Hey, Growth Investors: Real Estate Is for You, Too

The Motley Fool's Matt Argersinger is here to explain to you about real estate investing. We're talking properties!

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Nov. 3, 2021.

David Gardner: Real estate, on the one hand, the phrase has an allure, it's land, land's real, its buildings, properties, estates. In many ways, real estate is an investment choice and opportunity that more Americans naturally and intuitively understand, I would say well more than the stock market. Many of us have mortgages, which are loans we took out to own a home, and we pay that off over time confident that the value of our property, aided by inflation, will be well more in time than what we paid to own it, and that makes us real estate investors. Too you could be a landlord or a realtor. Anyway, the stuff of real estate is much more understandable to most of us listening right now than the stock market's wily ways. Let's not forget that another way to invest in real estate would be in stocks within that industry. REITs, many of them real estate investment trusts that pay outsized dividends, looking for some investment income in your life? 

Real estate can be your friend. Yet, speaking only for myself, real estate hasn't been much of a friend to me, I've never put up big numbers with real estate investments, I've loved my houses over the years, maybe new one every decade, but the actual increase in value of these hard assets has been for me paltry. Now I hasten to add, I can live in my house, I've never been able to live in my stocks, I really love that about my houses, but no, my investing money has stayed pretty much 100 percent in common stocks. Not only do I have no regrets about that, but it's a much joy and prosperity. Real estate hasn't really been my friend, we haven't got to know each other too well over the years, but I have friends. You'll get to know them every week on this podcast, and one of them for a long time now is Matthew Argersinger, investor, analyst and advisor here at the Motley Fool several years ago, that made to my mind a radical shift from finding Rule Breakers to leading our fellow Fools into largely uncharted territory for our company at the time, territory that you and I can call real estate. Now Matt is joining me for one special week in which we throw our Rule Breaker branded clipboards and Rule Breaker branded pens, and Rule Breaker branded green eyeshades, and talk not stocks but real estate. Let's learn only on this week's Rule Breaker Investing. [MUSIC]

Welcome back to Rule Breaker Investing, it's time for real estate investing. A lot of people might look at and go, well, are there rules that can be broken in the world of real estate? I would say that my friend and guest this week, Matthew Argersinger broke our own internal rules by even expressing interest in this topic, he has some real life experiences to share. But to take an open up millionacres and have a bunch of services that increasingly we're investing in a building at The Motley Fool, what we realized the relevance of this but we needed somebody with a rule breaker eye and so I'm just delighted that Matt will be joining me very shortly. I do want to mention, this is a sister podcast looking back over this year that's been thinking of other ways to invest. July 21st Venture Adventure with Ollen Douglass, venture capital. That was the focus with Ollen a couple of months back, google it if you didn't get a chance to listen to it, Venture Adventure was a lot of fun. Bitcoin 2021, earlier in this year I had Jim Starwiki, longtime financial journalist and a friend of mine and Aaron Bush to talk it out bitcoin early in the year and in January coming up Aaron is going to return to talk about NFTs, which I'm looking forward to. So of course, most of our focus on this podcast remains on common stocks, and by the way Matt will be talking about those this week as well. But I love that we're having a little forays into other forms of very relevant, very interesting ways to invest your hard earned dollars. So without any further ado then, Matt Argersinger welcome back to Rule Breaker Investing,.

Matt Argersinger: Thank you David, it's great to be back.

David Gardner: You know Matt, you and I definitely are going to talk about real estate, and it's different forms, there's a myriad of opportunities out there. It's a great big world out there, turns out Matt, but you were pointing out to me, there are just real estate stocks this year not having a bad year.

Matt Argersinger: Not at all, David, I was looking at it. If you look at the, as of market close on Monday earlier this week, the S&P 500 is the comment index and benchmark we used at the Motley Fool. It's up 24 percent year to date. It's been a wonderful year by any measure for the stock market, and that's been great for investors. But if you look at the real estate sector of the market, and I'd like to look at the Vanguard Real Estate Index because it's widely tracked and very popular index, it's actually up about 32 percent this year. I'm happy to say that a couple of the services I work on at The Motley Fool, one of them being Real Estate Winners, and one of them being Mogul, where we also recommend real estate stocks and real estate investment trust, our average recommendation this year is up 33 percent.

David Gardner: Wonderful.

Matt Argersinger: I'm feeling really good. It's rare to get a year like that for real estate. I often think as I'm sure most investors do, real estate is the slow moving, you're not going to get rich quick, it's a marathon type of investing asset class, and so it's very rare to get even a double digit annual increase in real estate, and here we are looking at 30 plus percent returns. Of course, coming off what was in 2020 a really bad year for real estate for a lot of reasons, but it's nice to see a real big bounce back in the sector this year.

David Gardner: Thank you for pointing that out, Matt and I would like to mention that Rule Breaker stocks this year, there is no index that Vanguard tracks, but at least a bunch of the ones that I'm invested in and I've been for many years in the Rule Breakers service, I think we're probably under performing. At least my personal portfolio is under performing in the S&P this year. I think real estate might be doubling up on me this year, which is not going to be true every year. Anyway, I'm delighted to know that and I'm not surprised that your services matter. I hope you will plug them once or twice during our conversation because we're very proud of what you're working on. But I'm not surprised to hear that they themselves are beating the market averages because that's been a big focus for you and for me over the years. There are a lot of directions we're going to go in our time together this week Matt, but I thought we should start with your story. Were you raised in a family that were real estate investors? What was your first real estate investment, maybe was it a stock or maybe it was a property? I know you've been playing the role of landlord a little bit in and around the greater DC area. Could you just give us Matt Argersinger, the making of a real estate investor, maybe five minutes or less.

Matt Argersinger: Sure. I joined the Motley Fool in 2008 and was very lucky to get to work with you on Stock Advisor and eventually Rule Breakers, and stock investing was always the game I wanted to be playing and I was so happy and grateful to have that opportunity to work with you and come to the Motley Fool. But so, real estate was probably a side hustle at best, and I never looked at it as really an investment that I want to make a big part of my life, but it just so happens that shortly after my wife and I got married in 2009, we were living in DC in the Capitol Hill neighborhood of DC, and we thought, well, we love this neighborhood, we know we're going to be here for a few more years. My wife was working at the Navy Yard downtown and I had just started the Motley Fool the year before, and so we thought, maybe it's worth seeing if there are any houses that are in real estate that we want to buy to live in instead of renting our apartment, which we've been doing. It came in at an interesting time in the real estate market because of this was 2009, this was after the crash and then the bursting of the real estate, so to speak, and so I remember we would go to a few open houses back in 2007 and it would just be a rush of people in all these houses. But in 2009 if we go to an open house and my wife and I will be the only ones there on occasion [laughs], and we had our pick and we're lucky to find a row house in DC, and David, you know this being a DC native that a lot of the row houses, especially in Capitol Hill and DuPont and those places, they're very narrow, and there's a main house on the top and then usually a basement apartment on the bottom. We found a house that had one of those setups where we could live upstairs and rent out the basement apartment, and help pay roughly what you thought would be like 1/3 or maybe 1/2 of our mortgage, and so it seemed like a really great opportunity. That's what we did, we made an offer, we got a house and shortly after we moved in, we were thinking about how to rent the basement apartment and who we should rent to, and my wife just happened to read this article I will never forget, I think it was in the New York Times about this new up and coming company called Air Bed and Breakfast.

Matt Argersinger: [laughs] Of course, we know today as Airbnb. But back then, there were maybe three, I want to say three or four listings for Airbnb in all of Capitol Hill in DC. We thought, well, that's interesting. The house we bought was right near Union Station, which is the big train station downtown. There'll be a lot of visitors coming to DC, so we thought, let's try this Airbnb thing out. That way we don't have to rent out. We don't have to sign a long-term lease for the tenant. We can just rent it on a short-term basis. It was so successful. I think we listed on Airbnb and within a month, I think we had booked out all of 2010. [laughs].

