Put Your Best Foot Forward

‘Money Talks’ — featuring exclusive bytes from the 'Kosher Money' podcast — is produced in conjunction with Living Smarter Jewish (LSJ) and Living Lchaim.

LSJ initiatives include free personal finance coaching, education geared toward young couples, referrals to financial planners, curriculum development for high schools and young adults, and video education library. 

To request help, please email: info@livingsmarterjewish.org

Living Lchaim is a podcast network dedicated to producing shows that enhance the lives of Orthodox Jews across the world. The Kosher Money podcast, created in partnership with LSJ, hosts lively dialogue around frum financial realities, facilitating awareness and educated decision-making.

The post Watch! Money Talks with Jeff Cohen first appeared on Mishpacha Magazine.

To Life! With Yoel Yitzchok Bodek

‘Money Talks’ — featuring exclusive bytes from the 'Kosher Money' podcast — is produced in conjunction with Living Smarter Jewish (LSJ) and Living Lchaim.

LSJ initiatives include free personal finance coaching, education geared toward young couples, referrals to financial planners, curriculum development for high schools and young adults, and video education library. 

To request help, please email: info@livingsmarterjewish.org

Living Lchaim is a podcast network dedicated to producing shows that enhance the lives of Orthodox Jews across the world. The Kosher Money podcast, created in partnership with LSJ, hosts lively dialogue around frum financial realities, facilitating awareness and educated decision-making.

The post Watch! Money Talks with Yoel Yitzchak Bodek first appeared on Mishpacha Magazine.

Photos: Avi Gass

When my sons were mesivta age and my non-Orthodox parents would come visit, they always seemed baffled by the amount of time the boys spent on limudei kodesh. Realizing limudei chol only took place a few hours a day, my father a”h would start to look worried.

“How are they going to be able to support a family one day?” he’d ask.

How indeed? Even in frum circles, where prioritizing Torah learning is a given, the question lingers. Many people are unable or unwilling to earn a professional degree. Where does that leave the people who lack formal schooling but need to put bread on the table for their families?

Robert Shemin, real estate investor and educator extraordinaire, has a solution. It’s called Project X, and it’s both a crash course in real estate and a lifelong connection to professional guidance and networking.

Robert’s a Jewish boy from Nashville, although his parents weren’t religious and didn’t send him to yeshivah. They sent him to public school, but even there he struggled — he had dyslexia.

“I can read but I can’t type,” he says in Successful Real Estate Investing (John Wiley, 2004). “I also have no sense of direction; I can’t read a map, I can’t put a three-year-old’s toy together. I have no spatial abilities.”

He graduated high school at the bottom of his class. Today, however, he’s worth megabucks.

In his thirties, after making a fortune in real estate, he decided to pay it forward by educating others how to succeed as he did. He began writing books and offering seminars to share the tricks of the trade, and giving lectures in countries all over the world.

One of those countries on his lecture circuit is Israel. Shemin began offering his course to groups of chareidim in Jerusalem some years ago. One father and son team, Zevi and Simcha Bennet, enjoyed such success that they approached Mishpacha to help spread the word to other segments of the frum community and create a Project X course tailored for them. This past March, Shemin and his colleagues came to the Ramada Inn in Toms River to present a full-day introduction to his method and Project X, along with the Bennets and Mishpacha publisher Eli Paley and staff.

The post From Property to Prosperity first appeared on Mishpacha Magazine.

How much money can you make?

What type of training will it take?

And what does the job actually entail?

Read on to find out whether this is the job for you

What will I be doing all day?

Physical therapists diagnose and treat patients whose function and movement are limited due to illness, injury, weakness, or other causes. They help patients improve their functioning and manage their pain through a variety of techniques, including exercises, massages and stimulation, and assistive and adaptive devices. A PT’s responsibilities include evaluating, establishing a therapy plan, administering therapy, monitoring progress, and educating patients and their families.

What kind of schooling do I need?

To qualify as a physical therapist, one must graduate from a postgraduate physical therapy program. Today, most programs award a doctor of physical therapy degree (DPT), though some programs give a master’s degree (MPT). Programs typically take three years and require a bachelor’s degree in order to be admitted, including certain prerequisite science courses. After graduating, you must pass a national exam in order to become licensed.

Many physical therapists choose to become board certified in a specific clinical specialty, which requires passing another exam.

What will my work environment be like?

Physical therapists work as part of a health care team, together with physicians and other paramedical professionals like occupational therapists. Typical work settings include hospitals, outpatient clinics, rehab facilities, schools, sports and fitness facilities, nursing homes, and home health agencies.

Some specialties within the field:

Orthopedic physical therapists work with the musculoskeletal system, dealing with injuries to the muscles, joints, tendons, and bones.

Geriatric physical therapists help older patients retain their mobility and independence while accommodating physical limitations.

Pediatric physical therapists treat babies, children, and adolescents with mobility limitations due to health conditions, neurological disorders, injuries, or developmental delays of gross motor skills.

Neurological physical therapists treat patients with neurological conditions such as brain injuries, spinal cord injuries, Alzheimer’s, or Parkinson’s.

Cardiopulmonary physical therapists concentrate on patients with cardiovascular or pulmonary conditions, helping them improve their overall health, endurance, and functional independence.

What can I expect to make?

The average starting salary is $65,000–$75,000.

Median salary in the US is $91,000. With experience, salaries can reach $100,000–$120,000.

Do I have the personality for it?

A good physical therapist enjoys working with people, and is empathetic, patient, hard-working, and a good motivator. A physical therapist also needs to be physically fit, since they’re engaging in exercises all day.

