Data Driven Program to Analyze the Real Estate Market for Huge Appreciation | REMAP
Looking to invest in real estate but not sure where? Check out this data-driven program that can help you find the hottest markets for appreciation. Using cutting edge technology and historical data, this program can help you make smart investment decisions that will pay off in the long run.
Transcription
Ariel Herrera 0:00
One of the most frequent questions that I receive is how do you choose what real estate market to invest in. And this applies to both new investors as well seasoned investors who are looking to allocate their money to new areas that may have a better return on investment? Well, you're in luck because in this video, I interview Arlie Wolf who has decades of experience in the real estate space, and has created a program that consumes lots of data to identify, which are the hottest markets. My name is Ariel Herrera with the analytics area channel, we bridge the gap between real estate and technology. Please subscribe to this channel if you haven't already, if you want the latest on tech news data and real estate. Within this interview, we're going to be covering three main topics. And this includes the three investment philosophies that you should be following benefits of using leverage and real estate, and then how to use REMAC, which is a real estate market analysis program that Arlie has created to identify hot markets. Alright, let's get started. Hey, everyone today and a tech in real estate podcast, we have a special guest Arlie Wolf, who's going to be giving us an overview of remap the tool that he's built to help real estate investors welcome Charlie to the channel.
Unknown Speaker 1:18
Hi, Ariel. And thank you so much for inviting me. You know, I love what you do with your podcasts, you've done a lot of them. And they're great materials, great content, I've learned a lot from Thank you.
Ariel Herrera 1:31
Thank you so much. I really appreciated you reaching out several months ago regarding a tool that you had already built. And you were looking to expand upon it and have it as well as a full blown web app that others can use to before we get into the tool itself. I would love the viewers to be able to hear a little bit more about you and your background.
Unknown Speaker 1:51
Absolutely. Well, you know, I'll start with, I was raised in a farming community in Central Washington, Mattawa, Washington, and my dad was a farmer there, he always had this dream. He's actually a blue collar worker. He's a pipe fitter. But he always had this dream to be a farmer. And, you know, as I mature, matured, and grew up, I come to realize that it wasn't the farming, because it's a lot of work that he was really interested in, it was it was owning land. And the means to doing that is to farm. And so on that little farm, we, you know, he taught me a lot about a lot of life lessons. And some of those life lessons were really investment lessons. And he's I'm sure he thought, you know, when in one ear and then out the other ear. But when I needed to pull these principles that he taught me, I was able to do it. So I'm going to share with you three principles that he taught me. First, he taught me he said this son, bilan because they don't make any more of it. And, you know, that's, that's, I didn't really know what that meant. I thought that was kind of silly at the time. But I think what he was he was teaching me was that the principle of supply and demand. And that's very important what we do, as real estate investors. The second principle he taught me was, it was, don't work hard for your money, make your money work hard for you. And again, there's something deeper in, you know, in that, and what that is, is the principle of appreciation and, and compound interest. And again, very, very important principle. And then the last thing he taught me was don't work hard, work smart. And you know, he was born in 1920. And I just remember that in probably at 82 when the computer chest started to go out, I my brother and I were the first ones in the whole town of 800 in Matawan to, to have a computer and and, you know, he understood he was he was forward thinking enough to understand the importance of computers. And from there, you know, we we learned, we learn by playing video games and other things important computer and then in 2005, I develop remap and that was the first version. And I did it out of necessity. I was a new I was a new investor. And I, you know, there were a lot of a lot of ideas, thoughts and recommendations on where to where to invest. I didn't know where to go and who to who to believe and I knew everybody was honest. It's just that they had their own perspective. So I'm thinking probably like you I thought, wow, you know, even in 2005, I, I developed remap, which is a real estate market analysis program. And it's like no other, especially back then, you know, that was before Zillow or Redfin or anything like that. And on my website, I do have a little bit about what it looked like then it had two parameters, it had two key indicators. And that was volume of sales, and average sales. And I mined it from this company called Melissa Data. And it just drove them crazy. Because I pulled all of the zip codes across America for those two pieces of data. And with that, I use that to make financial investment decisions. And I applied those principles, I'm going to go back to those three principles over and over again. Because, again, it's important, but as through the years, I've, I've used the old program, which I had to let go for a while because, you know, it cost back then it cost me $100 a month, and my wife and I didn't have $100 a month. So after a couple of years of it, she said, You gotta cut this out.
