Episode 191: Achieving Financial Stability Through Real Estate with Jack Gibson
From his college dorm making direct sales, Jack Gibson began his journey at age 19, where he built a multimillion-dollar venture before he was old enough even to rent a car. After several stock market setbacks, he became passionate about learning everything to do with real estate investing and generating passive income. This is why Jack Gibson is now a go-to person for investment guidance.
Gibson has also authored "Indestructible Wealth", a practical guide to building an investment income. In this episode, Jack shares his favorite investments to achieve financial freedom, and gives valuable advice for those starting out: focus on one main stream of income, and eliminate distractions to build your wealth faster.
Investing in Something Predictable
A common problem all entrepreneurs share is income inconsistency. It does not matter if your company is five, twenty, or fifty years old, results can still fluctuate depending on the country's economy. Of course, you can do dividends, but what good does a 1.5% average yield do? That is not enough to increase your net worth. As already mentioned in earlier episodes of the DealQuest podcast, it is hard to compete in the stock market, especially for the average individual investor. Doing anything other than dollar cost averaging into a diversified portfolio/trying to beat the market does not pay off for most investors. Furthermore, technology like program trading systems can make it all the more difficult to compete with the big players.
To ensure a stable income in his career, Jack started focusing on passive investments. There are always going to be times of volatility in the markets--and no business is truly 100% passive--but, by focusing on investments in less efficient markets like real estate in which you have more chance to be competitive and find lucrative deals and in connection with which you do not lose any sleep fearing losing your income overnight.
Real Estate: Low Risk And High Return
Real estate endeavors represent 70% of Jack’s total portfolio, and is a great place to have incremental growth. As it is a less efficient market, there are more opportunities for smaller players to do well. The competition between investors is also fairer, as it requires you to study and dedicate yourself to understanding the market:
- In real estate, you don’t need to check the valuations every day, different from the crypto market, for example. Even if the market drops 20%, in real estate you do not have to worry about your money as long as you own a cash-flowing property.
As an example, Jack once acquired an $80K property where he did not check the evaluation for five years, then he sold it for $230K. In his mind, no other investment has such low risk and high returns like real estate.
- You can increase income by adding extra value or repurposing long-term properties to short-term AirBnB, increasing yields by two to three times. Jack’s real estate journey began by buying up rentals for passive income, and then selling them for additional income.
- As much as it is comparatively safe, keep in mind that real estate is not 100% passive or without risk. When you buy a property, you’re buying a business: it’s got an income coming in, you’ve got property management, and you have got expenses and you need to understand all aspects of that business.
Storage: The Most Passive Income
As stated earlier, there are no investments that are completely passive. However, storage is as close as you can get to it. Although real estate represents almost all of Jack's portfolio, he says his favorite investment is storage facilities due to how passive and resilient it is to any economic downturn. The way Jack can have good returns in the storage sector while not having it be a distraction to his core real estate business is simple: he is an investor in somebody else’s syndicate which makes the storage facility investments.
Multiple Streams Of Income Can Distract You
You’ve probably heard the phrase: "You shouldn’t have all your eggs in one basket", this is partially true! But for people early in their career, multiple streams of income can become multiple streams of distractions, reducing your ability to dedicate yourself to the possibilities for your money to grow.
If you look at most financially successful people, they started with a single stream of income, focus and dedicate themselves to it, and diversified as they grew. According to Jack’s experience, this is the most effective way to build wealth faster.
You Can Invest In Down Markets
As opposed to what many people think, there are enormous opportunities in down markets, including when buying properties. People often miss this window out of fear and lose what could be a big deal. During the COVID-19 stock market crash, Jack was convinced the market was going to continue to drop, but after a few days, the opposite happened: it rebounded fast. Jack missed an incredible buying opportunity by trying to predict the bottom time. So, do not let fear stop you, markets always cycle in and out, we just do not know when.
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Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
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