The post So, You Want to Be a… Physical Therapist         first appeared on Mishpacha Magazine.

John Roach

The creator of the PC (personal computer for those of you have no idea what it stands for, you just know there are PCs and Apples) passed away in Fort Worth, Texas, at 83. The first PC, named TRS-80, sold in 1977 for $599, which sounds cheap but is about $2,700 in today’s market.

Stephen Wilhite 

Wilhite, creator of the graphic interface format, GIF as you know it, passed away at age 74. While there’s been an ongoing argument over whether GIF is pronounced with a hard G or soft G, Stephen himself declared it to be soft. The argument itself is such chutzpah, really. Hopefully the hard G people will show some respect for those who’ve passed and change their hard ways.

Winners

The Little Guy

Partially due to the fight put up by Czech Republic search engine Seznam, the EU is getting ready to enact legislation requiring big tech firms (think Google and Apple) to make their tech interoperable (able to work in other devices and environments) and to unbundle services that encourage monopoly status in the first place — like Chrome being the default browser on Android devices, among other things.

Additionally, app developers may soon take home more of their hard-earned money. Google generally takes a 30% commission on all app purchases (in app as well). This makes any popular app a passive income cash cow for Google.

However, after much protest, Google is voluntarily starting a pilot program with Spotify (not sure they really qualify as little, but relative to Google, I’ll allow it) which will give users the option to pay in other ways, bypassing Google’s app payment.

Losers(ish)

Google?

Google looks like it’s ceding ground, but don’t kid yourself. They’re still making more than everyone else combined. In the Spotify deal cited above, Google will still receive a commission, though it’s not clear yet how much it will be. And while legislators may be giving a closer look at Google’s competition practices, don’t be surprised if the tech super power is ten steps ahead, playing everyone like a fiddle while they look on in faux benevolence.

You Don’t Always Get What You Pay For

We know you’re way too pragmatic to invest in a more expensive phone as a status symbol. It’s just that you want the features, and if the most expensive one has the best features, so be it.

Well, the moment of truth is here for all those hiding behind the smokescreen of practicality. There are two mid-range phones out there that can compete with the big boys. If you’re looking for a great phone for yourself and your employees and don’t really care about the latest, consider looking at the Google Pixel 5A ($450) and Apple’s SE 2022 ($429).

The Pixel has a large OLED screen, a dual lens camera, great battery life, and a sleek modern feel.

The iPhone SE has the same performance as the new iPhone 13 but only has a single lens camera, iPhone 8 body (4.7 inch screen), and a shorter battery life.

When pondering the question of “How good does my camera need to be?” the simple answer is, unless you’re a photographer, you likely won’t really notice. But if you insist on the latest iPhone or Galaxy, we’ll know why you really got it.

Reboot!

Remember LimeWire? The peer-to-peer site where you got your favorite music and your computer got the newest virus? Yes, that LimeWire. The site is relaunching as an NFT marketplace. I’m not sure which iteration is sketchier. Marketing and NFT creator and investor guru Gary Vaynerchuk himself said that 98% of NFT will lose all value. At least when you downloaded a song, you had something nice to listen to. Bored Apes are not that interesting.

Boycott Ahead

Last time we met I mentioned that Etsy was raising its seller fees by 30%. Surprisingly, Etsy sellers didn’t love the idea. In response to the price hike set to be enacted in April, Esty sellers and customers plan to boycott the platform in protest. It brings to mind the 1902 Kosher Meat Boycott when the Lower East Side Jewish housewives refused to buy meat until butchers brought prices down. We’ll have to wait and see how effective this boycott is. If you have an artsy orientation or entrepreneurial spirit, I suggest you participate.

Rumor Has It

The latest and the greatest: Unverified but reported in two reputable outlets (as a rumor), Apple may be turning the iPhone into a hardware subscription service. Which basically means you’re renting it forever, you never get to keep it. There’s no escrow, down payment, or mortgage, just interminable fees. Don’t know about you, but if this happens, I’m out.

On a Silver Platter

You know you should keep up on industry reading, but really, who has time these days, especially now that everyone and their executive assistant have a newsletter?

Summari is a SAAS company that allows you to have your cake and eat it too.

Input any link and their AI will analyze it, summarize it, and offer it back to you in bullet points. I tried it for a blog post I wrote, and it did a great job. Then I tried it for an opinion piece from the New York Times. It definitely summarized it, and the English teacher in me was satisfied with its succinctness. But if anyone was quizzing you on details and literary appreciation of the original piece, there was none. Just the facts, ma’am.

You can summarize five items a week for free, or pay $6 monthly for individuals or $8 per person a month for businesses. Businesses also get summaries in Slack. The product is currently in Beta, so everything is free for the time being. It’s a great time to check it out.

(Originally featured in Mishpacha, Issue 908)

The post In Memoriam first appeared on Mishpacha Magazine.

While Pristine Kashering, a cRc-certified kashering agency run by brothers Noam and Shmuel Sonnenberg, services all sorts of clients across the gamut of religious observance, there was still one phone call that took them by surprise. The woman on the other end of the line wanted her kitchen kashered, and Noam prepared to take down her details. But the conversation took a surprising twist when she asserted that she personally didn’t care about kashrus, but her mother was paying for her to have her kitchen kashered for Pesach.

Happy to help another Jew have a kosher kitchen for Pesach, Noam told her a little bit about what kashering entails, and told her to make sure not to use anything hot in the kitchen for 24 hours before the koshering team came down.

