Episode 10: Rental Property or Real Estate Syndication? How to Choose the Right Strategy for Your Wealth Plan
Is owning a rental property really the smartest way to build wealth—or just the most familiar one?
For many investors, the first instinct is to buy a rental property and become a landlord, but owning one property can bring concentration risk, unexpected expenses, and more hands-on responsibility than expected. As markets shift, it is essential to understand how real estate fits within a diversified financial plan.
In this episode, Shannon Kiefhaber, real estate investor and asset manager at Riverside Group and Twenty-Five Eight Capital, opens up about her transition from single-family rentals to multifamily syndications and commercial assets. Listen in as she explains how to evaluate return on equity, what passive investing through syndications really looks like, and how to align real estate decisions with your long-term wealth strategy.
What You’ll Learn:
Why many investors underestimate the true cost of owning a single rental property.
How vacancy, capital expenditures, and property management impact cash flow.
The difference between concentration risk and diversified real estate exposure.
What a real estate syndication is and how limited partners participate.
How metrics like cash-on-cash return, IRR, and equity multiple compare to market benchmarks.
How depreciation and cost segregation can enhance tax strategy.
The importance of aligning real estate investments with your overall financial plan.
Ideas Worth Sharing:
“The problem is people dramatically underestimating the true cost of owning a rental property and overestimating the benefit of having only one property. I'm not trying to say rental properties are bad, but I think scale matters here.” - Shannon Kiefhaber
“For building wealth, it's not about necessarily doing more and more deals—it's about building something or designing something that supports the lifestyle I want to live.” - Shannon Kiefhaber
“If you’ve been holding real estate for the past 10 years, it’s a great time to hold real estate. It’s highly appreciated. And so now you have to actually start looking at another metric called return on equity.” - Shannon Kiefhaber
Resources:
Shannon Kiefhaber: LinkedIn
About Our Guest:
Shannon Kiefhaber is an Asset Manager at Riverside Group and a Managing Partner at Twenty-Five Eight Capital, where she guides operational efficiencies, oversees lender communications, and manages capital deployment across multifamily and commercial real estate portfolios. With a background in engineering and hands-on experience transitioning from single-family rentals to large-scale assets, Shannon brings both analytical rigor and operational insight to real estate investing. She works closely with investors to design strategies focused on scale, tax efficiency, and long-term wealth building.
Connect with Us:
If you're ready to stop avoiding your finances and start building the future you deserve, schedule a free call with me at pelicanfinancialplanning.com and let’s create your personalized financial plan together.
And if you want ongoing guidance, clarity, and confidence as you grow your wealth, subscribe to our newsletter for financial insights delivered right to your inbox.
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Read the Transcript:
Shannon Kiefhaber: The problem is people dramatically underestimating the true cost of owning a rental property and overestimating the benefit of having only one property. I'm not trying to say rental properties are bad, but I think scale matters here.
Welcome to The Wealth Development Studio. I'm your host, Genevieve George, Senior Financial Advisor and Founder of Pelican Financial Planning & Wealth. Our goal for this episode is to provide clarity about today's financial topic, inspire you to be brave with your questions, and gain confidence in your financial future. So take a deep breath, grab your favorite cup of coffee, and step into the studio. Your dose of financial empowerment begins now.
Genevieve George: When many people think about real estate investing, they picture buying a rental property—being a landlord, dealing with tenants, repairs, and leverage. Today, I'd like to broaden that conversation and talk about how real estate can fit into a diversified investment portfolio without owning a single property outright.
I'm joined by Shannon Kiefhaber with Riverside Group and Twenty-Five Eight Capital. She is a former engineer who transitioned from solving technical problems to overseeing a multi-property real estate portfolio built across generations. Her background offers a thoughtful lens on real estate as an asset class, and she brings a unique blend of technical thinking and real-world investment experience to how she approaches real estate today.
So Shannon, one of the questions that I get a lot as an advisor is, “Hey, I'm thinking about buying a rental property. I think it would be great to have a little bit of that passive income coming in.” My answer is always, “I need more information. Let's really talk about it. Let's dive in. Let's look at the financial planning.”
But let's just say you and I are sitting over a cup of coffee or maybe a glass of wine or something, and I say, “Hey, I'm thinking about buying this rental property.” What would you say?
Shannon Kiefhaber: Thank you. Yes, and because of my background, I get this question all the time from friends, colleagues, and things like that, and I absolutely love it.
I am super passionate about real estate, and I do jump to initially want to encourage everyone to buy rental properties, right? But as I've been in it now for 10 plus years and matured in my thinking a little bit, talking with financial planners like yourself, I think I've learned to say, “Why are you considering real estate? What's making you want to question this or want to buy a rental property?”
Because I think a lot of times it's not actually the real estate, it's people dramatically underestimating the true cost of owning a rental property and overestimating the benefit of having only one property.
I'm not trying to say rental properties are bad, but I think scale matters here. If you are underwriting that first deal and you see this house and you're like, “I wanna buy this rental property,” and you only look at what's my mortgage gonna be putting let's say getting a bank loan with 20% down and then you add in interest and property tax and you say, “Look, it makes a hundred dollars a month.”