David Gardner: Wow.

Matt Argersinger: I mean, roughly 25 days of every month, and we probably priced too low. That was probably a reason for that, [laughs] but we just had so much success with that. It really opened our eyes to the opportunity and we were essentially paying our mortgage by Airbnb being the apartment because the rates you get with Airbnb are much higher. Of course, there's a lot more work involved. You're changing out. Guests come in for a few days, they leave you have to turn over the apartment. It's a lot more work, but it opened our eyes and two years later, we bought another property very similar, which had a main unit and then a rental unit attached to it. That just became our way of building wealth in real estate. Later on, I partnered with a friend of mine and we made some commercial real estate investments as well. Today, my wife and I, we still have some properties in DC. We have commercial real estate investments that we've made. It was just delightful a few years ago when I sat down with Austin Smith and a few Fools here, and we said, "The game of real estate has changed." I know we're going to talk about that in a moment, but it's really changed to a point where the individual investor, the Foolish investor, can really get involved in the asset class like never before. We ended up launching Millionacres, and of course, we launched several services, two of which I'm an advisor on. It's just been awesome to really explore this asset class in a way that we think can be very foolish. Really focusing on the principles of long-term investing in the asset class, which wasn't really possible with real estate up until recently. That's a little bit of the story to where I am as a real estate investor.

David Gardner: Wonderful, and speaking of earlier podcasts in 2021, Matt told his story. The date was April 14th. You were on with Jason Moser. That was a delight, telling their stories, volume 2. Matt, I was asking you to give short shrift to your own life story, but we really went into it more at length on April 14th. I highly recommend that to any Fool who enjoys this week's podcasts, you got to know Matt a lot better through that podcast. But sticking to our knitting here, Matt, you've done a nice job, kind of breaking down this week's conversation into three main chunks. I am just going to throw them out upfront then let's get started. Well, you've entitled it how the rules for real estate investing have changed, of course, you added in parentheses, been broken over the past decade. The democratization of this asset class and the opportunities that are out there for everybody listening, that's exciting. That's going to be the first section. The second you've entitled three undeniable long-term trends and one major uncertainty for real estate ahead. Then the third, and probably the most unfortunate of the three sections, the one that I might encourage people to just skip all together if they feel like [laughs] it just went too long this week, you're going to be quizzing me on real estate multibaggers. I will show my lack of knowledge of this entire asset class in this whole industry within stock market terms. You'll be asking me about some of the tickers, which I won't recognize and how they've done, and I'll undershoot and you will make some great points. That's ahead, but let's stay focused.

Matt Argersinger: I can't wait for that by the way. [laughs] I'm so looking forward to that. [laughs]

David Gardner: I'm dreading it, Matt. Thank you though for bringing the preparation that you have. Okay, let's get started. The rules of real estate investing have changed, have been broken over the past decade. What's an example that comes quickly to mind for you, Matt?

Matt Argersinger: The example I can think of is if you go back just 15 years ago, not very long ago, the idea of being able to invest in a institutional quality, piece of real estate or development. Imagine a large-scale office building in New York City, maybe a hotel development in Los Angeles. Something that's a $100 million, $200 million plus capitalization.

David Gardner: Yeah, most of us don't have that kind of change.

Matt Argersinger: No, and never will. The idea of that is just how could you even do that? It's not even possible. Just to throw an example out there, there is a new platform out there called Rex, which I just learned about it I had a meeting with. Literally they're letting you buy pieces of equity in New York City skyscrapers. You're thinking yourself, how does that even work? But they're doing it, and it's possible. That's just one small example, but really this all started back in 2012, the passage of the JOBS Act, Jumpstart Our Business Startup Act, which came out, and what that did was, for the first time it enabled certain classes of investors, mostly accredited investors, but also non-accredited investors to invest in privately listed securities or crowd-funded equity raises. That really opened the door for investors of all kinds, really to get involved in private equity, but also in real estate. Because unlike most asset classes, most real estate is held in private hands and it's in the money for it, and it's managed privately. It's raised for privately. So that asset class just remains so far out of reach until really 2012, and so less than a decade.

David Gardner: You know what I'm thinking about, Matt is I'm thinking about how for the stock market, things have been democratized in recent years by the ability to buy fractional shares, which is certainly Robinhood, but most brokerage firms are headed there if they're not already in the next year or two. Buying pieces of things, buying one part of one Amazon share. Buying, a tiny part of a New York city condominium. Pieces of things.

Matt Argersinger: That's exactly right. It's just pieces of equity that we can allow our portfolio to get exposure to that we otherwise wouldn't be able to. Since really 2012, you've had the spawning of so many crowdfunding platforms like CrowdStreet, RealtyMogul is another one, RealCrowd. If you go to those platforms, essentially every month, they're coming out with new private real estate opportunities that you can invest in. It's amazing that you can sit down really in front of your computer, like having a Robinhood account, you can have an account in a CrowdStreet or elsewhere. With a few clicks of your button, you can invest in a apartment building in Seattle [laughs] if you live on the east coast or you can invest in a hotel in Miami, no matter where you live.

David Gardner: Now, I haven't done this myself, Matt, but I know that a significant part as you launched Millionacres a few years ago and the Mogul offering that Millionacres has, Millionacres, a sister company of The Motley Fool. Matt, in particular, I think CrowdStreet was a platform that you were focusing on at the time. Maybe it's probably an early leader. I know it's still early days for this whole industry, but I'm hearing you mentioned a number of other names now these days. But I've still never done that myself. Some of our listeners are really into this, but many of us haven't visited one of those platforms yet. Could you just briefly describe. Does it look like an Amazon page, but instead of buying, I don't know, new light bulbs? [laughs] Because I'm always running out of light bulbs. Thank God for LED making it so I don't have to change so many light [laughs] bulbs anymore, but anyway, is it just looking down a product page and going oh, yeah, I can buy a piece of that?

Matt Argersinger: Yeah, it is. Most of the sites are very simple to use. You can go and they have their marketplace or their market, and you can click on that and you will see a number of opportunities just across your page. Wow, OK, so here's a retail complex in Florida. Here is a hotel in Salt Lake City, here's an office building in Chicago. Click on it and it will describe to you, OK, what are you investing in, what's the business strategy here? What's the development team behind the deal? What I love about it is it allows us the Motley Foolish investors to really analyze the deal and look at the fundamentals of the deal, the marketplace, the sponsor or the developer. In real estate lingo it's called the sponsor. But what's their pedigree and track record? Really things like that that helps us build the case for recommending these deals to investors. It really reminds me, I keep thinking about, you brought up Robinhood and fractional shares. But I will even go back farther and say this feels like that moment in the early '90s when you had the rise of the Internet, and not only the rise of the Internet but the rise of the online discount broker, and the ability to not get on the phone and spend $50 or $100 of commission [laughs] to buy stock. I mean, you are logged into an account that you created. You're spending maybe at that time still $30 or $40 to buy stock, but it was a lot cheaper and faster than it was. Of course, nowadays we have free trading and fractional trading and it's almost gamified. It's amazing. I feel like real estate is having that early '90s moment.

David Gardner: That's a great comparison. A lot of us don't quite know enough to feel confident that we might want to put our thousands of dollars into that office building versus that other office building across town, that same city or a totally different coasts. But I know part of what you've done is you've developed a rating system, and so part of what Mogul has done is it provides for Mogul members a numerical system that helps them sort through. Of course, you're recommending the ones that you really like that fit with the framework that you are operating off of. In a lot of ways, I think the Motley Fool back in the '90s that you just referred to, we were green lighting the idea that people should buy companies and invest patiently and do it differently from Wall Street. A lot of people need to be nudged to believing that they could even if they weren't finance majors. I wasn't either, but I think you needed the advisor. You needed advice to really embolden you to think that you could invest your money there and do that, and Matt, that's what Mogul is doing.