Unknown Speaker 6:23
And so I cut it out. But I learned enough, and I knew how to go and manually, you know, download all the data and do all of this stuff. And it just took so much time and it's just, you know, it broke that third, third, third principle, which is work smart. So, through the years, I think my first home I bought in 1998, that's my residence in California. And, and then in 2005, like I said, I created remap.com. Since then, I've purchased and sold a lot of properties. I've I've flipped, I have bought and held. I have land, I have commercial property. And and it's all been, you know, the right decisions have been based on this model and, and this program. And, yeah, and so that's a little background about me.
Ariel Herrera 7:31
Thank you so much for sharing that those philosophies that your father instilled are invaluable. And I know you had mentioned that these principles tie really closely to investing and some investing tips, would you be able to explain a little bit more there.
Unknown Speaker 7:49
You know, there's many ways to invest, there's many ways to invest. And a lot of people have been doing this very successfully. So I'm just going to show you one one thought, and just the the principle that I apply, and my kids are getting to the age that they're they're asking about investment that Dad Hey, how do you investment? How do you invest? You know, as they were growing up, what I used to do is say, I would get the check, you know, the the rent checks, and I would show them and I would say look how hard I'm working for this. And then I would sign it. And I would deposit it. And you know, and they would just go, ah, that's so boring. You know, when they were younger? Yeah, now they're starting to think, Oh, well, you know, maybe there's something to that. So I believe that, that you could manage your real estate portfolio, similar to how you manage your stock portfolio. And what I mean by that is stock is very data driven, you know, you buy a stock based on its performance, you wouldn't go and just pick a stock out of nowhere. And and buy it in hopes that it would would do well for you. Once you invest, don't stop, don't stop there continue to watch you continue to trend. And what I do in with my stock portfolio is I I go and I asked an expert and I looked at the trends and once a year I make just a minor adjustment. Now you might not do that in real estate. It's a longer term. But that's that's the that's the philosophy. What's great about real estate is that you're leveraging your investment. And Archimedes said that give me a lever, and that's your loan. Right? And a place to stand on that is the real estate property. And I can move the world. And so real estate is sort of like that, in that in America anyways. You don't have to put out 100% capital. I mean, if a home is $100,000 You don't have to put out $100,000 To purchase that home, all you have to do is put down 10 or 20%. But the beauty of it, here's the leverage is that, that 10, or let's say it's 20%. When that property appreciates, you're not just appreciating 20% of your investment, it's 100% of the investment that's appreciating. And so these are those first two principles are actually these are the three principles. And this principle, these principles in particular, is don't work hard for your money, make your money, work hard for you let the intro let the appreciation and the compound interest, and just the the, the tenants pay for your property. Those are all ways to make your money work for you. And, you know, so here's, the next thing is just, this is how I think, but it's just beautiful. It's a beautiful thing. And that is the rule of 72. So you've probably heard of the rules of 72. What that is, is it's really an investment. It's a rule of thumb. And what it says is that it helps you kind of it's just approximate, it's approximate how long it takes for your investment to double in, you know, over time. And the formula is you take 72 divided by your the interest. And the resulting you know, what that comes out to be is the how long it takes the years that it takes to double your money. And so for example, take 72 And you divided if the interest if the appreciation, whether it's in the stock market or in real estate is 8%. Okay, compounded, then 72 divided by eight is nine. And, you know, in nine years, you double you double your money. And so the rule of 72 I often also refer to is compounding in real estate anyways, is compounding interest on steroids. Right? Because let's take an example you buy just for simplicity, you buy $100,000 house you put down $20,000 that secures that property. And if that property appreciates eight 8% That property will be worth $200,000 in nine years $200,000 in nine years. Now, if you invest in the stock market, which which you should you should do
Unknown Speaker 12:49
that $20,000 becomes you know you what you gain on that is $20,000 but in real estate, what you gain is $100,000.05 times five times your original investment by the way Now isn't that beautiful? That's a great way to do it. That's a great way to do it and and sort of like stocks you can you can move stocks without having capital gains, you can do that in real estate, with 1031 exchanges. In fact, I did not too long ago, a three, three sales via 1031 exchange of three properties. And I moved it into
Ariel Herrera 13:48
Yes, definitely. It's super incredible. Use leverage to really empower you and you're so
Unknown Speaker 13:53
and then this actually I believe you're
Ariel Herrera 13:55
someone occupy route you can put a little 3.5% down
Unknown Speaker 14:00
showing how remarkably incredible calm works is that? You know, the the secret is that and people don't believe this is that there are markets across the United States not just when one location where over the past 10 years do you have appreciated at least 8% per year, there are markets over the past 20 years in the past 30 years. If you look at the history that have appreciated by that much which means that there are markets where if you you can find the money to get enter into the market, you will five times your money your initial investment in 10 years, over 10 years over 10 years so you can see how that works alright, so this Is remapped to it's a real estate market search engine like no others, and I how I know that is I've been looking for a tool like that after that what I developed in 2005. So it's been nearly two decades I've looked, there are a lot of good products, programs and applications and and things.
