1. Marco Santorelli's Investment Strategies: As the founder of Norata Capital Management and Norata Real Estate Investments, Santorelli provides invaluable insights into his personal journey of real estate investing. Starting with an 84-door portfolio in 2004, Santorelli shares key lessons learned from the 2008-2009 market crash and emphasizes the crucial difference between being an investor and a speculator. His strategy revolves around understanding the complexities of real estate investing, focusing on cash flow rather than solely relying on property appreciation.

2. The Five Profit Centers of Real Estate Investing: Santorelli discusses the five profit centers of real estate investing, which include cash flow, equity growth, price appreciation, tax benefits, and leverage. He highlights the unique advantages of investing in real estate, touching on factors like job and population growth, mortgage rates, and insurance costs. These insights are instrumental in understanding the profitable aspects of real estate investing and how these factors contribute to the overall return on investment.

3. The Importance of Branding in the Real Estate Market: Santorelli shares his experience in creating and marketing the concept of "turnkey real estate investments," emphasizing the importance of developing a unique term or concept to stand out in a competitive industry. The conversation underscores the significance of consistently promoting the term and creating quality content to support it, leading to increased exposure and success for the original creator.

00:00 - Vikas Gupta (Co-host)
This is the Hacking Real Estate podcast, season two, episode three.

00:05 - Marco Santarelli (Guest)
You know, I kind of jokingly say that there are three kinds of people in the world. There are those that make things happen, like real estate investors. There are people who so people who make things happen, people who watch things happen. And then there are people who wonder what happened, and you don't want to be that ladder category. So the important thing is to take action, because until you actually do pull the trigger and take action, you're not going to see your wealth go up, you're not going to see your income go up, you're not going to see things come out of it, the benefits that we want when we think about real estate investing or a study real estate investing. So you definitely have to take action. Until you do that, nothing else matters.

00:43 - Brandon Hall (Co-host)
Welcome to the Hacking Real Estate podcast, where we dive into the stories of seasoned, hands-on and tech savvy real estate investors. We'll learn the strategies and tools they use to maximize returns and minimize hassle, all while navigating the rapidly changing real estate market. I'm your co-host, brandon Hall, and managing partner of Hall CPA, and I'm sitting alongside my co-host, vikas Gupta, ceo of Azibo. With our combined 15 years of experience in real estate investing and entrepreneurship, we're here to help you up your real estate game. Let's get hacking.

01:15 - Vikas Gupta (Co-host)
Hi everyone, welcome to this week's episode of the Hacking Real Estate podcast. Our guest today is Marco Santorelli. Marco is a two-time Inc. 1,000 entrepreneur, investor, author, broadway producer and the founder of Norata Capital Management and Norata Real Estate Investments, the largest nationwide provider of turnkey investment property. He's also the host of the top-rated podcast, passive Real Estate Investing, with over 500 episodes to date. His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom. Marco, welcome to the show.

01:52 - Marco Santarelli (Guest)
Hey guys, I'm pleased and honored to be here and I'm excited for this episode, so thank you.

01:58 - Vikas Gupta (Co-host)
Thank you. So, Marco, in your own words, can you tell us your real estate journey?

02:03 - Marco Santarelli (Guest)
Yeah, my real estate journey in a nutshell is basically this I just knew at a young age, in my early teens, I wanted to be financially free. I didn't want a job, I didn't want to have to work for someone else. So I took it upon myself to study two basic things. One is business and entrepreneurship, and two was real estate investing, because I just knew from people that I was introduced to, that you can be financially independent by owning a portfolio of real estate. And I wasn't sophisticated in any way at the time. I just had a hunger for learning and educating myself on how to become successful, especially in real estate. So when I turned 18, I set out to buy my first rental property and I had to. I jokingly say I had to wait until I was 18 years old because I couldn't qualify for financing prior to that. But I was working a well-paying job at a grocery store. I saved up enough for a down payment and then I ultimately just bought my first rental property, which is a townhome unit at an end of a complex, fixed it up, leased it. There was no internet back then, so it was basically a newspaper and a sign on the front yard. But I leased it and managed it, and that was how I cut my teeth in real estate. And it was shortly after that that I got my real estate license, started selling real estate, which I really didn't like, but I was only doing it for the experience and the commissions. So I mean, truth be told, I'll be honest, it was just something I was hoping to make money at, but it gave me the access to the MLS to start buying another property, and that's really where I got started.

03:33
And then, if you just fast forward to the early 2000s, when credit was cheap, the interest rates were really relatively speaking low and it was easy to qualify for financing, I just hit the gas pedal. I just went full time in 2003, 2004. And over a nine month period, I acquired 84 doors. And that was the one of the reasons why I started Norata real estate investments, because people were coming to me saying, hey, wow, how are you doing this? Can you coach me, mentor me, help me? And I said, no, I can't, I don't have the time, but I can help you with deal flow that I'm looking at, and that's how the business was started. So over the course of that time, I got involved in real estate and then I really accelerated my investing and building my portfolio just over the years, especially with the help of cheap credit. So that's a long story short, if you will.

