Ed Cernobori is a reformed financial advisor that realized real estate is the best form of wealth creation and dedicated himself to building rental property portfolios for himself and his clients in multiple markets. Most financial advisors don’t think about hard assets like real estate. Ed fell in love with these non-traditional assets, which changed his career path. Because of the passive income cash flow, he helped his parents move from the stock market and into turnkey rental properties. Today, Ed has been a rental property management client of JWB for 4-5 years and lives in the San Francisco East Bay Area.
Ed’s strategy for growing passive income cash flow through rental property management is simple. You only buy the house once, but you deal with your property manager every month as long as you own your investment. So, regardless of who you bought a home from, you need to know the best rental property management deal for a rental property investor.
In today’s discussion, Ed Cernobori shares the following:
- What are the best rental property management practices across the biggest rental property investment markets in the US?
- What are the best markets for you, depending on the type of investor you are?
- Why he went from believing in stocks to investing in real estate and the passive income cash flow it creates.
What Was That Transition Like From Investing In The Stock Market To Rental Properties?
Ed was a financial advisor for 15 years, and he shifted his clients from stocks to hard assets like real estate. He visited a lot of different cities to see which city and group were best for his parents. He traveled to JAX and met JWB, and the rest is history!
But before that happened, a friend of Ed’s sent him a link to buy a property online. “Can you believe people can buy properties online?”
He clicked on the link and bought the house in Houston, TX for approx. $77K. He was hooked on buying real estate in other states because living in the SF Bay Area, that price point was super appealing.
Most investors in the stock market start small. They typically begin with a savings account and have modest financial goals that include mutual funds. Over time, they accumulate more savings and invest in individual stocks. If they are lucky, these stock market investors can find income-producing stocks to get them closer to earn money in the short term.
But when Ed saw that he and his clients could generate passive income streams via turnkey rental properties at low interest rates that top-shelf rental management companies like JWB manage, he saw that was the ideal place to invest. That was the key to transitioning his focus from stocks to real estate investments.
What Do You Like About Rental Properties That Made You Make A Change?
Carlton Sheets is someone he’s followed, but in CA, it is harder to find cash flow positive rental income. When he saw that investing in real estate was natural to him and he could see the returns, he remembers in 2016 that he had a few properties, and the stock market was having a banner year at 20%. But the four properties he bought were performing better than his stocks.
He saw firsthand what all the real estate podcasters were talking about. He was looking at investing through the traditional lens of the stock market but saw the comparisons first hand that real estate is a better investment.
The thing about real estate is the different ways it appreciates and how you get income. It’s the tax benefits, the protection against inflation, the cash flow, and the leverage you get. There is also the fact that real estate is tangible.
There are so many benefits to investing in real estate. You benefit a local community directly when you own real estate in that market versus the intangibles of holding Coca-Cola stock.
People who invest in the stock market desire appreciation of the stock. If you have a 16% or 20% appreciation in stocks, that’s a banner year.
By comparison, you will have 4% appreciation in real estate in a typical year, and the cash flow you receive is usually a 16% return. That’s a “normal” real estate year, plus you get more value by holding onto a tangible asset like a rental property.
Shares in a company aren’t tangible, while real estate ownership is a hard asset. For these reasons, Ed Cernobori invests in real estate on behalf of his client’s investment portfolios.
What Assets Did Ed Have Available To Invest In Real Estate?
He had the assets in his savings account for the $20K to put down on the $77K house. Later on, he took money out from his IRA to buy a house, but now he knows better than to do that. He took a hit on taxes, and now he knows there are other ways to do that, like opening up a Self Directed IRA. But the house he bought with that $30K from the IRA has doubled in value.
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How Did He Decide To Invest In Jacksonville?
He went to different markets where the appreciation was growing. He invested in Dallas, but he saw the prices were going high, and it was harder to get positive cash flow. His parents wanted to move their assets from the stock market into real estate, so Ed invested in Memphis, Atlanta, and Jacksonville on their behalf.
