting pretty deep into
[00:28:35] Justin Green, CFP®: No, no, no. Yeah. Yeah. We can keep going with that. Yeah. Yeah. Cause I've heard of those and uh, I'm pretty familiar.
[00:28:40] Ryan Corcoran: so if you spend more than 500, I think it's 500 hours a year in real estate.
Um, so let's say you have a full time job and you spend 500 hours a year working on, say, by a couple rental properties. You can do a cost segregation study, which basically breaks the property down. All the components outside of the land. So we're talking the walls, the roof, the, the chimney, if there's one, the everything, right?
So that all depreciates, right? But they, it's called accelerated depreciation. And so you can take like a very large percent of that and write it off year number one. And what that now does is, so let's say that hun, let's take that million dollar property and that has $30,000 of, of net income and cash flow.
Well now, let's say the first year we're writing off $200,000 instead of 40,000 like we talked about before. That $170,000 that I did not use goes to all the other, all the other income I made that year, because I'm a real estate professional, it, it wipes those taxes out. Okay. So I essentially have a, a, uh, less of a tax liability from that.
And so what that does is allows me to go buy more real estate and pay no, pay less taxes on it. Right? I mean, it's just crazy.
[00:29:46] Justin Green, CFP®: Yeah, and, and you know, if you're looking at doing a cost segregation study, you know, definitely contact an advisor or
[00:29:52] Ryan Corcoran: Oh, for
[00:29:52] Justin Green, CFP®: advisor.
[00:29:53] Ryan Corcoran: Don't contact me.
[00:29:55] Justin Green, CFP®: uh, probably don't even contact me. Well, you can contact me. I'll get you into the right person's hands. Um, but essentially what it's doing is that you, you're right, it's breaking down the element.
So like, you know, most people when they think of buying a property, it's the building the land, and every fixture in between. And that is just one thing. But the cost segregation says, No, no, no, no. That's land, that's building the stuff in the building.
[00:30:21] Ryan Corcoran: Yeah. Essentially. Yeah. It's, it's right. It's saying that the,
[00:30:24] Justin Green, CFP®: And, and,
[00:30:25] Ryan Corcoran: last 37 years. Right. So maybe the roof last 10 years and so you write it off much
[00:30:29] Justin Green, CFP®: Exactly.
And so those, some of those items can be depreciated much quicker, which is essentially what you're doing. Um,
[00:30:37] Ryan Corcoran: Yeah,
[00:30:38] Justin Green, CFP®: like I said, you would contact your advisors. Probably doesn't make sense if you don't, if you're like doing like very little real estate. But I know once you get deeper into it, that's,
[00:30:46] Ryan Corcoran: get Yeah,
[00:30:47] Justin Green, CFP®: be a very valuable strategy.
But it costs money to do the study as.
[00:30:50] Ryan Corcoran: Oh yeah,
[00:30:51] Justin Green, CFP®: you have, you have to do the, like Yeah, you gotta, What? What is, I don't know how much it costs. Is it like pretty decent penny? Or
[00:30:58] Ryan Corcoran: Um, I'll give you, I bought one of the buildings I did this year, just, just one of them cost me eight grand.
Um, and so I do that across
[00:31:05] Justin Green, CFP®: is it one of those things like it's based on the value of the building
[00:31:08] Ryan Corcoran: Yep. Based on the value Yep. And how much work they have to do. Uh, but yeah, I didn't mean to go on a tangent on this. It's, it's just one of the benefits of owning real estate. And if, you know, if you're, you're a fitness entrepreneur, uh, or, or you own a restaurant or you own, uh, a retail store, or you are a doctor, I don't care what you're doing.
Um, I'm a firm believer that real estate is the best way for someone to build long term. Literally all you have to do, seriously buy a multifamily property, stay on top of it, manage a manager and watch it. Appreciate over 10, 15, 20 years and from literally like a handful of properties, you will become a millionaire doing nothing.
Like literally, I'm not saying hands off, right? We, we talked about
[00:31:48] Justin Green, CFP®: say nothing.
[00:31:48] Ryan Corcoran: we did talk about this, but to me, like one, at this point, one property is. You're just adding it onto the belt, right? It's just another tick on the belt. Right. I have a management company in place. I have a team that can handle it.
And so that's the goal, right? For anybody who's not in real estate is to try to get to a point where you can buy real estate and have a, have it taken care of for the most part.
