The “Johnny Appleseed" Strategy That Took Me from $60K/Year to Millionaire

24:11And it was like, okay, well at this point, it's all fun and games because I could, I could live my life right now for the rest of my life. And every, but every month I don't touch it, I get more, right? It builds bigger. And so for me, it's just like letting that equity build in the background. It empowers you in some ways to enjoy your job more. Knowing you could walk away tomorrow makes it a whole lot less hard to go to work. You guys better not tick me off three days in a row. Honestly, that's freedom. That ability to work because you want to, that's where I think everyone's trying to get to.

24:43And it's awesome that you got that. All right, Joseph, amazing, amazing story. Love how you've done this. Love the perseverance, man, and adaptability. I think that's super cool because as you said, if you adjust, you can figure out the way to make money in almost any market. And you've now done it in, I guess, at least you would say three different cycles. I don't know if you'd say you made money in the pre-crash cycle, but you were in it at least. But then you figured it out in sort of the recovery, what we on the show called the Goldilocks era, where everything was perfect from 2013 to 2022.

25:19But now you've also figured it out in what we call the upside era, which is just trying to be a little bit more precise. So really impressive portfolio you've built. So Joseph, you've written a book. Tell us a little bit about it. Well, this whole adventure that started in 2008 with me trying to understand what people were told to do with their money, what worked, what didn't, that became my latest book, which is called How to Get Rich in American History, 300 Years of Financial Advice that Worked and Didn't. So like, what were people told to do? How did it change? What actually worked for people.

25:51This is a study of what everyday people did with their money and what failed for everyday people. And so what to avoid. And I try to kind of walk through all those lessons about stock market investing, about real estate investing, about personal finance, all these things and how it's changed. It's changed dramatically. And people are responding to the book. I'm really fortunate that it's a national bestseller, which was certainly not something I thought when I walked away from the 2008 Titanic thinking, oh, this great financial crisis is going to be really good for me one day. So it's been a lot of fun sharing that with people.

26:21Well, that's amazing. Congratulations. We'd love to hear some of your top pieces of advice that our audience should take home with them today. We're going to get to those, but we got to take one more quick break. We'll be right back. Everybody has a space that's sitting there quietly, costing them money instead of making it. A guest room holding random storage and a treadmill that hasn't been used in months, a second home that only gets used a few weeks a year, or your primary home while you're traveling, just sitting there, fully capable, producing zero return. While you're away, it's actually a great opportunity to list your space on Airbnb and let it start earning for you.

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31:22Welcome back to the BiggerPockets podcast. I'm here with investor and author Joseph Moore. Joseph recently wrote a book, a bestselling book about the history of financial advice and investing. Joseph, give us your top five pieces of investing advice you think our audience should take away today. It's very hard when you're in the middle of the storm to step back and see the whole picture. And that's one of the things history does. That's why I love history books for investors because it helps you see other people's lives in the big picture. So you can put your own there. All right. So let's talk about the big picture for our own lifetime, right?

31:55Demographics is destiny. That's the first lesson I'd tell people. When populations have declined in history, there is a flight to quality. And we are living on the cusp of a population slowdown and eventual decline. Now that's a, that's not a popular thesis. People don't want to hear that. But when populations were booming, there were many opportunities wherever you went, right? I know the experts, the periphery, but as the population growth is slowed, go where the people and the quality are going. We don't have a lot of these experiences in history to look at, but everyone we can shows that people collapse on city center.

32:28They go where the quality are, because if there's less people, that means there's less nurses, there's less doctors, there's less restaurants, there's less everything. So people go wherever the quality is. So demographics is destiny. Now for me, that means you can hedge against demographic slowdown by kind of owning in advance where that demand will never go away. So for me, that's top school districts in growing Sunbelt cities. Like the children, the population of children is going down. So if you're in a top school district in an area where there's less and less kids, understand that eventually school districts themselves are going to start to struggle as drivers of real estate value.