At the appointed time the team arrived, ready to get to work — only to find the cleaning lady hard at work… washing the oven grates in the sink with hot water. That effectively derailed the plans, but they did squeeze her in for the next day.

“When it comes to helping others have a kosher kitchen for Pesach, you need to step up to the plate, whatever it takes.”

Why Not DIY?

While most of their clients are standard frum Jews, it’s still easy to mess up when kashering a kitchen if you don’t really know what you’re doing, Noam explains. There are a multitude of sh’eilos and complexities that can come up, not to mention the potential damage to appliances and cabinets when kashering isn’t done properly. It’s more than just foil and boiling water.

“The process does involve a lot of boiling water and foil, but it needs to be done right,” Noam says. “And ‘right’ is more complicated than most people realize.”

Noam’s heard stories of people who burned themselves badly, ruined their cabinets, and even damaged appliances while kashering. As part of their training, the agency employees learned about different kinds of ovens, stove ranges, countertops, materials, and how to kasher each one without causing damage.

“And we’re constantly learning more,” Noam adds.

A Business is Born

It was early 2020 when Noam and his wife left Israel, where he was learning in the Mir, to visit his in-laws in Far Rockaway. On Taanis Esther, their son was born… and a week later, life as they knew it turned upside down. With Pesach around the corner and Covid on the rise, people were completely overwhelmed. Hundreds of people didn’t have the headspace to even think about Pesach. Some were sick, some were sitting shivah, and many had never made Pesach before and didn’t have the foggiest idea how to kasher their kitchens.

Noam’s brother Shmuel happened to be at his in-laws in Far Rockaway too, and they decided to band together and do something.

The brothers realized they could fill a huge need by kashering kitchens. After speaking with their rebbeim at great length, they purchased top-grade machinery, and started advertising the old-fashioned way.

“We printed out flyers, and went to the only place that was open at the time — supermarkets,” says Noam. “We approached people shopping for Pesach, and distributed flyers, keeping the requisite six feet away, and also stuck them on windshields in the parking lot.”

The brothers had tapped into a real need; within days they’d booked 68 kashering jobs. Masked and gloved as a Covid precaution, they did house after house, mostly locals, though they did manage a few jobs in Brooklyn and Queens.

“Shmuel and I were busy 14 hours a day — we were even kashering at 2 a.m.!” Noam remembers.

The brothers knew a good thing when they saw it, and one year later, they decided to expand Pristine Kashering beyond New York. Word quickly spread in Baltimore, Lakewood, and Monsey, and they hired a few employees to help with the out-of-town jobs.

The operating system is simple, Noam explains. Clients are asked in advance which materials and appliances their kitchens are equipped with, so the team can come prepared. They have machinery that heats up water at record pace, and sprays a precise amount to countertops, effectively getting the job done mess-free. Jobs generally take about an hour to complete (depending on the kitchen size), and when the team leaves, the kitchen is fully ready for Pesach.

They also offer to cover kitchens, and for those who don’t like the spaceship-foil-lined kitchen look, they offer some really innovative products, like trendy, heat-resistant, fiberglass covers for stovetops and waterproof counter linings.

Doing It Right

While an official hechsher isn’t common in this line of work, it was important to the brothers that their clients feel confident their kitchens had been kashered to the highest standards.

When Mishpacha ran an article featuring Rabbi Fishbane of the cRc discussing the need for more regulation in the kashrus industry, Noam was inspired to get officially certified. He reached out to the cRc, who guided them through their certification process, and Pristine Kashering became the first nation-wide cRc-approved kashering business.

All of the employees undergo intense cRc mashgiach training. They take advanced classes on hilchos kashrus and must pass a test before they take on any jobs. There is also a cRc mashgiach who is informed about every job and will drop in sporadically to oversee the process. Every client receives a cRc certificate and goes into Pesach confident that the job was done right.

Noam also finds the overlay between his learning during the year and his bein hazmanim business fascinating.

“It’s also something I’m thinking about all the time,” he says. “I’m learning hilchos kashrus in my chaburah in the Mir now, and I’m understanding it in such a practical way… When I sit and learn all year, this is what I’m learning. It’s an amazing experience to be able to actually use what I’m learning in a practical way to help others and earn a small parnassah at the same time.”

While Pesach is obviously peak season, the brothers do find that people need kashering other times too: to prepare a vacation rental, when going away for Yom Tov, or if they mistakenly treifed up their kitchen. So Pristine offers their services year-round to accommodate Jews seeking kosher kitchens.

“Even people who have made Pesach for many years say they don’t know how they did it without us,” Noam says.

By the time people get up to the kashering stage, they’ve racked up hours and hours of heavy cleaning, and they’re wiped. Kashering can seem like a huge hurdle they just can’t jump over. That’s when Pristine steps in with their equipment, and after about an hour, the kitchen is good to go.

“When you do that for people, you become their hero,” Noam says. “People have described us as their knights in shining armor.”

(Originally featured in Mishpacha, Issue 905)

The post Turning Up the Heat  first appeared on Mishpacha Magazine.

What will I be doing all day?

A nutritionist counsels people how to eat well in order to maintain a healthy lifestyle.  Typical responsibilities include assessing clients’ current diet and health requirements, developing meal plans, tracking the effectiveness of the meal plan and modifying as needed, and educating people about good eating habits and the relationship between nutrition and health.

What kind of career options do I have?

Nutritionists can work in a variety of settings, including hospitals, outpatient clinics, private practice, cafeterias, nursing homes, schools, government programs such as WIC, and more.