Matt Argersinger: That's right, and thanks for bringing that up. Yeah, we have a score from 0-100, and so every deal that we recommend in Mogul, we rate from 0-100. Generally, every deal we recommend is going to have a score of at least 75. But really what we're looking at is, what is the risk reward for the investor? The higher the score, we think the better the reward is for the risk taken on any given deal.

David Gardner: Give an example.

Matt Argersinger: Sure. Well, let's see. We recently rated a deal that I'm really excited about. It got a below average score. Maybe it's not the greatest example in the world, but it scored an 81, and it was a hotel redevelopment in Salt Lake City. I wasn't very familiar with Salt Lake City, and I've actually never been there, until I researched this idea, but there's the Union Station, which is the old train depot in downtown Salt Lake City.

Matt Argersinger: Developers can go in there and redevelop it as a five-star hotel. They're going to build more flooring in the back, but they're going to redo the entire depot itself it's right across the street from where the Utah Jazz play. What's fascinating about Salt Lake City, I didn't notice either, is that, there really hasn't been a new full-service hotel in downtown Salt Lake City, built in the last 20 years. The idea that you're going to able to rent a hotel space or a conference room at this really beautiful, iconic building right in downtown Salt Lake City in a few years, once the redevelopment is done sounds really appealing and looked really compelling to me and there was risks involved. We're talking about hospitality and we're talking about a redevelopment. There are risks and so the score probably wasn't as high as it could have been, but still a very compelling idea, especially if we think, of course, in a post-COVID world. We're traveling again. We're going to places like Salt Lake City to go skiing or for other reasons and it just seemed like a great opportunity. That's an example of one deal that we recommended recently and I am pretty sure score it'd 81 out of 100 in that case.

David Gardner: That's a great example Matt. I have been to Salt Lake City because it's not too far from Park City and there's some great skiing in and around that area. I guess these occasions then three immediate questions that I have for you because I think a lot of us, especially those hearing about this kind of investing for the first time, are going to wonder any one of the three following things. So Matt, how much money do I have? How much money am I probably putting toward that investment? What is my minimum investment that you would recommend for somebody who would participate in that particular mogul recommendation or any of the others? The second is, do I have to be accredited or not accredited? Explain a little bit of that. It is the United States distinction and may not make as much sense for our international listeners. But at least if they are trying to invest within the US, they probably need to be accredited in some cases. My three questions. Number 1, how much money do I need to devote to this? Number 2, do I need to be approved by some regulatory body to participate, and third, how active would I need to be? Do I need to have a portfolio. We always recommend 25 stocks at the Motley Fool. Do I need to have 25 of these different investments and do I have enough money to invest in that way?

Matt Argersinger: All great questions. I'll start with, the minimum investment is usually an easy one because it's usually dictated by the deal terms. Normally with the deals, we're recommending these private commercial real estate deals, the minimum investment is $25,000 on most crowdfunding sites. That's where you need to start. Now of course, you can invest much more on that if you like, but 25,000 is usually the start. The second question is yes, that's a key ones. Most of the deals that exist in the private real estate world still require the investor to be an accredited investor. In the US what that means is that the investor needs to have a net worth of at least one million dollars or an annual income of at least $200,000 or $300,000 annually if investing as a married couple. Those requirements might seem stringent. The nice thing is they haven't really been changed for decades and so more investors have joined that class or that distinction of investors. The other good news is that there are other platforms out there. Fundrise is an example of one. LEX is another one, the one I mentioned earlier, where they are focused on coming up with reg A offering deals which do enable non-accredited investors to invest as well. The opportunity set might still seem limited to a certain class of investors, but that is opening up every day. In the third question, yes. If you're investing 25,000 or more a pop, it can be difficult to amass a portfolio of 15, 20, 25 investments as we can do pretty easily in the stock market. What I tend to do is I say, try to have at least 5-10, and have a cross-section or diversification across both categories. Don't just have five retail investments or five office investments. Try to have maybe one retail, one office, one industrial, one hospitality, and probably not forgetting one self-storage maybe. Diversify across that and then diversify across market as well. I mentioned Salt Lake City. Well, great, you have an investments in Salt Lake City but maybe look to also have an investment in maybe California somewhere. Maybe one in Texas, maybe one in Florida, maybe one in the East Coast, to give yourself a little geographic diversification. So having five or 10 of these private investments staggered overtime in different places and across different property categories, I feel like you are pretty diversified.

David Gardner: I love how it has you poke in your head up and looking and seeing what's going on around the world. Not just in your own backdoors. Although I assume you probably feel like you've got a little bit better inside baseball knowledge, if you're looking at a property in the greater Washington DC area where you're based and where the Motley Fool headquarters is based than, let's say Salt Lake City. But that is never discouraged me from buying some stocks outside of industries that I'm focused in myself. I love learning more about the world. It feels like you're getting some specialized knowledge about what's happening in, around some of the American cities. You start cheering on this random hotel in Cincinnati, because you invested in it, because it had a good Mogul rating.

Matt Argersinger: That's absolutely right. I'm happy to say we've made, I believe five investments in the DC area. I want to say that's probably our most popular market that we've invested in because I feel like I know it best of course, but yeah, we've made 40 plus now maybe 42 private real estate investments, and they're really all over the country.

David Gardner: Another question I have to ask you then on behalf of everybody listening, how long does this baby take to pay off? What can I expect for my 25K? What might it grow into, by what date typically? I realize there's no real average here but.

Matt Argersinger: Right. I am glad you brought it up because it's a key consideration. I'd say the minimum hold period tends to be three years. Some deals can range out for five, seven, even 10 years. You have to be ready to keep money invested. It's very much like venture investing. In other words, your money is in and you really can't get that money out until the deal is either sold or maybe it's a cash-flowing deal works, paying you out distributions very much like dividends and stock, and that's pretty typical. I am very happy to say that we had a deal. This is remarkable. We had a deal that we invested in in February this year in Las Vegas, and it was a apartment building just about two miles from the strep. It had been under a little bit of duress given COVID. The occupancy was lower-than-normal, the rent collections were suffering a little bit. We took a little bit of a risky bet there on a bounce back in Vegas. The all-in cost basis for the developer who bought the community that we partnered with, was $70 million. Well, that property went under contract about a month ago for 110 million. The developer had not done anything to really improve the property as they planned and the whole period plan for that property was five years. We went into the investment thinking it was going to be a five-year hold but our investors were able to get an 80 percent return in about seven months.

Matt Argersinger: Now, that is unusual, but you can certainly get some really big and early wins sometimes with some of these deals.

David Gardner: Well, as we come to the end of the first section of our three sections of discussion this week, Matt, your final bullet for this, you sent in great preparation ahead of time, making me really lazy as your interviewer because I know where we're headed because you set me up. But your final bullet says, "The world's biggest asset class is more accessible than ever." That feels like a pretty good takeaway from this portion of our conversation. Rules are being broken, asset classes are being democratized, technology is enabling this. It's good news for all of us who are interested in the many ways that we can invest today that really were closed to us a decade or three ago.

Matt Argersinger: That's right. Real estate by most measures is about three times the size of the stock market. That's obviously huge. We're talking trillions and trillions of dollars, but it has been that asset class more than any other major asset class where I feel like it's been out of reach for the individual investor. I just think over the last 10 years, less than 10 years really, it's been broken wide open and every day I see new innovations around it. We talked about the crowdfunding aspect of it. But even earlier, you were talking about Aaron Bush, who I will love, a colleague of mine and a former co-advisor of mine at The Motley Fool. He's looking at crypto and NFTs. Well, there's this whole, now, virtual real estate, NFTs, Metaverse, [laughs] real estate world that's being built out too. That's really interesting and fascinating. I just feel like there are so many ways now for the investors to get involved. I love it because real estate has a great track record. I think it can serve a really important part of an investor's portfolio. I know you're 100 percent stocks, David, but I think there are some investors who might find some value in having, say, 15, 20 percent of their portfolio in real estate. As you pointed out, most of us do have exposure to real estate because we own our home. That's a real part of our net worth as well.