Ariel Herrera 15:22
Yeah, very powerful. That's actually my first time hearing about it.
Unknown Speaker 15:28
And how it worked, that
Ariel Herrera 15:29
I would love to be able to transition
Unknown Speaker 15:34
is huge. It's millions and millions, millions of lines of data. There's, you know, 1015 market indicators, as you'll see from here that were filtering through. So, you know, don't work hard work smart. Well, this is how one way to work smart. And what we do is we say, and again, I'll go back to stock market, I'm looking for like in a stock market, I'm looking for volume, well, you know, you can do the same type of thing here, I'm looking for price range, you can do the same type of thing here. And we're going to take on our homepage, we have some examples. And we're going to take a look at this third example here, how to search for the highest appreciating, buy and hold markets, right, you can later on, you do this example how to search for entry level flip markets. And then you know, if you're just really interested in where the really rich people live, then there's a, there's a little search for that just for fun. But here are just some some indicators that we're going to use. So we're going to look at property types. And you can look for, you know, condos, all kinds of different properties, but we're going to concentrate on single family, residential region type. And that is, there's a lot of data that is by metro region by state by county, we're going to focus on place and city. So it'll return cities, the time range we're going to look at is 10 years, because this is a long term buy and hold. We're not going to look for 10 years in the future, we're going to look 10 years in the past. And we're going to say, well, what are the areas that have appreciated the most in 10 years, and then we're going to look and get this, we're gonna look for areas that have appreciated 250% or more over 10 years, I'm not this is not 100%, we're talking 250% or more. Alright, and so I'll run this search, it's a property types. And here are all the property types. And we're going to go with single family, residential, region type. And you can do all that's a good one to start with. But there's, there are other region types, we're going to go even down to zip code and neighborhoods. So it's, it gives you a lot of resolution there. But we're going to do go with place and city, state, let's just look at all states, we can look for Florida, we can look for California, Ohio, just anywhere, but we'll do all and then the time range, and I've got to move this the time range, let's do 10 years, like we said. And then you search. And here are all of the indicators. And you can see there are many indicators to look for month to month, year, the year over year, Appreciation Day on the market, all kinds of things, what we're going to do is we're just going to focus on price out median sales, percentage appreciation or depreciation, because sometimes you may want to look at a market that's depreciating. And, and we set what did we say 250%. We'll throw that in there. And then home sold, I'm going to throw in there 100, because that's what the example says. And the reason I put 100 is what I found over time is that if you you can find markets where there's only one or two sales, but those are very, very small. And that's maybe that what you want to do. But I found that, you know, sometimes you go into those markets and there and you don't have a lot of selection of who you work with the team that you build, because there's only one realtor in the town type of thing, or one property manager. So I'd like to, to go with 50 or 100 homes sold to avoid those very, very tiny market. And it's thinking now it's because we're going through so much data takes it about a minute or two to think so what I've done this I've This is the results. And again, we'll just go back, and then we'll go back and we'll see that when it returns in a minute or two it'll be the same results. 250 percent 100 homes sold, and all of the information is the same. So and here is what is returned, we have 30 cities that have returned. And if you look at that,
Unknown Speaker 20:19