33:00So demographics is destiny for me in the Southeast where there's still population growth. You can make really good financial decisions there. I assume you're talking about maybe Japan, what was going on there, right? Like one of the better case studies in a limited pool of case studies of what happens with population decline. And I think the big picture here for people who are worried about it is, you know, nationally, could prices suffer? Could home price appreciation be less in the future? I think so. But it's just regional, right? Like to your point, it's just going to be very specific about the areas, why it's more and more important that you understand where you're investing and buying at the right price given where you're investing, which is something we always talk about on the show, but great advice here, Joseph.

33:45All right. What's investing lesson number two? It's the land. That's the second lesson. It's the land. And we hear a lot, we have a housing shortage. We have a housing shortage. Okay. True enough. But what we really have is a land shortage, specifically residentially zoned land. And so you will make your greatest returns when you realize that what you're buying is the zoning. And the more exclusive the zoning, the greater the return. That is, again, why I go to top-ranked school districts, right? And I'll tell you a pro tip here. Like, city school districts, especially in the Southeast, tend to be better than county school districts because counties can constantly redraw their lines as their demographics shift.

34:22This is, again, those things that come in handy when you know the history, right? When county school districts started to be founded by states, cities were given the chance to opt out. And the cities that opted out tend to be very fiercely loyal to their city school district. Interesting. And so those lines aren't moving. And so you can know if you have a good city school district that the lines are where the lines are going to stay. So, yeah, just understanding that what you're buying is the zoning and it is the zoning that is creating that excess value for you. It's not you and your brilliance.

34:49It's that the county commission isn't going to allow them to build more of certain types of structures near where the city is. That is fascinating. Did not know that. Great point. Just one question, though. How do you think about upzoning trend then? because we're seeing a lot of municipalities generally change their zoning in favor of more housing. So do you think this strategy will be as effective in the future if this trend continues? Well, I think you've got to keep your eye on it for sure. Now, I will put my political cards on the table and say that I am all for upzoning. I am rooting for upzoning and it would make me poorer.

35:23In fact, on Substack, I just wrote an essay called Please Make Me Poorer because I would I would much, I mean, I've got millions of dollars in real estate values, equities. Like I, I would much rather own a smaller slice of a growing pie than my particular slice of a pie that no one else can have. And I think we really need as a society to realize we're undermining the future of people being able to get into real estate and have homeownership and these types of things if they want that or have rentals that they can afford to live in. These, this is a political problem that could bite real estate investors the other way.

35:55I'm much less scared of upzoning than I am of never upzoning. And then voters deciding, well, shoot, if I can't own and I can't really afford to rent, then let's take away from these landholders, which by the way, has happened in history. Really, really interesting perspective, Joe. Thank you for sharing that. No, I think it's a good point. We talk about on the show all the time, I'm a big believer in producing more homes. I think allowing more supply to be built is the only way we get back to a healthy housing market. So I'm with you on that. And I understand that for some investors, that might mean individual properties, individual investments, not necessarily going to do bad, but may not have the exclusivity that they once had.

36:34But man, I would rather see a predictable, steady market where supply and demand are somewhat in equilibrium than the crazy pendulum back and forth that we've seen in the last couple of years. At least that's me. All right, let's move on to investing lesson number three. Yeah, number three from history is monetize your space. In every housing shortage we've ever had in American history, and by the way, this is neither the first nor the worst. In the 1940s, it was statistically two times larger than today's shortage. Wow. A young World War II veteran ran for Congress when he got back from World War II explicitly.

37:06His number one campaign platform, affordable housing. His name was John F. Kennedy. So we have had housing shortages before. What Americans always did to navigate them was monetize their space. what BiggerPockets coined as the phrase house hacking, right, is actually an old 19th century strategy. It was the most common way families paid off their mortgages. They would rent out the extra rooms in their house. They would save up, get a house, rent to borders. And this was how they would pay off the house. And it was, I mean, so common. So I, in fact, the kind of do it yourself, real estate investment world that kind of kicked off in the sixties and seventies, part of it was kicked off by a woman named Doreen Briar, Briar bear, Briar bear.