David Gardner: I want to ask you one more question about Mogul. In fact, I think some people are probably listening, going, hey, what is that service? I would like to hear a little bit more about it. Please give it a little plug in a sec. But Matt, one big picture question for you, how big is the residential real estate market versus commercial real estate, roughly ballpark? You just gave us a great sense that the stock market is maybe a third of the asset class size of real estate. I've always been curious, residential versus commercial and I guess I'll also just throw in, could you have imagined 10 years ago or so when you let your first guest into your English basement, that these crowdfunding platforms would be enabling you to do and say what you're doing here 10 years later?

Matt Argersinger: The first product question was the size of the residential market. The one confusing aspect is whether or not you include multi-family in the residential pie or in the commercial pie. If you include it in the residential pie where traditionally it has been included, it's easily I think a $9 trillion market, if my numbers in my head are correct. It is bigger than the commercial market, if you do that. If you instead include the multi-family part in commercial, which people are tending to do, they're a little more equivalent because now you're comparing the single-family housing home market essentially to the commercial market, which also now includes apartment buildings, etc. But either way, you slice it, we're talking big markets. We welcomed our first Airbnb guest into our apartment, gosh, more than 11 years ago. I never dreamed that you'd have this whole crowdfunding universal rise up to the point where it was so easy to friends and also to invest in the asset class so easily and efficiently, and even speaking to that early Airbnb experience. There are now Airbnb operators out there that you can actually invest in. Their whole business plan is essentially just to operate portfolios of Airbnb rentals in a lot of different markets. But anyway, that's going down a different rabbit hole. But if you're interested in learning more about this, if you're interested in seeing how we do things in our Mogul service, you can just go to Millionacres.com and click on the Invest button in top tab there, and that'll give you some information about Mogul, the service that I'm on.

David Gardner: Great.

Matt Argersinger: I don't know if we're accepting new investors nowadays. I should know that, but I think if you want to join Mogul, you're always, of course, welcome to join Mogul. Click on that and that will give you all the information you need about it. But in a way I think we're doing our small parts to democratize real estate for the individual investor.

David Gardner: That's wonderful. Matt, if I'm an international listener, is this a US-only thing, or could I participate?

Matt Argersinger: Well, that is a little more complicated because I think most of the deals that we recommend are only available to US investors. Now, that's going to change because there's some more regulations and I think some more language that some of the sponsors are waiting for to determine whether or not they can let international investors in. But right now, most developers only allow US investors to participate just because they're worried about some legal implications of allowing international investors in. So that is a little bit more restrictive. But again, it's one of those things where I expect very shortly within a year or two that rule is going to be broken as well.

David Gardner: Well, we are here early days. You brought us here, Matt. Thank you for that. When you were first explaining this service and the way you were thinking of it working, I was likening it to eBay. Now, we're not providing the platform of eBay, but imagine if you had an advisor looking at eBay saying, "You should go buy those collectibles over there." That has a high rating. That'll be much more likely to pay off for you than those other things on eBay. That's basically what you're doing using crowdfunding platforms. It's a really cool approach. I obviously, I'm a fan. Let's go on to section number 2 of the conversation. You've entitled it, "Three undeniable long-term trends. One major uncertainty for real estate ahead." Let's start with trend number 1.

Matt Argersinger: Sure. Well, this one is probably going to seem obvious, but not necessarily the implications. But e-commerce is a major trend, undeniable. We've been watching its growth and it's exponential reach across the country for decades now. But what happened, I guess, in the pandemic and we're still going through that is you had really about five years worth of expected e-commerce growth get pulled forward because all of a sudden, as of March 2020, a lot of us are sitting at home. We're not going to grocery stores, we're not going out to do our normal shopping. We're not even going out to restaurants. It just really expanded the business of e-commerce more than we could ever have expected in such a short period of time.

Matt Argersinger: What that's done though is created a real dire need for more industrial and warehouse space in the United States. Because we just don't have the capacity right now and you're seeing that cascade across the economy, which is, we don't have the capacity to do all the shipping, logistics, warehousing, cold storage, all the things that you need to have in place to be able to really facilitate this massive amount of e-commerce that's happening in the country. There was a stat that CBRE put out earlier this year that still blows my mind that we need 400 million more square feet of industrial warehouses just to handle returns. Just to handle people who buy things online but want to return them, we just don't have enough capacity. It's a staggering number. What you're seeing is the demand and the value of industrial real estate in the United States, particularly warehouse and logistical real estate just soar in value. Some of the numbers are just staggering, there's billions of dollars worth of deals getting done. Some of the valuations to that marketplace that we're seeing are valuations I never thought you'd see on a per square foot basis for essentially what is very drab industrial warehouse space. You never thought you'd pay a lot of money for something like that on a per square foot basis, but that has become so valuable especially when that real estate is located in close infill locations, last-mile location near big cities. If you think about places like Dallas, Texas or Tampa, Florida or Nashville, Tennessee, places where there's just a ton of growth going on, they don't have much industrial warehouse space. They need a lot more.

David Gardner: I heard that firsthand in fact this week. On Motley Fool Live, we had the CEO of one of our companies we've invested venture capital in through Motley Fool Ventures. I was mentioning Ollen Douglass earlier, his name is Cameron Johnson and his company is Nickson. Really interesting company, they operate only in Dallas, Houston, and one other Texas city, only in Texas. They do Furniture as a Service, sounds crazy until you realize it's totally logical for anybody moving into a new apartment, especially if let's say you've taken a new job at a new city and you need to start there next month and you're moving your family there, they fully outfit your apartment for you before you get there. But what has been so important to them was this idea of warehouse space where they can keep all of their furniture. As you just mentioned, that has been a dear commodity, you even happen to mention Dallas. But I think a lot of Americans accept, we have so much room still not built up in this country. We love our national parks, so we're not trying to build everything up across this country. But well, what an interesting, undeniable, I agree, you were calling this a long-term trend though, not just a one or two-year COVID thing. It reminds me, Matt, that part of the coverage, and again I'm always a full arm's length away from what's happening in the world of real estate. I really don't follow up very much, but I'm constantly hearing that we didn't build for 10 years, that it will take us 5-10 years to build ourselves out of this predicament. I'm thinking in particular of residential real estate. Is that connected in here?

Matt Argersinger: Absolutely. Not only did 10 years ago you had a down economy, but we were just not building enough real estate of all kinds really or we had too much of certain kinds of real estate like retail. If you think about shopping malls and things like that, that maybe served a really good purpose 15, 20 years ago. But that space, and we'll talk about the next trend because that's related to that, but that space is much better used now as e-commerce hubs where we can store things like furniture and move things around and be able to have trucks come in and out or even trains. That just wasn't something we were really focused on. One of the outcomes of COVID, there are many outcomes, but one of them is that we need more space like this and I think there's years to play out. There's investments that you can make behind this and we're going to talk about a couple of them in the quiz that I'm going to give you. But you can see some of the performance that some of these industrial REITs have had, it's really impressive.

David Gardner: That's awesome. Let's move on to undeniable long-term trend number 2.

Matt Argersinger: We just talked about e-commerce. But the flip side of that is what is happening to traditional retail. I just talked about what happens to shopping malls or traditional malls or strip malls, all this retail real estate that we have where people are just going to less and decide to do more of their typical household and grocery shopping online. I think there's a real trend now and you're seeing it happen nascently. But I think it's something that's really going to take off in the years ahead, which is taking this millions and billions of square feet of shopping malls and parking lots and turning them into experience-based, entertainment-based or mixed-use real estate that can do a lot of different things. There's popular examples of a mall being turned into an Esports arena, and that's happening more often than you think. But you're also seeing Amazon for example going and buying old shopping malls, either turning them into warehouse space or data centers. You're seeing big former real estate shopping malls being turned into apartment buildings, and senior living, and hospitals. I think there's just this huge transformation that's going to take place. In the United States, we just have so much retail real estate, multiple times which you'd find in a typical European country. We just don't need a lot of it right now, at least in its current form. I think a big trend in the years to come, and it's going to last a long time, which is taking all this real estate and really transforming it into things we really need more of and we'd like to use more of, which is for experiences, for entertainment, for services, things that we need, for where people to live because we also need that as well.

