Smart Investing: How to Profit from Real Estate with Minimal Capital?

Hey everyone, we are talking today about how to get into real estate. If you've wanted to be a real estate mogul, maybe you've seen it on TV and you're like, hey, that looks cool owning a whole bunch of real estate, but you're not sure how to get started. You don't feel like you have the capital to get started. We're going to talk about fractional today and how to use that to leverage getting into real estate. Again, a lot of what I do is crypto and it's, you know, it's crazy. It goes up, it goes down right now. It's going up. So crypto is looking real good right now, but whatever goes up has to come down as well. So, uh, you definitely want to have more secure things as part of your portfolio and there's no, nothing more stable, uh, historically than real estate. So I recommend that everyone at least think about it as having it a part, uh, of your portfolio. So audience, thank you guys so much for joining me. Kind of have an evening video here tonight. I'm in the States and 6 p.m. I don't usually do videos this late, but that's what worked out with the fraction with Stella and with the fractional team. So we're doing it. So there might be some new faces on here who don't usually get to join me live. Um, so go ahead and say hello if you're here and question for the day. I hit like, obviously, I mean, that goes without saying. Um, but then let me know, have you ever owned any real estate, any real estate at all? Um, just let me know in the comments. So, and good to see you, Dave. Good to see you, Dane. Dave, welcome to your first live as a community member. So appreciate you being here. Uh, lax bros. Good to see you, Dane. Always good to see you, uh, Eduardo. Good to see you. Um, baby bonk. I don't know what you mean by that, but, uh, if you guys have questions as we're going as well, please feel free to ask. They can be about fractional, which we're going to talk here in a minute, or they can be about real estate in general. I'm sure Stella would love to just, you know, talk about real estate in general. So let's go ahead and start with introductions. So Stella, my audience knows me, so I'm going to skip the introduction. Um, but Stella, tell us a little bit about yourself as we get going here. Of course. Thanks for having me, James. And so excited to see that we've got a whole crew here live. So I'm Stella Han. I'm the co-founder and CEO of fractional, and we are building a place for a motivated people to come together, collaborate and co-own investment properties together. Um, so a little bit more about me personally, I'm actually a software engineer by trade. So I know James and I relate there. Um, and actually grew up in the Bay area where both of my parents were software engineers as well, but they ran this passion project, investing in real estate. And I was basically, you know, the cheap family labor growing up. Um, but, you know, certainly left a seed in me in terms of how I thought about investing in general, the importance of, you know, having passive income to building generational wealth and all of that. Um, so that's really, you know, what piqued my interest in this whole bridge to, you know, from tech to real estate investing. Um, and I primarily invest out of state, uh, recently hit my 150th unit. So that's a huge win for me personally. I've been really excited about that. And you know, what's really been game changing for me is actually teaming up with other people. When I, you know, just got started, I, you know, didn't know much, you know, none of my parents did out of state investing, you know, Bay area is not that affordable. I don't have that much cash though. I was, you know, kind of felt really stuck. Um, and I was doing a ton of research. Some of you might know bigger pockets. It's a really, you know, big forum where a lot of real estate investors gather. So it's doing a ton of research there and kind of felt like the more I learned, the more lost I was because you're just like getting information overload. And really I turned things around by meeting some really great people that, you know, aligned with me in terms of interest. They had a bit more real estate investing experience than me. And we decided to, you know, just team up together where, you know, one, we can obviously split the cost, right? Like you don't have to come in with a hundred thousand dollars yourself. You could do 5,000, 10,000. So we pulled our funds together and then also working with other people that did have experienced it. It really just helped me actually learn by doing actually learn by investing. So that was a huge game changer for me and became, you know, the inspiration to create fractional as well, where I want to help other people who are in the same spot as me be able to, you know, get fractional as a launch pad into their first investment. And then also use, you know, partners and forming a team to scale up as well. So really excited to share more. Awesome. Love it. What's your, what's your programming language of choice, if I can ask? Oh, it's definitely Python. Oh, Python. All right. You are, you are hardcore programmer and say Python is your choice. I was always a PHP dev. So that's what I, what I grew up doing. Amazing. So when I talk to people about real estate and I have some experience in this, when I sold my business, I had, I saw on TV, oh, people buy real estate. I want to be a part of that. The main, the main hesitations and the problems I ran into and the main hindrances that I hear from people when I talk about real estate are first, I