04:24 - Vikas Gupta (Co-host)
So a lot of folks bought a lot of property in 2003, 2004, 2005. A lot of those folks struggled a little bit in 2008, 2009. Like, how did you do and what did you learn going through sort of that tough times for real estate investing?

04:38 - Marco Santarelli (Guest)
There was a lot learned, you know, that we could talk about for literally hours. One of the biggest takeaways was this A lot of people who thought they were real estate investors and I say investors now in air quotes were really speculators. They were buying real estate with the hope and anticipation that prices were going to continue to go up, and for a long period of time they did, and they continued to go up until they didn't right, and that's basically what happened. So, you know, the tide went out and you saw who was just standing there with their shorts down. So the problem is that a lot of people were buying real estate thinking they were real estate investors, but what they were really doing is they were really speculating on prices going up. So they were buying for appreciation or the anticipated appreciation in that property, and they were not paying attention to the cash flow of the property or the ability for that property to cash flow to carry itself.

05:32
So that way you can serve as the debt, and that's why millions of people got into troubles, because when credit dried up and the market dried up, because there was an oversupply of housing and not enough demand to absorb that supply, people were left stuck with properties that they, one couldn't sell or had a hard time selling. Two, couldn't rent or lease, so they didn't get the income and even when they did get the income from renting it out, they didn't have enough to cover the debt service and so they were forced to basically let it go into foreclosure. And that's why there were millions of properties that went into foreclosure and you know you look at some of the ground zero locations. It was like the inland empire of California, like the Riverside area, las Vegas, phoenix and Southwest Florida. You know the whole Fort Myers, cape Coral area and that whole Southwest Corridor where there was just tons and tons of new construction going on, and the situation where you had cheap credit, easy credit and the ability for people who could, you know, jokingly fog a mirror and get you know financing. It created a frenzy and it just created all these speculators.

06:39
So that was one of the biggest takeaways or lessons from the time is look, if you're going to invest, invest prudently. Invest not specifically for cashflow, but just make sure the properties that you're buying are in good markets. Good neighborhoods can carry themselves, meaning they're sustainable. They have the cashflow to like the income to service the debt, so you do have positive cashflow and have a medium to long term time horizon or perspective on it. Because if you're short, if you have a short term mindset, short term mentality about it, then you get into this trap of being a speculator, hoping and praying that you're going to have those unrealized gains in appreciation or equity and you lose sight of the fact that it's a business and you need that property to carry itself. You need cashflow, otherwise it's not sustainable, it'll fail. So I guess that's you know a long way to say don't be a speculator, invest for cashflow and have a long term horizon.

07:35 - Vikas Gupta (Co-host)
So you mentioned cashflow. You mentioned appreciation. I know you have a framework. What is it? The five pillars of wealth creation in real estate? Presumably those are two of the five, or maybe I'm wrong, but why don't you walk us through how you think about it after your 20 plus years of experience?

07:51 - Marco Santarelli (Guest)
Yeah, so I talk about, you know, either the for-profit centers or the four pillars of real estate investment, investment, real estate. You could argue there's five and I'll just go through them, but you know this is the way you can preserve and create wealth using real estate. So a lot of people you know a lot of and when I say people, I'm talking real estate investors are focused on, sometimes, cashflow, and that's great. You know they're building a portfolio and they want to create cashflow, either immediately, over time, and other people are focused more on equity growth to create their you know their net worth and increase their net worth. There's no right or wrong. You're going to get both. If you invest properly and wisely and prudently, you'll get both over time. But what's exciting about real estate and why it's one of the most impressive and powerful asset classes to invest in and actually you could argue it's the most historically proven asset class is because it has these four or five pillars and they're basically this you know the first is essentially cashflow. You know, when you invest in real estate invest properly you're going to have cashflow. And when I say cashflow, I'm making the assumption we're talking about positive cashflow, not negative cashflow, and you may not have that in the first year or two years for various reasons. You know it's a strategic play. You're actually planning it to be that way, but ultimately you do want to have positive cashflow because you want the income not necessarily because you need the income, at least not right away but you want that positive cashflow for the income that your properties will kick off. But it provides sustainability and when you have a down payment on a property and you look at that cashflow, it gives you an immediate rate of return. It's a realized gain, but it gives you a rate of return. It's either in the form of a cap rate or just your cash on cash return. That's the beautiful thing about real estate on the front end.