Typically, you want to get the 1% rule of investing in a $100K house and get $1000 in income. But when you invest, you buy in different areas for different things. He invested in Dallas and Houston for growth, and Jacksonville for cash flow and growth.
If you’re not going for cash flow, you’re speculating. Your success all depends on your investment philosophy.
What Are Typical Rental Property Management Practices Across The Biggest Rental Property Investment Markets In The Us?
In his search for the ideal rental property management companies to handle his clients’ real estate portfolios, he began with his own portfolio. Ed soon discovered, “You have to kiss a lot of frogs.” But referrals and reputation are a big deal, which was the biggest reason he invested with JWB.
For example, Ed “kissed a frog” in Houston with a property management company that had four tenant turnovers on one property. He wishes he would have flown there before working with them to meet the team in person. That visit ahead of time would have helped him discern if he should have worked with this Houston property management company. However, that’s a hard lesson he learned, and Ed hopes others can learn from his mistake.
If you are looking at a property management company, meet them if possible, interview them, ask them for regular reports, and schedule out what inspections you want to be done on your property. If the property management company cannot do that for you, it’s a disaster waiting to happen. Ed stated he would be selling that Houston property because of the mismanagement.
Lousy property management cannot only hurt your long-term investment success, but it can also damage one of your most valuable assets — your reputation. Communication between you, your property management company, and your tenant is key to success. There are many lousy property managers out there, but JWB is a fantastic rental property management company!
Make it part of your routine to look over the reporting and call your property management rep to go through it with you. Is the communication good? While settling for passable property management is fine, as real estate investors, we owe it to ourselves to place real value on excellent customer service if we genuinely want to accelerate our real estate investment business.
How Did Ed Buy From JWB, Plus Purchase A Jax Property On His Own For JWB To Manage?
Ed bought properties from JWB, and he purchased some of his own as well. Ed started buying turnkey rental properties from JWB in the existing inventory. We knew it was a good-performing property. Great experience!
Ed bought new construction from JWB next. After that, Ed purchased a house from a real estate agent and remodeled it in Jacksonville. Then, he handed it to JWB to manage that property.
If you want to flip rental properties, you’ll need these three pieces to the puzzle: time, quality, and expense. If you have those three things, you can flip properties in JAX and turn over the property management to JWB.
But are you willing to do all of that work on your own? Flipping properties in a different state from where you live come with a whole different set of headaches.
However, due to Ed’s experience, he has gone more into an active role in investing in the Jacksonville real estate market. So if you want to develop your own properties, you can be like Ed and have JWB manage those properties for you.
Ed shared a story about how he tried a different rental property management company in Jacksonville, and it was not a good situation. He made the mistake of managing these properties himself. Later, he tried other property management companies and found the same mediocre results. Today, all of Ed’s eleven Jacksonville rental properties are managed by JWB.
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How Did Ed Go From Believing In Stocks To Investing In Real Estate And The Passive Income Cash Flow It Creates?
Ed learned that JWB takes excellent care of his parent’s portfolio. He bought properties with existing tenants and property management companies. He tried working with these different property management companies, and the differences between them and JWB were apparent quickly.
Other management companies have a team and a business model similar to JWB. But the response time is different.
You will not know the difference between property management companies until you work with them firsthand. They don’t do long-term leases, and their professionalism is lacking. Their communication wasn’t excellent either.
If you don’t know what your inspection is or what your cash flow will be, your chances of bringing in a solid income are riskier. You want excellent communication and long-term leases. There’s a big difference between seeing the rental’s performance versus guessing what the rental is doing.
With JWB, you get to be a passive real estate investor. They give you the security of knowing your property is in capable hands that will keep things running smoothly, leaving you room to focus on what you want to do.
In a sense, he is using the give to get the principle. Ed wants to renovate houses to contribute to the community and use the money earned to grow the real estate portfolio.
