5 Things Spain Taught Us About Smart Real Estate Investing | Ep 65

James: If you want to invest smarter, our trip to Spain revealed five key lessons that every smart investor should know. And we're going to talk about this on the Furlo Capital Real Estate Podcast, where we dive into the intricacies of passive real estate investing. And our overall mission is to equip people to invest wisely in both properties and residents so that together, we can build wealth while improving housing.

I'm James, and this is my wife, Jessi.

Jessi: Hey, one of the most, one of my most favorite things, I don't know if you're gonna talk about this, but one of my most favorite things while traveling mm-hmm . Is especially to especially if there's a beach or something, is just a beach comb. I, and even hiking. Oh, a beach cone, right?

Not the beach itself. Beach combing, what is it? Beach comb. I mean, I love beaches. Well, not a beach comb. The act of beach combing. Okay. So you just, you walk along the beach and you look for pretty rocks and shells and things and I, I don't know. I'm a nerd like that. I collect, you're not a nerd. I collect rocks.

Is that nerd? I don't know. That's something, I dunno if that's nerdy. Something else weird. I whatever. Weird. That's good. I , yeah, I collect rocks wherever we go. And so I, and then I have them, I haven't like written on them where they came from, but I have like collections of them in our garden and in little flower pots and I see them and I'm like, oh yeah, I remember that.

And especially unique rocks. Like, I can, I remember. I'm like, Oh, I know where I got this from. I remember the exact, the exact time and place that I found this other rocks. I'm like, yeah, I don't know why I saved this. It's a rock,

James: but you collect a lot of them. I mean, you're not talking like four or five.

Jessi: No, no, I collect, I collect a lot.

I mean, Not big ones, because then I have to carry them, and I have to pack my luggage. But like,

James: it's 20, 30? Yeah, 20,

Jessi: 30. Even like, so this time around I collected them because I knew I was going to use them for a special purpose. And so I collected shells, rocks, and I turned them into jewelry. And then I gifted those to people.

Which is like, oh, so

James: fun. Well, in the same way, we have gift wrapped. Five lessons that hopefully you will find as valuable as rock jewelry.

Jessi: I actually, I was having a friend look through them and they told me I don't wear rocks. I was like, Hey, you know, it's from Spain. Hang it up somewhere. Not everyone invests in

James: real estate.

It's all good.

Jessi: But if

James: you do. You're really going to like this. And so, yes, we recently returned from a trip to Spain. We were there for two weeks. It was great. We ditched the kids, had a ton of fun. We spent some time in Barcelona and then also in Malaga, which is on the Southern coast, it's like a hour away from Gibraltar, if that means anything to you and just absolutely beautiful.

That was there. And but yeah, I wanted to kind of, I want to pull together five lessons that I got from the trip and just talk about that and, and how we can apply that to real estate investing.

Jessi: There you go. Yeah. There's always a real estate twist.

James: Dude, there always is. So let's talk about the first one.

Which I wonder, I'm trying to think if I want you to try to guess. What some of them are, I feel like some of them are pretty obvious. So the first one is all about the power of location and lifestyle design. Right. So Mulligan itself, it's pretty cool. It's actually become kind of a hotspot for like digital nomads and retirees.

And that's primarily because the weather's amazing. So remember our severe weather.

Jessi: Oh my goodness. I was explaining that someone, yeah, severe was what I would call a drizzle.

James: Maybe, I mean, I maybe

Jessi: a little we

James: off and on rain for sure. Yeah. And that was a severe weather warning, like, dude, oh yeah. What kind of place is this?

Where that's a severe weather warning, which it turns out it only rains like 40 days out of the year.

Jessi: We got one in there,

James: so, so, yeah. I mean, we were there in the dead of winter. Yeah. Like, yeah. Well,

Jessi: and we, it was like in the sixties, seventies, like we were wearing jackets at different points, but yeah, not really.

Yeah, no. Much of anything wasn't. And there like. Some of the people who live there all the time were like parkas, puffy jackets, hats, gloves. I mean it was like Wow. Okay. This, I can see how this is severe when you used to just sun all this regularly. It's over a hundred there

James: apparently normally. So we picked a good time of year.

So the point is location matters.

Jessi: Yeah.