Or if you're lucky, to be honest, these days, and let's say maybe it makes more, but you didn't account for vacancy. What happens when a tenant moves out? You may have a month or two where you're trying to fill that unit, repairs, and then also capital expenditures, and putting in a new roof, putting in a new AC.
When you have to do that, you effectively take away your cash flow that you would've made for years. Back in 2017, when I did start buying single family houses, I was hoping to cash flow a hundred dollars a month. That is only $1,200 a year. Is that going to be worth the time, the investment, the mental load?
I think you have to ask yourself those questions.
Genevieve George: Yeah. Yeah. And what you're talking about too, if you're owning one property, in the investment world, concentration risk, right? So we have one property, we're putting all our eggs into that basket and hoping that it's gonna cash flow. But you're right.
If it's not netting enough to cover your regular expenses, then how does it net enough to cover the unexpected expenses or potentially expected, but like things you just thought weren't gonna come up.
Shannon Kiefhaber: Yeah, absolutely. And for some of my friends who are super handy and they absolutely love repairing homes, that is fun for them.
That might be a good opportunity. Or let's say you love going to Amelia Island and you wanna go every single year or multiple times a year, then maybe buying an Airbnb for that purpose. Or maybe you need a short-term rental loophole for some tax advantage there. And you love going there. I think you can get some efficiencies when you have these other reasons, but I think the biggest thing is, why are you buying the rental property?
And if it's for cash flow, appreciation, depreciation, then I think sometimes investing as a limited partner in a larger deal makes more sense. But if you do love some of those other opportunities, then I do think buying a single rental property or a few makes a lot of sense.
Genevieve George: Yeah, so it's not a no. It's just make sure you know what you're getting into and understanding all the pros and cons.
And one of the biggest things that you mentioned, I think is really important is planning for those vacancies, because that can be really unexpected. Think about 2020, how did that impact you with your properties that you did have at that time?
Shannon Kiefhaber: Yeah. Honestly, that was such a unique time.
It wasn't as terrible as one would think. Actually, right now is even difficult. Post COVID. We got used to having no vacancy. Especially here in South Florida, I would have a day or two in between renters. Most recently, it took me three months, and similar operators are finding the same thing with single-family homes.
I'm also having tenants call me right now and saying, “Hey, my rent. I've looked around on Zillow or whatever, and rents have dropped, and I'm gonna move or you can drop my rent.” So I've actually had tenants calling me and asking me to reduce the rent. And to be honest, I've done it. In some cases, if I do a rent analysis and it justifies it because I'd rather it not sit vacant for one to three months, which is what we're seeing in the marketplace right now.
Genevieve George: Yeah. That's a really important thing to be watching for. So one of the things you mentioned was an alternative way to get real estate exposure without maybe necessarily buying that rental property.
Can you explain that a little bit more?
Shannon Kiefhaber: Yeah, so I think one alternative is investing passively in larger real estate deals through what's called a syndication structure. And I think that for a lot of people, maybe the goal isn't to own a rental property per se, but it is to participate in real estate as an asset class.
And there's other ways to do that that might fit your life better than just buying that one-off rental around the corner from you. And so a syndication is really just when a group of investors pool their capital to buy a larger property. And it's usually something that individual investors can't buy on their own.
So I think it's a good option to decide, like to help design intentionally like what you're trying to achieve with real estate. I know for me, I've had to learn that for building wealth, it's not about necessarily doing more and more deals, it's about building something or designing something that supports the lifestyle I wanna live.
And that has been for me as a real estate investor, transitioning from single-family rental homes into larger multifamily assets and doing that as a syndication method. So basically pooling my money and buying large hundred-plus unit apartment buildings.
Genevieve George: Excellent. And so other investors can come and be a part of that syndication.
I'm sure each deal is a little different. There's barriers to entry, but let's say I met your minimums and now I'm a part of your syndication. What does that look like on a longer-term basis? Am I locked in for a certain period of time?
Shannon Kiefhaber: Absolutely, and it is deal-by-deal specific. We currently have a property under contract, so I can use that as an example.
So we have 114 unit multifamily apartment deal under contract in Virginia—Beach, Virginia, which is where we acquire the multifamily properties. And so for that specific deal, let's say, for example, you invest a hundred thousand dollars. Our projection is this is a value-add deal. Value add meaning that it has not been touched since the original owners built it in the early ‘80s, so they have not put any capital into the property.
So it needs a significant amount of work. What that means is we're buying it so far under value, under replacement costs. We'll go in there with an aggressive business plan in three years to remodel every single unit, and rents are $500 to $700 below market rent. And so our projection would be, in three years, we'd be able to return cash out, refinance, and return at least 50% of investor capital.
And, but then what we'd really like to do is hold it for 10 years. So let's say you get at three years, you get 50% of your money back, and then we hold it for an additional 10 years, and at the end of the 10 years we sell the property, and that's when you get a return. And I can go into the returns. It gets a little complicated when you start talking about cash-on-cash return versus equity multiple versus internal rate of return.
But I think those metrics are really important because if you're trying to compare a real estate deal to what is the S&P 500 doing, you do have to start looking at some of those metrics to be able to have an apples to apples comparison.