California Oops, hold on, let me do this. Oh, and you can sort by each field, which is, which is great. And I'll show you why. There's a Oregon, Idaho, Cleveland, if you can believe that. Florida, there's lots of Florida's Look at this. There's Arizona, but there's, there are a lot of Florida's in here. And that might be interesting to you, Errol, since you live in Florida, West Palm Beach, all of the St. Petersburg. Now you can kind of refine your search. Usually, I've started with a very refined search, you know, like 250%, there's not a lot of properties like that. But you can start broader, say 100%. And you'll have hundreds or 1000s of returns. And then you can go into for let's say, let's say home sold. And here's a check. So there's the minimum amount of home sold, reset, 100. And anything above 100 is good. The other thing we'll look at is median sale price, median sale price. So there are homes that you can buy with markets that you can buy in that median sale price is 119,000. That have appreciated, you know, 250% over the last 10 years. Now, unfortunately, you know, past performance doesn't guarantee future returns, you know, you've heard that. And that's true. So you still have to do some research. And you still have to understand why. But this gets you to wow, that's done great. Maybe it'll do the same. In the next 10 years. Let's go and do some further research on that. I'm going to go with Bend Oregon, I can then select one, any any one city, and then I can run a trend. And there is the trend for Bend, Oregon. And you can see that 10 years ago in 2012. You can buy property in Bend Oregon 495,000. And as of February 2022, that's it that that market in that market. That market has appreciated to 785,000. Wow. That's that's even more I think that 250%. But the the other thing that's very interesting about this, and this is this is similar to a graph that I I would have created in APAC in 2005. You can see volumes of sales, right. And now not every region is going to show it like this. But this is very pronounced. Take a look at let's see, that is right here is June 395, that's when the highest volume right in June, that's what everybody real estate investment tells you is that in the summertime, you're going to have higher volume. Right. And those higher volumes, August September, you have that's that's the peak within that year 439,000. Now, if you had bought in December, in that market, it's 348,000. And you can see where there's a dip in volume, there's also a dip in price. And so just by waiting, I don't know, till December as a as a as a buyer, you can knock off 20 $30,000, you know, potentially maybe even more depending on some markets. And again, this is a great example because it's very pronounced. You can you can see it. The other thing, the other feature that we have, we have the ability to graph all of these all of the results on a Google map. And that's to me, that's very, very helpful. One of the places that I've invested is in Lancaster, California. And and I know why what drives the the appreciation there. It's a bedroom community of Los Angeles. It's only about 45 miles away. So a lot of people go there because they can't afford to pay two three times the price in Los Angeles. But you can see the proximity of Lancaster to,
Unknown Speaker 25:07
to a major metropolitan. And you can see why, you know, maybe that is appreciate one of the reasons there are many other reasons. But to load the map, what you do is you go into if it's the first time, you're asked to set up an account, and it's real simple, it's just your name, your email address and a password. Once you've done that, you can go and you can map it in. And then you can kind of take a look at the the areas that appreciated Now, note, look at now all of for Florida appreciated, right? All of Florida free, she ate it. But these are the areas that are appreciated that have appreciated the most. Why is that? I wonder? Their coastal areas people love to live. You know, although there's water surrounding Florida, they love to see the water, I think, and that's why it may have gone up.
Ariel Herrera 26:06
Awesome, so informative, being able to quickly plot which cities have had the most appreciation, in terms of use case, this would be useful, I'm assuming for someone who's looking to go into a new market, or someone who's even trying to understand the markets are currently in better, correct?