James: Right. And picking a place like that where it is all about the sun. It's about the coast and just kind of the overall vibe I think is important. And so when you're investing, you know, shocker, this is rule number one, right, is about location and it just further reinforced to me, like just.

How different locations can be and how important that that they are. And so you obviously, when you're investing, you want to try to find a place that's a good location. And, and that's not just, I mean, yes, obviously you can go after vibes, but one of the ways that you define a good location are through some demographic trends, right?

Our population's increasing, our employment rates going up, going down, that kind of stuff. And so, yeah just that minor, go ahead.

Jessi: Well, and. One thing I'm I keep thinking in my brain too is like you're not necessarily finding a location that you would like to be in But if you're if it's an investment property, you're finding a location that other people might find valuable and perhaps for different reasons You know, you might want a place to retire and go skiing but no, but a rental might yeah Not us but yeah a rental Might be some place warmer, or have beach vibes, or have, you know.

It's more

James: important to be near jobs. Sure. And transportation.

Jessi: Right. So, it kinda depends a little bit on what you're looking for. Yeah, that's fair. You know, as you're thinking through what the rental is going to be used for. Yeah. Location does matter.

James: Yeah, and again, this is no surprise, right? This is definitely the number one rule.

Sure. And I think it just was complete. It was just continue to be reinforced by going to a place that was such a different environment. That sounds important. Alright, rule number two, or lesson number two. I I got like a double title here. It's basically, would Gaudi approve? And this is comparing long term value versus short term trends.

Ooh,

Jessi: interesting. Yeah, yeah. So what it would, who's this Gaudi guy? He was an architect. Gaudi. Sorry. Gaudi. Gaudi. He was an architect. Mm hmm. And invested a huge portion of his life, about 40 years, into one singular architectural project. Yeah.

James: Yeah. Which he didn't even finish. He didn't finish. As a matter of fact, it's still going on.

What's it called again? I always forget. La Sagrada

Jessi: Familia. Ah, yes.

James: And that is Basilica. Basilica. A church. Barcelona. Basically. Yep. It's ginormous.

Jessi: It's ginormous. It's huge. I was trying to describe it to someone and I'm, I just, I don't know. I like, it's huge. It's as if you put, I don't know, like a skyscraper in the middle of a town.

I'm like,

James: this just describes it. Right. Like, cause you have to like, you just have to see it. And the point is like, there are other buildings too that are over a hundred years old that people are living there. And, and a lesson is to just really think longterm, right. Both in terms of your investment strategy.

And in terms of the types of properties that you want to buy, you really want to focus on ones that are going to be around a while. They have quote good bones is the idea because it's going to reduce your maintenance costs. It's going to make it so like, yeah, it, you can hold onto it for a long time if you want to.

And it's a selling point when you do eventually go to sell it. Sure.

Jessi: I also like, this is a, maybe more of a negative spin on things. It's like, maybe don't invest in things that are over. Designed or like overdone, you know, it's kind of like, okay, I get it. This was like a, a passion project. And it was, I

James: guess if he had investors, that would be quite frustrating.

Cause I never, they're still waiting to get their return.

Jessi: Yeah. They're just like, when is enough enough, man?

James: We paid some money to go take a tour. So it's not negative. I mean, it probably is negative, but. It's not totally zero. I don't know how, if it was investors or who constructed it. Oh, it's all paid by the government.

It's gotta be my guess. Who knows. But I don't know. Maybe it's the Catholic church is paying for it. I

Jessi: don't know.

James: But anyways, that's kind

Jessi: of what it makes me think of is like,

James: Yeah.

Jessi: Okay, do you really need to keep going on like making this better and bigger and more and all the time?

James: We just need a house to worship, right?

Jessi: Yeah, it's like, okay, I think enough is enough. Okay, you know, so it's like yeah, that's fair Yeah, just invest wisely.

In

James: don't ever complicate it.

Jessi: Yeah,

James: but

Jessi: Get good bones, but don't get overly extravagant mansion if you don't need that.

James: Totally. Totally, totally, totally. Alright, number three. This is Investors vs.

The Law, Spain edition. So, I don't know if you caught this, I was reading something about it, but Spain, and particularly in Barcelona, is significantly cracking down on short term rentals. Yeah,

Jessi: you mentioned that to me, because we stayed, I mean, we stayed in short term rentals, Airbnb types of things.