[00:32:09] Justin Green, CFP®: Yeah, the, the odds of the real estate appreciating over the long term are pretty high. It's not guaranteed. Nothing's ever guaranteed in life. Uh, but it's pretty high. And so it can, it, it is a decent way to, to build wealth. Um, you know, going back to the example, if someone wanted to get started, where do they find that first deal?
So I've heard you talk a lot about like,
[00:32:33] Ryan Corcoran: before. Yeah.
[00:32:33] Justin Green, CFP®: They're hidden. They're not, you know, they're not always listed like you've gotta find them.
[00:32:39] Ryan Corcoran: The first two properties I bought were on the mls and so, I'm gonna, if, if you are looking for your first, let's say you're renting right now, Uh, I don't know, you've got, maybe you've got a wife, you don't have any kids yet.
Maybe, maybe you're, you wanna buy your first property, but you're starting another business, Right. Honestly, what I would do is I would buy a multi-family property and I would live in it, and I would suck it up for a year. Uh, and I, I know it's gonna sound miserable. Living in a three family with a bunch of people you don't know, you're gonna have to hear them over you.
The parking's crap. You live in a shitty location. I don't really care like that One year. We'll jumpstart the rest of your financial career and
[00:33:12] Justin Green, CFP®: what they call house hacking, right?
[00:33:14] Ryan Corcoran: You have to be, you have to be willing to sacrifice for a little bit. Um, but honestly, man, it's not that bad. Like if you're renting in the first place.
First of all, typically it's not be a beautiful place that you're renting. And if you are renting in a beautiful place, you're paying a pretty penny for it. Right. So I I can probably guarantee that you'll, it'll be cheaper for you to live in a three family. I'm not saying it's for everybody. Um, but that is what I would do if I were starting off in real estate.
So that's
[00:33:37] Justin Green, CFP®: That, that is how a lot of people start. Yeah, that's a good idea. House hacking is a very common way to get into real estate cuz you're there, you're local. If something does happen with the other two apartments, you're on scene. Um, yeah, maybe it doesn't help you build those systems yet, but like it's a good intro.
[00:33:54] Ryan Corcoran: the worst case scenario is you absolutely hate it and you rent the unit that you live in and now you have a frigging property, right? You can move out if you want to or you sell it, right? That you can al you can pretty much always reverse something. Um, and so the next step I would do is if you don't wanna do that and you live in a house already, you maybe have a family and it's not feasible for you to live inside of an apartment, which I totally understand.
Find a really good real estate agent, try to find and network with people who are in the real estate space, go to real estate meetups. That, that's probably one of the biggest things you could do is start networking with people who are in the space. You don't have to own property to go there, but when you show up there, you're gonna have people who are miles ahead of you in knowledge of real estate that you can leverage now.
Um, so yeah, that's what I would do if I was looking to start off.
[00:34:36] Justin Green, CFP®: Yeah, it's always a good idea to find a room to hang out in where you're like the least knowledgeable.
[00:34:41] Ryan Corcoran: man, dude, I could go on for days about. That's all. That's literally all we did. That's, that's our job as an entrepreneur is to always be the stupidest person in the room. So you're consistently moving forward, so you're consistently uncomfortable, uh, and then your mind just starts keep opening up to new ideas.
[00:34:57] Justin Green, CFP®: absolutely. Cuz yeah, you meet people who are on levels above you and you're like, they're doing things you didn't even, you never would've even dreamed of. And they're like, that's like the base baseline for them. You know what I mean?
[00:35:08] Ryan Corcoran: yeah, yeah, yeah. No, I don't want, I don't wanna drag this, this point on, but when I moved here to Rhode Island, um, I joined a mastermind down here, and that's not just real estate. Like one guy owns a plumbing business, one guy owns a management company. Uh, another guy owns a restaurant, right?
So, and they're all young. We're all in our, we're all late twenties, early thirties, and we're sitting down and we were like, All right, what are your goals for the year? And mine? I said, My goal, I forgot, I think I said, I want 250 units by the end of. The guy next to me goes, Yeah, I wanna make a million dollars a month.
The guy next to me, the guy next to that goes, I've made $2 million and it's January and I need to get to 10 by June. And I'm like, Dude, what? Like, like my mind was blown. Right? And now since, since then, I've partnered with all six of those guys on deals, my income has increased. My, everyone who I'm around. Everyone's elevated. It's just crazy, man. Like that's, It's probably the number one thing anybody can do in any business is to just get around people doing things that you can't even like wrap your head around.
[00:36:06] Justin Green, CFP®: Yeah, just get in the room. Just find a way to
[00:36:08] Ryan Corcoran: Correct. Even if you have to pay to do it. Like I pay to get in the room with people. I don't care.