David Gardner: Speaking of big trends that are undeniable, that office desk that a lot of us reported to two years ago is now your home office desk. You're right. We're not getting out as much and there isn't as much need necessarily for us to get out, although some of us are a little stir-crazy. I'm just trying to get out more because I enjoy getting out and around, seeing the beautiful mixed-use spaces that are sprouting up in around Washington DC area, which has a very vital real estate market. I want to start asking about the future of work that's on so many people's minds right now. But looking ahead, spoiler alert, that's the big uncertainty ahead we're going to be talking about in a few minutes. Let's park it for now, move away from our home office desk that might be our office desk for the rest of our lives or not. We'll get back to that, Matt. Let's go to undeniable long-term trend number 3.

Matt Argersinger: Sure. Number 3 is what you have is this big migration going on. In our country, we've had several major migrations that have happened in history.

David Gardner: Go West, young man?

Matt Argersinger: Go West, young man or even go North to the Midwest and go work at Ford in the teens and twenties of the last century. But what you have today is a massive migration to the Sun Belt, away from the more traditional Northeast or Midwest markets and even away from the coast to a certain extent, and really down to a lot of those big Sun Belt cities that are just experiencing so much growth. We mentioned Dallas earlier, think of Austin, Texas as well, Phoenix, Arizona. I mentioned Nashville, Tennessee, which is on the Northern edge of the Sun Belt, but I consider it in the Sun Belt. Atlanta, Georgia is another one. Charlotte, North Carolina, Miami, Florida, Tampa. Those markets are experiencing about three times the population growth as the rest of the country, and it's really all people moving to those places. Now, they're moving for a variety of reasons. COVID partly has made worker distribution a little more distributed [laughs] and so more flexible. A lot of people are going to those areas because they're cheaper places to live and they are up and coming. There's also just lower-cost in general, and you're seeing businesses really move down and take advantage of lower taxes, lower labor costs, and really good talent, good employee talent as well. You hear every day that the Teslas of the world are moving to Austin, Texas, or big financial firms that made their homes in New York City for decades are now moving to places like Miami or Fort Lauderdale, and that's a real thing. If you look at the employment numbers and population numbers, there's a real surge in the country's population to those places.

David Gardner: That was happening well before COVID, that move to the Southwest, the Sun Belt as you're saying, was happening but it's been accelerated. COVID has accelerated a lot of trends that were already in place, but man we're running out of warehouse space. I hope we're not running out of Sun Belt, Matt. It's a classic example of something that was already happening, people moving away from, I know you're a New England Patriots fan.

Matt Argersinger: Yeah.

David Gardner: Are fans going to go to the games anymore or is it all about the Arizona Cardinals of the next year? I'm not sure. [laughs] Everybody moves away from these Eastern hubs or the West Coast. Maybe it is all about the Arizona Cardinals, I know we're talking football here. But I just think it's interesting that a lot of the things that have happened in the last two years were already in place, they're just happening faster.

Matt Argersinger: Yes. One thing I love to look at is you can look at U-Haul data. Someone rents a U-Haul truck in San Francisco, drives that down to Phoenix, Arizona, or Salt Lake City. Then U-Haul puts that data out there and you can just see the net miles that have been traveled to the Sun Belt versus going back. People are moving to these places in droves. You're exactly right, it just really picked up after COVID. Again, it's one of those things where I just see playing out over many years. What are the implications to that? Well, we need more housing, we need more industrial space, we might even need more office space or at least co-working places if people are going to move to these places and want to have places where they can meet colleagues or do share work projects, and lots of hotels. There's just lots of real estate implications to that as well. I like to say and a lot of things we do know in Millionacres, it's real estate follows people and money. The people and money are definitely heading to the Sun Belt, and so real estate is going to follow and try to keep up with that.

David Gardner: All of that Matt, takes us back to the future of work and the one major uncertainty for real estate ahead.

Matt Argersinger: Yes. The big uncertainty, and I think there's no doubt, it's the traditional office building, because I can see what's happening in the residential space. I can see what's happening in industrial, we talked about it. I can even see what's happening in the hospitality space. I think hospitality real estate is really going to bounce back probably beginning 2022 for sure. Where I can't see through the clouds, and I think many investors and economists are struggling too as well, is what happens to office because we have billions of square feet of office space around the country. Think about all of those office buildings in New York City, or Chicago, or Los Angeles or San Francisco, other big cities, where for years, decades, you'd have millions of workers getting up every morning, getting in a car or getting on some bus or train and going into a city and go into one of these mega buildings and going to work, and that was the way we did things forever. In The Motley Fool, we have offices all around the world and our headquarters is in Alexandria, Virginia, and for almost 10 years, living in DC, I got on the metro, the subway in DC and rode 20 minutes down to Alexandria to go to Motley Fool HQ. What happens to that relationship that we had as workers, employees with the office building? I think that's going to change, I think the space that we need to do work or the space that we want to be in with colleagues is going to change, and I don't know of anyone who has a great answers to how it's going to play out. I think the right answer is probably going to land somewhere in that hybrid model where we do spend a lot more time than we think outside of the office or at home. We do spend part of our week, part of our time at an office or shared workspace. But what we do in those spaces might be a lot different. It might be reserved for collaborative meetings, or team get-togethers, project oriented tasks rather than coming to a desk at work that we had that was dedicated to us and sitting for a large part of our day and doing work and then doing other things while we're at work, but I would love to know the future in that, because there's a lot of money that's going to be made [laughs] in the office market if someone can figure it out. Even if we do go to a hybrid model, that huge implications for the amount of office space that we have in the country, just like retail, it's going to have to change. It's going to have to be evolved into maybe apartments or hotels or other uses because we just probably have too much of it.

David Gardner: Well, for companies that are highly invested in this space thinking, obviously, particularly of commercial real estate, often they are leveraged. I'm not one of them, and I don't envy the position that they're in, having to make hard decisions. But since our audience is really individual investors, that's for the most part, who listens to Rule Breaker Investing and follows Millionacres every week, I think the good news is, we don't have to know the answer right now, because usually big trends, and this is one of them, play out over time. There will be innovators who come in and do crazy stuff we wouldn't have thought of, just like there are crowdfunding platforms for commercial real estate today that you and I as individual investors can invest in and no one was thinking about that 20 years ago, so I'm very confident that innovators will come in and there will be some really cool new things that show up, and you and I can figure those out a year or three from now. Matt Argersinger and every Rule Breaker listening to me right now, if they are real trends, they'll keep playing out for years after that, so you don't have to put a ton of money in here or make a big bet either way, it's not binary, it's much more likely that it will be both end in the same way. Classically, we use more paper today, even though the Internet showed up and at one point, we thought electronic would replace paper. I suspect there will be both and it'll all grow out, but we could watch it happen and invest as we go. I'm curious for your investing advice through Millionacres, Matt. Do you have any examples where you have started to see something new or taken a risk on some of these new, unproven view of the future of work?