09:40
Short term, the second pillar, or profit center, if you will, is something that some investors don't think about too much. But most investors will finance their investment and so they'll have a mortgage. You know, whatever it is 80%, 75% loan to value and it's great, it's smart because you're using other people's money. But each and every year, in fact literally every month, your tenant that is paying rent to you is effectively paying down that mortgage for you. And you know it sounds like a very basic thing and most real estate investors understand that. But what they don't understand is this is that each and every month that principal payment becomes larger and larger and larger and as time goes on you're paying off more and more of that debt, which means you have more and more equity in that property each and every month.

10:27
So if you look at the equity gain each and every year and you compare that again, you know it's just a fraction. You know numerator and denominator. If you divide that into your down payment, you see you make a rate of return. Now you know, I like to use a $200,000 property as an example. If you put 20% down on a $200,000 property, it's $40,000. If you look at the amortization at today's rate of 8%, that first year rate of return on the equity gain or the principal paydown, however you want to look at it, is 3.3% in year one and year two goes to 3.6% and year three goes to 3.9% and then 4.2. And then 4.6 and 5. So you can see how this starts to increase. It's by itself a rate of return on that down payment you've placed, just in the form of the amortization of the loan, the equity gain.

11:22
So that's the second profit center. That's the second pillar. The third is related to that and it's just the price appreciation over time from appreciation. That is usually the whopper where you get the highest rates of return.

11:37
Let's just take again a very simple example a nominal 5% rate of appreciation per year. It's realistic, it's not too high, not too low In long term. You know, over time you're going to expect C4 to 7%. That's called 5%. But that 5% rate of appreciation on $200,000 property is $10,000. After the first year it doesn't sound like a whole heck of a lot. But think about this. You put $40,000 down, that $10,000 gain unrealized gain, but still a gain against that $40,000 is a whopping 25% rate of return. That's pretty impressive. And then you know, if that happens again the next year, that 5% on that 200, whatever $10,000 property is now a 26% gain and it starts to increase a little bit more each and every year. And it's very impressive because now if you take that third profit center of appreciation, you add it to the equity gain from the amortization another 3.5%. You add that to the cashflow of that property. In my example, like a real example, it's about 6% rate of return from the cashflow. You're up to 34% in your first year as a total return on investment realized and unrealized gains. That's pretty damn impressive.

12:52
So those are your three profit centers.

12:57
The fourth one is something Brandon can certainly talk about you know forever and that is the depreciation and the tax benefits of that depreciation, which is more money in your pocket because you're lowering the tax impact that would come into play from the cash flows of that property.

13:13
So you know, those are savings in a sense, but those are immediate returns that go straight down to the bottom line. It's spendable cash. So those are for profit centers, and if you really want to throw in a fifth, I would call it leverage. The fact that you can actually borrow up to 80% of the purchase price, for sometimes more, and leverage your investment capital five to one is amazing, like you really can't do that with other asset classes, and so that's what makes real estate interesting, powerful and an attractive to virtually everybody, whether you're accredited or non accredited. That's a long way to describe five profit centers of real estate, but really you got to stop and pause and think about what I just said, because when you start to add it up, you know we're talking about total annual rates of return that are in the 30% range and above If you just do that simple math way, I did it.

14:44 - Brandon Hall (Co-host)
Thanks for explaining all of that, and what I like about the way that you just described everything is that even if one of the profit centers isn't necessarily performing very well, you still have four more right, which leads me to my question of the Appreciation Profit Center. Now, the market has been pretty wild over the past couple of years. Where do you see the market going over the next 12 to 24 months? Like that appreciation piece, what do you think is going to happen there?

15:11 - Marco Santarelli (Guest)
Well, on the one hand, this is a crystal ball question. You ask anybody this question, they're going to have, you know, an opinion or maybe a prediction or a theory. So nobody knows definitively for sure. But you know, I spent a lot of time watching market information, housing trends and data and analysis on that data, and so what we won't see is the wild, wild appreciation we saw during COVID like in 2020 and 2021, which just was completely unsustainable, but we had just the perfect storm for that to happen. But what we do see going on for the rest of this decade is a lack of supply and still strong demand, and I hope that because of high mortgage rates having gone up to about 8% plus, which is, you know, a record for a while now, we do see sales having slowed down, even with new construction, but that's not sustainable. That will not continue for the next two years. We will see, sooner than later, the Fed kind of ease back and maybe not go back into a quantitative easing mode, but we will see them kind of stop pumping the brakes because there's going to be a breaking point in the economy where, if they tighten too much, they're going to put the economy into a tailspin. They're trying to balance a lot of things right now, you know, between employment, unemployment, cooling the economy down, cooling consumer demand down.