James: Yeah.

But, I've Yeah, I can't remember, I think it's like four years from now, they're just, they're phasing them out. That's just, no. Totally outlawing them, just like, no. Not even a thing. We're not doing short term rentals anymore, which, I haven't read the law, I don't know, but it might be like Perhaps like the place that we stay at, they officially become a quote, hotel, a small boutique hotel.

Interesting. Like a one room hotel, maybe, I don't know. Or they have to go through a different system.

Jessi: How is that different between like a hotel versus a short term rental? Is this time that people spend there?

James: That's a good question. Well, I mean, so I don't like, for example, Albany, they're changing the rules for some of their short term rentals versus hotels because there's specifically a hotel tax.

That, that Airbnbs and, you know, vacation rentals are supposed to pay. But, interestingly, the city of Albany doesn't have a mechanism for actually collecting it. And so even though there's a rule to do it. It's not enforceable because they can't do it. So part of what they're doing is they're saying, Okay, we're actually creating the system.

And so now we're going to require everyone to register so that we can make sure that we're collecting the tax and get it from you, which, which, which I get. Yeah. And, and so maybe there's going to be something like that where it's like technically vacation rentals aren't a thing anymore. They're all now labeled quote hotels.

But I guess is the definition has to do with like the number of rooms. Oh. Or something.

Jessi: Well, and to the consumer, like the person staying there. It virtually would be the same process. I think so. I

James: don't know. Yeah, but they're, but they're cracking down on it. And so especially like vacation rentals, it's really important that you pay attention to the laws and what's allowed, what's not allowed.

And as a general rule, they say a place that doesn't have any laws yet for them is not good because eventually they will. Oh, and so you're going to have to change something. Yeah. So ideally you actually go to a place where like Albany, right? They're clearly, they're thinking it through. Here's what to do.

So you go, okay, that's a safer place. to do a vacation rental. Yeah. And that's true for longterm for just regular homes for other investments. It's good to know what are we allowed to do? What are we not allowed to do? Even just from a tenant landlord standpoint to a building standpoint. Makes sense.

All that stuff. Yeah. It's just super important. The know. And to recognize. Like if you think about it, if you own a vacation rental and then they pass this law, like dude, you might like, now what do we do? Right? Yeah. It's like, do you turn

Jessi: it in? Do you sell it? Do you turn it into a? Yeah. Cause everyone knows about it.

Right? It's not

James: like you can just like on the sly. Yeah. A lot of the stuff on the vacation rental in particular is that they're, the concern is that it's taking housing away from longterm people. So it's driving the cost of housing up in general because it's reducing the supply of homes. That's the, that's the argument.

And so to make it harder to have a vacation rental, more people will opt not to do it. Therefore the supply of longterm homes will increase. Therefore. Not necessarily reducing the price because no one actually wants that, but retarding the growth of prices. I

Jessi: guess.

James: Yeah. I

Jessi: mean, interesting.

James: Yeah.

Jessi: Yeah.

James: All right. Number four. Ready for this? Okay. We're learning all sorts of stuff. Okay. Number four is the role of emotions and experience in property

Jessi: value.

James: So you might've noticed this, there was definitely like a vibe that was around in different plazas and, and so it's. You and I we have a saying that talks about you fall in love with a deal not the property.

Jessi: Mm hmm

James: But at the same time people who when they're looking to rent They don't think that way at all. Nope. It's all about, it's all

Jessi: about the property, the feel, the vibe, the feels. Exactly. Oh yeah.

James: And so the question that I would, that you want to ask yourself is like, how can you make it more desirable?

Through potentially some small, maybe even some big improvements because you want to have that emotional connection.

Jessi: Okay. So it's finding the deal, finding something where their numbers work, but then looking at opportunity for adding that. Yeah. Deals. Yeah. So I think about our very

James: first duplex was one where it had a pretty big living room and then it had what felt like a really squished kitchen.

Yeah. And when you had the table in there, it did not have the vibes. Correct. It just, it felt like it wasn't sized correctly.

Jessi: Yeah.

James: And so what we did was we took like a third of the carpet out. And put in some laminate that made it more like a dining area. And now all of a sudden it became very obvious, Oh, we shouldn't have the kitchen table in the kitchen.

