Real Estate Nerds 49:

Bad Beats

"Successfully Building Long-Term Passive Investing Strategy"

Jeremy Roll
Real Estate Investing Expert
Real Estate Nerds
Episode 49: "Bad Beats"

Listen to the Podcast Here:

On today’s Best Deals episode of The Real Estate Nerds Podcast, we hear from investor Jeremy Roll. After a decade in the corporate world, Jeremy began pulling his investing funds out of the stock market and pouring them into real estate assets. What started as a series of long nights reading books in the Investing section of Barnes and Noble has evolved into a consistently cashflowing, reliable investing strategy that serves Jeremy to this day.

Jeremy Roll on Cashflow Investing and the Value of Long-Term Strategy

Our host and attorney Scott Smith welcomes Jeremy Roll onto the show. Together the two investors discuss Jeremy’s background, real estate beginnings, and how he developed the strategy that has led to consistently good deals in the long term.

[1:00] Jeremy is originally from Montreal, Canada but moved to the U.S. to obtain his M.B.A. from the Wharton School in Philadelphia. He spent a decade in the corporate world.

[2:00] In 2002, just after the dotcom crash, Jeremy began seeking investment alternatives that weren’t linked to the highly volatile stock market. He began pulling funds out of stocks and bonds and into managed real estate funds. He found cash flow was far more predictable when he began using this strategy, and that he also had more opportunities to diversify.

[4:00] By 2007, Jeremy had pulled all of his investing funds out of the stock and bond markets and was working at Toyota headquarters: “I loved having both the paycheck and the cashflow…But I had enough cashflow to take a risk and leave the corporate world.” Jeremy is now a full-time passive investor with a portfolio that spans a variety of asset classes. Since 2007 he has focused on increasing his passive investment “snowball” to keep the trend going and avoid returning to the corporate world.

[7:00] “In my opinion, the average long-term returns of the stock market will be much lower than real estate,” Jeremy explains. He points to the tax benefits of real estate, and highlights that the freedom he has gained from real estate investing has been a major appeal for him when deciding to make these types of investments.

[8:00] Scott asks how Jeremy went about researching his investing options, and specifically, what that process looked like. Jeremy points out that he spent many nights in Barnes and Noble reading a variety of investing books.  Reading about many different ideas and methods helped Jeremy decide to pull the trigger on changing his investing strategy. He was also influenced by a family friend who was achieving success with syndication opportunities.

[10:00] Scott asks Jeremy about his process for determining which asset classes made sense for him, as factors like tax benefits can change. Jeremy explains that “Cashflow investing is the opposite of a get-rich-quick scheme. It takes a long-term view.”

[10:41] He explains that if he were no longer happy with the cashflow coming in, he might change his strategy. But for now, his investments are working for him in both the short- and long-term. Jeremy’s ideal is ensuring that his investments offer consistent cashflow so that he does not have to concern himself with redeploying his capital into other methods.

[12:00] Jeremy points out that his preferred type of investing is highly liquid and draws listener attention to SEC regulations he describes as “anti-flipping laws.” He recommends his methods for any investor who values predictability with their investments. Scott asks if there are personality factors, such as risk-aversion,  that drove him towards passive cashflow investing. Jeremy cautions listeners that his strategy is not ideal for anyone impatient or expecting massive returns within the year, even with sufficient capital.

[14:30] Despite having been an investor for 17 years already, Jeremy looks forward to the future: “A long term mindset can determine your success.”

[15:30]  “You can invest in assets across the entire risk spectrum,” he adds while also stating he does have a personal preference for lower-risk investments.

Jeremy Roll on What a Best Deal Looks Like

Scott and Jeremy turn their attention to two of Jeremy’s best deals. The two investors also discuss the criteria Jeremy uses to identify good deals, and some of the practices that he has used to remain successful despite the current market’s challenges for his investment preferences.

[16:22] “I think everything is overpriced right now,” Jeremy explains, adding that in a way he looks forward to a downturn so he can take advantage of lower prices. Yet this belief did not stop him from investing in an Alabama-based mobile home park. His investment cashflowed heavily right from the beginning, and he enjoyed 95-97% occupancy rates in a relatively economically strong area.