16:40
But housing is a necessity. The thing is is we have far more demand for housing and new housing units each and every year than we actually have supply. Even with the aggressive building that nationwide home builders have had recently, over the last few years, they're not keeping up with the increased demand for new household units. Now they have caught up. We're getting to a point of equilibrium, but that doesn't get us out of the deficit that we have for housing units. We need approximately 1.5, 1.6 million housing units per year and for the longest time we've been producing much less than that, closer to 1.1 million housing units. So we've been creating this deficit for many years. The only time we actually were in equilibrium was, believe it or not, right before the housing crash of 2007. It was really 2006, 2007 that we had meter beat the demand side of the equation with the amount of supply being produced, but then we kind of went into a recession which created all kinds of problems. So, to answer your question, housing is still going to be a very viable, strong investment if you're talking about real estate as an investment, but even as a homeowner. The housing market and I hate talking about the housing market as if there's this one national blob of housing there's no such thing. All real estate is local. It happens at a very local and sometimes a hyper local basis. But if you just want to generalize, housing is going to continue to be strong because of the simple supply and demand factors. It's economics 101. We have far more demand than we have supply. We're going to be this way until probably 2030. That's what I'm reading and seeing in terms of estimates. Before we get to a point of equilibrium.

18:30
Am I bullish on real estate? Yes, of course. You have to be very selective in the markets you choose and where you invest. Some markets are hot right now, some are not, and I'm talking about not in terms of price appreciation, but I'm talking about in terms of market conditions and demand. I guess all I can say about that is that I'm bullish on housing. I still see continued demand growing with supply lagging, and that's what's been pushing prices up to a large degree. That is also what has been pushing rents up aggressively over the last three to four years. All of that is cooled down now, like the year over year, rates have been coming down considerably. The next two years we're probably going to see single digit and probably low digit growth in terms of rent, probably around the 4% in terms of rent. But the appreciation side of the equation is really going to be very much market specific at this point. So that's probably a long and complex answer to your question. You were probably hoping for a simple answer right.

19:30 - Vikas Gupta (Co-host)
No, long and complex is good because it's not a simple problem. I'm curious you talked about hating to talk about the housing market because it's so local and so hyper. Look, you talked a little bit about earlier. You talked a little bit about, like you know, one of the mistakes speculators made was not necessarily buying good properties in good neighborhoods you just now talked about. Some markets are cooling off, some markets are still a little bit hotter than others. So that's a long-winded way of saying, like, what markets do you focus on? Or what are you looking for in a market? Were you active now, or you may not have been active a few years ago? Advice for us.

20:02 - Marco Santarelli (Guest)
Well, those are two different questions. So what I look for is one thing and you know what market conditions are right now is related but separate. So the first question what I look for is pretty fundamental in nature Markets that have jobs, a stable job market, but ideally job growth is a market to be focused on. Now, that doesn't mean the numbers make sense because you can look at, you know, like the Bay Area, california Bay Area, there may be jobs and job growth, although there's a little bit of a pullback recently in the tech sector but you may have strong job growth but the numbers just don't make sense. Why would you spend over a million dollars, you know, for a small, you know one bedroom house that you know doesn't rent for more than 0.3 or 0.4% of its purchase price on a monthly basis? You know the numbers just don't make sense. It'll be negative cash flow all day long. So jobs and job growth is one factor and the other factor that plays in pretty strongly is population growth. Like, is there migration and population growth in that market? Because, again, it's economics 101. If you have a growing population, organically and through immigration, you're creating upward pressure on that housing market which will not only sustain and support that market. But it'll also be a driving factor towards price increases because of the increased demand versus supply as well, as you know, upward pressure on rents in that market. So you, being a landlord or a real estate investor, you want to see those dynamics in play. So jobs and job growth and population growth are two major factors that I look for in a market you know, and then, tied to that of course, is there a supply in that market and also, do the numbers work? You know you don't want to be in a market like the Bay Area, where it's impractical. But markets like Indianapolis, kansas City, the Greater Baltimore area, the Memphis, tennessee, these are just examples of markets that we have inventory in, that we operate in, where the numbers actually do make sense. You know Kansas City, missouri, indianapolis and places like that. You know these are markets that make sense numerically and the fundamentals in the market are strong. So they certainly make sense a little bit more.

22:16
I say speculative in a cautious way, but a little bit more aggressive markets that have stronger appreciation potential because of the strong growth are the Florida markets Not all of them, like certainly you wouldn't go into Miami or Naples, it's just too expensive. But you know places like the Southwest Corridor, south of Tampa all the way down to Fort Myers and Cape Coral, are experiencing tremendous growth, a lot of investor activity. Because of that growth the number still makes sense, although they're getting a little bit skinny on the cash, on cash return side. But you know these are markets that are experiencing strong to very strong growth and we like those and I've kind of transitioning into your second question you know about like, maybe where and I'm not giving you financial advice or making strong recommendations but certain markets, like you know Charleston in Atlanta, indianapolis, richmond, many of the Florida markets on the northern half of Florida are doing exceptionally well. You know they're just a great place to consider if you can get the right deal.

23:16
Markets that are slow to very slow would include San Antonio and Austin. You know they've become overpriced and not favorable for investment purposes. Salt Lake City, to you know some degree, vegas and Phoenix have had a very long and hot run. So you know it's also become a market that has slowed down and is not as favorable now as it used to be for investment purposes. So you know you just have to do your analysis, pick the markets and for me it's a top down approach.