Some common specialties include:

Clinical Dietitians — They provide nutrition therapy, counseling either individuals or groups, and providing customized food plans to help clients achieve specific health goals, whether weight loss or managing a medical problem.

Management Dietitians — They design meal plans in public food service settings, such as school cafeterias, hospitals, or food corporations. Their responsibilities may include purchasing food, overseeing kitchen staff, and more.

Community Dietitians — They promote nutritional awareness within the community, by educating the public about food and diet. They may work in public health clinics, government agencies or HMOs.

What’s the difference between a nutritionist and a dietitian?

Legally, anyone can use the title nutritionist, whereas to become a dietitian, one must become licensed by taking requisite coursework and passing a national exam, thereby earning the title Registered Dietitian Nutritionist (RDN).

Do I have the personality for it?

A successful nutritionist should be patient, sympathetic, and caring, a good communicator and listener, and an effective motivator who can encourage clients to have confidence in themselves. They should also be open to learning and staying on top of new research.

What can I expect to make?

Salaries range from $55,000 to $85,000.  Managerial salaries can be over $100,000.

The average solo private practitioner can make $120,000 to $150,000 working full-time.

The post So, You Want to Be a… Nutritionist first appeared on Mishpacha Magazine.

David Boggs, who coinvented the Ethernet in the 1970s, passed away at the age of 71 from heart failure. While you probably only think of Ethernet as the yellow cables you used to connect your computer to your printer before the world went wireless, it was actually an important forerunner to the Internet. When a technologist questioned the math behind Ethernet, Boggs cheekily rejoined, “Seems Ethernet does not work in theory, but only in practice.”

Keep Your Info to Yourself

Everyone knows that WhatsApp has end-to-end encryption. It makes people feel safer in their communication (who they think is reading and cares about their chat hock, I’m not sure). But most people don’t think twice about the security of their emails. Think about it; you’ve probably included information in your emails that you care more about than your block chat. While standard email providers don’t offer much protection from prying eyes, the following are secure email providers to consider if security is a priority.

ProtonMail — It’s Swiss owned and based and lives up to Swiss privacy values. It offers end-to-end encryption, utilizing a zero-knowledge proof approach, meaning that no one working in the company can read any email you send using their service. Protonmail can be used on iOS and Android devices. They offer a free account that includes 500 MB of storage (for comparison’s sake, Google offers 15 GBs of free storage). Paid subscriptions start at $6 a month.

Hushmail — They offer plans geared to specific verticals, like health care, law, small business, and personal use. They are HIPAA compliant, which is good news for health care providers. Hushmail is available as an iOS app, and an android app is in the making. They don’t offer a free plan. Professional plans start at $5.99 a month and personal plans start at $49.98 a year.

Zoho — They offer end-to-end encryption, and they’re more affordable. Their encryption is both in the delivery and in the resting data (meaning it’s unreadable if intercepted or while it’s stored on their servers). They generate automatic reports if there’s suspicious activity and offer two-factor authentication and SSO — single sign on. Zoho is also part of a larger suite of productivity tools that may be convenient to integrate with. They offer many tiers of service, with their Zoho Mail Lite starting at just $1 a month with 5GB of storage.

Siri Speaks Screen

Whether you’re multitasking or you’re getting old, Siri can read whatever’s on your screen. All you have to say is “Hey Siri, Speak Screen,” or swipe down from the top of the screen with two fingers to activate it. But first you have to enable it in settings. To do that, go to setting in your iPhone or iPad, tap accessibility, then tap spoken content, then select speak screen by toggling the button to the right. Voila, Siri will read to you in her dulcet tones.

Starving Artists

Creative selling is getting more expensive. Etsy announced that it will raise seller transaction fees 1.5%, from 5% to 6.5%. This will take effect April 11. So, if you were thinking of taking your creative side hustle to Etsy, it’s still not a bad idea, but scale back your dream a bit, it’ll take more to get there now.

Own Your List

Marketing experts often talk about diversifying the platforms you use to reach your audience, one major reason being that brands are at the mercy of the platform and its capricious algorithms, which can make a brand lose relevance, be shadow banned, demoted from feeds, and the like. Brands can also be locked out of accounts with little recourse.

One company that learned this the hard way was Little Things. They built a company by creating feel-good video content, like clips of puppies and recipes on Facebook. It was incredibly popular, and they made millions. Until (you knew that was coming) Facebook tweaked its algorithm to promote posts that were from family and friends, versus companies. This throttled their views, engagement, and ad revenue, and the whole kit and caboodle went down the drain. They let go of more than 100 employees and the former CEO says he lost $100 million.

Moral of the story: Don’t just diversify platforms, but own your lists. Building and maintaining a robust email list is the best way to keep in touch with your customers and audience. Relying on social media platforms is a disaster, one algorithm tweak away.

Podcast 101

LinkedIn started a podcast network, joining the ranks of Spotify and Stitcher. Well, almost. They currently only have 12 shows, but they’re looking to expand. If you already have a podcast, just fill out an easy form (Google: LinkedIn Podcast). If you’ve been waiting to start a podcast (c’mon, everyone has one, why not you) it’s easy to get started. All you need is a smartphone and the Anchor App, which makes recording, editing, uploading and sharing a podcast really easy. Okay, okay, if you want it to sound decent, get a mic (a cheap one will do) and hide in your coat closet to record (I’m serious about that). Then invite me as your inaugural guest.

(Originally featured in Mishpacha, Issue 903)

The post In Memorium first appeared on Mishpacha Magazine.