Unknown Speaker 26:23
Yeah, I think it's very useful, because it allows you to tailor your investment to what your needs are, when I first started investing, what I needed was I needed to back then I lived in San Jose, and you know, and it was just the market, it was just, it was too capital intensive. I mean, it costs so much money, 600,000 500,000 400,000 whatever it was back, then I said, I, you know, I just don't want to put all my money in one in one property, and, and then have something happened to it. So what I decided to do was take the money that I had and go into a market that was you know, I, I purchase homes 10 years ago, 12 years ago, $420,000 in there $400,000. Now, wow. And, and rather than then buying a home in San Jose back then for $500,000, I bought four homes for 120 to $200,000 each, knowing that there's a good chance that they will appreciate well, and the other thing I look for is, you know, when I said well, why do you some people just invest for cash flow, and some people just invest for appreciation? Why do you do that? Why not? Why not? Look for markets that have both, so that you can sustain your investment with the cash flow. And then, you know, make 510 20 times, you know, your initial investment. And, and so that's kind of phase two. So this is this, right here is actually phase two, because Phase One was in 2005. This is phase two, there's going to be a phase three and phase four of this website. And I'd love to work with you or others, because I see when your podcasts and I know you can use API's to pull rent data. Yeah, I would love to put rent data in here that I just wasn't I haven't been able to do that yet. But with the rent data, then you can really search for, hey, where is it appreciating and or potentially appreciating? And where do I actually get good cash flow where so I can maintain my properties and have you know, a little extra. But that's for that's for those you know, at you if you're an entry level investor, look for areas that are low costs to enter, but good potential and good cash flow. If you are, you know, so me. If I want to buy a property, now I go and I buy cash. And I, you know, the really low cost area, there are some risks to it. And the risks are, well maybe it's a little higher crime or maybe the neighborhoods are not great for schools, or whatever it is. Those are risks. They're worth the risk worth bearing. Because you can upgrade remember that 1031 exchange 10 years upgrade into a better neighborhood a little better whatever. I like to go into neighborhoods that are have good school district or medium school district that are kind of established little newer homes. Just because at this point in my life I can Did that answer your question?
Ariel Herrera 29:50
Yeah, it did. And also gave a little bit more use cases to this tool is super useful, very excited to see for the future where it can go as And if someone wanted to use it today, is it currently free to go on to remap to and use the tool?
Unknown Speaker 30:06
Oh, yes, it's apps, it's absolutely free. And yeah, because it's really the long term, what I really want to do is I do really want to share my, you know, share my successes, and also just the tool, just make it open for everybody. For my kids, you know, I'm hoping that they will use it. So if we go to, let's see here, market, see in this market, there's market simulator and market game, those are not ready yet. But that's what I want to do is I want to create a market and I have the foundation for it, I have the I have the black box that will allow me to do that. But eventually, I'd like to do a market simulator. And then with that market simulator, allow new investors or seasoned investors to go in and say, Hey, I know what's happened in the past. I don't know what's happened in the future. I'm going to play this game, I'm not going to but and so that I can make decisions and react to it and see, you know, how I do and it'll, it'll be a contest. Let's see who can make the most money. It'll be like this something like this here. Here's a little foreshadowing your rich uncle has passed away and given you a million dollars, you have 10 years to invest that money. What are you going to do with it, and then you go into the into the market game, and you figure it out. And you try to best everybody else. And you learn, and you'll learn as you go. But it costs it costs nothing. It's available to everyone. And I hope you use it. And so my name again is ardley Wolf, this is remap to.com. And you can use it on your iPhone, your iPad, your computer, Mac or PC, if you have any problems with it. Or if you have suggestions, here's the other thing is hot pics. What, what we're trying to do is we're we want to know, when you use this what you think your hot picks are? And we'll put it we'll put it on here. We don't have anybody Yes, we have my hot pink right now you can go in there and take a look at that, you know what we encourage people to do because I want this website to be a lessons learn lessons shared, you know, an educational website where we, the users are kind of the think tank, and so as to go and research and you think oh, this is really a a great place to invest in, in the hot in your hot pics, and in my hot are hot pics. There's a link to my business Facebook page, just go in there or you can email me and and tell us you know what, what parameters you use, why you think that market that you've landed on that city, or multiple cities are would be your hot pick. And we will take a look at all of them. And we'll pick the ones that we that really merit. The you know, kind of more dialogue and discussion. And here's here's the secret. If you get in early, you'll be you know, you'll get in there. But as that fills up, you know, we'll have to be a little distributed on who we can we'll we'll put up there.
Ariel Herrera 33:50
Yeah, totally understandable. Well, this has been terrific Arlie not only have you provided a platform that bridges data together to help new as well as seasoned investors choose particular markets. We are also creating a community and sharing knowledge through these other areas of in your website, which I greatly appreciate. So thank you so much for your time orally and once again, your email if people want to reach out to you
Unknown Speaker 34:14
what would that be? Email is Arley ar l EY at remap to.com But please also copy ardley e wolf at SBC global comm for now because I'm having problems with the the other email and that's a RL e YEWOLF at SBC global.com.
Ariel Herrera 34:41
Excellent, thank you so much.
Unknown Speaker 34:42
Thank you. I really enjoyed this morning with you