Like getting in the room is huge.
[00:36:14] Justin Green, CFP®: Yeah. All right, man. Final two questions I ask everyone. Uh, this doesn't have to be real estate, but what is the most irrational emotional thing you've done with money?
[00:36:24] Ryan Corcoran: Oh man. Dude, I am a car guy. I like, I, I, I, I just have purchased cars for no reason. Like, and I, I regret it like right after, and I'll either sell it or, or maybe I won't. Like, I, my, my dream to have a car collection, right? So I've got, I'm growing that right now. Uh, but yeah, that's the most reckless thing I do.
I will spend money on cars.
[00:36:43] Justin Green, CFP®: Cars is a very common answer. Not in your, not in the sense of like collecting cars, but a lot of times people, cars, cars get people, right. They even as a financial advisor, I know I had to buy a car in 2018 when mine died and I went into the dealership and as like I left when I left, I just looked at my wife now and I was like, I really get it.
Like I get how they get people. Like, they almost got me, like I can get it. And she actually, she helped me. What do you mean?
[00:37:14] Ryan Corcoran: spend, could you spend money on worse things? Like, like I'm, I'm not saying it's a good, financially it's a good
[00:37:18] Justin Green, CFP®: Yeah, I mean, I get you, I get you. But like when people. If you can't afford it, then yeah.
[00:37:26] Ryan Corcoran: Oh, that's a different story, dude.
[00:37:27] Justin Green, CFP®: You know what I mean? Like if they, Yeah, if they get you to, you know, I'm thinking of like, I just saw the other day circulating on social media was like this car dealership did like a to or something and like went around to the employees and like, Hey, what's your car payment?
You know, what's your car payment? Everyone was like 13, 1400 plus and I was just like, Man, are we really trying to normalize that? Like
[00:37:50] Ryan Corcoran: I, I have a, I have a, I, I have a rule that I stick by. I will not buy any type of vehicle, whether it's financed or I, I buy it outright. If I am not, first of all, if I'm spending more than 10% of my income on it, I won't buy it. And if I don't make five times the car, then I won't buy it.
So right there, like if I'm gonna buy a hundred thousand dollars vehicle, I gotta be making over 500 grand a year for one car. Right? And so,
[00:38:14] Justin Green, CFP®: And that's the thing. So there's levels, right? So it depends on what you're making. If you're, if you know, if you're making good money and you wanna spend a little bit more in a car, totally fine.
[00:38:23] Ryan Corcoran: Absolutely.
[00:38:23] Justin Green, CFP®: But one, I used to say don't buy brand new. But then the market kind of flipped a little bit. So it was actually
[00:38:30] Ryan Corcoran: a new one.
[00:38:31] Justin Green, CFP®: for a while.
[00:38:32] Ryan Corcoran: could get like an allocation, it was cheaper to buy a new car than it was to buy a used one.
[00:38:36] Justin Green, CFP®: Yeah, it was weird. So I don't really say that anymore. Originally that was always my thought, and even when I bought, actually it made sense for me to buy a new one. Um, and I did like an 18 when the nineteens were coming out and so like the eighteens were heavily discounted. But anyways, Um, Alright. Last question.
You're sitting in front of a financial planner. What's one financial question you would have?
[00:38:56] Ryan Corcoran: All right. I, my knowledge on the stock market, the, uh, bomb, all that kind of stuff, man, I haven't focused a ton of time in that. So if I'm sitting in front of a financial advisor, it's okay if I have, let's say I got a couple hundred thousand dollars I wanna invest in the stock market. Where do I even start?
[00:39:17] Justin Green, CFP®: So, yeah, the, the couple things you would wanna look at,
[00:39:19] Ryan Corcoran: at is
[00:39:20] Justin Green, CFP®: What is your goal? Like, what's your goal of the account? Um, and tie it back to that, right? Cause there's different types of accounts. There's retirement accounts that you're gonna be penalized if you touch before retirement. Um, there's like a brokerage account which could be very flexible and, you know, could come in handy down the road if you needed it for a real estate deal, for, you know, use that example.
Um, so first thing you want to do is figure out. What do you need the money for and how, what is the time period? Is it three years, 10 years, 20 year, Three years? Don't touch the, the stock market. Anything under five years. You probably don't wanna touch it. It's too risky. Uh, year to year, like over the long term.
It's got a pretty good track record, you know, eight to 10% annualized over the long term. Uh, year to year, three outta every 10 years, it's gonna be down. You don't know which three years those are gonna be, right? So anything short term, you don't really wanna mess with that. You wanna keep that kind of liquid and out of the markets, right?
