Real Estate in the Ideal Wealth Grower System w/Axel Meierhoefer
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Episode Description
Welcome to the Freedom Point Real Estate podcast! Axel Meierhoefer joins Jeremy Dyer in today's episode to share his personal journey to real estate, his emphasis on immediate cashflow, how his system helps new investors, and more.
Former Air Force officer and accredited investor, Axel with his wife has built a modest real estate portfolio, securing their financial future and that of future generations by leveraging 80% of other people's money and working LESS than 24 hours/month. Driven to empower others, Axel hosts "The Ideal Investor Show" to educate through insightful interviews, daily mini-episodes, and the IDEALWEALTHGROWER™ system.
CONNECT WITH AXEL MEIERHOEFER!
Website: https://idealwealthgrower.com/
LinkedIn: https://www.linkedin.com/in/ameierhoefer/
Youtube: https://www.youtube.com/@IdealWealthGrower
Facebook: https://www.facebook.com/idealwealthgrower
CONNECT WITH JEREMY DYER!
Website: https://startingpointcapital.com/
Instagram: https://www.instagram.com/startingpointcapital/
LinkedIn: https://www.linkedin.com/in/jeremydyer
Facebook: https://www.facebook.com/startingpointcapital
Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12
Summary
Tip #1: Income is Key for Cash Flowing Success
“The ‘I’ in IDEAL stands for income from cash-flowing properties. Income generation is at the foundation of every successful real estate investment.”
Axel emphasizes the need for investments that generate steady income, positioning cash flow as the core driver of financial growth in real estate. Passive investors should focus on properties that consistently cover their expenses and yield positive returns, which enables ongoing financial stability and growth. Choosing cash-flowing properties also mitigates risks, as dependable income can cushion against market fluctuations.
Tip #2: Leverage Financing for Faster Growth
“You can buy a $200,000 house with $40,000 of your own money and $160,000 of the bank’s money, which is leverage.”
One of the most powerful tools for real estate investors is leverage, using financing to increase buying power. Axel’s example of acquiring a high-value property with a smaller upfront investment shows how leveraging can multiply returns without tying up significant capital. This strategy allows investors to expand their portfolios faster, though it’s essential to manage debt responsibly and ensure properties maintain strong cash flow.
Tip #3: Understanding the Value of Depreciation
“Depreciation provides tax-saving advantages that make it hard for the stock market to compete with real estate.”
Depreciation offers substantial tax benefits, a unique advantage in real estate compared to other investment types. Investors can offset taxable income, effectively reducing their tax liability while building wealth. Passive investors should work with tax professionals to maximize depreciation, making sure they’re leveraging every allowable deduction for optimal returns.Tip #4: Prioritize Location-Specific Knowledge of the Asset
Tip #5: The Power of Equity as a Wealth Multiplier
“Equity growth happens as you pay down the mortgage and the property appreciates, growing your net worth.”
Building equity is essential to long-term wealth, with each mortgage payment increasing the investor’s ownership stake. Equity can be reinvested into new properties or leveraged for other opportunities, making it a crucial asset in the IDEAL strategy. Axel recommends maintaining a conservative loan-to-value ratio, as this provides a safety net and preserves the value of the investment over time.
Tip #6: Control in Turnkey Investing vs. Syndication
“In turnkey, you control the asset directly. In syndications, you have less control and can’t decide on management.”
Axel contrasts turnkey and syndication investments, noting that turnkey investing offers more control, allowing investors to make decisions about management, maintenance, and property sales. Syndication, on the other hand, often leaves investors with limited decision-making power, which may not suit everyone’s preferences. New investors should consider how much control they desire over their investments before choosing between these strategies.
Tip #7: Effective Property Management is Critical
“If you don’t like the property management, you can always find another. You’re the CEO of your own business.”
Reliable property management is essential for maintaining cash flow and protecting the investment’s value, especially in passive investing. Axel advocates for evaluating and selecting property management based on standards that align with long-term goals. Investors should monitor performance periodically to ensure property managers are maximizing rental income and minimizing expenses.
Tip #8: Setting Clear Financial Goals and Evaluating Progress
“The first thing we look at in a session is what goals you have and what you want to achieve for your money.”
Establishing well-defined goals is crucial for any investor, providing a roadmap to track progress and adjust strategies as needed. Axel suggests revisiting these goals regularly to ensure that investment choices align with broader financial objectives, such as achieving time freedom or hitting specific passive income milestones. This intentional approach helps investors stay focused on long-term outcomes.
Tip #9: Tip #9: Evaluating Investment Locations and Markets
“If the area doesn’t meet the 1% rule, we know it’s not the area for you to invest in.”
Axel introduces the 1% rule as a criterion for evaluating investment areas, which posits that monthly rent should be at least 1% of the purchase price. The rule ensures that properties have strong income potential, making it a quick, effective way to filter out less promising markets. Researching local markets thoroughly enables investors to choose areas with strong rental demand and appreciation potential.
Tip #10: Exploring New Investment Avenues (BTR 55+)
“BTR for 55+ is interesting because you have better tenants who appreciate being the first to live in a new property.”
Axel shares his interest in build-to-rent (BTR) properties aimed at tenants over 55, who often seek well-maintained, modern housing. This demographic is known for being reliable and taking good care of the property, making them ideal renters for passive investors. Exploring niche markets like BTR can offer investors an edge, with potential for high occupancy rates and lower maintenance costs due to careful tenant use.