Genevieve George: Right. Yeah. Some sort of benchmark to compare to if you're gonna give up assets in the market to put into what would be an illiquid investment for that period of time. Is that an accurate description?
Shannon Kiefhaber: Absolutely. So the way we look at it is you're planning for the future. This is not—yes, you do get quarterly distributions, so there is cash flow, but the way that money is really is supercharged is by staying in for the entire hold period and really taking advantage of the appreciation of the property.
But it is really great for, again, you're getting massive appreciation at scale because again, this is a value-add type of project. Plus, you're getting massive depreciation because now you're depreciating a 114-unit asset. And again, we do a cost segregation study, so the bulk of the returns are then offset tax-wise by the depreciation that's done.
And again, I know that gets a little bit more complicated, but for the right person, and again, why talking to your CPA and your tax professional, it fits in to a certain, again, objective. So you knowing the end in mind and why you wanna be exposed to real estate obviously matters for something like this.
Genevieve George: Yeah. So if you think about the average investor that maybe is only invested in liquid assets, if they were gonna take a hundred thousand dollars out, invest it there, there might be an emotional side to that. They might feel different 'cause they don't see that a hundred thousand in their regular account statements, but it's still an asset.
It's still on their balance sheet. And then they're getting regular reporting from your team to say, okay, this asset has appreciated this much. These are some of the tax benefits that you're seeing, and then they're getting regular distributions. Is that accurate?
Shannon Kiefhaber: Yeah, absolutely. We have an investor portal, and we send quarterly distributions, and we're always available.
A lot of my partners are really into taking a lot of video of the units and all the updates. But the way I look at it, and to be completely honest, the way I sold it to my husband was saying, “Hey, we have two boys, 7 and 10 and they're gonna go to college one day, hopefully, if that's their path, let's take this a hundred thousand dollars and invest it.
We don't need the money. Let's co consider it saving for college in the future, or saving for them.”
And 10 years when we do need the money by our property's projections, it'll effectively have been, it'll be a 20% IRR. So it'll be like, our money had made 20% a year for 10 years, and so it's like giving ourself the gift that in 10 years. And I think it's good too. ‘cause sometimes to me, if you set it and you forget it, and if you don't see it, you won't spend it.
Genevieve George: Yeah.
Shannon Kiefhaber: It is illiquid. You cannot then go and try to sell this early. But again it probably fits in a part of, I guess, overall savings and investing plan.
Genevieve George: Yeah. So from an investment side of that, the same concentration risk that we are watching for when we're talking about buying a single piece of property or buying individual stocks or whatever the case may be, that's something that that I would be talking to them about too. So I recently had a friend say she was interested in buying a piece of property, and it didn'tget my red flags flying because it was less than 10% of her overall investment portfolio and it wasn't gonna affect her long-term future, right?
If it was more than that, maybe we're having a deeper conversation. You really need to understand the pros and the cons and understand, “Okay, here's what the trajectory looks like under the 10 year plan of illiquidity, and here's what the rejection looks like under your current expected market returns,” which of course, are unpredictable.
Shannon Kiefhaber: Yeah, and with us it, and even on the single-family and now the multifamily side, it's called forced appreciation. That means that it's not correlated necessarily to what the market is doing. We're forcing the appreciation by hard work and sweat equity. And you can do that yourself too.
For example, right around the corner from me is a single-family house. And I really want to buy it. It will be so fun. All I think about is how much fun and how much potential, and how great it could be. And I went to my husband and he was like, “I can think of 10 other ways that we can have way more fun than remodeling a house to maybe flip and maybe hold it.”
And maybe he's like, “How much does it make?” And I'm like, “Oh, like it's not gonna make a lot of money. Maybe a hundred dollars a month maybe, but probably not.” And so honestly, we are not buying the house around the corner, and we're putting it in as limited partner investors into this deal because it gives us more of the lifestyle we wanna have, which is to passively invest in a property.
But I totally sympathize with the desire sometimes because real estate is fun, and it is fun when it's tangible and it's right around the corner from you. So there's an element to that. But when you do the math, which my background is engineering, and so I can't help but dive into the numbers, it does not make financial sense in this case for us to do that deal.
Genevieve George: Plus, I had this also come up with somebody else that I knew they were interested in maybe buying the house across the street to make a rental property. Now it's like you're gonna make your rental property across the street from your home.
Shannon Kiefhaber: Yeah.
Genevieve George: I think that would drive me crazy because now your renters are right there and you could see everything that they're doing, and that's your investment, but like you're not, I don't know. I think it would make me a little crazy.
Shannon Kiefhaber: That would be really, really, really hard.
Genevieve George: It would be hard to be—
Shannon Kiefhaber: Yeah. You're too emotionally connected and attached. And again, you can see everything. And if they don't mow that grass on every other Tuesday, you're gonna be dying inside. But that's not a good thing.
Genevieve George: Yeah, I'd be over there like mowing the grass, like “Oh no, it's Tuesday. It didn't happen. I better take care of that.” They don't want that either, right?
Shannon Kiefhaber: No. No. We wouldn't be friends.