We should have it in the quote old living room in the dining area, which suddenly opened up the kitchen a lot and made it seem really, really big to the point where we could add more storage and and it fit. And like that was a way that we were able to change the flow, the feng shui, the vibe of the place.

And so you want to look for those kind of deals where you can really add some value. To it, to, to make it, to make it better. Mm-hmm . At the very least, if something's funky, you gotta just, like, this is funky. Yeah. You can't embrace

Jessi: it.

James: Exactly. Yeah. I've recently started managing another property and one of, and the units, they are all funky.

It's kind of, it's got a cool landing area when you first get into it, and then there's some stairs that go up. Mm-hmm . And it's one of those where like I, the rooms are weird, you know, you're like, wait. How many bedrooms are in this place? Like, it's just kind of a weird layout. And then the, and the closets themselves are cause it's like, cause it's on the second floor and it's got the roof that comes down on a slope.

So the closets are like, there's a little door and then it's like a hallway, essentially. Like, oh, I think this is the closet. It's funky is what it is. Now there's going to be some people who are like, oh, this is cool. It's cute. It's different. I like it. But you also got to be like, dude, this is just weird.

Like, we

Jessi: know it's weird.

James: Yeah. And, and that's, and in some ways that becomes a discount because that is a pain for someone, even though they think it's funky. Sure. Well, that was like

Jessi: one of the places that we stayed in. The layout was a little weird, but they embraced it. It was like, it had a skinny little living area space, but then they created this like.

Yeah. To kind of give you more space and you could spread out a little bit because that skinny little area. Yeah. You know, had a, it was like a hallway that had a couch in it.

James: Yeah. It was like,

Jessi: okay.

James: Yeah. It was a little

Jessi: weird, but okay. I see it. Yeah. The loft is super

James: cool because they, they like, they built it.

Inside the room. Yeah. It wasn't. It was strange. Like it had like I beams and metal and they built like this frame then they just put plywood over it. Right. Like it's now a loft. Yeah. And then the stairs were crazy steep. Oh, they were, yeah, they

Jessi: were super steep. I, I had to pay attention going up and down those stairs.

Yeah. Yeah. It was, it

James: was practically like going up a ladder. Yeah. It was pretty nuts. But yeah, they totally, they made it work.

Jessi: Yeah.

James: It was all right. Okay. All right. My, here's my last big lesson. Okay. Unless you want to tack on a lesson. No,

Jessi: I'm good.

James: All right. I, I have a new term I'm going to do use except I always struggle to say the word and so it is what it is.

It's the Iberico investing principle.

Jessi: Iberico.

James: Iberico investing principle. Yes! Why great assets take time.

Jessi: Huh. Nice. So,

James: I thought it was interesting. I kind of have like two lessons really that I Are you,

Jessi: are you going to explain Jamón

James: Iberico? Yes. Okay, good. I kind of have like two lessons that, that I got from this.

And and one of them was a surprise lesson, I guess, but related to it. So Hamon, you bet it go is it's there like it's a, it's a cured ham. Yeah. Yeah. So they raise hogs. They feed them. What was it? Like acorns, super nice acorns, like free range, all this stuff. And then they take them. They they slaughter them.

They take a leg and then they. They just like, they essentially put it in a pile of salt. Like it's not just like rub some salt on it. It's like a mountain of salt. Totally on it. And then they leave that in there for a little while and then they take it out and they hang it up. Not for days, not for months, but for years.

This thing totally dries out. There's a, there's an art to all of it. And then what they do is they put the, the leg. On a lathe, essentially. It's this weird thing. It's like they, they grab both ends of it. But it doesn't rotate. Instead, they take a, like a flexible knife, and they just carve off little little slices.

Yeah. It's what it is. I mean, it's, it's one of those where you're like, Wait, isn't this just bacon that's been cured? Like, yeah, no, it is. It's super fancy. It was everywhere, by the way. And it was delicious. Yeah. That's essentially what it was. Charcuterie meat. And And it, and it was, but what was interesting, it was highly sought after, like everyone wanted it, including me.

It was amazing. My surprise lesson is when we first were going there, I was really excited about chocolate dipped churros. I was like, yes, it's going to be the food. I'm going to eat so much of it. Amazing. There was like one place that had it. That was it. And even then it was like a, like a food cart type of place, like a

Jessi: mall food court type.