don't want to manage properties. That's a pain trying to find tenants. And I bought a property. And the first thing that I was supposed to do was evict someone. And I was like, I didn't, I did not sign up for this. This is not what I want to be doing. Um, second is I don't have capital. So you need, you know, most places you'll need 20% down or something like that. As you're buying a, you know, 200, $400,000 property. I don't have 80 K sitting around. How do I invest? Um, and then also, I don't know what properties to buy. I hop on Zillow and even in Lincoln, there's like thousands of options. And so can you kind of talk about those three things and how fractional helps solve it and tell us a little bit about what fractional is. Yeah, for sure. Well, I'll start with what fractional is. So, you know, we're creating a social and an infrastructure platform for people to actually join venture. So essentially, you know, find business partners and decide to buy property as a group. So, you know, on the platform, there are, you know, folks that are pitching different investment ideas that they have where they're looking for other partners. Um, so you can actually see here is an example of Bree who is actually one of our fractional users. And, you know, she really wanted to get into real estate. She was a rookie to start, you know, didn't really know how to really kick off this whole journey. And she ended up finding another community member, Ian, who actually runs our Cincinnati community on fractional. So he is, you know, an expert when it comes to the Cincinnati market. I've done a couple of investments with him myself, too. Super awesome person. And they ended up teaming up with a couple of other folks. And what's really cool when you have the dream team is that essentially, you know, everybody has their superpower that they can bring to the table. Right. So Ian obviously has a ton of experience. You know, he knows how to source deals. He also, you know, knows how to do like creative financing. So interest rates are really high right now. Right. Like you've got seven, eight percent. That's definitely going to, you know, bump up your expense ratio and hurt, you know, the income that you're going to get every month. So there's actually, you know, pretty interesting ways which I can go into later where you can get like three percent interest rates in today's day. Right. Like that's something that Ian was able to bring to the table for his team, you know, to Frank, who is another person that's interested in Cincinnati. So they all, you know, came together and, you know, bought a house. And everybody is like, you know, contributing something to the group. Frank was helping manage like contractors, you know, oversee the project and all of that. And, you know, that's a true unlock here is you're really able to come together and do something that's way more powerful than yourself. So fractional, you know, we're providing the platform for that. We're handling a lot of the administrative tasks behind the scenes. So, you know, when you think about a group coming together, you know, you need to have an LLC entity that's created, that's holding title to an operating agreement where you traditionally would need a lawyer, you know, pay them a fortune to get all of that done to even, you know, business banking, accounting, tax filings, you know, K1 distributions, like all of that is probably just flying over people's head. Right. Like that is the not fun stuff. And that's what fractional is really streamlining behind the scenes as well. So the way I think about it is, you know, one, there's the social ecosystem where you are able to find your people and your team. And then we also just, you know, streamline that entire process so you can actually focus on what's more fun, which is, you know, working with your team members and actually doing the investing together. Okay. I love it. No, that's that. I love that because like you said, if you're not good at the underwriting process and all and you have no interest in that, again, that's what keeps people away from real estate. You can invest as a team with some, some people enjoy that kind of stuff. I've met them. They exist where they like, enjoy the underwriting process and looking for houses and things like that. So you can join a team and you can invest together in a project. So really love that. Can I ask how much capital does an individual need to get started in fractional? Like, you come in with a hundred, $200 or is there a minimum or how does that work? That's a great question. So the minimum investment amount on the platform is $5,000. That's because we do still want every, you know, owner to feel like they have skin in the game. Like we do truly want them to feel like they are an owner and they have a stake in this and they're, you know, actually doing this with their team. But on a project by project basis, different, you know, communities, they might have different preferences for how many people they want to work with. You know, some people are totally open to working with, you know, 50, a hundred investors, right? Some other folks maybe don't want as many cooks in the kitchen where they might only want to work with five investors. So that obviously, you know, changes the minimum investment amount per project, but overall as a whole on the fractional platform, it's $5,000 minimum. Okay, good. No, I like that because that's better than having a thousand people in on one particular project who are each putting in 50 bucks or something like that. That could be some chaos. So I like that. So