Genevieve George: So talk to me about how you transitioned into working—Did you have some single rental properties prior to joining the multi-property business?
Shannon Kiefhaber: Yeah, so we did, so my husband was or is still in the Navy, and so the one great thing about the military is they make you move. And so we were forced into being landlords. So we lived in Virginia Beach, we had our first home that we purchased. And we specifically chose it, knowing that one day it might become a rental.
And so it did. And we got sent to California. And so what we did is we just bought a house every time we moved. So we had a house in California that became a rental. Then we moved back to Virginia Beach. And then we started buying strategically, buying single-family houses and duplexes outside of the Navy bases, and that guaranteed renters, and again, a constant stream of new renters.
So we had several single-family houses and duplexes. And then what we ended up doing when I did move home back to South Florida to transition and take over the family real estate and development company was ended up selling those houses in 1031 into doing a 1031 exchange into a larger apartment building again in South Florida.
And the main reason for that and the why, again, I brought it up, but the reason why we bought the first house and the way I was able to get my husband on board with buying the first house, and again, this is back in 2017, so keep that in mind with the numbers, but it was $100,000 dollars.
And we put 20% down. So we put $20,000 down and I said, “Listen, we would be saving for college.” Instead of doing that, we took our bonus and we put the $20,000 down and bought this house. And the goal was to have my boys to have it be a tangible asset that they could one day go by and see, and then maybe I could pay them to mow the grass and just make it a tangible real estate exposure.
And so then when we moved from Virginia Beach to Florida, I wanted to acquire a property in Florida. So again, that same value could exist as they grow up. So that's kinda how we transitioned.
Genevieve George: Now, you started in Virginia Beach and then, and so you bought your first house and then you moved to California and you bought another house while you were stationed there and did that a couple times.
Was there like a formula for rate of return, or what you were looking for from a rent perspective when you were doing that? 'Cause you were buying these with a bigger plan in mind?
Shannon Kiefhaber: Yeah. Gosh. So the first few, I wish I could say that I was part of the master plan, and I was doing numbers, but I wasn't, and that's okay too.
Like you can make it work. I think in my mind was the back of both of our minds were these would become rentals. So we were cognizant of school zones and property size. I mean, we weren't gonna go out and buy a 4000-square-foot potential rental house. These were 1300, 1600 square foot homes that we knew would be a great rental one day in the future.
But strategically, then, once we started buying them around the Navy base. Yes. So by that point, I had gotten more sophisticated, had my Excel, rent analyzer that I still use today, because the simplest is sometimes the best. And so yeah, the goal was the 1% rule. So if you can buy a property for $100,000 dollars that rents for $100,000 a month, there's a good chance that you will cash flow.
That's really hard to do right now. I underwrite a lot of deals and in the single-family space, it's near impossible to get the 1% rule, right? But yeah, I was trying to target an 8% to 10% cash on cash return and a minimum of $100,000 a month in rental income. So as you can imagine, that's not life changing money at that point.
But then by the time we scaled and we had, let's say, five properties, each one making $100,000 a month. Now you're talking, oh you're scaling and you can get better systems and better pricing and things like that.
Genevieve George: Now, when you were not in the same community as those properties, which, once you moved, you were not, were you having to utilize a management company to assist with managing those properties or…?
Shannon Kiefhaber: Yeah, that was difficult. So we did get a property management, and the one thing I'll say about that is it's hard to find a good one, and we went through a lot of bad ones, but no one will care about your property as much as you care about your property.
So even when you find a good one, it's still not great. But again, if you factor it into your numbers, having a property management company, which I think you do need to do if you're remote, finding someone that understands real estate investment or maybe owns rental properties themselves is always about best place to start.
Genevieve George: Yeah. I think that's something that people don't always think about as well. Like, I bought my first home myself and then later moved, and in my mind I was like, “Oh, I'll just rent it out.” And then when I started doing the math, I was like, I'm not even gonna be in the same state as this property.
Shannon Kiefhaber: Yeah.
Genevieve George: I'm gonna have to pay a management company to take care of this. And the math on that was like just not working. Like it doesn't work. Like it was much better for me to walk away, sell it, walk away from the property, and not have that added expense. Because if you have a vacancy, you still have to pay them.
Shannon Kiefhaber: Yeah. It definitely, again, that's where scale matters. You have one rental property, you're talking a 10% property management fee. If you put that on in your underwriting, you're no longer making $100 dollars a month, now you're breaking even. Maybe you might be losing money, especially if the AC goes out.
So that, again, that goes back to scale matters as you get more properties. But it was still when we had six properties, I think our property management fee dropped to 8%. That's still significant.
Genevieve George: Yeah. Yeah. Some people have even way higher than that, I think.
Shannon Kiefhaber: It's a vacation rental, it's 20% plus easily. Yeah.
Genevieve George: Yeah. That's in an incredible cost to have to overcome with your rental income there.
The other thing that I thought about too is like that first home that you bought. You went into it with a plan. You had the luxury of knowing like, we're in a military family, like we're not probably gonna end up being in Virginia Beach forever.