23:45
You know, I like to look at it like a funnel. You pick the best markets that make the most sense and have the right fundamentals, then you work your way down to the sub markets and areas within that metro area. Then you focus on the neighborhoods that are going to have the highest desirability and where the numbers make sense. You know, I always like to jokingly say if you can find a hundred thousand dollar property that rents for $1,000 a month, a 1% rent to price ratio, which doesn't really exist anymore, that's ideal. You know, that's an ideal scenario. Now you just have to have the right team, like the right property managers, et cetera, in place and you'll do very, very well. But that $100,000 property is, you know, hard to find today. Now it's the $150,000 property or more. So if you want to drill down on any of that, we can try and give you a big answer to your two questions.

24:38 - Vikas Gupta (Co-host)
It was a big question, so I appreciate the big answer. I mean, in today's environment with 8% rates, how has that shifted the way you think about, especially your first piece, your cash on cash return.

24:49 - Marco Santarelli (Guest)
Well, higher mortgage rates certainly have affected, you know, the cash flows and the returns on, at least the immediate returns, the cash on cash returns on real estate, because the cost of capital has gone up, it's much more expensive and so that means your debt service is higher and that means your cash flows are lower. So you either have to just deal with it and accept the lower rate of return or lower cash flows. And then, you know, wait it out two, three years and then refinance to a lower rate. You know, assuming that we're going to see lower mortgage rates which I anticipate we will we'll probably see a drop down to the mid-fives within two years. You know that's certainly anticipated and that's my prediction. But yeah, it's caused some people to pause and wait on the sidelines to see what happens with mortgage rates, to see if they're going to come down, or maybe wait until they do come down. So there are people who are waiting. Unfortunately, some people are waiting, thinking or hoping that we're going to see, you know, a market crash or a rise in foreclosures. Those people will be sadly disappointed because we're just not going to see. You know what we saw in 2007, 2008.

25:53
It's a completely different environment. The dynamics are different. We have true legitimate demand right now and not enough supply. So those people who can't afford to buy real estate for their home or as rental property will do so. And the inventory you know, whatever inventory is out there is what they're going to pick and choose from. But don't forget, you know, there was a time decades ago, like in, you know, in the 80s, where mortgage rates were 16, 17% or higher and there were still people buying, you know.

26:26
You know the qualification criteria was different. It was harder to qualify. So that just means that you had to move out further to get a less expensive property to be able to afford it. Because for most people it just starts with the monthly payment what can I afford every month? And then you work it backwards Okay, if I can afford this much, I can afford a home that's $100,000 or $200,000. And then you start looking at markets or maybe areas within your local market. However far away you have to drive from, you know, the central core to where you can afford it. You basically drive until you can afford it. So you know, these are just the dynamics we're dealing with. But a lot of people will end up moving because they just can't afford the cost of living in places where they want to live, you know, be it coastal markets around the country, or, you know, southern California, northern California, I've been hearing a lot about people who invest in some of those markets that you mentioned, like Florida, the Gulf Coast.

27:22 - Vikas Gupta (Co-host)
In general, you know concerns about rising insurance costs. Like, have you seen something similar and how is that affecting the way you think about some of those markets?

27:31 - Marco Santarelli (Guest)
Yeah, I haven't deep dived into it, but yes, you know, I've heard and seen that insurance costs have gone up considerably in places like Florida. In some cases even carriers have stopped issuing insurance, at least for the time being, which has made it more difficult to get insurance in some of these markets. But yes, it's an expense, you know, in your investing and if it's gone up, it's gone up, it's going to affect your cash flows and your rate of return. But I've also seen over the years that it is kind of a cyclical thing. Like insurance. Carriers will jack up their rates and they'll do that for a period of time and then they'll readjust them, you know, as the years go by. So they tend to come back down.

28:11
As you know, things kind of settle out and they you know they have control over their costs or whatever policies they're paying out on. It's nothing new, it's been around. It's just something you have to be aware of and anticipate, especially if you are in a state like Florida or you've got property that's in a so-called flood zone or close to the coast. Just be aware that your insurance costs are going to be pricey and they could potentially go up or be canceled and you're going to have to go and find another policy. It just happens. But you just need to be aware of that, if not budget for it, but at least be aware of it going into the deal. It's just a fact of life.

28:49 - Brandon Hall (Co-host)
My understanding, too, is those insurance costs. Like it takes a couple years for insurance companies to rebase their underwriting. So, like, as insurance companies exit the markets, premiums go up because you've only got a few remaining companies in the markets. But my understanding don't quote me on this but my understanding is that those insurance companies will come back into the market a few years later, once they rebase everything. So I guess, the point being that the drastic rise in insurance costs that a lot of people are experiencing on the coast might not continue. It might just be a temporary thing. I mean, I think that we're at a new, a new high, a new premium price Like that's the new floor. But my understanding is that after like a two year period of this, you're kind of back to normal. It's just a new normal.