then when you're investing in a community project like this, do you have to find, do you ever invest with people you don't know? Or is my community all investing together or maybe explain just a little bit how that works? Yeah. So actually a lot of people who end up investing together on fractional did not know each other beforehand. I think that is, you know, truly the magic of fractional is how we're really, you know, building a community around folks who are like-minded, but, you know, didn't necessarily know each other beforehand. And, you know, not everyone is privileged enough where, you know, they have friends that think the same way as them when it comes to investing, right. Which is why I think, you know, even, you know, James, you having this channel, right. It's really gathering people who are like-minded, you know, who want to do something together. So we host different communities where, you know, people have something that is relatable to each other. So it could be, you know, all of your followers, James, who, you know, share a common connection with you and want to invest together. It could be people that are interested in a specific market like Cincinnati, right. Like everybody who wants to invest in Cincinnati will group to, you know, even for me, like I'm in an investing group with Carnegie Mellon alums, because that's where I went to college. And we share, you know, that common thread here. So lots of different, you know, places where people can find others that, you know, they will naturally be able to build a higher trust with. And then we do a lot of different events on the platform as well. You know, when there's a deal, usually a project leader is hosting like an online session to, you know, get to meet other people that are also interested in this investment opportunity, really walk through all that together. So that's also a really great opportunity where you can kind of like get a deep dive into, you know, someone's brains as an investor, right? Like, how do they think about projects? And that's also a really great place to build those connections too. Yeah. Great place to learn real estate too, because again, you might be a novice or, but you might be partnered with like Stella who has 150 properties. So if you've wanted to learn real estate investing, if you've been kind of nervous, you have some capital maybe, and you're like, ah, I don't know if I want to go out and do this on my own. So many things could go wrong. It's hard to make that initial jump, but if you're able to partner up with people, then you can kind of learn from them as you go. And then maybe you're ready to be the lead on the next one after that. So I love that. Exactly. I mean, even for me, I'm still learning every single day. Like there are plenty of markets that I've never invested in that I'm so really curious about and, you know, would love to build my portfolio that way as well. You know, even for example, I know you asked in the very beginning, like, you know, how does property management work and things like that? So I totally relate to that. Like, I do not want to deal with a tenant, like calling me at 3am asking me like how to fix their broken toilet in Atlanta. Like I, that is not, you know, my cup of tea. You know, there's different ways to go about this. You can obviously, you know, as a group, hire your own property manager, but I've also invested in projects that are short-term rentals. So these are, you know, properties you would put on like Airbnb, Vrbo, for example, and hiring a property manager for that is actually really expensive. You know, it goes from 20 to 25 to even 30% of your rental income. And, you know, I was lucky enough to find other partners who, you know, actually really did enjoy that active property management aspect. And they became, you know, property managers for our group. And obviously, you know, we want to compensate them for their hard work. So we ended up paying them 8% of the monthly income we were making. So it's truly like a win-win here, right? Like for me, I get to be involved in a short-term rental project. I get to work with really awesome people, and I get to save some money. And for them, obviously, it makes a lot of sense for them because they're also equity owners in the project. They don't want to pay someone else 25% when they really enjoy doing this themselves, right? So I think it's just a lot of, you know, finding people with complementary skill sets, interests, and that's how you get this whole thing to scale up. Okay, I love that. And I want to do a shout out to Steve Wise. He's a great man of the Lord. Got to meet him. Go look him up. He's actually a motocross racer. So check Steve out. Good to see you, brother. I'm glad that you could make it here today. Another thing I was thinking about, and just let me know what you think about this, but is the diversification. Because again, if I only have $40,000 total in capital, if I'm going by myself, I have to put that pretty much in one property. And if something doesn't work out, then it's like, oh no, I have problems. But if you're able to invest with other people like this, then you could probably put that $40,000 into eight properties or something like that. So there's a diversification aspect there as well. Is that accurate? Have you found that to be true? Yes, exactly. So definitely helps a ton starting out when you have limited capital. I also think it helps you define what your true investment strategy is and what works best for you as well. For me, when I just got started, I was like, wow, everything sounds so interesting. I