[18:30] Jeremy believes a strong local economy can combine with other factors, such as better-than-average pricing and the proper operators, can create layers of security within an investment. “You’ve got to invest in the right people,” he explains, pointing out that he was essentially betting on mobile park operators with a great track record. He found the high return rates and low prices appealing, particularly since his preferred types of investments are harder to come by in the current market.

[20:30] Jeremy adds that his operator underpromised and overdelivered through conservative estimates.

[21:30] Scott invites Jeremy to share another best deal and highlight any trends that have contributed to his success. In 2015, Jeremy purchased four self-storage facilities from one of the Top 30 operators in the United States. He purchased three of the properties directly from the investors, and secured prices 10% lower than market value.  His investor was a high-profile, high net worth individual with whom he has maintained a relationship.

[22:30] Jeremy was able to secure cap rates between 3.5 and 8% for these A-class Florida properties. He was able to sell the properties three years later, a feat he considers only achievable because he “bought them right.”

[24:30] “We were really picky about how we bought properties,” Jeremy explains. He believes his success is largely attributable to this simple fact–along with having the best operator for a given property. He believes making purchases the right way is particularly important in this current real estate climate.

Lessons Learned from Jeremy Roll’s Best Deals

Jeremy and Scott each chime in about what they feel are the most important takeaways from Jeremy’s story for our podcast listeners.

[19:00] Scott’s main takeaway: “Expect the downturn and price things appropriately.”

[21:20] Jeremy’s advice to listeners is simple and direct: “Be very careful right now. Pricing is high. Real estate is cyclical. You have to be cognizant of where we are in the cycle. If you’re a new investor, step back and look at the cycle.” He points out that you can do everything perfectly, but if you fail to execute the right timing, your investment may fail in spite of your hard work.

Connect with Jeremy Roll

Connect with Jeremy Roll via his email, He’s happy to network with new and seasoned investors alike, including assisting new investors with navigating the waters of the real estate market.

Listener Resources

Thank you for joining us on today’s episode of the Real Estate Nerds Podcast.

For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.

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When making business decisions that affect your long-term goals, like what types of investments to make with your retirement dollars and which vehicles to use, it really is best to be aware of all of your options. We frequently talk about the Solo 401(k) and Self-Directed IRA as tools for funding your retirement. But what about life insurance? And what about the stock market? What if we told you there is a tool that allows to to reap some benefits of both? It’s called Indexed Universal Life Insurance–and some investors have found it a useful addition to their retirement plans.

What Is Indexed Universal Life Insurance?

Indexed Universal Life Insurance (IUL) plans are a variety of permanent life insurance plan that features a cash-building element. One primary benefit of these plans is that the policy holder gets some of the gains of being associated with the stock market without all of the risk Wall Street is famous for. This is in no small part because of how these policies are designed. IULs earn in part because they are directly linked to a market index, such as the Dow or the S&P 500.  Any gains remain within the policy, albeit a cap rate will limit how much you can make. However, you are protected during a particularly bad year for your index with an IUL. The worst case scenario with these plans is that you make nothing, but you never actually lose money no matter how poorly your index performs. The protection of your principal is actually derived in part from the same cap rate that limits your gains.

How much money do policyholders stand to make? Historically, returns run between 5-9%. The S&P Index has actually returned at 9-11%, but the upside limit on UILs stems from the account’s cap rate. For this reason, many advisors argue that the UIL can make a wise addition to a retirement or estate plan once more traditional and self-directed accounts are maxed out.

Tax Benefits of Indexed Universal Life Insurance (IUL) Plans

There are three key tax benefits of IULs. First, you may pay into the policy with pre-tax or after-tax funds. Withdrawals from the policy may be made tax-free if you are under 59 1/2. Such withdrawals are regarded as loans, with your death benefit serving as collateral. Any funds paid out to the beneficiary are also tax-free, including normal benefits upon your passing. This is true regardless of their value.

Ask the Experts at Royal Legal Solutions About Your Retirement Planning Options

Regardless of where you are in the retirement planning process, Royal Legal Solutions an assist you. We have extensive experience educating investors about self-directed investment options. Many of our investor-clients love our Solo 401k information, product, and compliance services. Our Self-Directed IRA services can also be helpful for retirement planning, as the SDIRA is yet another vehicle that allows you to diversify and take total control of your investments. To determine which of the available retirement planning strategies are best for you, consult with one of our experts at Royal Legal Solutions. You may also contact us with any questions you may have about your options.