Matt Argersinger: This is going to sound funny to a lot of your listeners I think, but what is old might be new again, and it's not even that old, but WeWork was going to come public a few years ago with a lot of [laughs] fanfare, a huge valuation, and of course we know that, that collapsed and it never came to fruition, but it did recently go public again via SPAC maybe a week or two ago. WeWork actually might have the model of the future, but they were just maybe a way ahead of their time, which is, it could be a situation where the future office really is a co-working or office sharing type of platform and maybe WeWork isn't necessarily the answer or the right company to bet on, but that could eventually be one of the models that wins the day, I guess any traditional office market and wouldn't that be kind of ironic in a way that the much derided WeWork of several years ago is actually the future, they were just kind of ahead of their time. [laughs]

David Gardner: Well, and we've seen that happen before, I think about Webvan 25 years ago or so late '90s, brilliant business model that just didn't work. It was too early for the world, but grocery delivery that didn't even sit in the giant for a while, it came straight from the farmers to a warehouse straight to you. Webvan invested a ton of money, had a talented CEO attracted from big business and caved in badly in the late 1990s, and so I wouldn't be surprised if you're right here, Matt that, that is a smart idea, that is a model, and certainly, WeWork is not the only player here. I think in every American city there's some entrepreneur who probably has his or her local brand for that kind of shared office space within that neighborhood of that city. I think, I'm not going to say it's ubiquitous, but it feels like it's a real thing out there, so I hear you on that point. Any other predictions you want to make about the future of work or real estate investing prior to us moving onto what I'm dreading, which is Section 3 of this interview?

Matt Argersinger: [laughs] No, I will just say that, I think what our conversation shows is that, even in real estate, which a lot of us think of it as a slow moving stagnant industry, the changes can be pretty monumental, especially when you go through a global pandemic, that really changes the game, and so even in real estate, we're seeing some huge changes and they're just starting to play out and they've got years to go.

David Gardner: It is as you said earlier, the world's biggest asset class, so there's just huge dollars or whatever currency you want to talk about, invested in all of this because it's the earth around us, which I hope we're treating well as well. That's a separate conversation for another day. But thank you, Matt, for that tour through three undeniable long-term trends and of course, one major uncertainty for real estate. Let's move onto section number 3. It's time for you to quiz me on 10 real estate multi-baggers. I hope I know at least one, Matt. You've been on the show before, you helped initiate the Market Cap Game Show, you were my guest star the first several. Occasionally, I would make you look bad, not by intention [laughs] but just because I'd ask you about a stock you didn't know and you'd massively misguess high or low the market cap or Etsy, but that's another thing. [laughs] Now the tables are about to turn because this is something you know really well that I don't, and it's quiz time. I'm here on behalf of all of our listeners, so I'm a proxy for people who probably know a lot more than I do about this, but if you like to see slow-motion train wrecks, [laughs] let's get ready and strap in. What do you got for me?

Matt Argersinger: I love this, it's my chance to stump you finally, and I think if anyone's [laughs] listening, if you get more than, what do we do? If we get more than David in this case, you can go to Twitter with the hashtag, [laughs] I beat David.

David Gardner: Love it. [laughs] Absolutely.

David Gardner: One week only but how could it not be? Thank you, Matt.

Matt Argersinger: I've got 10 tickers. I'm going to give you the ticker and you're going to see if you can guess the name of the real estate company. These are all companies, that have been around for at least 10 years and they've put up monster returns over the last 10 years. Here we go with ticker number 1, I think you're going to get this one. The ticker is AMT.

David Gardner: AMT. Thank you. I am going to get this one. You're leading me off with the softball, which I appreciate and I hope the softballs keep coming from the pitching machine. But that's American Tower and that's a company that's been a long time Rule Breaker. It's been a significant winner. I haven't checked it recently, but I think it's outpaced the market over 10 plus years. A company that really got rich off of dropping down cell towers all around the US and the world during the age of mobile and it's also coming to convert it Matt, into a REIT. It started out as just, I guess a real estate stock. That's how I think when we first ranked it for Rule Breakers a long time ago, but it converted into a real estate investment trust. You could talk a little bit more about that if you want, especially if you're going to be asking me about any other REITs, it'd be good to define our terms. Just explain that for some of our listeners new to real estate investing. By the way, if there are more REITs coming, that's going to be the only when I get.

Matt Argersinger: [laughs] American Tower, you got it right, it's long time Rule Breaker, Graybar performer. It's up almost 500 percent over the last 10 years. So almost a 20 percent annualized return out of American Tower. It is a real estate investment trust, and real estate investment trusts have been around since the '60s actually, but it's a way for a company that owns predominantly real estate to convert into this structure that enables them to avoid federal taxes if they pay out 90 percent of their pre-tax income out to shareholders. That's why your typical REIT is going to have a pretty high dividend yields. Interestingly, I don't know if you know this or a lot of your listeners to you, but American Tower is actually the largest REIT in the world. Just by the nature of its business, being in the cell tower business, which we know has been just huge, probably undeniable trends over the last decade plus 20 years now actually. It's also a very international REIT. It's more than 50 percent of its assets actually are outside the US. It's one of those rare US listed REITs that also has a lot of international exposure to it.

David Gardner: Well. Matt again, thank you for picking a Rule Breaker to lead off with and I didn't know just the extent of the size and success of American Tower. It is an ongoing Rule Breaker recommendation. I'm really happy that's been part of Rule Breakers for many years but it represents [inaudible 00:56:56] I don't know that well and yet it's the one I know best in this industry. What's number 2?

Matt Argersinger: Number 2 ticker is ARE?

David Gardner: I don't know this for sure. I'm going to guess. I do want to mention, I am not googling or looking at anything in terms of the quiz to come. I wanted to go in blind. The one thing I did do as I Googled, what are the 10 largest US home builders? Because I thought that would remind me of some companies like Lennar. I don't know if that's one of the ones out here. I really like preparation but no, I'm going in blind. However ARE I do think I know this because it's been a recommendation in other Motley Fool services, probably one of yours, Matt, but I think it's Alexandria Real Estate and if I have that right, that's Alexandria, Virginia where Fool HQ is based. Do I have that right?

Matt Argersinger: Well, you've got the company right. Alexandria Real Estate Equities, ARE. As far as I know, it originated from San Diego. I don't think it has any connection to Alexandria, Virginia.

David Gardner: It has no but [laughs] I always assumed, "Surely, it's got to be ARE Alexandria." [laughs]

Matt Argersinger: But no, it was found a long time ago by Joel Marcus as a real estate company designed to own life sciences and biotechnology real estate. You can imagine they started out on the West Coast. They've expanded, of course, they just actually signed a mega new deal to build Moderna's new headquarters in Cambridge, Massachusetts.

David Gardner: Loving it.

Matt Argersinger: But huge winner 350 percent return over the last 10 years, about 16 percent annual return. A great way if you're looking to get exposure to Life Sciences and Biotech, but want to do with the real estate, that's certainly one to look at.

David Gardner: Now I remember why I know this one because it's been talked about before on Motley Fool Industry Focus, one of our podcasts and sometimes mentioned on Motley Fool Live as well. Now I remember that it's that whole life sciences, bio-sciences tie-in. It's not an Alexandria, Virginia tie-in, but that's one of the cool things about this area, Matt. Is that some companies really specialized, so while you think it's just a REIT you're buying a real estate company, it's actually a play on, in this case, life sciences. I think a lot of us have a lot of hope and belief that that's a huge area of growth. Who are the companies leasing the space to all of those kinds of companies, which is often specialized laboratories? They have to be built in a certain way to spec and in some cases it's much more technical, it's harder. This may be true of some of your others to come. We got eight more to go, so we should keep moving. But it's cool how you can buy a play on blank, fill in the blank with your real estate company.

Matt Argersinger: Certainly is. Here is ticker number 3. This might be a tough one, it is EGP.

David Gardner: I'm just going to go with Eagle Properties because it looks like it might be Eagle Properties. That's all I got for you.

Matt Argersinger: [laughs] I love that guess. It's actually EastGroup Properties. I doubt anyone listening has probably heard at this company [laughs] but it is a tremendous performer. It is up about 550 percent over the last 10 years. It is really the intersection of two of the trends we talked about, which is e-commerce because they're mostly an industrial warehouse industrial REIT and they also are Sun Belt-focused. About 90 percent of their real estate is located in the Sun Belt region, and in fact, 50 percent, I think, is located across Texas and Florida, those two states alone. Really benefiting from those two trends and it's been a monster performer. But one I'm sure many listeners have not heard of EastGroup Properties, EGP.