29:42 - Marco Santarelli (Guest)
You know, over the last 20 years, since I, you know, started investing aggressively and looking at Florida and then, you know, launching Norata real estate investments, I've seen hurricanes come and go in Florida and every time they come by, you know they create the damage that they create. Insurance companies are paying out on their policies. Some of them pull back. Some of them, you know, leave the market and then they, they do, they come back. You know, a few years later they just come back because they want the business. You know there is business there to be underwritten and so they, they come back and they, they reprice.

30:15
But, you know, keep in mind, there's more than one insurance company. So it is a competitive environment. If you don't want to be the most expensive because if you are, you're not going to get the lion's share of that market you know you're not going to get as much business as you can. So, fortunately, it's a competitive environment and people will shop, and they do shop insurance policies all the time, and so there's a tendency for it to normalize again over the course of two, three years.

30:38 - Vikas Gupta (Co-host)
You mentioned your, your investment firm, so you're providing turnkey investment property. Tell us a little bit more about that.

30:44 - Marco Santarelli (Guest)
Yeah. So let's define what we mean by turnkey, because there's a lot of companies out there that have used that term, kicked it around and to some degree, plagiarized it. I started marketing the bejesus out of that term about 20 years ago when I started the business, and all the marketing and advertising and promotion that I did all wrapped around this concept of turnkey investment real estate. And for us it's not only the properties which are turnkey investment properties, investment grade rental properties, but it's also the experience and the process and everything that we bring to the table, from the education to the context and whatnot. That to me, I call that a turnkey real estate investing experience. So it's you can be an investor investing in turnkey real estate and have both the service and the product is turnkey Real quick.

31:29 - Brandon Hall (Co-host)
I didn't realize that you were. You were the guy that like originally kind of came up with that.

31:33 - Marco Santarelli (Guest)
Well, I didn't create the word, I just I just took that and I looked at the concept of turnkey investment. You know, turnkey investing and turnkey real estate and I, I just I just marketed the crap out of it. And I mean, if you type in turnkey real estate and any derivative of that on Google, right now we're always coming up number one, maybe number two.

31:52 - Brandon Hall (Co-host)
I had the same experience with real estate CPA. So you know, for a long time like I marketed myself as the real estate CPA the domain name is the real estate CPAcom and when I was doing it there was one other firm that like, like it said that they were a real estate CPA but there's really nobody else. Nobody else saying I just realized people were searching for that term and so I just marketed myself heavily and so, yeah, we're kind of like same experience. Anywhere you search for a real estate CPA, we're going to show up number one. But now there's a lot of these real estate CPAs out there or people saying real estate CPA. So it's kind of it's interesting, but it's like, anyway, I know how hard that is. I guess my point is is I know how hard that is to like make a term streamline. So how do you kind of get your hands on?

32:39 - Marco Santarelli (Guest)
that, yeah, and you too, and yeah, it's a very similar experience. What you just described, brandon, yours is easier to work with because people are more are very likely to type in real estate CPA if that's what they're looking for. But the term turnkey is not something that is common, vernacular. People don't use that on a day to day basis, so it's not like someone's going to go to Google and specifically type in turnkey real estate, or at least not back then. Now, more so, because you know it's more common to see it in publications, magazines, online and wherever else. But, yeah, that, which is one of the reasons why I had to market the crap out of it. But it is what it is, it's, it's turned. I wanted it to be turnkey, turnkey real estate investments and turnkey real estate investing, and so those are the search phrase that I've, you know, optimized for the last 20 years on an SEO basis, and continue to do so, and that's why we basically own the space on, you know, on search, when it comes to that real estate investing.

33:32 - Brandon Hall (Co-host)
And just real quick, because this isn't something we like have talked about on this show. But if you can come up with a term, like if you can look across other industries and you can come up with a term, and you can apply it to your industry and this is like this goes for your, if you're a business owner you're listening to this W2 job investing in real estate, trying to build something, a business If you can identify a term such as turnkey or real estate CPA and start using that term religiously and then get other people to use the term, it's all going to flow back to you at the end of the day. Like sure, you might have other people that, like that, take a little slice of your pie, but the whole, the whole pie has gotten a lot bigger because now everybody's looking for turnkey real estate investments, whereas they weren't before. Right, people were looking for real estate CPA in the past, but that keyword usage since I started this in 2016, has skyrocketed because now everybody wants to be called a real estate CPA and so that's what they write about. And if we're the number one SEO, then we're going to get all of their views right.