So that's, that's the first, uh, the first two things. Uh, what type of account you think you need, uh, your time period. And then the third one is honestly like, Figure out what type of risk you can handle for you. I already know you're
[00:40:29] Ryan Corcoran: know, I was just about to say, let's say I don't need the money and I'm super risky.
So
[00:40:33] Justin Green, CFP®: Yeah. So in that sense, like you're probably going to be looking at almost a nine, like sometimes like a 90 to a hundred percent stock portfolio.
[00:40:41] Ryan Corcoran: Mm-hmm.
[00:40:42] Justin Green, CFP®: And honestly for someone who either hasn't looked into it that much or like just wants it to kind of sit there and do its thing without you handling it, you wanna look at like low cost index funds. Um, so, you know, I'm not in the business given specific investment advice on the podcast, but those are the things you would wanna look at.
Like what type of, uh, low cost fund could I just sit there and park it in? Um, and you could look at, you know, there's, there's US stock funds, there's large. Uh, which is gonna be like a little bit more stable, a little less risk, which means less return. Mid caps and, and small caps are usually, um, They're a little riskier cuz they're smaller companies, but they, when they're growing, they're gonna grow faster.
So there's a chance for a higher return. Uh, to be honest with you, the market right now sucks. We're down like 20%, which is honestly a good time to
[00:41:31] Ryan Corcoran: time,
[00:41:31] Justin Green, CFP®: buy because you buy low, sell high. That's the name of the game. Unfortunately, human behavior like does the opposite, right? Whenever people start a, whenever people start coming outta the woodwork to ask me about investing, it's because something is really, Hey, dude, Should I be investing in Tesla?
Uh
[00:41:49] Ryan Corcoran: yeah. It went up, It went up
[00:41:51] Justin Green, CFP®: at an, it's at an all time high. Okay. You know, should I be in game stop? Uh, it's at $350 a share and the company's like terrible. You know what I mean? So like, human behavior is always driven by that emotion. They're like, Oh, it's doing really well. Maybe I should buy when it's actually the reverse.
Like, you know, things are struggling right now. It's not a bad, bad time to, uh, maybe put some money in there now, to be honest with you, for someone building a real estate, Your returns might be better, to be
[00:42:19] Ryan Corcoran: Well, you know man,
[00:42:20] Justin Green, CFP®: But it's, but it's a business, you know what I mean? Like, if you, it would be more about diversification for you.
Um, it would be more about just like, you know, having something that's not a hundred percent correlated with the real estate market. You know what I mean? Like, it, it may, it may not pace your returns, uh, but if the real estate market tanks, like maybe the stock market doesn't go hand in hand, sometimes it does, sometimes it.
[00:42:43] Ryan Corcoran: yeah. I know we have to wrap this up. I, I want to just end with one point because I, so the reason I brought that up is because Sure, I don't, I don't know the stock market that well.
I have some, I have some capital in it, and it's doing fine, but I can't, I don't have time to pay attention to it, and I just want to stress that. So a lot of people say millionaires and everyone is super successful, have a bunch of streams of income. And that's true, they do at some point. But dude, to make a million dollars and to become wealthy and successful in your business, you have to focus on one frigging thing until you're so goddamn good at that, where it can run on autopilot before you can start like doing a hundred different things because someone else is gonna beat you, right?
You're just not gonna grow. You're not gonna grow, and you're not gonna, It's almost impossible.
[00:43:25] Justin Green, CFP®: I agree a hundred. I agree a hundred percent with you. And, and that's usually when I have fitness business owners who start to think too much about real estate. I try and remind them, uh, do not take your attention away from the business that you've already spent five years growing. Um, and I'll leave that on one thing.
There's a comment saying it's, um, concentration will get you rich. Diversification will keep you. We.
[00:43:46] Ryan Corcoran: correct.
[00:43:47] Justin Green, CFP®: All right, man. Let everyone know where they can find you and learn more.
[00:43:49] Ryan Corcoran: All right, man. Um, I have a terrible relationship with social media. I'm starting to grow it. Um, so Instagram TikTok at RJ Corcoran oh eight, and then I started a YouTube channel.
So if anybody wants to learn about real estate, please jump in there, learn something that the point of it is, uh, you know, to give away as much information as I can so people can do what I do.
[00:44:06] Justin Green, CFP®: Appreciate your brother.
[00:44:07] Ryan Corcoran: All man, thanks.