David Gardner: Thank you for that and Matt, I certainly didn't get that one. If anybody did your beating, Dave [laughs] but I would like to add that I assume part of what you're doing as somebody who looks at this industry and recommends these kinds of investments, Matt, is that your as much studying the industry tied to it and this case e-commerce and the previous case life sciences. You probably have a leg up if you have an ability to read the financials of those kinds of companies, or if you've worked within that industry, I assume you see with the sixth sense, when you're looking at certain areas of the real estate niches, spaces you really know as a hobbyist or professional.

Matt Argersinger: It's absolutely true. I think with a company like EastGroup for example, if you understand some of the tailwinds behind their business and you look at some of the regions where they have exposure, you can look at a lot of up-and-down fundamentals of a particular REIT. But the nice thing is with a business like that, you can also take it very top-down approach, which is where do they have exposure? What kind of tenants are they serving in the regions where they're operating? You can make a pretty good guess of whether or not a REIT is going to have success based really on just that.

Matt Argersinger: You're two out of three. Not bad, David.

David Gardner: It's going to get worse. [laughs]

Matt Argersinger: We'll see. I'm doing these tickers now about a quarter.

David Gardner: Thank you.

Matt Argersinger: I'm help or not, I don't know. [laughs] But the next one is LSI.

David Gardner: There was a company called LSI Logic. I thought, but isn't that not a semiconductor company. I have no idea. [laughs] Let's go with Land Science Institute.

Matt Argersinger: I love when you try to guess the company name. This is Life Storage, which is a self-storage company. One of the leading self-storage reits in the market. If there is one real estate class [laughs] that you would've wanted to invest in forever actually, it is self-storage, because for whatever reason, Americans love our stuff. What's fascinating about self-storage, just some context Life Storage, it's up almost 600 percent over just the last ten years. It's been a monster performer. The whole self-storage industry doesn't really exist outside of the United States. It's bizarre. As an investable class you just can't find it anywhere else.

David Gardner: Isn't that interesting?

Matt Argersinger: A love of stuff in the United States that this whole industry has really just propped up. Today we have more self-storage facilities than ever and they see me popping up. My wife and I, we actually invested in the new self-storage development out in Denver, Colorado, which is just the city itself.

David Gardner: Influx of stuff.

Matt Argersinger: People and stuff, we're moving to Denver, [laughs]. We thought that was a good investment, in our opinion and one of the best operated self-storage reits out there and the performance definitely shines through.

David Gardner: Cool. Undeniable long-term trend.

Matt Argersinger: That's right. Ticker number 5. MAA.

David Gardner: Like the others, I have no idea. Unlike the others, I'm not going to make a lame guess on this one.

Matt Argersinger: I thought you might do like Middle American Airlines [laughs]. The company is Mid-America Apartment Communities. I know, boring. This is again, intersection of two really good trends, which is just Sun Belt migration. This is OK, I'd say 80-90 percent they're mostly garden-style apartment buildings located in the South and Southwest. They are actually largest apartment owner operator in the country. It's a very large reit and it's up about 40 percent over the last 10 years. It's been nice performer.

David Gardner: Matt, when you are giving the returns, this is inclusive of dividends. Is this all-in? Is that what you're doing? Yes.

Matt Argersinger: Yes. Correct. Inclusive of dividends. Total return. So far two out of five. [laughs] Let's see here. I got it. Here is a softball. Softball is now coming your way.

David Gardner: Great.

Matt Argersinger: I think you'll love this one. The ticker is MTN.

David Gardner: Yes I do love this company. It's Vail Mountain Resorts.

Matt Argersinger: You got it.

David Gardner: This is a company that has been a long time Stock Advisor recommendation. I made it years ago just thinking, nobody's inventing any new mountains anytime soon that's going to have new ski slopes. There is the opportunity to develop some slopes that were nascent, but more than anything, Matt for Vail Mountain Resorts, which is rolled up its industry in some ways. It's been very acquisitive of some of the great properties for skiers in the world today. There's that great trend of summer time when in the past, people would just leave, let's say Vail and go summer somewhere else and come back to ski, but enough other people start going. Vail's beautiful.

Matt Argersinger: Yeah.

David Gardner: In the summer. Colorado summers are gorgeous, and so these have become warm weather destinations as well as we have shifted our thinking around the value of these outdoor properties. I definitely know this one. I know it's a market beater and a company that I've really enjoyed following.

Matt Argersinger: Yeah. Stock Advisor members are thrilled that you made this recommendation because it is up over 900 percent over the last 10 years. It's a ten-bagger. Actually the best performing of the 10 that I'm bringing today, and you're absolutely right. It's been just a great story about increasing and enhancing the time spent at Vail Resorts around the country. I remember as a kid in new England, I went to Stow Mountain a couple of times, had some really great skiing experience there. Then of course, a few years ago, Vail Resorts decided to buy Stow. Maybe a big move out to the East Coast and bought up a number of resorts out there. Pretty much the best in the business, Vail Resorts and you're right, there's just not making more mountains.

David Gardner: Thank you, Matt. I really appreciate that you brought me even three out of six. That's way better than I thought I would be at this point and I'm not going to declare that I've gotten my last one right, but I might have gotten my last one right.

Matt Argersinger: Well, we'll see. Your Google of homebuilders may have helped you with the next one..

David Gardner: Well. I haven't memorized them all, but there's Pulte. What do you got?

Matt Argersinger: All right. Ticker is NVR. A little bit of a trick one. I'm tricky on this one.

David Gardner: Okay.

Matt Argersinger: This one is unfair.

David Gardner: Nuveen Realty. It's a fund. It's not even a real estate stuff. I'm making this up.

Matt Argersinger: I believe Nuveen has some real estate funds, so you're not far off. The actual company name is NVR. They used to be known as NVHomes, they bought Ryan Homes a while later, and then change it's name into NVR. I think the NVHomes stands stood for Northern Virginia Homes back in the day because it was a company that was founded in Washington DC. They built most of their early properties in Alexandra, Arlington, Fairfax, which of course we know all those counties around Washington DC and here in Northern Virginia. So NVR, it has been an amazing performer over the last 10 years. It's up almost 700 percent. About a 23 percent annual return. What's really fascinating about NVR is that they don't pay dividend. They don't hold conference calls. All you get it every quarter is a really brief, like one page-and-a-half press release with their latest financials and then of course the other 10 Q, but they're just by the book company. There's not a lot of flash. I love it. They're a Rule Breaker in their way because they pioneered the whole idea of not owning the land where they build their homes. Traditionally homebuilders will buy a plot of land, hold that land, and then at the right time, start selling plots and building homes on the land. NVR instead buys options. Essentially leases on land that they can get out of at low cost. They speculate and say, OK, we think we're going to build 80 homes here. But if we don't, we're going to pay the land owner a breakup fee and that's kept their capital costs really low over the years and let them be very efficient with our capital. Other homebuilders, of course have followed that model now, but they're the early companies to do that. Pretty interesting.

David Gardner: That's great, Matt. Another winner here, it occurs to me to mention that I'm assuming your list of 10 who's who among the winners. Obviously not every one of these companies in this industry is a winner, but of course, we're focused since we provide advice to our members on what does win and whether or not you and I have recommended any or all of these, it does, I think, really pay us off to focus on what's working out there and study success. I appreciate that. I don't know if you're going to present anymore losers, your 8, 9, and 10, but I hope neither you nor I pick them. [laughs]

Matt Argersinger: The next ticker, Ticker number 8 is RHP.

David Gardner: RH is one of my favorite stock picks from Motley Fool Stock budget. That's restoration hardware which is its own amazing story. It's definitely just RH though. I don't know, but I'm going to go with residential home properties.