Aliza had always known her father worked in business, but never understood exactly what he did. When he passed away and she took over as executor of the estate, she did a search of his assets and was shocked to find 800 properties, albeit most of them worthless, which he’d supposedly bought in anticipation of the area becoming popular overnight. She had little in the way of records and no bookkeeping files. While the easiest thing to do would have been to sell all the properties as a package deal to the highest bidder, Aliza decided to figure out which of the properties were profitable and to only sell the rest.

While Aliza is hard-pressed to see the glamor in real estate (“it’s just another job”), many others strike gold (or, at least, copper) in real estate investment. Let’s look at the different types of real estate investing, what the experiences of the investors were like, as well as their tricks of the trade.

Just Call Me Landlord

Though Hershel from Cleveland, Ohio considers himself a newcomer to real estate investing, his portfolio says otherwise. He started off buying an inexpensive home in Far Rockaway, New York. With experience in construction, he was able to fix it up himself, raising its value. Next he refinanced, and was able to withdraw equity from his house in the form of cash. Then he used the cash from his refinance to buy another property that had just hit the market.

Now Hershel was at a crossroads. He consulted with his rav, who advised him to take advantage of opportunities that would present themselves. Ultimately, he decided to focus on properties in lower-income neighborhoods that came with guaranteed rent from tenants, in the form of Section 8 vouchers. (Housing Choice Voucher Program, also known as Section 8, is the federal government’s program for assisting low-income families, the disabled, and the elderly afford housing.) Hershel is careful to treat his tenants like he would want to be treated. “This is even more important since most of my tenants are not Jewish, but know I’m an Orthodox Jew,” he says.

Business took off, and before long, he had properties in Alabama, upstate New York, and Ohio. “Diversification in investing is important, but in real estate, it can hurt you,” says Hershel. He was spread too thin. At this point, he decided to consolidate his portfolio and look into hiring a management company. “I heard management companies weren’t a good idea, but I found a great company to work with. This allowed me to still keep real estate as a passive income. Yes, there are extra expenses when you hire a management company, but it freed up my time to do more.”

Management companies take on the burden of collecting rent, making repairs (sometimes at a cheaper price than if you were to find them yourself), and acting as the go-between between landlord and tenant. Initially, Hershel stayed on top of the management team. With time, the two parties got used to each other, and mutual trust followed.

In contrast, when Aliza stepped in after her father’s passing, she discovered that her father’s management team was downright crooked.

“They would make fake bills for renovations of properties that turned out to be boarded up,” Aliza recounts. The rule she made for herself is to only retain properties no more than three hours away. “The people who work for you should be scared that you’re going to check up on them at any time. My dad never checked up. It’s nice to trust people who work for you, but people make bad decisions.”

Buying & Selling REITs

Let’s say you like the idea of investing in real estate, but you don’t have (or want to throw) large sums of money into deals or properties. Consider REITs. REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of industry sectors, including retail (shopping centers), industrial (warehouses and distribution centers), offices (skyscrapers and office parks), residential, and health care, among others. There are publicly traded REITs (e.g., that trade on the stock market) and private ones. Some examples of publicly traded REITs include American Tower Corporation (ticker: AMT) which owns and operates cell phone towers, Simon Property Group (ticker: SPG) which is the largest owner of shopping malls, and Americold (ticker: COLD) which owns cold storage warehouses (its customers include Kraft Heinz and Walmart).

REITs can be further divided among equity REITs and mortgage REITs. Equity REITs invest in properties and earn income from rent, property sales, and dividends. Mortgage REITs invest in mortgages and mortgage-backed securities (a type of asset that is secured by a mortgage or a collection of mortgages). These types of trusts can earn income through the interest collected on mortgages (though keep in mind that interest rate changes can greatly affect their return). Lastly, hybrid REITs invest in a combination of mortgages and real estate.

REITs offer a number of benefits to investors. Like stocks, publicly traded REITs trade on major stock exchanges and can be bought and sold instantaneously so your money isn’t locked up (unlike owning actual properties or investing in deals). Further, REITs are required to distribute at least 90 percent of their taxable income to shareholders annually. This makes REIT dividends quite substantial (higher yield than bonds at times).

But REIT investors also have to face the risks. While some argue that REITs tend to have a low correlation with other assets, (which can help investors reduce the risk in their portfolio), investors should still expect the price of a REIT to fluctuate, including dipping when the stock market drops. In other words, when the S&P 500 zigs, don’t expect your REIT to necessarily zag.

While REITs might seem more simple than buying an actual building, a proper analysis of a REIT requires a bit of legwork. First of all, REITs are sector-specific. For example, Simon Property Group owns malls and other retail-specific properties. When the pandemic hit in early 2020, malls suffered along with the retail sector. So when you’re checking out REITs, dive deeper and analyze the industries that the properties intersect with.

Further, REITs aren’t just impacted by real estate trends. They’re often affected by market and economic forces, such as changes in interest rates, inflation, and government policy changes.

Understanding Investment

There are two main strategies when it comes to property investment: focus on the cash flow from the rent, or buy properties in the hope they will appreciate over time. While some investors get lucky with a sorely undervalued property, oftentimes it’s very hard to time the market and predict trends correctly. While Hershel prefers to “buy and hold” his properties, he sees the benefit of balancing both strategies, especially when it comes to the tax benefits. With a background in accounting as well, he understands the tax implications of buying properties that appreciate in value versus those that provide rental income.

“When there’s high cash flow from the rental income, I’ll have to pay higher income tax,” he says. “Yet when I have appreciating properties, I have losses from depreciation on paper, and these two can balance each other out.” Ultimately, having an accountant to weigh in on investment decisions can be extremely helpful, if not vital.