37:48I can't remember how to pronounce her name. And she was a secretary in Washington DC who just kept renting out her house to other single ladies. And then eventually realized, well, I'll just rent my room and then go buy another house. And she did this in the sixties and seventies. And she ended up owning like five nice suburban homes and she wrote a best selling book about it. And that really was what got the self do it yourself, real estate movement. Yeah. She's one of the two origin points. Yeah. So there's two books that really start the you can invest in real estate yourself movement and she's one of them.

38:16So monetize your space when there's a housing shortage because look, I don't like that there's a shortage, but you got to pick which side of it you're going to be on. Yeah. Well said again. All right. Well, house hacking, you know, we're big fans of here, whatever you call it, borders, rooming, whatever. It's a good strategy. It just works. It's apparently worked for a lot longer than I even knew for 80 years or something, whatever it is. Awesome. All right. What's number four? Always remember that real estate is optionality. That is really the financial move that you're making is you're buying an option.

38:46Real estate is a put option on the dollar. It's a call option on housing combined with an income annuity and a tax haven. Like it's four different benefits all at once. You are buying everything's upside and protecting against everything's downside. So it is the most broadly powerful investment class for everyday investors in the history of the world. So buy the options that if they pop to the upside, they're going to offer the biggest payouts, which is again, back to what we about earlier. If you buy a tiny trailer in rural America, that's fine, but understand that its upside is pretty limited.

39:16You want to buy where you've got the option that if it pops to the upside, you get all of that gain. So real estate is optionality. Never forget that that's what you're getting into. I love that. I've got a friend who's often on the show. His name is James Danner. He's a house flipper, very successful. He just calls it the juice. Yeah. Every house has got to have a little bit of juice in it, right? You could buy something for cheap, but there's no juice. It's not exciting. I completely agree with that. And it sort of goes along with the time in the market thing, right? Because we don't know when these big pops in real home price growth are going to happen, inflation adjusted home price growth, right?

39:55But if you're in the market and you have the property with a little bit of juice, you're going to look like a genius. That's why everyone listening, we call this era of real estate, the upside era is because you have to position yourself for that upside that will come. We don't know exactly when, we don't know exactly how, but it will come. That's what you have to position yourself for. So Joseph, we're on the same page about a lot of this stuff. So see if you can get me to disagree. What's number five? All right. Lesson from history number five, marry your spouse, not your house. So first and foremost, understand that marriage is actually a superpower because capitalism is a team sport.

40:29So you definitely want to keep your family on the same page in this real estate investment journey. However, the larger point here, if you really buy at a great price, if you really kind of quote unquote, steal the property, you kind of made all your money on day one. And so now don't get married to the idea of the property because actually statistically speaking over time, your return on investment is going to slowly degrade. And so once you realize you've made your money, and this was a hard lesson for me because when I first started in rentals, I was like, I'm going to own this forever. I'm going to retire with these houses.

40:57And then I realized these houses have all kinds of problems that I'm going to not want to deal with when I'm 70. So at some point when you realize you've made your money and your equity is where it needs to be, go ahead and move that on to the next property and the opportunity. So marry your spouse, don't marry the house. I love it. I mean, that's what I'm doing right now with my portfolio. Yeah, I've been doing this 15 years. I got a lot of properties built in the, I got properties built in the 1800s. I'm trying to sell those, you know, like I don't wanna be dealing with that 10 years from now, 15 years from now and trading out.

41:29And to your point, mathematically speaking, your ROE, your return on equity, often peaks three, five, seven years into a deal. And it's not to say you have to sell it, but if you care about efficiency and how effectively you're deploying capital, selling, trading out, trading up really matters. I thought you were going to say to sell your primary residence though, which maybe you should as well. But I thought that was where you were going with marry the spouse and to keep moving, which is kind of a live and flip strategy. But you have one more for us, right? Yeah. We asked for five, but I think you got six.

42:04Oh, okay. All right. Give us the bonus. Bonus round. We got a bonus. A bonus history lesson. So get started and get practice. I think if you're a real estate investor, I know you guys call it, what is it? Analysis paralysis. Isn't that one of the words you guys like to use? Believe it or not, I followed BiggerPockets a lot when I was starting this journey. So I'm pretty familiar. Good. Thank you. Yeah, no, it helped a lot. There were a lot of times I was like, I don't really know what this rule is. Maybe somebody on BiggerPockets knows. So, but I really encourage people like if you're going to get into real estate investing, then just get involved in real estate investing.