want to do single family laundromat. Oh, let me get into self-storage. Oh, let me do multifamily. So many things sound really cool, but you never really know how it feels until you are actually part of that experience. And being able to not put all your eggs in one basket, being able to be an owner in different things, it can also get you a better feeler of, does one strategy fit with me more than another? So for me, I've learned that I prefer multifamily and something that's a little bit more scalable that doesn't require hours and hours of my time every single day. So I dabbled into short-term rental. It was really cool. We got to build all these really amazing guest experiences, but I decided that's not my forte. I'm glad I experienced it, but I'm kind of just going to leave it at a low level and then put more emphasis on other things that work for me. Okay. Love it. So my audience, they like to make money. That's kind of why they watch usually, I find, or my charm, one of the two things. How does this work? So normally when you buy real estate, you'll get some rental income coming in monthly, and then you'll also have, as the property grows, you'll have some equity that is built over time. Is it the same way or are you going to get, or does it depend on the property or how does that work with Fractional? Yeah, it's pretty much the same. Just think of it as instead of you are owning one house, it's you and your five new buddies that you met on Fractional. So everybody owns some percentage ownership of the property. Usually that's the simplest way to determine that is basically your money invested divided by total amount of money everybody in the group is pulling together. So say that's 25%, then you would get 25% of the income that's coming in every month. And then when the group sells, you also get 25% of the profits of sale. So that would be the appreciation. So that's a very simplified version of how this works. Obviously for each deal, there might be different nuances, but yeah, it's pretty much the same as owning a house, but just the part of it. Okay, gotcha. And then it's up to you as a group. You can kind of decide if you're going to do short-term rental, you're going to do long-term rental. You kind of decide that as a group? Yeah, exactly. And a lot of times on the platform and in the communities, there's usually a few people that might have an idea already, and that's when they will write an investment project and share it in the Fractional community. And oftentimes, they might already have a strategy in mind where they've done some research and they feel like if they were buying a five-unit multifamily in DC, which is what I did, I did a ton of research and I was like, okay, I think actually using this as a long-term rental with an affordable housing play would actually make the most sense. And I would organize a discussion and have other people also jump in, kind of like confirm my thoughts or even question me, right? The more questions upfront, the better, because we can actually kind of iron through all the edge cases together. And then at the end, everybody would come to a consensus about what is the best strategy if we actually want to move forward in buying this together. Okay, I love it. So this is also a great option if there's real estate people watching and you find specific deals where it's this would be a great property, this is underpriced, or maybe it's something off-market that you've been able to find, but you're wanting to put together the financing, the funding for it, Fractional would be a great option for you too, because I know I'm not going to be leading up our community looking for housing projects. So we need those people on here as well. So love that. Absolutely. Tim says, it's the charm, sir. Hey, thanks, Tim, man. I appreciate it. And Steve says, former racer now enjoying investing in some stuff you promote, brother. Good to see, man. I'm glad you can make it here today. So I thought we could do a little bit of education as well. So what do you look for? So a lot of my audience has probably never invested in any real estate. Could you kind of talk about what you would look for if you were starting all this from the beginning and you're like, I want to get my first property? Because I think there's something about getting that first property where now you're a real estate mogul and there's something about making that jump for the first one. What would you look for in that first? Yeah, I totally feel you on that. Real estate investing is really addicting. Once you get into one, you just can't stop. So I definitely relate to that. In terms of your first investment, I think the best exercise to do is actually some internal reflection first around what your investment strategy is and why you even want to get into real estate in the first place. I think that answer kind of varies for different people. So for me, when I think about it, I want to get into real estate because what's really special to me is that cashflow that I can get every month. It makes me feel like I always have this rental income coming in. I can pursue whatever I want. It's like that fire movement that a lot of people aspire to. So that was something that I really looked for. Versus if you ask the same question to some of my friends, they might say, I know we don't really care about the monthly checks that come in. We are here for that appreciation. We can hold five, 10 years. We'll get the paycheck at the end. I think that is the first question you should ask yourself, is what is real estate? What kind of goal are you