While Hershel only sees his real estate investments as passive income at this point, he does try to target a 15% to 20% “cash on cash” return. This means that if he puts $100,000 into a property, he’s hoping to get between $15,000 and $20,000 in rental income each year (as a frame of reference, the S&P 500 has an annualized rate of 10.5% for the past 50 years).

Hershel won’t divulge the secret to how he finds his properties, but he will say that he uses MLS listings such as Zillow to find them, trying to narrow in on sellers that have multiple properties they’re trying to sell as a package. Since the seller wants to offload the package to just one person, as opposed to dealing with multiple buyers, he’s more likely to net the deal.

While he finds it profitable from a business perspective, he shares his altruistic motivation as well. “If you can control a few blocks, you can help raise the standards and change an area for the better.”

For some investors, passive real estate can morph from the occasional headache to full-blown nightmares. Rachel from Baltimore and her family are in the hard money loan business. A client of theirs used the money to buy a property in Newburgh, New York. When the borrower couldn’t repay the loan, he asked if he could just give them the property in exchange for forgiving his loan. They agreed, figuring they’d just renovate the house and eventually sell it. But soon after the closing, Rachel found out that the amount of unpaid taxes for the property equaled the value of the property! Then things went from bad to worse.

“We got a call from the church across the street,” she says. “They were calling to complain about the house we had just bought. Let’s just say we wish we never had our name attached to that property.”

Rachel and her family were left with no choice but to cut their losses and simply donate the property to the church. They lost their investment, but they ended the nightmare.

“The lesson we took from this is that you really have to know what you’re getting yourself into,” she says.

The Art of a Deal

The idea of owning property might sound appealing, but the logistics can be daunting. This has led many “average Joe” investors to partner up with real estate professionals who find the properties, buy them, and then share the wealth.

So what’s so great about these types of deals? High returns. The structure of such deals is usually based on how long the properties will be held, and can differ in complexity. For example, sometimes an investor receives a yearly return such as 7% to 8% on his investment. Investors can also see cash on top of their annual returns from the sharing of refinances, sales, or cash flow (in the form of “splits” with the investment firm).

It’s hard to predict which deals that investment firms do will go sour and which will strike it rich. A real estate investor from Lakewood, New Jersey, says he’s done multiple deals with the same real estate investment firm — one deal hasn’t yet earned him a penny, while another netted him 150% within two years!

River Rock Capital, a real estate investment firm based in the Five Towns, specializes in acquiring and managing multifamily properties (ranging from six-unit buildings to 700-unit complexes), primarily in New Jersey and Texas. A few years back, a broker had brought them an off-market building in Jersey City. Forty-eight hours after the closing, the same broker called up and asked if they would sell the property! Taken aback, they asked how much the buyer had in mind. Six weeks later, the building was sold, and investors received two and a half times their initial investment back.

But let’s say our Average Joe wants to DIY-it and find these deals himself. Unfortunately for him, investment firms like River Rock Capital have a leg up. In real estate, it’s all about reputation and trust. Brokers and sellers prefer to deal with buyers who have a solid history for making the deal go seamlessly and quickly.

Found It, Flipped It

While not technically considered investing, “flipping” properties is another way to make money off of real estate. Flipping houses involves buying a property, renovating it, and selling it for more than what it was originally bought for. While it’s not always a given that the property can be sold for more, those in the business are willing to take the gamble.

Shaya Samet from Far Rockaway, New York, finds the easiest way to find such a deal is for a broker to introduce him to a property that’s undervalued.

“You can see the house, analyze how much work the house needs, and then based on the work needed and the comparable homes in the area, you can see what your profit margin will be,” he says.

While Samet started off by hiring a contractor to renovate the property, he soon got to the point that he could have his own construction crew. It lowers costs and is more efficient, but means he needs at least seven to ten such deals yearly to keep the crew busy.

But waiting for brokers to approach you with deals may not always be a lucrative approach, as some brokers have learned to hold the best deals for themselves or direct these deals to someone they’re connected to. Other ways to get “flippable” properties is through short sales and bank foreclosures. A short sale is when the owner of the property owes more on the mortgage than what the property is worth, while a foreclosure is when the lender (bank) seizes the property when the homeowner can no longer meet the financial obligations of the mortgage.

Banks aren’t necessarily in the business of holding properties, especially since these properties cost money (snow removal, taxes, and other preservation needs), so banks are motivated to get rid of them. However, these sales can take months, sometimes years. While properties like these can yield great deals, it can take a lot of time and patience.

Another caveat: Flipping a house can cost real money. If you don’t have the cash to cough up to buy the property, you may need to resort to hard money loans that can be around 12% in interest. If the project takes longer than expected, you’re paying interest on your loan for longer, and losing out on your hard-earned profit.

The Risk Factor

Is a deal like this for you? First of all, there’s no such thing as return with no risk. While many other industries, like the stock market, are highly regulated, the real estate industry isn’t. Just because a real estate professional may portray a deal as a slam dunk, it isn’t necessarily so. Numbers can be inflated (e.g., potential rental income or assumed appreciation of the property) and deflated (e.g., expenses of the property), and the broker may not be up front about all the terms.

Aliza considered investing some of the cash she’d made from a property sale into a deal. However, upon reading the fine print, she became uncomfortable with the line about having to guarantee the loan from the bank. Ugh, she thought to herself, no way, no how. She considered hiring a lawyer to look over the contract, but the expense just didn’t seem to make sense when calculating what her assumed return would be. Ultimately, she decided the risk was too high and walked away from the deal.