34:34
So the point is that, if you can. If you are a business owner and you're trying to build something cool, you can if you can identify a term that you can apply that nobody's really using and that you can apply to your business and use that on an ongoing basis see some success. And then other people are going to see your success and say, well, I want to call myself the same thing or something very similar. They're going to start using that term too. As long as you can remain number one or two on those SEO listings, you will reap the benefits. Everybody else is going to do marketing for you. Essentially, that's been my experience. I'd be curious to actually get your take on that. It sounds like you kind of had a similar, a similar experience, because you're number one on the SEO, on the Google listings for pretty much anywhere If you look up turnkey.

35:24 - Marco Santarelli (Guest)
Yeah, yeah, well, actually it's actually pretty amazing how many phrases we dominate, now to the point where Forbes, like you name it, wall Street Journal everybody's quoting us. Now They'll take content from our blog and then reference it saying, according to the Rata, real estate, this, this, this and that. But that takes time, it takes years. I guess SEO is not a slow thing. It takes a lot of effort and a lot of quality content, and by quality content it's got to be stuff that has value and people will want to read it or link back to it, like reference it, because if they're not doing that, you're not really getting, you're not getting the benefits of other people giving you essentially a vote for the content you have. So you do have to create a lot of content around those keyword phrases and derivatives of those keyword phrases.

36:11
I'm actually surprised that nobody was tapping into real estate CPA. It's kind of shocking because it's I mean, to me it's just, it's so obvious. You know, if you need a CPA that specializes in real estate, why not type in real estate CPA? But I mean you even locked down the domain name, which again blows me away that nobody, someone else, didn't take it.

36:32 - Brandon Hall (Co-host)
Yeah, well, now there's a lot of now I do coaching with CPAs and so there's a lot of firms out there that have kind of followed my methodology of calling themselves the CPA for something Like there's like the brewery CPA, the fitness CPA, the I think there's even like the therapist CPA now and stuff the dental CPA. So, but it works. It works Like if you pick a niche and you go all in, just like you did. You pick the niche, turnkey, it's all you're going to do or it's what you're going to specialize in. You know it's a slower start, that's for sure.

37:04
If you're, if you're thinking about any sort of business and you want to niche down, I think that it's an amazing decision and a good strategic decision, because you can carve a moat that even copycats can't beat, right, we have a lot of copycat like accountants that do exactly what we do. They literally look at our engagement letter and they Say it's the same price, same scope, and we're gonna go and say the same, the same things. So you're gonna you're gonna breed all these copycats. But if you are like the first mover, if you can niche hard enough and deep enough into that niche and market yourself well, you can create a moat. That is untouchable and that's the beauty of niching, but it is. It is a little bit of a slower start because you're saying no to 95% of everybody. Right, you're only taking on a Small amount of people. But, man that, once that engine gets going, once that flywheel starts spinning, yeah, no, I agree 100%.

37:58 - Marco Santarelli (Guest)
That's that's the experience I had. It was, it was a slow start but that's why I had to, you know, push it hard for many, many years. But you know that kind of leads to. You know your question about. You know what is turnkey real estate investing? I mean, for us we had a specific definition. This is kind of where we often went off on a tangent which is great, great marketing tangent. But you know it's like people are now kicking the phrase around, calling anything and everything you know turnkey, almost like putting lipstick on a pig and saying, well, that's, you know, a turnkey rental property. But that's not the case At the end of the day, for us, what turnkey real estate investing or real estate investment Means or is or should be, is property that's in a good market, good to great market.

38:39
In a good neighborhood. The property is in new condition or it's either new or like new. So no deferred maintenance and it's in good condition. There's nothing to be worrying about in terms of cap X or maintenance and repairs. So good market, good areas, good neighborhoods, a good property, professional, full service property management wrapped around that, unless you opt to manage it yourself.

39:01
But you should always have full service property management company or firm that's basically the essence of it right there and of course you know, should be cash-flow positive with a qualified tenant in place. If you do that, you've mitigated 80% or more of your risk. And a big factor in that risk Quasion is actually the neighborhood, not the market. A lot of people get it backwards so Neighborhood you can be in a shitty Market and be in a great neighborhood, because there's always great neighborhoods in every single city and market out there. But if you're in the right neighborhood, you'll always have Quality tenants, a good demographic and you'll have desirability, where people always want to live there, and you'll always get the best, like the cream of the crop, living there. So that's how you mitigate risk.

39:45 - Vikas Gupta (Co-host)
So you're putting together these turnkey investments and then and then are you selling them off to investors, or like, if I'm Interested, sounds like too good to be true, but if I'm interested, out of why, how do I get involved?