Matt Argersinger: Not bad, it's actually Ryman Hospitality Properties. [laughs] Among a lot of real estate, this company is mostly focused on resort style properties, and they are the only Gaylord National Resorts brand. Including the one that's nearby National Harbor, the Gaylord National Resort there.

David Gardner: On the Potomac River, that's right.

Matt Argersinger: They own a bunch of entertainment venues as well, including the Grand Ole Opry in Nashville, the famous Western music concert venue. It's really a hospitality entertainment company, and they've been very successful. Had a tough 2020, as you can imagine with COVID as a lot of hotels and resorts did, but really bouncing back nicely here in 2021, and a really long-term winter. Last 10 years, up 660 percent over that time.

David Gardner: Wow, despite a tough 2020, that's remarkable and I will say this is one of those where I do recognize the company. I've certainly been to the Grand Ole Opry, our son went to school, Vanderbilt, which is right in Nashville. It allowed me to get to know one of America's fastest growing best cities today. The Ryman name I see in different places. National Harbor, as you mentioned, right on the Potomac River in Washington DC. Sometimes you know the company, you just don't know the ticker symbol. In this case, I have to admit I didn't know either particularly well, but thank you for connecting us in with what sounds like a family name and not a big brand, but as soon as you start saying, well, all of the Gaylord resorts, etc. We we all start to go, "Oh, that's the company."

Matt Argersinger: That's right. The great thing is about real estate, is anytime you're at a concert, or a stadium arena or at a beautiful resort, there's a real estate company behind that, sometimes you can invest in. Two more to go, David, see if you can get one more in the next two. They might be tough though. This one we've talked a lot about, and it's one I probably mentioned before on various podcasts. But the ticker is STAG.

David Gardner: Unfortunately, I'm not going to get this one. It's one of those ticker symbols that looks like something you could parse. It looks like stage to me, so I started thinking, is this a real estate play on all of those Live Nation venues. Some of which Live Nation, by the way, owns but I'm assuming that's not at all what this company is about. I don't know STAG.

Matt Argersinger: Well, the company name is STAG Industrial. You can almost get it by the ticker, but STAG Industrial. Another one of those industrial companies that focuses on your warehousing and logistics. Unlike EastGroup, which we talked about earlier, this company, STAG, is all around the country, but they focus on your secondary markets. They have big presences in places like Cincinnati, Charlotte, what's the other one? Philadelphia. Outside major cities, but in those smaller secondary cities. They made a nice business for themselves. Really focused on acquisitions. They are about 95 percent of their real estate, they add to the portfolio comes through acquisitions. Unlike EastGroup, which does a lot more development. But they've done a really great job of allocating capital and the stock. The total return for the stock is 630 percent over the last 10 years, so a nice winner.

David Gardner: That's wonderful, Matt, and I so appreciate you bringing a mix of different companies. I know many of these are US-based companies. You did mention American Tower upfront has so many global assets. But even though we're probably rightly concentrating in the US for this list of stocks, there are a lot of these same business models and companies in wonderful places all around the world, and not always that easy to invest in many cases, maybe private companies that we can't touch. But I still appreciate. I really initially thought this is just a quiz that makes me look silly and indeed that's exactly what it is. [laughs] But more to the point, you're providing some really cool ideas for people who are interested in looking further at investments within this space. As we get to number 10 here, it occurs to me, a lot of these will probably be working 10 years from now. So while it's natural to look back over the last 10 years and see how they've all done, this is a steady Eddie business that's going to keep growing and there are lots of innovations and opportunities coming within real estate writ large. Matt, I feel like you're giving us a window into the future with many of these ideas. What's number 10, so I can close out with only three right?

Matt Argersinger: [laughs] I left this unfair one to the last.

David Gardner: Perfect.

Matt Argersinger: You probably won't get this one, [laughs] but it's one we just recently recommended in our real estate winners service. So it's our newest recommendation there, but the ticker is SUI.

David Gardner: There's that phrase, sucks to be me, which is how I feel right now. [laughs] It's suck to UI. I don't know SUI. It's a Swiss REIT.

Matt Argersinger: That's right. It's the Swiss acronym, wherever you're watching the Olympics, you see SUI, the red, when you're thinking Switzerland, but no. The ticker gives no clue as to the name, but it's Sun Communities. They are the largest owner of RV parks and mobile home parks in the country and they also have a big marina business, boat slips and such. But really a fantastic winner, up 700 percent over the last 10 years. When you think about affordable housing in the United States, which seems to be less and less of it, this company has seen a lot of demand because they offer something that is pretty affordable, more affordable to more people, which is cheaper homes on where you don't necessarily have to buy the land. You can own your home, but you lease the land or the platform underneath your mobile home or RV to Sun for a modest rental fee per month. It's a very affordable place for a lot of people live. But great management team. You have the son of the founder who still runs the business. He's been running it for, gosh, almost 30 years at this point and a fantastic winner for investors.

David Gardner: Well, that's a cool one to mention. It reminds me of my bad stock pick for Rule Breakers four years ago. In fact, it was November, so four years ago this month, Camping World, which has really been up and down, but as a seller of RVs and certainly a brand name, a lot of people would recognize, I had higher hopes for these last four years. I will mention that I recommended the stock at $35.61 four years ago this month today it's 38 or so, it's up about seven percent. The problem is the market over the last few years is up 91 percent. it's been a huge underperformer. Matt, this is a great one to close on because you're showing, well, I might have had some good idea that RVs would be growing and I couldn't have known about COVID back in 2017, but we still could have made money here. Sometimes it's the land, not the hardware or even sometimes software sitting on top of the land, but the land itself can have a lot of value.

Matt Argersinger: That's right. A lot of ways to make money in this world. If you have an idea and sometimes real estate, is the way to go.

David Gardner: Well, Matt, you took us from the democratization of this asset class for all of us as individual investors, you took us through undeniable long-term trends and a big question, and you just took us through 10 real estate multi-baggers, including some new ideas for our listeners. That was very generous. I so enjoyed spending this time with you. Do you have any concluding thoughts?

Matt Argersinger: Yes, David. I thank you so much for having me, by the way, three out of 10. That's not bad. I threw you some heat.

David Gardner: I appreciate that. Four or better, the hashtag is I beat David. This week only on Twitter. We're going to shutdown that hashtag after a week. [laughs] But no, I outperform my own expectations. You left me feeling good even though I only got three.

Matt Argersinger: Three hundred hitter in baseball, that's hall of fame.

David Gardner: True that.

Matt Argersinger: I appreciate you bringing me on, I think real estate might be a curious topic for a Rule Breaker Investing podcast. But I think as we talked about, whether it's investors being able to access the asset class like never before or some of the big trends that are really changing the game. I think there's a lot of actual Rule Breaker themes within the real estate space, and I'm excited to see if investors have opportunities there. I know they do.

David Gardner: Thank you, Matt. You sure do and you're living proof with your outstanding returns to the launch of Millionacres a few years ago, which we're just delighted by at the Motley Fool. I do want to say that, rules are being broken all the time and if you even just think about how we've all shifted culturally from office space to home office space or from malls to e-commerce, those were conventional wisdoms, those were big structures, those were Goliaths, those were assumptions that we all had in place over the last few decades that have all been subverted or changed. Rules are always being broken and having an eye toward where the real money is in this, the world's biggest asset class. Well, you've given us a window into that this week, Matt, so thank you so much and I do want to encourage as we close here, anybody who has a question? Did Matt stir your curiosity? Do you have questions about crowdfunding platforms or how to get started or any aspect of this? Well, here's the good news at the end of every month for this podcast, of course, we do a mailbag. Our email address is [email protected] and I've already had Matt pre graciously accept my invitation to join me at the end of this month for this month's mailbag. So we would love your best questions or thoughts, your life in real estate or the prospects for this asset class going forward. Any insights, stories, poems, we accept all of it. [email protected]. Matt, I'm going to say, Matt, see around Thanksgiving. Happy Thanksgiving.

Matt Argersinger: Thank you, David. Happy Thanksgiving to you.