Yeah. Yeah.

James: I mean, it was delicious. Don't get me wrong. I had it, but. Everywhere else had this Iberico meat and I mean it was like all the different places you could go it was there and it was clearly like this is what we're food

Jessi: market. Yeah, everywhere.

James: And so that was a surprise for me. And I think that happens with real estate investing sometimes, where you walk in thinking, Oh, I'm going to get this thing out of it.

And then when you're in the midst of it, you end up going, Oh, actually there's this other benefit to it that I wasn't even thinking about, didn't even realize and, or another challenge or something like that. Sure. And so I think that lesson is just like, yeah, you know what, you may have expectations walking in and that's okay, but yeah, be willing to be flexible for something bakingly delicious.

And

Jessi: some would say even better.

James: Yeah, the other some yes Definitely a little bit slightly healthier for you But then but then the other like the more obvious lesson is just you know what investing well, it takes time You can't You can't just rush in. Yeah. Expect it. Even if you're doing a flip, like that's not just do it in a day or even wholesaling which that's, those are full-time jobs.

I don't necessarily recommend them. Sure. But especially as a passive investor, it's like, no, you gotta be willing to say like, Nope, I'm in this for the long haul. Yeah. This is even if I am doing a short term loan mm-hmm . Like I'm doing that and then I gotta roll it in and I gotta do the effort. I gotta look at it.

It's not as simple as a stock market of opening up an app, transferring some funds and being done. It's, it's more involved than that, but like the Iberico, I think it'll, it produces something that's really good and enjoyable and ultimately sought after that people want. So it's the, you better go investing principle.

You gotta tend

Jessi: to your pigs, people.

James: Exactly! Tend to your, oh man.

Jessi: We watched a little video about it and that farmer looked pretty happy.

James: He did

Jessi: look pretty chill, just wandering in the beautiful hills. I did love though that

James: they were talking about how they, they obviously they spend a couple years raising the hogs.

Oh yeah. They then spend years curing it. And they get to the part of the video where the guy's doing the carving, and he's like, This is the hardest part. I was like, Is it? He's like, This requires the most skill. Does it? I'm pretty sure that farmer He's working

Jessi: pretty hard. Yeah. Chasing pigs around. But I get it.

James: I get what he's saying. He's trying to say I think it's the art of it all the art of it. Yeah, just get a nice They didn't

Jessi: get super intense about their carving. Oh, yeah, and

James: they

Jessi: all do it manually. I

James: thought I noticed that they Slicer mm hmm, which I thought was

Jessi: which kind of makes sense. I mean the the legs are like weirdly shaped

James: You can invent a little machine that would do that auto slicing But, or, I mean, well, ultimately what you do is you don't leave it on the bone.

You take it off, make it a chunk, and then

Jessi: you

James: put it through a slicer like that. I mean, that's ultimately what we do.

Jessi: No, it probably changes the flavor!

James: Oh, dude, a hundred percent they would tell you that. You gotta go with the

Jessi: With the grain of

James: the marble or whatever. I don't know.

Jessi: I don't know. I don't know.

All I know is it was good

James: I also think like instant bacon's not bad either, but I know but Yeah, no, it was good. So anyways, but yeah, so it was a good trip And I think those are my five lessons just quickly to review them I think you want to keep location in mind I think that continues to be the number one lesson you want to have that like would Gaudi approve of it is you know Is this going to be around for the longterm?

Is this a good, does it have good bones? Is that lesson? You really want to pay attention to the laws to make sure that whatever you're doing is in alignment with where the government's headed and you want to try to keep in mind, like, what are those emotional appeals that people renting from you are going to want or ultimately buying are going to want from you and how can you tweak the property to, to make it.

And then finally, it's the Ubetico investing principle of like being up for the long haul and be recognized that you are going to invest, invest, invest. It doesn't necessarily have an instant payoff and that's totally okay. Ultimately it turns out to be something delicious. So there you go. Those are my rules or not my rules.

They are kind of rules. Those are my lessons. Yeah. And so hopefully you found those interesting. And if you are interested in learning more about investing with us or having us manage some of your properties, we would love to chat with you. You can check us out at furlo.com. So with that, thanks for listening and have a great day.