39:57 - Marco Santarelli (Guest)
It's funny you said too good to be true because I was gonna. I didn't. I didn't purposely say one thing before which I'll say now. Like all the value of the services we provide, the knowledge, the resources and the properties, all that stuff comes at no cost or fee. So you, as an investor, buyer, can work with us. We'll, figuratively speaking, hold your hand, walk you through the process, educate you, answer questions, find out what your Goals or strategy is, talk about the markets you should be in, show you inventory ready to go, turnkey investment grade rental properties in those markets and Help you go through the, the, the transaction you know, with escrow, with the financing we have, all the you know connections to financing, the title companies, the inspectors that you need, etc. Etc. Etc. Like everything is through us. It's like, you know, to use that phrase has been overused but a one-stop shop. We provide you all that, all that knowledge, resources and contacts and properties at no cost. There's no, you have everything to gain and nothing to lose working with us. So, yeah, it does sound too good to be true, but that's our model. That's what our model has been for Going on 21 years.

41:00
Now January will make 21 years that we've, you know, been Providing that service and as far as the markets go, we're in about 25 markets. About nine or ten of them are very active Markets. You know, I've mentioned some of them before and it really just comes down to you as a real estate investor. Are you more focused on appreciation potential or you're more focused on better cash flows Right from the get-go, like higher cap rates, or maybe you want a hybrid market? Well, that's fine. We have hybrid markets as well, where you get kind of less of each one but a good balance between the two. I mean that's what we do. I mean that's that's what we love to do, that's what we've done for 20 years.

41:41 - Vikas Gupta (Co-host)
That sounds great. It's been a fantastic conversation so far. So if you don't mind, we'll go into our three closing questions, fire away. So question number one what is your favorite book? And it doesn't have to be real estate related. You're gonna hate my answer.

41:56 - Marco Santarelli (Guest)
There are literally so many good books out there it's really hard to pick one. I mean it's it's that even possible, right? I Love so many different books for so many different reasons. Depending on who you are, what you're looking for on the real estate side, you know if someone's like doesn't have the right mindset, or they're just getting started or they need that foundation, lover mer hatem. I love rich dad, poor dad, as a foundational book on wealth principles side of the equation, like Ray Dahlio's book called principles, which is this thick and it's like a doorstopper, but it's a fantastic book. It talks about everything from life to investment philosophy. That's a great book to read and you know it's. It's one of those must read books. You know, if you're more conceptual and philosophical, you know, stick to the tried and true books, like they can grow rich. Or one of my favorites is how to win friends and influence people. So I'll leave you with those four, because those are four to me must read books.

42:48 - Vikas Gupta (Co-host)
Great. No, I love it. I love the, the best of category. I. I'm not hating you for that answer, I'm loving you for that answer. Second question and we've touched on this a lot throughout this, this episode here but if you had to pick one, what is most important to you in real estate? Investing cash flow or appreciation Appreciation.

43:05 - Marco Santarelli (Guest)
I'll put a caveat on that little asterisk. If I am young like Brandon, but I have time on my side and and cash flow is not important to me right now Definitely Appreciation is where I would go, because I want to build my, my net worth as fast as possible because guess what, later, in a few years down the road, I can tap into that equity growth and leverage it. I can compound my gains into more real estate so I can fast-track my wealth creation. If you're focused on cash flow too early and too fast, you're being myopic. You're you're really, you're focusing on something that's good but it's not going to get you far fast.

43:47 - Vikas Gupta (Co-host)
Got it, marco. I think you're the king of nuanced answers, which is good. It's a good thing. I love nuance. Okay, good, and our final question Is there any final piece of advice that you'd like to leave our audience with that we didn't get a chance to touch on?

44:01 - Marco Santarelli (Guest)
You just opened up a can of worms, my friend. I'll tell you the first one that came to mind. The first one that came to mind is literally this is Take action. A lot of people will listen to your podcast, they'll listen to my podcast, they'll read books, they'll talk to people who are investing in real estate, but they either Wait too long to pull the trigger and actually invest or they don't do it at all.

44:21
You know, I kind of jokingly say that there are three kinds of people in the world. There are those that make things happen, like real estate investors. There are people who so people who make things happen, people who watch things happen. And then there are people who wonder what happened. And you don't want to be that ladder category. So the important thing is to take action, because until you actually do pull the trigger and take action, you're not gonna see your wealth go up, you're not gonna see your income go up, you're not gonna see things come out of it the benefits that we want when we think about real estate investing or a study real estate investing. So you definitely have to take action. Until you do that, nothing else matters great, well, fantastic.

45:01 - Vikas Gupta (Co-host)
This has been a great episode. Really appreciate you joining us. Before we let you go, though, where can our audience find you?

45:07 - Marco Santarelli (Guest)
I'll just leave you two websites. There's my personal website, which is my name, marco Santarelli Com, and I have links to all of our ventures, businesses, productions, p firm, everything is there. And. And then the real estate website is norata real estate comm and or a da norata real estate comm, and Tons of content and information on there like tons, so you can't go wrong great.

45:34 - Vikas Gupta (Co-host)
Thank you very much, marco I.

45:35 - Marco Santarelli (Guest)
Appreciate this, guys. Thank you so much.