Yeah. But I think other people maybe don't have that, and they go into their first home, and they think it's exciting. Like I was really proud to—I bought my first home when I was like almost 23 years old and I was like excited about it, and it was emotional to walk away from it and say, “Okay. I'm not gonna have that forever,” so I don't know.
It's hard to break that. And I run into that too with clients where they're maybe moving into buying their next property, and they are thinking through, “Should I keep this as a rental?” And I think part of it is the illusion of rental property and cash flowing and doing all these things. And I can address the math part of that with planning, but I think the other part is emotional.
That was mine. I bought that. Like, I'm so proud of it, and so what would you say to somebody that's going through that internal drama? The math says whatever it says, but there’s…
Shannon Kiefhaber: Yeah. No, we're in a similar place actually. So our first ever house in Virginia Beach is still a rental, and we have a strong emotional attachment to it.
We brought one of our babies home to that house, and we have a VA loan. We have a really low interest rate. I'd say where the math really comes in is you look at return on equity, so we bought that house for $350,000, and it's worth $650,000 now. The rent is still only $3,000 a month, so it's not meeting my 1% rule.
I would never buy that house right now as a rental property. It would not make money. We have an emotional attachment. But the problem is our return on equity is really low, right? There's just so much equity in that house. And what is the opportunity cost of not tapping into that and using it for something?
Now we have thought about it so many different times, and for that particular property is we will not sell it only because we love Virginia Beach and we have family there, and we think we will go back, and we would love to spend time there.
For all the other properties‚ the single family properties that we own in similar boats, I have lost the emotional attachment. I will sell them all now again. Because if you just look at that return on equity piece and you think about what else you could be doing with, and if you can be getting a, even a modest, let's say 5% return on $600,000, that's a significant difference if you look at that equity.
And I think that helps sometimes help you detach from the emotional connection. But I can't discount that it's there because I feel it too.
Genevieve George: Yeah. Thank you for sharing that. I like didn't know that, and so that's interesting. But yeah, I'm seeing that with different clients. Okay. So you started with having these multiple properties across the country based on where you guys were moving around and then you moved to Florida, which is how I met you, so super glad to have you, and you sold most of those to go into that first apartment deal.
How has that sort of transitioned over time? Are you doing more and more apartments or other types of real estate?
Shannon Kiefhaber: Yeah, so that was multi-family apartment, first multi-family apartment.
Still trying to find and would love to buy more multi-family apartments. They're just—the price points are tough. There's not a ton of multifamily where I live, so if I was investing down in Miami, Fort Lauderdale, just the sheer volume is so much more. Like it's hard for me to invest in multifamily because there's probably only 10 of where I live.
I love to own all 10, so that'd be a goal. That's my goal. But so I have had to shift a little bit from the multifamily space. So our family's portfolio, my dad was a developer back in the late ‘80s, early ‘90s. And he was developing, which is now what is now like an industrial flex type property with a retail in the front and warehouse in the back.
And so that has been where my focus has gone into more industrial properties and medical office. So the way just maturing as an investor, really now looking for triple net properties only. And that is properties that—larger assets where the tenant is responsible for the property taxes, the insurance, the repairs and maintenance.
And so those are the type of deals that we're investing in and acquiring now.
Genevieve George: And those are the types of deals that individual investors can be part of through these syndication opportunities. Is that accurate?
Shannon Kiefhaber: So the syndication side of the business is through 25/8 Capital, and that is purely acquiring multifamily apartments.
Genevieve George: Okay. Okay. So then the Riverside Group is the medical and the commercial space?
Shannon Kiefhaber: Correct.
Genevieve George: Okay. Great. And have you had to shift with the changes in the interest rates as far as leverage? Because obviously, as a homeowner and working with individuals, we saw such a huge move for people to come here in 2020, 2021, and then having these super, super low interest rates.
Now people feel locked in. They're not going anywhere. Yeah. But I'm sure that your business has still been rolling, so you've had to make adjustments along the way. So maybe speak to that, how that's impacted you.
Shannon Kiefhaber: Yeah, absolutely. So on the multifamily side, we bought two properties in 2022, and that was just when interest rates were starting to rise.
So we bought two large multifamily properties, and we did that using bridge lending. And you can Google it, and you can hear disaster story after disaster story. And I think bridge lending got a very negative connotation, as it should. But bridge lending basically means we had floating-rate debt, right? So when we started our, the bridge loan, we were at 3%. Fantastic.
Genevieve George: What about regular communications? When somebody is included in your syndication, and they're a part of, maybe let's use this example of the 114 unit. A new investor comes to you, they're a part of it. What can they expect during that period of time working with you?
Shannon Kiefhaber: Yeah, so we have an investor portal now that everyone gets to log in, and it shows like how much you've invested and what are the returns to date and all communications are stored there. And we try to benchmark against what we stated. So like for this deal, we say, okay, there's gonna be an 8% preferred return.
We anticipate a 20% internal rate of return by the end of the deal. So, in 10 years, we sell the property, it would be like you made 20% a year for those 10 years. So we try to benchmark and just try to be as honestly as transparent as possible, giving more information than I would think most people probably want to know.
They just wanna say, “Oh, okay, look, yeah, I'm getting returns. Check that box.” But no, the communication can be as much or as little as anyone wants.
