Real Estate Speculation vs Investing | Q&A with Paul Moore
Wealth building doesn't have to be difficult and time-consuming. Knowing the effective modes of investment and approaching them with the correct mindset can surely set you towards passively accumulating wealth.
In this episode, Paul Moore shares his knowledge about investing and how to ensure you aren't simply speculating. He discusses multiple aspects of real estate and whether or not they are a good investment. Paul also talks about his insights on business and entrepreneurship, along with the adversity one can expect in taking this path.
Tune in to this podcast to learn more about real estate investing!
3 Reasons to Listen:
- Learn about the challenges of being an entrepreneur and building your business from scratch.
- Figure out the differences between investing and speculating.
- Identify the advantages and disadvantages of various real estate investment types.
- Bigger Pockets blog by Paul Moore
- How To Lose Money podcast
- The Perfect Investment – Create Enduring Wealth from the Historic Shift to Multifamily Housing by Paul Moore
- Human Trafficking & Real Estate
- Receive a 5-part free eCourse + two free eBooks (mobile home park investing and self-storage investing)
Paul Moore is the founder and managing director at Wellings Capital. He is also an author, podcast host, and contributor to Bigger Pockets and Fox Business.
Paul began investing in real estate in 2000, flipping over 50 homes and 25 high-end waterfront lots and rehabbing and managing dozens of rental properties. He also developed a subdivision and started two successful online real estate marketing firms.
To know more about Paul and his work, you can visit his website. You may also reach him through LinkedIn.
[03:20] About Paul and Wellings Capital
- He’s been married for 33 years and has four children.
- He used to work in Ford Motor Company in Detroit.
- Wellings Capital walks alongside accredited investors to create more wealth and save on taxes.
- The company provides a way for interested individuals to get involved in recession-resistant commercial real estate.
- People can invest and own a fractional piece of dozens of commercial real estate assets through their funds.
[07:44] Being an Entrepreneur
- An entrepreneur creates something out of nothing.
- Entrepreneurs can take an idea of passion, find an underserved niche, and create something that serves mankind.
- Entrepreneurs must be wary of chasing shiny objects and giving up on projects as fast as they start new ones.
[10:29] Experience in Engineering
- Paul had a degree in petroleum engineering, which wasn’t as fruitful, so he decided to get an MBA.
- He feels like he was never meant to be an engineer, even with high grades in science and math.
- He realized that marketing, writing, and content generation are the industries he fits into the most.
“An entrepreneur is somebody who is very creative and takes something and creates something that wasn't there before, out of nothing.” - Click Here to Tweet This
[14:48] Lessons From A Corporate Environment
- The people with the easiest jobs were the most unhappy and miserable employees.
- If entrepreneurs don't strike a balance between working and resting, they'll burn out.
- He realized he has to be fully off on certain days and fully on work during other days.
[17:40] Being Entrepreneur of the Year and Business Struggles
- The title had value in his resume over the years.
- He was afraid of being unmasked as a fraud because he was in a small company.
- He realized that almost every successful person on the planet has impostor syndrome.
- Being a serial entrepreneur will put you in a perpetual stressed-out emergency mode.
- Be prepared to lose a lot of money, time, and sleep along the way.
[23:25] Experience in Non-Profit
- After selling his company, Paul moved to Virginia, bought 120 acres of land, built several homes, and started Gateway Ministries.
- The goal of the organization was to welcome international students and introduce them to American culture, customs, and people.
- They also fund mission trips and thwart human trafficking.
- Retiring and being bored made him into the worst version of himself.
[27:18] Investing Versus Speculating
“Investing is when your principal is generally safe, and you've got a chance to make a return, but speculating is when your principal is not at all safe.” - Click Here to Tweet This
- Investing is when your principal is generally safe, whereas speculating is when it’s unsafe.
- Entrepreneurs turned investors are dangerous as they take risks and try to innovate.
- Great investors are disciplined and sort of boring. You should not look for excitement.
“I wanted excitement out of my investing, and it cost me dearly. I made a lot of money, but I lost a lot of money as well. And I learned the difference.” - Click Here to Tweet This
[30:32] The Effect of the 2008 Housing Crisis
- Before the crisis, he was in a large boom, starting a real estate company.
- He found himself where he was exactly ten years before, where he was two and a half million dollars in debt.
- Paul had a light bulb moment and found a way to subdivide and develop his land. Listen to the full episode to learn more about Paul’s story!
[41:09] Finding God
- God isn’t a big vending machine in the sky, but God truly is faithful.
- God has given him a lot of talents and gifts. His purpose is to create inspirational content.
- Stepping out in faith when you have a clear word from the Lord will be rewarded.
[46:34] The Pros and Cons of Real Estate
- A lot of single-family portfolios end up working harder than they need to.
- Flipping can be a great way to make short term money.
- Luxury real estate is overall somewhat speculative, and you could lose money paying dues.
- Home construction and subdivision development is risky and also somewhat speculative.
- Listen to the full episode for more insights about residential real estate!
“I'll tell you, a lot of people who build portfolios realize they're working harder than they need to, to make less than they could.” - Click Here to Tweet This
[52:08] On Commercial Real Estate
- In commercial real estate, the values are not based on comparable properties but on the income divided by the rate of return.
- You can significantly increase the asset value. That's why the wealthiest people own commercial real estate.
- Mobile home parks are one of the best things to invest in, as it is a recession-resistant asset class.
- Self-storage units are also a very recession-resistant asset class.
- Multifamily housing is now in the speculative territory and is very risky.
[01:01:14] Investment Funds
- Funds can be blind pools, so people don't know what they're investing in. They also have extra fees that will lessen the amount of return.
- However, it’s possible to mitigate these disadvantages by defining terms clearly and negotiating better deals.
- Investors can also diversify.
[01:04:47] The Investor Criteria
- Potential clients are professionals in their high-earning years and want the wealth-building potential of real estate.
- People who are already in real estate but working harder than they should can go passive and earn more money.
- High-income earners who are trying to get tax breaks are also potential clients.
- The minimum investment size is $50,000
“You don't have to know all the details about real estate to know if you can trust somebody and you can evaluate their track records. So find somebody you can trust. Evaluate them very, very thoroughly.” - Click Here to Tweet This
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