There are other factors beyond our control that can impact real estate investment; take Covid as an example. Real estate investors with portfolios that included retail stores were affected, as well as buildings that had tenants who were there due to work. When they lost their jobs or switched to remote work, they left, and the property’s rental income suffered. Further, certain locations were affected by an eviction moratorium, which meant landlords couldn’t evict an unpaying tenant.

The Big Fish

While some like to dabble in real estate, others, with a knack for the numbers and a relatively large appetite for risk, dive in all the way. With good mazel, they can make a comfortable living from building up and maintaining a large real estate portfolio. Take Chaim, a real estate investor in Florida. One of his first deals involved a massive retail strip center that a broker told him about. The broker’s uncle owned the property and was looking to sell it. Chaim liked the location and went into contract for the property for $30 million.

Soon enough, he realized things weren’t aboveboard. “I realized the guy was lying about the financials,” he says. “I pulled out of the deal and also realized that there was no way the guy was paying the mortgage based on the current financials.”

Being a savvy businessman, Chaim called up the bank and said he was interested in the property. While nothing came of the phone call, a year later, Chaim got a call from a bank representative. The property was now in default and the bank asked if he was still interested in buying the property.

The location was great but the property was really run-down. Chaim did his due diligence and determined that the default was due to mismanagement and overleverage (the property owner had borrowed too much and was unable to pay the loan premiums). Ultimately, Chaim bought the property for $21 million, and brought a few other investors into the deal. They financed $15 million of the purchase price, and refinanced about 18 months later, recouping their initial equity. Eight years have passed and the property is worth close to $60 million.

With the money from this initial deal, Chaim looked for more deals. “Typically, I don’t syndicate out to a million people. I have a few partners and we’ve built up a lot of trust in each other.”  With a full bank account, Chaim ventured on numerous deals, some more complex than others. After many years in the business he’s learned to pass on the smaller stuff. “I’d rather make 10% on a $20 million property than 40% on a $200,000 property.”

“I purchased an office building in West Palm Beach for $3.5 million,” he says. “Prior to my purchasing the building, the seller had signed a lease with up a government tenant for a large space in a mostly vacant building. The tenant had a list of renovations that were supposed to be made before the move-in date but these renovations didn’t happen. When I bought the building, I was hoping to renegotiate with the tenant and get an extension on the tenant’s buildout plan. Surprisingly, the government declined my request for an extension and signed another lease down the street. This was a huge blow. If the government had moved in, it would have effectively raised the [building’s] value from $3.5 million to $7 million.”

Chaim decided to fight and ended up in litigation with the government. He argued that they had no clear right to terminate the lease. They offered him $700,000 to settle, but he declined. While Chaim ended up losing the lawsuit, he was able to sell the building for $4 million, recouping his initial investment and money spent on legal fees, and he doesn’t regret it.

“If it happened again today, I would still buy the property,” he says. “The risk wasn’t that great, but the reward would have doubled my money in a short amount of time.”

With the surge in Florida’s popularity, we ask Chaim what he thinks will happen now to Florida’s real estate market. “There are thousands moving here and everything is exploding,” he says. “On the one hand, the market has a bubble kind of feeling — you can ask whatever you want for your property and it will sell. But on the flip side, it seems like the higher prices are justified by the amount of people moving here. It’s no longer a vacation spot. There are real industries here.”

Ultimately, Chaim doesn’t know what will happen in the future and if a market correction is in the cards . He believes mazal plays a significant role in success in real estate. The timing has to be right, but timing anything is difficult. “Nobody can honestly say for sure that something is going to be a slam dunk. There are too many variables,” he says.

Short-Term Renting

Avi and Nechama always wanted a second house near the beach, and while vacationing at a certain West Coast beach town, they came across a house for sale. They ran the numbers and realized they could swing it. After buying it, they decided to offer the house to short-term renters, and covered their mortgage payments like that.

While it’s no simple task to let strangers stay on your property, with the right precautions and doing your research ahead of time, the rental money can be a nice complement to your regular income.

Leverage Smartly

If you’ve ever purchased a house, chances are you know what leverage means, even if you’ve never heard the word before. When you “leverage” a property, it means that you borrow funds in order to purchase a property instead of having to pay the entire price yourself (e.g., a mortgage). Being able to leverage is one of the main reasons that real estate investing is so attractive.

Let’s say there’s a property worth $1 million. You put down $250,000 and borrow $750,000 from a bank. Rent from the property (after paying expenses) is $90,000. You have to pay $59,000 in annual loan payments. $90,000 minus $59,000 is $31,000 (the amount in cash you make each year from the property). The return on your cash investment is 12.4%.

But now let’s say you pay fully in cash and don’t use leverage. This pushes down your return to 9% per year ($90,000 income on $1 million).

While leveraging sounds great, it’s risky business. If you can’t pay your loan to the bank, the bank may be able to foreclose on your property and you can lose your investment. Further, if your property value falls, you may end up with a loan that’s more than the entire value of the property. If you have a short loan period, you may not be able to refinance the property or sell it before the loan is paid off.

Chaim warns about the pitfalls of overleveraging. Assume you buy a property for $1 million. You get a loan for 75% or even 80% of the value of the property. If you’re paying $60,000 on the mortgage and you lose a tenant, or something unexpected like Covid hits, you may end up with mortgage payments that are higher than the income from the property. You can easily end up in a situation where you can’t cover your mortgage or your mortgage payments are eating up too much of your cash flow.