Genevieve George: And I think, and part of conversation you and I have had previously, you like to engage the investors to really understand the property as well.
So I think you shared that you're providing not just those financial updates but doing video updates so that clients can see what those improvements are being made to the property and see that force appreciation that you're creating through those remodels. Maybe talk to that.
Shannon Kiefhaber: Yeah. No. My partner Victor loves to take videos.
I'm a big fan of a before and after. That's like why I feel like everyone is, that's why do you, while you're in real estate. Yeah. But yeah, lots of video updates and lots of pictures.
Genevieve George: Now, one of the things that you talked about was when you were getting into making these decisions, you're looking at your balance sheet.
I think that's important for the average investor. If this is gonna be their first time investing in real estate in this way, if they're used to seeing a certain dollar amount in their accounts, and now they have invested in this real estate property, and it's not showing in their accounts. I think it's important to point out that it's still an investment that's a part of their balance sheet, even if it's not in their liquid investment.
So it's just a matter of making sure that your entire professional team is aware that you have that so that you're constantly looking at that and seeing that investment as a part of the bigger picture. 'Cause I think sometimes people, the money leaves and they sort of forget about it.
I want it to be front of mind.
Shannon Kiefhaber: That's if you're used to, you just have your, let's say, investment dashboard or something. But I definitely quarterly update a personal financial statement, quarterly update a net worth calculator. And so that kind of captures all of those investments.
And I think that also helps, especially with the personal financial statement, right? And in that you'll have your schedule of real estate owned, and that really helps guide decision making because you can have your real estate owned and you have, let's say, you have your purchase price, but now you have the appreciated value, right?
And so you have to make sure, like to me, a good analysis is you're looking at, okay, here's all my real estate owned, here's what I bought it for. Here's what it's worth now, yeah, your cash on cash return was really great when you first bought your property, but now let's say it's been 10 years, and so now you can't just look at your cash on cash return from when you first bought it.
Now you actually need to be looking at the return on equity because I think if you've been holding real estate for the past 10 years, it's a great time to hold real estate. It's highly appreciated. And so now you have to actually start looking at another metric called return on equity. And so that's where, so where my growth and my strategy has changed, that now I have these more highly appreciated assets that now I need to make new decision-making based on return of equity.
And if return on equity is now, for me, a lot of times, 2%, 3%, is that good enough and does that mean that my money's working for me? Or is it time to sell that asset and recapitalize and make new investments?
Genevieve George: Excellent. Yeah, I appreciate you sharing that. Now I'd love to hear a little bit about the transition over time where you started with the one property and then you started purchasing properties around the military bases as you and your husband had to move, but also with the foresight to know that other people have to move there too and need somewhere to live and to where you are now. 'cause we talked about this 114 unit property that you're in process of developing the funds and going there. So how many properties are you working with? And give us the update there.
Shannon Kiefhaber: Yeah, definitely. So in 2021, we moved back to Florida, and I took over my family's real estate portfolio, and so that mainly consists of commercial properties and medical office. So my dad, as I said, started in single-family rentals and then started building industrial properties in South Georgia and across Florida. And so, once a real estate investor, always a real estate investor, so he eventually wanted to retire, so I moved home and took over that portfolio and the management of that.
So majority of my time is spent in asset management for commercial and industrial properties. And then, like I said, then we're the way we're continuing to acquire new assets is mainly in the multifamily space.
Genevieve George: Excellent. And are you limited on where you can purchase those properties, or you're just assessing the opportunities when they arise?
Shannon Kiefhaber: Yeah, so a lot of my time now is really looking at the portfolio and saying, “Okay, where do we have older assets that have risk?” The way I look at risk now is a lot of our assets were all built in the same timeframe, so they're gonna have the same capital expenditures that are all gonna need at the same time.
And looking at, okay, what assets are in areas that maybe didn't grow, that the towns are growing. So really just looking at where can we sell assets and then reposition that capital into better markets, better growth markets. And then honestly, really focusing in on triple net properties where the tenant is responsible for the bulk of, let's say, the maintenance, taxes, insurance, things like that.
So just trying to upgrade properties, newer assets in better locations.
Genevieve George: That's awesome. That's great. And I feel like all of this is making me just think through all of the things that you're managing for these properties. If I'm an investor, I am not having to manage that. Where if I buy a rental property down the street, I am having to manage these things.
I am having to keep an eye on when that new roof is gonna be needed and what—have I saved enough for that? Have I netted enough to cover that? So I really think that's a really important differentiation there in that there. Not to say don't buy a rental property if that's something that's really interesting to you, but to really dive in on that why that you talked about earlier on, what are you trying to accomplish with that, and can you accomplish it in what sounds like maybe an easier way to accomplish it without having to spend my entire day working on only that property.
Shannon Kiefhaber: Yeah, and absolutely. And I'm an operator. I own and operate my own properties, but I'm also a limited, I'm a passive investor, so I have invested in a girlfriend's deal in Miami. I think several properties in Miami. I think it's a great market.
I don't know Miami. I don't speak Spanish, and I think that she's an amazing operator, so I invest in her deals in Miami to get exposure to that market, to get exposure to that asset class. Even though I am an owner-operator, I love that passive income check. And so I do, I look at a lot of things now through that lens.