hoping that it can achieve for you? And then from there, that will really impact the kind of markets you look at. For me, as someone who cares more about cashflow, I would need to invest in markets where the rent to property value ratio is a lot higher. So this is likely Sunbelt areas. This is why I invest out of state in Georgia, Texas, Florida, for instance. Those are areas where it's not super expensive to buy a house. It's not millions and millions of dollars. It's a couple of hundred grand. And then for rent, you're hitting that 0.8% to 1% rule. So that's the way that you can cashflow. Versus if you want to buy in a more appreciating market, it's likely going to be more expensive markets, for instance. So that's the first level of minimization for what markets to even look at. And then from there, then thinking about your risk tolerance. Do you want to deal with the tenants at 3 a.m.? Or would you rather just be in a better neighborhood, have higher quality tenants? Maybe the properties there is probably a little bit more expensive relatively. So kind of doing some adjustments there as well. So even thinking more about the strategy. Do you want to just be more hands-off? That way you just hire a property manager. It's more of creating guest experiences. We made this Travis Scott themed house in Houston for our Airbnb. I think that's a very different type of investor and type of personality. So kind of additional optimization from going to the market, the neighborhood, to even how you want to rent out the property. It really, really just depends on who you are as an investor and why you're here. And then I think from there, you'll have a lot more answers on how to find your one thing. Okay. I love that. Yeah. That's the same answer I give when people say, what should I invest in? Just in general, it's like, well, you got to be really clear on your goals. What are you wanting? Because there's going to be a big difference in what type of property you buy. If, hey, I'm looking to just, I don't need any cashflow. I'm just looking to put this into something for retirement in 30 years or something like that. Well, you're going to be looking at drastically different properties than, hey, I want to turn my capital into a passive income stream. You're going to have drastically different things there. So you need to be really clear on your goals when you're jumping in to real estate or any investing. You need to be really clear on your goals. So love that. Tyson says, no, we watch for the red hair. You know what? How about everybody comment your favorite feature or characteristic of James Pelton? That would be good for my ego tonight. Everybody go ahead and comment that. That would be amazing. Can't wait to see the answers. Yeah. Yeah. I'm curious to see. Tyson says, can she give an example of the house price to income cashflow? So, I mean, this is going to vary pretty drastically, but can you maybe give, you know, if somebody's putting in 5K and they're looking mainly for cashflow, I don't know, what are maybe ballpark numbers of what somebody can be thinking about? Yeah. We can do some quick math right now, right? So I bought just a real basic property. It's a single family home in Atlanta. We got it for around $200,000. And that property is actually making a little bit over $2,000 in monthly rent. So this actually hits that golden 1% ratio that a lot of investors look for. Although it is very challenging in the market right now. So we got that with, you know, a 25% down payment, right? So that's, you know, around $50,000 up front. Let's add in, you know, another like 10,000 to get the property already ready where, you know, it's at a good quality to get tenants in and everything like that. So, you know, if you invest at 5,000, right, like you would basically, you know, 10% of the property, right? So we say, you know, we take the $2,000 of monthly income, and let's just make an assumption, right? Like, let's say we're spending around, you know, 50% of it to mortgage, you know, maybe random repairs that are coming in, paying property taxes, insurance, and all of that, right? I think it's a pretty fair assumption. So you would actually get around $1,000 in net profits, right? $2,000 in rental income, we're taking away 50% to handle all the expenses. So that's $1,000 per month, right? And we said earlier that with $5,000, you're holding around 10%. So, you know, that gets you $100 per month. And then obviously, there's still the appreciation as well that, you know, gets factored in when you sell. So that's an example of, you know, something super basic. But obviously, it definitely depends deal by deal. And that's why when you check out a lot of the projects on Fractional, you'll see a lot of the really great leaders, they have an actual like spreadsheet at the bottom of their investment project. It's like people punching a lot of numbers. This is actually my favorite thing to do an investment is like actually like doing all this research, pulling comps, plugging it into my spreadsheet to see like, how much cash I can make every month, you know, factoring and appreciation what's like my, you know, final ROI, for instance. So yeah, if you're into the numbers, definitely check those out. And I think you'll have a really fun time. Hey, praise the Lord for people like you who enjoy that type of thing. Because that does not sound very enjoyable to me, which is why there's Fractional eyes, we can partner up, you can do that. And I will just make some money and we'll all be happy together. So love that also very brave of you. I'm always too, too