“In speculative markets, there’s a lot of overleveraging,” he says. “Sure you can buy more real estate if you’re overleveraged, but if the market turns around, you’re going to be in trouble.”

Work the Numbers

A big advantage of investing in real estate is the tax benefits. Considered a bona fide business, real estate investing allows you to take tax deductions. Paying interest on the loan? Making repairs? New software? Travel expenses? These are expenses and can be considered deductions. (Make sure you always ask your accountant first!)

Then there’s depreciation. While you can’t write off the entire purchase of residential property right away, you can write it off over 27.5 years. Is your property leveraged? You still get to depreciate the total cost of the property, not just the cash you put into it.

Ultimately, having income from rent means income taxes, but balancing it with an appreciating property that you’re depreciating over time can allow you to offset your income. However, keep in mind that as you depreciate your property, you’re also lowering your cost basis. This means higher capital gains when you sell. Next stop, 1031 exchange!

(Originally featured in Mishpacha, Issue 901)

The post The Rap on Real Estate Investing     first appeared on Mishpacha Magazine.

A University of Montreal research paper on artificial intelligence says that while AI has made considerable progress in the past decade, scaring half the world into thinking that their jobs will be gone and giving the other half dystopian nightmares, it isn’t so simple. Researchers have come to the stunning revelation that humans are incredibly complex, and it’ll take a lot more time, energy, and research to get AI near there. So, if your job requires human emotion, then you’re safe — for now. Or for always. Shockingly, the study posits that AI will never match human intelligence and social complexity.

Fix It

The Right to Repair movement is gaining steam. Apple parts are finally available for anyone to purchase and have any tech do the repair instead of overpriced Apple-certified techs. Microsoft, once again coughing Apple’s dust, recently partnered with iFixit to sell tools for surface repairs. Cheaper repair days are here. Go ahead, break your tech without a sweat.

Safari Bug

Important alert: If you’re using the Safari app on your phone, there’s a security bug. The good news is Apple developers have patched it. The bad(ish) news is that you need to update your operating system. Some people let their phones do it automatically (who are you?) while most people push off these seemingly minor updates indefinitely, or until they go on a cleaning frenzy and rid their phones of all notifications and suggestions. If you’re the latter, update Safari 15.3 ASAP. Unless of course, you like leaking your browser history for the world to peek at.

TRENDING: Topics

Google offers a new alternative to cookies and FLoC

Third-party cookies are still on the chopping block, and marketers still don’t have an identity solution that satisfies their targeting goals and is also protective of users’ privacy. Plain speak for they want to know everything about you without knowing it’s YOU. Google, who is doing away with third-party cookies for Chrome, initially came out with FLoC, which, long story short, nobody liked. They recently introduced a new identity solution called Topics.

In Topics, the information available to marketers are the five most popular topics (there are currently around 350 categories) for each user based only on the user’s activity for the past seven days. They plan on throwing in a sixth topic just to throw marketers off your scent. You’ll receive targeted ads based on that information. This information is stored on your device’s browser, not on Google’s servers, and deleted every three weeks. Users will be able to opt-out or block certain topics from being assigned to them, but c’mon, no one is touching their settings.

Is this the final version? Probably not. Does it help marketers? Not really — the topics need to be more granular and the lookback longer. Does it protect your privacy? More than current third-party cookies, but advertisers can still figure out you have a weird skin rash, are coveting a Range Ranger that’s out of your budget, and that you forgot your wife’s birthday.

Hey, if you really cared about privacy, you would have switched browsers years ago.

Keypad Shortcuts for Productivity (or Because Your Mouse is Broken)

Window (symbol) — opens start menu

Alt+Tab — zooms out so you can see all open applications, use the arrows to navigate to the one you want

Alt+F4 — closes programs

Tab — if you’re in a menu, pressing tab will jump you to the next section or field, and use the arrows  to navigate once you’re in the section you want

Windows+E — opens file explorer

Enter — confirms choices

Esc — lets you exit from menus or dialogue boxes

Windows+Up Arrow — maximizes applications

Windows+Down Arrow — minimizes applications

Windows+Left (or Right) — snaps the current window to either the right or left of your screen

Spacebar — lets you scroll through websites when you’re not typing

Shift+F10 — opens the right-click menu

Shift+Arrow Key — lets you bulk select text

Shift+Control+Arrow Key — use to select one word at a time

Control+W— closes down whatever is currently open

Cut out this section and tape next to your computer for quick reference until your fingers have it memorized.

Quote

“I think it has the potential to be more significant than the vehicle business over time.”

— Tesla and SpaceX CEO, Elon Musk, discussing Optimus, the humanoid robot his company is developing this year. He’s realistic, saying that “it probably won’t work,” but he hopes to have a prototype within the next year. Sounds cool, now let’s wait and see.

What’s Up / Down Money Edition

Up: Stripe — The payment processor is considering an IPO and is currently valued at $95 billion (and significantly more on the secondary market, more like $250 billon). With no firm plans in place, it (and possibly you) can play its cards right and win big when they go public.

Down: Cryptocurrencies — Not that any of us understand them anyway, but Harvard economist Paul Krugman says the cryptocurrencies have “disturbing parallels” with the subprime mortgage meltdown. In the past few weeks, cryptocurrencies stocks have fallen significantly. Since November, some have lost nearly 50% of their value at the lowest point. Buh-bye, Bitcoin Billionaires.

(Originally featured in Mishpacha, Issue 899)

The post The Air Leaves the AI Balloon first appeared on Mishpacha Magazine.