I think I shared there's a rental house that's for sale or a house that's for sale down the street from me. And I love it. I drive by it every day, and I've put in an offer on it, and I wanna buy it. And to be honest, my husband was like, okay, do the math. Should we buy that rental property down the street from our house?
Genevieve George: Get your spreadsheet out.
Shannon Kiefhaber: Yeah. Or should we, are you sure we should do that? Or should we spend that money and invest in the 114 unit? And to be honest, he was right. Like as much as I want to buy the property down the street because I love it and it's tangible and I can remodel it and have fun, there's a lot of other ways that I could have fun with my family and not be renovating a property.
And I honestly will make more money when—I did the math—investing in this portfolio in Virginia Beach, and now I'm a passive investor, and it's just a better fit for our strategy and for our family. But I sympathize because that's a hard decision, and I think a lot of times, yeah, that's probably where a financial advisor is helpful, right?
Because we take the emotion out of it and it's a numbers. It's a numbers game.
Genevieve George: Yes. Yeah. And that is really what it boils down to is for my job is particularly when people are talking about single rental properties, we're really trying to break that down because we talk about giving up liquidity to an investment like a syndication, but you're also giving up liquidity to a rental property down the street too.
So you need to make sure you know what that potential rate of return could be, and the comparison of the two is really interesting because there is some level of guarantee you have a preferred rate of return to those investors, where there is a little bit more of a risk almost on a single property if you have multiple, it changes the risk.
But there seemingly a risk to a single property where something could go wrong, something. Major expenses could arise. You could not have a renter there for a little while. The markets could change. So it is an interesting comparison between the two. Particularly if you're talking about, let's just say it's $100,000 that we're gonna invest that most likely means you're also having a mortgage on this piece of property.
'Cause there, for where we are in South Florida, there aren't a lot of $100,000 properties. So now you've got a mortgage too that you have to cover. So there is a potential that that rental, single rental property down the street could end up costing me more money.
Where there is potential that the syndication isn't asking me for any more money.
Shannon Kiefhaber: Yeah, absolutely. And I think a lot of times, especially when you just talk about one rental property, I think people have a really hard time not being emotional about it, right? So you want your house to look really pretty and really cute.
And so then you maybe go overinvest in this rental property. And so I think if it's not like your full-time job, you don't really have a good understanding of the market, you might over-improve the house, and you're not gonna recoup that investment. So yeah, I think there's a lot to think about when you're just buying more and more.
Genevieve George: The individuals living there, it's not theirs. They're renting, and you'd like to hope that they're respectful of the space that they're renting, but it's not theirs, right? Yeah. And so the idea of having a rental property on the street and knowing that they had a party there last week or that they didn't mow the lawn.
'cause that's the piece that I can see when I drive by, right? I think that would make me a little crazy. But yeah. There's pros and cons to all of this, and I really like how you framed some of those early investments around the longer-term plan, even just for your own family.
I liked how you framed that, like, “Okay, we're gonna buy this. And we're gonna have it for 10 years, and at the end of that 10 years, the kids are gonna be pretty close to college age. We can use that investment as a tool for saving for that college expense or whatever that expense may be.” So I like how you framed that around the longer-term plan individually to your family.
Is that something that you take into the professional space as well, where you're planning out these various investments?
Shannon Kiefhaber: Yeah. So I think, again, your strategy grows as your wealth grows, right? And so now a lot of times when I'm looking at properties or investments now, a lot of it has to do around tax optimization and like debt planning and things like that.
So really, for me and on us right now, tax optimization is driving real estate investment choices and whether we should buy or not buy or sell or not sell. And so again, that, so your strategy obviously changes as your circumstances change and as your wealth grows. So for us now, it's more of a consolidation.
And fewer properties, higher quality properties, and really doing that in a strategic way to redeploy capital. So that's been our driving decision maker. Again, that's not at all what I was thinking about 10 years ago, 15 years ago when we first started, and we were building our wealth.
So that's why I think these conversations, especially with financial advisors and professionals are so important because I wasn't thinking about these things back then, but I didn't need to, I didn't have wealth to preserve. I was building it. Now, we are much more in a wealth preservation phase, and so that totally changes risk tolerance and how and where and when you deploy capital.
Genevieve George: I love that. I love that. And you spoke a lot about the tax strategy too, and I'm sure when you bought that first home and even in your mind when you said this will probably be a rental property 'cause we're more than likely gonna be, I don't know, asked or told to move, fallen told into moving.
But you probably weren't even thinking about the concept of a 1031 exchange for tax purposes. And maybe you particularly might have known about that from your family stuff, but like the average person doesn't know what that is, and so that's really important too, because that's a matter of getting with your professional team and making sure you understand what is the most strategic way that you can go about this consolidation of properties and moving into more of the commercial and medical space that you talked about that there are strategies involved in doing that and understanding how they work and making sure always that's always, I keep coming back to this, but the ins and outs of what you're getting into before you enter into that.
Shannon Kiefhaber: Yeah, absolutely. I would say that most of our investors are high W2 income earners, doctors, things like that, that where they love their job, they're excellent at their job. They should not quit their job and invest in real estate.