scared to do math live like this. Because I just I can't think that quickly. So kudos to you for being willing to do math live. People can fact check you in person. So love that. AJ says smile. That's my best feature. AJ, thank you. I should I should have my wife make sure she hops on to see see what people have to say about me. So love this. All right. Can we talk about how do people get started in Fractional? What do they need to do? I think there's probably a lot of people who watching who are like, Hey, this sounds great. I want to get involved. I have my community link, which I've shared with people. But can you kind of tell us what this process is going to look like for people when they they join my community? And then what's going to happen next after that? Yeah, for sure. I'll actually share my screen right now. I love that. Everyone here is super lucky because James actually created a community on Fractional. And you know, that's where we can all meet each other, you know, mingle and start networking and look at some cool deals together. So, you know, it's Fractional is free to join. So everyone, you know, make an account, join James's community. And some really cool things is I've actually shared, you know, three projects that, you know, have happened on Fractional for everybody to already, you know, start getting some references for what other cool people have done. This five unit off market multifamily in Washington, D.C. is actually a project I led with a fellow partner. We ended up having around 10 people buy it. It was around $850k, you know, definitely something that I could not afford on my own. So I'm very lucky to have found investors for this too. And, you know, you can kind of see what I was even considering as a project leader, you know, what people kind of share in these projects. I'm looking at the Washington, D.C. market, the neighborhood, you know, more about the property to even when you scroll to the bottom, you'll see this, you know, infamous spreadsheet that I was talking about earlier. Yeah, definitely, you know, check out a lot of these projects that I've shared already. I think it's a really great place to start. And I know from there, there's a lot of different, you know, people on Fractional. We host a lot of, you know, different events that are happening. A lot of different project leaders are, you know, going live every week to share about a new idea they have or a new opportunity that they're, you know, trying to decide if it's something that, you know, folks in the overall Fractional ecosystem want to go in on together. So, yeah, start by making an account and joining James' community and checking out some of these projects that we've done in the past. Love it. We did have one question. Is it possible to learn more about Fractional without giving my phone number during sign up? People are picky with their phone numbers. Is it possible to sign up without a phone or is that just a part of signing up? Yeah, that is just a part of signing up. But there are a couple of other pages that, you know, don't require a sign up that you can look at as well. We have like a How It Works page if you want to, you know, learn more about the whole process. An About Us page. So, yeah, definitely check those out and hopefully that makes you feel really confident and excited to, you know, actually become a member of the community. Awesome. Can you pull back up that page that we were looking at? I thought it might be helpful for people while we have you on the line here to walk through. I think some of the numbers are going to be our kind of mysteries to people. Could you go over like what is cash on cash? What is a cap rate? And maybe just some of those basic numbers that are going to be, you know, what people are looking at for each individual project. Yeah, for sure. Let me switch my tab. All right. So, this is actually, you know, the spreadsheet that I was using for my own five-unit DC deal. And, you know, I think logically it should be fairly simple, right? The first section is just putting in, you know, how much money you would need up front, right? So, that's the purchase price, the down payment, any sort of, you know, money you need to put in to repair the property. And then you start thinking about, you know, what are you going to make every month, right? So, this is, you know, researching the market, seeing what other similar properties are charging for rent. For this specific one, we wanted to go with affordable housing. So, we were actually looking at the DC government website for, you know, looking at what the government pays, you know, for Section 8, for voucher tenants, right? So, over here, it's like, you know, five units. These are the numbers that we got, you know, getting that into the annual income. And then after income is obviously the stuff that we don't love as much as the expenses. So, you know, we have all the categories of expenses that people need to think about. You know, property taxes, right? So, you got to, you know, do some research, look at the county website, you know, try to pull those numbers. Repairs, CapEx, are you paying for a property manager? Insurance, you know, who's paying for utilities? Is it us, the landlord, as investors? Is it the tenant? You know, are you in a place where there's actually weather and you have to pay for snow removal, right? So, you know, different things like that, we've lined these out. So, a lot of it is just, you know, different people in the group doing the research. A lot of times it is the project leader, but, you know, sometimes I need a