What Is The Difference In Experience When Investing Turnkey Versus A Syndication?
When you own a turnkey property, you own one or two, and you don’t get much income. So you want to own more turnkey single-family homes to grow your investments. When you own your properties, it’s more work, but you have more control.
When investing in syndication, you’re getting fractional ownership of a pool of houses, and you don’t have control. The syndicated properties you own have the benefit of you not having to do a lot of work.
Ultimately, people are better off investing on their own, but not everyone can afford to. That’s why owning homes via syndication is an option. It at least gets you into investing in the real estate market.
If you can own a tangible asset, that will give you the most long-term growth. There is undoubtedly a place for syndications, but that is often reserved for accredited investors. But the diversification of cash flows and assets is a great way to go.
You can do that with turnkey rentals, but the plan will take longer. They will both get you to your goal. If you’re only buying one property, it won’t pay off like multiple properties in your portfolio. The goal for owning turnkey properties is to own many of them.
With stock markets, you don’t know if it’s going to go up or down. With real estate, you’re in for the long game, and you’re going to grow your assets over time at a faster rate than the stock market.
Is Ed Cernobori Still Working A 9-to-5 Job?
Yes, Ed went full-time into real estate and started a syndication company. He is investing people’s money in real estate. He helps spread the word about investing in real estate versus the stock market.
Ed wrote an ebook about this topic, and you can learn more from his website at www.BlackTreeGroup.com.
Does Ed Buy And Hold Or Flip The Properties He Invests In?
Ed buys and holds the property, typically. The first house in Houston he purchased is the first one he’s thinking about selling. Ed may 1031 Exchange it, but could also buy something else with it. He’s selling it because the rental property manager isn’t up to his standards.
Most people look at the house first and the property management last. Ed discovered that he needs to flip that notion. Investing with a good management company is more important than the money you make off of the house.
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What Tools Can You Use To Decide On The Market You’re Investing In?
If you want to look at these free tools, visit www.jwbwebclass.com. JWB put together a free webinar that shows you everything you need to be successful in identifying the real estate markets that will offer you positive, passive income cash flow.
A home from Woodstock spoke with his fiance and saw the numbers making money on this. He went with his gut and the numbers, and he got excited about his investment in the Inn.
Does Real Estate Generate Better Returns As An Investor With Lower Risk?
Yes. Ed says that real estate is better hands-down. With real estate, you have appreciation, tax benefits, and cash flow. With stocks, you don’t hold onto tangible assets. People tend to lose more or make less when they invest solely in stocks.
Focus on what’s practical rather than a historical study. Ed sees that some reports that come out have an agenda. Fees and taxes are usually not included in these reports either. When you invest in the stock market, you don’t have leverage nor cash flow.
Real estate takes work, but the returns are good, and your risks are reduced because of the rental income. Your Return On Investment can be much higher in real estate over the long haul.
How Can Someone Contact Ed Cernobori?
The website, www.blacktreegroup.com, has all of his contact information. Edward@blacktreegroup.com is his email.
How Can I Learn More About Finding The Best Rental Property Management Group And Passive Income Cash Flow?
Join us in the JWB Facebook Group at https://www.facebook.com/CashFlowProperties.
You can also go to www.jwbinventory.com to see what properties are currently available. We encourage you to contact the JWB team for a consultation to determine how our turnkey rental properties can deliver positive passive income cash flow.
When you are ready to take the next step with Jacksonville real estate, visit www.chatwithjwb.com. We will walk you through the numbers to show you what your potential Return On Investment will be.
We hope you enjoyed hearing Ed Cernobori’s perspective on rental property management and how it directly affects long-term passive income cash flow versus investing all of your money in the stock market. If you have questions after hearing our conversation with Ed, we invite you to reach out to JWB so we can discuss your personal financial goals and help you find a way to reach them through turnkey rental property investments.
To Your Success,
Gregg Cohen