Genevieve George: Not full time, right?
Shannon Kiefhaber: Not full time.
Genevieve George: Just stop saving those lives…
Shannon Kiefhaber: Exactly.
Genevieve George: Be in real estate instead.
Shannon Kiefhaber: So it's a much better option for them to diversify into real estate more as a long term. I'd say wealth generating tool, and it's a longer-term horizon.
Genevieve George: And the tax strategies that you're implementing at the company level, those flow through down to the investors. So that doctor is receiving the benefits of your cost segregation study and the increased depreciation, all of that through the K-1 that they're receiving on an annual basis.
Shannon Kiefhaber: And when you take these strategies and you combine them with your financial advisor. So, for example, when we had a lot of depreciation over our most recent purchase, then we were able to move a lot of money from IRA to Roth. And so we were able to basically avoid paying tax 'cause we used the depreciation on the new purchase to move all of that money into Roth.
And so again, those are strategies that I wouldn't have thought to do that on my own, but the power of real estate and working with the financial advisor, we were able to offset that and hundreds of thousands of dollars were able to be moved tax free.
Genevieve George: Yeah. That's amazing. That's amazing. And that speaks to looking at the full picture, not just the individual pieces, because that piece over there, there could have easily been no communication with the team to say, we're gonna be in a really low tax year.
What else can we do? So it's a matter of making sure all those parties are informed. And so to your investors that are receiving this information on their portal, they should be sharing that with their CPAs. Maybe doing some tax planning before they send that K-1 in April?
Shannon Kiefhaber: Yeah, absolutely. Again, and that's another thing that you learn, there's a big difference in working with the CPA and just having someone prepare your taxes versus actually working with someone that is doing tax strategy. And those are sometimes two different people and both very important, but arguably the tax strategist, especially as you have more investments and higher.
Your wealth froze. That's a very important piece of the puzzle that I think, especially if that we were missing for a long time because you're out there, you're doing work, your head's down, you're grinding, you're building wealth, right? And then at some point you look up, and you're like, “Oh, okay. Wow. I reached the top of the mountain.”
And I think making sure that you hire the right team, and I definitely learned that firsthand, but having a real estate attorney, having a CPA tax strategist. Those are all necessary members of your team, and I always say I am like, I don't need to be the subject matter expert and I'll hire the person.
I need to know enough about everything to be dangerous, but I'm not the subject matter expert on tax strategy.
Genevieve George: No, “I’m the real estate though.” So that's where we need all the parties. Yeah, this term comes up a lot when I'm talking about this, but you need a CPA that's consultative, that's gonna look for those opportunities and share them with you.
And that generally happens through tax planning and tax strategy, not the tax reporting. That is a lot of people's focus, particularly when you're like you're describing, keeping your head down, just going through the motions, and then pulling all the documents together to send to your CPA after the fact.
There aren't as many tools that you can use after the fact.
Shannon Kiefhaber: Yeah, there’s nothing you can do at that point.
Genevieve George: Yeah. Yeah. There's a couple things, but not many things. So yeah, I appreciate that. I just love talking with you about this. Let’s be able to share more with individuals. How can people that might be interested in investing in real estate, not directly but more through a syndication, how can they get in touch with you and learn more about the opportunities within your company?
Shannon Kiefhaber: Yeah, our syndication team and multifamily acquisitions team that is under 25/8 Capital—2-5-8 Capital, and we put out a lot of just content to educate people. So a lot of that's on LinkedIn and we have a website, 25/8. A lot of the information we put out is really to help people learn more about, honestly, not just real estate, not just syndications, but just to be better savvy investors on all fronts.
And we have monthly—not podcasts—but we put together like monthly webinars where we bring in guest speakers. We'd love to have you as a guest speaker one day, but just because we're all, we feel like we're all trying to learn and support and help each other grow professionally, personally, your net worth, but all of that, right?
And so it's a great community. We love people to check it out. And you're welcome to reach out to me anytime with any questions. I love talking about real estate. I love talking about tax strategy. Anytime.
Genevieve George: I love that. And I think it's so important. That's my mission too. I try to lead with that education piece, so there's so much people don't know or think maybe is out of the realm of what they can participate in. And individuals, it's my understanding $100,000 is the minimum investment right now for this indication?
Shannon Kiefhaber: Yeah, we've taken investors for less than that, 'cause again that's a large amount of money to commit to a deal, to commit to a new relationship. So yeah, we're open to less than that. We're just happy to spread our mission, get more people invested in real estate, get more people to think about this long-term generational wealth building. And I don't think there's a better way to do it than in real estate right now.
Genevieve George: That's amazing. Yeah. I appreciate you sharing that so much, and I'm looking forward to continuing to talk about this and I hope everything goes really smoothly with the syndication.
Shannon Kiefhaber: Thank you. Yeah, we close at the end of this month.
Genevieve George: Excellent, excellent.
That's it for today's episode of The Wealth Development Studio. Remember, financial clarity is powerful. Do you need help with your financial plan? Go to pelicanfinancialplanning.com to schedule a call with me. Until next time.