little bit of help and I'll ask different people in the community, like, hey, can you, you know, research this thing and just put it in the spreadsheet? And that's really, you know, what gets you to your net operating income, which is just income minus expenses. But if you truly, you know, wanted to look at your cash on cash, you would also need to bake in, you know, mortgage, right? Like, if you do get a debt, you obviously have to pay, you know, principal, you have to pay interest every month, that's going to impact your cashflow as well. So, that's how you get a lot of these metrics at the end, is like, how does the property do? Cap rate is basically like income versus the amount that you're investing without, you know, considering any sort of essentially like mortgage, right? Because you want to look at each property without its financing situation fair and square. And then cash on cash is essentially what factor in how you do financing, right? Like, does it actually make sense? This is where, you know, I was playing around with, you know, how much should I actually put as a down payment to kind of optimize my cash on cash, right? So, you know, we did 30% here, maybe it would have been better to do, you know, 50% at, you know, 6.5% interest rate instead, right? So, you know, you kind of are using this sheet as a playground for a lot of experimentation to then optimize for the metrics that mean the most to you, other people who are investing together. And then, you know, factoring appreciation, that's how you kind of get your, you know, total return on investment with that, you know, net proceeds after sale as well. So, super high level. Obviously, you know, when people are considering our project, we like spend a lot of time doing a lot of analysis like this. And I, you know, I think it's really important for people to really understand like what they're getting into and being able to map out a lot of these situations. So that way, you know, you're being conservative as an investor, you know, what could be the case and then, you know, have a goal to shoot for as well for how you manage your property. Yep. Absolutely. And this is where the educational piece comes in, where again, if you were jumping in to your own property, you would have to know what all this meant right off the bat before I would recommend buying any property. I would recommend, you know, what a cap rate is and understand how it's calculated. Also too, what I see a lot of real estate investors tripped up on is they don't think through all of the expenses. So, they start running numbers, but they forget, oh, there's going to be a water bill. Like you had on there $6,000 a year for your water bill. And some people forget expenses like that, and it really skews your numbers. So again, this is an advantage to getting in with other people who've done other properties, because I guarantee you all these expenses are things that these property owners have seen in the past. And so they know, oh yeah, that's going to be an expense that we got to put in there. So, I think this is a way, way better way to invest in real estate than you just going out and learning through trial by fire, jumping into your first property and being surprised by a lot of things. Exactly. Learn from other people's mistakes, right? Don't make those mistakes yourself. Oh, totally. Totally. Totally. Can I ask, what do you generally look for range-wise on cash-on-cash or cap rate? What are numbers that you look for where it's like, oh, that might be a good deal? I don't know if you have ranges or if there's specific numbers. What are you looking for to see a good deal? Yeah. I mean, it definitely depends a lot on the market as well. For the markets that I'm looking at, generally, I like to hit between like 5% to 8%. I mean, that's a pretty big range too. Again, it's very dependent on the market. But I still like to be in areas where there is economic and population growth, where there is appreciation. So, generally, 8% cap rate in those markets is like crazy, crazy, crazy good. Usually 6% to 7%, I'm already pretty happy with. Versus if you bought in San Francisco, good luck, right? You're not going to get anywhere near the numbers that I mentioned. So, a lot of it is really dependent on in the markets that you're in and in the strategies you're playing. A good cap rate for a Class A building, meaning it's a really nice luxury building, right? That's going to have much lower cap rate because it's more expensive compared to a Class C building where it might be in a more up-and-coming neighborhood. There's still a lot of progress to be made there where you do get higher rent for a lower price of the building. I think, obviously, we're always looking for the top of the crop when it comes to an individual sector we're looking at. Certainly, that's the standard that I want to hold when I'm doing investing as well. Okay. Love it. Guys, let me know. We do have a question here. Guys, let me know if you have any other questions for Stella before I let her go. I say this all the time, but I am not a real estate expert. So, Stella is going to be better. I'm not a fractional expert either. So, if you have questions about real estate or fractional, please ask while Stella is here. Don't ask me later because then it will be evident how little I know about some of these things. And I want you to think that I'm really smart. So, please ask your questions. Petrus would like to know, service accommodation, which I think is like fully furnished places that you're providing. I guess, how much flexibility is there in