42:35You just need reps. You need to get out there and try it. And so one of the things as I look back that went right for me was that I tried on properties that didn't go particularly well, but I could manage it. And even though I sometimes, a lot of times I made money, sometimes I lost money, but I got experience and I got good at something. And if you're going to get good at something, you need to practice. And so I encourage people staying on the sidelines for a certain amount of time is okay. you're watching, you're learning, but at some point you just got to get out there and start so that you learn what it's like to actually manage real estate.

43:05A hundred percent. You learn by doing. It's a hard thing to do though, because you don't want to go in blind. So what do you think the sweet spot is? Like how much time do you have to spend learning before you go out there and just do something? Definitely do more than read one book, right? But I will say like, you'd be shocked at throughout American history, how many people who are really, really smart will wait way too long and how many people will kind of almost blindly and almost foolishly rush out and make it work. And so a whole lot of capitalism is people who kind of lean out a little before they're ready and they take the initiative.

43:38Now, I'm not. Please don't hear me tell people like, if you've never read a book, you've never studied under somebody, you've never. One thing I'd tell young people to do, especially go meet with somebody who's done it and not somebody who's selling you something, not somebody who's selling you a class, not somebody who's doing a seminar and wants you to sign up for their 9.95 thing in the back of the hotel room. Okay. Not those people. America has 360 something million people and a ton of them are real estate investors. Find one in your community who's done it, who succeeded, who will tell you the truth, have buy their coffee.

44:07They'll probably buy yours anyway, because they'll probably take sympathy on you. Like sit down with somebody and say, you did this. I want to learn how and do that with a few people. And I'll tell you one thing I did when I made the transition to being nicer houses and bigger properties, I went and met with a guy and I just rode around with him all day. And he was super like, again, it's about relationships. And I just, I just asked him questions all day. We drove around to his properties and he showed me stuff. And I learned more from that one day about what it was like to invest in that area and the things I had to watch out for than I could have reading all the, all the books and all, you know, all the things.

44:39And so I would encourage people, you do need to educate yourself. It's probably best to do it relationally, but you got to get started at some point. Learn enough to not make a catastrophic mistake. I think like that's that's the thing and real estate relatively forgiving so it's pretty easy to not make a catastrophic mistake learn the basics get in there and do it and i love what you said about the relationship thing like i would encourage people to still do that actually in the last two weeks i host this podcast i've been doing this for 16 years i've done exactly what you just said i've driven around with two different investors i moved to a new city about a year ago i'm still trying to learn.

45:16And I just reach out to people, ask them what they're working on. I went and looked at six different properties, learned about it, made some friends, made some connections. That's the fun part of real estate. You should always be doing this and trying to learn from one another. That's basically the basis of BiggerPockets in the first place is to help people connect and learn from one another. So absolutely love that last advice, Joseph. Man, thanks for being here. This was super fun, super interesting perspective on real estate. I learned a lot. Really appreciate your time. Hey, man, thank you so much.

45:45And the Bigger Cockets community has done a lot of great things for a lot of people, and I'm one of them. So thanks for all y 'all are doing. Absolutely. And tell us, what's the name of the book and where can people find it? How to Get Rich in American History, 300 Years of Financial Advice That Worked and Didn't. It's from HarperCollins. It's available everywhere they sell books, although for a brief time in our launch week, we were sold out, which was a good problem to have. That's awesome. But still a problem. And so we're back in stock. And it is a national bestseller. I hope people will go out and learn because history is great, but it's even better if you can learn from it and apply it to your life.

46:16And I specifically wrote this book for investors like us who want to take the past and learn from it and apply it to the real world today. Awesome. Thanks again, Joseph, for being here. And thank you all for listening to this episode of the BiggerPockets podcast. We'll see you next time. Thank you all for listening to the BiggerPockets real estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian Kay.

46:46Copywriting is by Calico Content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. BiggerPockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.

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