what is offered? Is it pretty flexible? It's whatever the community decides. You can kind of do whatever you want with the property? Exactly. So, Fractional is a company. You can think of us as just a social and infrastructure platform, right? We're here to provide the community for people to meet each other, do projects together. We obviously set up the whole partnership and everything, but we are not investors as a company. So, we don't control what people want to invest in. As long as there's interest from folks on the platform, then, hey, you got your partners for your next project. It could really be whatever you want it to be. We've had folks do pretty random things, like trying to buy a country club to more standard things like single family homes, multifamily. So, whatever your heart desires, you control your own destiny here. I love it. Maybe what you guys could do next is a Tinder for property investments, where you just swipe, like, oh, I'm not interested in that, not interested in that, and then you can match people up that way. Isn't that a genius idea? Yeah, I love that. That would be sick. Okay. All right. Trademarked, copyrighted. If you do it, I will take 10%. If you want help, if you want PHP help building it, let me know and I'll be there. I'll call you up. Awesome. All right. Well, I think maybe last question before we let you go, unless you have anything else that you want to talk about, but what would you say to, I have a lot of investors that are watching, a lot of investors who are not involved in real estate. What would you kind of say is like an elevator pitch for real estate as an investment class? For people who are in stocks and they're in crypto and they're in all these other things, what would you kind of give as an elevator pitch for, hey, you should hop on fractional, you should start getting into real estate? Yeah. Well, I think real estate investing, it's stability. It's that cash flow. Cash is king or queen. Cash flow is super huge here. And a lot of tax benefits as well. And I think, especially for folks that like to be more active and like to feel that control of destiny, I really think getting into real estate investing, it's truly being an entrepreneur, right? You're building a business. And when it comes to building a business, you want to find great business partners. It's exactly the same as starting a company, but obviously it's real estate investing. And that's also why we're here at fractional to make that dream happen. Awesome. Actually, one question that I have about the taxes, do you guys provide tax guidance or is it the goal to have someone in the community or in the funding part that can help with taxes? Because again, I think that's a big part people don't understand is depreciation and the 1033 exchanges. Is that something you guys provide or how do you handle taxes? Yeah. So we actually handle all the tax filing for the LLC, which is the entity that owns the property with all the investors in it. So we're taking care of that. We do all the K1 distributions as well. So you're literally just getting a K1 and either handing it to your own CPA or just punching it in TurboTax. It's super simple. And for people that have more complex projects, there's no different things like cost segregation, all of that. Our team has the resources to be able to plug those right in as well, if a certain group needs that. Okay. Amazing. Well, we will go ahead and close there. Thank you audience for joining James Pelton after hours. I appreciate it. You notice it gets really dark in my office as it gets to be evening here. That's shining in the darkness right now. Yeah, that's right. That's right. Well, I got this ring light thing that helps keep me illuminated, but audience, you guys are amazing. I appreciate you following me. I take you guys in so many crazy different directions, and I'm just so thankful that you guys still watch and that you are willing to follow and listen. And again, it gets me to be able to connect with people like Stella. Again, you guys make this possible. So thank you guys so much for watching. Really appreciate it. And Stella, thank you for building something. I think this will help a lot of people in their financial goals. I think real estate is a great place. Again, all you people who are trying to get into crypto to hit the bull market at the right time and not lose all your money in the bear market, that's great. But real estate has been the asset class for the last hundred years. I think real estate should be a part of at least you thinking about it as part of your portfolio. Please don't just try to chase thousand X gains and Shiba Inu or Dogecoin. Get some assets that will actually provide some cash flow, will provide some real money for you in the future. That would be my encouragement to you all. But Stella, thank you for bringing something that can help people get into that. And thank you for coming on and sharing your expertise. Of course. What a fun time. Yeah, it's great. I'm sure we'll have you back. And if you join my community again, I'll post that link again for you guys to join. We will have some things going on. So I'm going to work with with Stella and her team. We'll get some projects in there going. I'd love to get you guys involved. So maybe you can let us know to like what you're good at. What do you what do you like doing? Do you love spreadsheets like Stella loves doing those because that would be amazing. We'll bring in. So hop on in there and we'll see you later. So thank you, everyone. Have a great night and we will talk to you later. Bye bye.