Building Wealth Through Real Estate

In today’s episode, I sit down with James Prendamano, founder of PreReal Investments, to talk about building wealth through real estate and the value of experience in navigating changing markets. James shares how his career grew from residential sales into commercial investing and why understanding taxes, market cycles, and risk is essential for long term success. We discuss the dangers of following advice without context, the four lenses he uses to evaluate real estate opportunities, and how macroeconomic and geopolitical forces shape individual markets. We also explore how AI is transforming the industry and changing the way investors approach real estate. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

• 0:00Speaker 00

  Welcome to Office Hours. I'm David Meltzer and it's time for the executive spotlight. I have James Prendamano here with me. He is the founder of PreReal Investments. PreReal Prendamano, real estate. He knows everything about the real and the unreal in real estate investment. He's the leader, the voice of the space. James, welcome to Office Hours.

• 0:21Speaker 01

  Thank you so much. A pleasure to be here.

• 0:23Speaker 00

  It's not only a pleasure for me to have you here, but I call this an MBA in the day. When I'm able to talk to the voice, the credible voice of real estate, my favorite investment category, it's a blessing that you come on my show, not only to educate me, but truly elevate the awareness for people in our community that should be at least considering why real estate investment is truly the best investment. What are some of the things that make real estate such a real benefit, a real investment for especially United States citizens?

• 0:59Speaker 01

  So there's a number of reasons and it depends where you are in your process, right? Where you are in life. But the thing I love about the business is I started as an agent and there's a, there's a low bar for licensing. It's not difficult to get your license. So it's a fairly inclusive business and you have the opportunity to enter in. I entered in as a residential agent doing home sales and from there I expanded and learned about commercial and all the different facets. For me personally, I'm about problem solving and the business is about problem solving, right? So if you're a problem solver at your core, I got licensed in all the different disciplines from loan officer, home improvement contractor, expediting. I wanted to know all of the different things that would occur

• 1:41Speaker 01

  to solve the problems for my clients. So if you have kind of that service mentality, and again, it's a low bar financially and from an education requirement to be able to enter the business, it was just a perfect fit and something that I fell in love with.

• 1:55Speaker 00

  And to that measure, one of the reasons I find real estate so interesting and so attractive when it comes to investment is if you look at the core basics of investment and you take for me, the bibles of investment, things like Think and Grow Rich, Rich Dad, Poor Dad, the foundational principles of investing, where your assets generate more income than your expenses, that's wealth. Generational wealth is when your assets generate income that generates interest, that compounds, that exceeds your expenses, that's generational wealth, tax-free.

• 2:36Speaker 01

  Yeah.

• 2:37Speaker 00

  And when you look at the criteria for either wealth or generational wealth, real estate fits that bucket better than anything else. It is an asset that generates income that will exceed your expenses, but it's also an asset that will not only generate expenses, but interest that will be tax-free and exceed. And the tax-free component, a lot of people miss. How long line, along your journey, was it when you started to really understand the math and take taxes into consideration?

• 3:09Speaker 01

  So, once I made the transition into commercial with that, I had to learn about 1031 exchanges and QOCBs and QOFs and all of these great ways and mechanisms to shield your taxes. And you do one or two deals on the investment side. If you are not educated on the tax situation, and you'll learn pretty quickly that it's an important component to it. And like you said, it depends on what you want to focus on. There's the mailbox money type of investment that we've done really well in, but then there's the generational wealth stuff. You know, I come from humble beginnings. We now have thousands, literally thousands of pieces of real estate from shopping centers and golf courses to hotels and everything in between. It's a great way and a great opportunity. And when you learn about the

• 3:53Speaker 01

  tax advantages and you learn about the system, you can really do some incredible things there.

• 3:58Speaker 00

  There's a lot of hype as well, especially with, and you and I are old enough to have done real estate investment previous to social media. And one of the most frustrating things are what I call 19-year-old life coaches. In specifically real estate, there's a ton of 19-year-old life coaches. There's a lot of advice that is partial in its context. It's not that it's bad advice, but they're not explaining the specific situation in which the advice is applicable to, and they explain it as a generality to get more followers and to get attention or other things, who knows? But for you, there's some basics. How

• 4:40Speaker 00

  has the confusion and the noise impacted what is real? And I know you deal with what's real in real estate.

• 4:48Speaker 01

  Yeah. So, much of it, I'm sure is well-intended, but in real estate, we have cycles, typically seven to 10 years.

• 4:57Speaker 00

  It's a little longer right now.

• 4:58Speaker 01

  If you, if you haven't been through at least one, you can appreciate what a down market means and how to not only survive, but thrive in a down market. Once you've been through two or three, I'm on four or five at this point.

• 5:11Speaker 00

  Me too.

• 5:13Speaker 01

  Then you really start to understand completely how the game is played and that helps you sort some of the noise out. But if, if folks are trying to educate in a topic where they haven't been through those cycles, I would say meet it with perhaps, maybe, when you hear that advice, right? There's no substitute for wisdom, none.

• 5:36Speaker 00

  Yeah. We talked about yesterday, knowledge being a commodity and how valuable wisdom is today, even comparatively, but it's the same in real estate is true. It's the same behaviors that created success in real estate in the early 1900s as it does today. It's the same behaviors and people that understand the outcomes and the length of time that it takes in order to do so, aligned with timing and risk tolerance, it takes a certain mindset. One of the reasons that you are the voice of real estate investment, the most credible source that I know, is because you also integrate mindset into the math.

• 6:18Speaker 01

  Yeah. So, along with the social influences, there are endless reports and articles and studies and news that on its surface can be very, very dangerous. We've, we've applied a holistic approach to real estate. And with that comes the mindset and the discipline of being able to identify and understand, is this a psyop? Is this coming from a legacy source? Is there an angle or a purpose beyond just reporting what the data is? And we have learned to ingest everything, but selectively really amplify or lean into certain things that others historically haven't looked at. But for us, it's really important to look at the broad picture.

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• 7:33Speaker 00

  And speaking of looking at the broad picture, we have been in a very long market. The cycle has never been this long as far as sustainability and growth in real estate. And obviously fueled by several different things that exist. And you can see it's very segregated in it, in its ways. Meaning, for example, in Austin right now, they're having a boom because there's 4,000 new millionaires because of SpaceX. That's a big impact on an individual market. What criteria should people be looking at today that they can rely on?

• 8:10Speaker 01

  Yeah.

• 8:11Speaker 00

  I would never ask you, do you think the market's going up or down? But I'd love to know what you're looking at to determine in a specific market. And it could be as narrow as Newport Beach versus San Juan Capistrano. A huge difference in markets. But what criteria should people look at when they're analyzing these specific areas in, let's say residential real estate?

• 8:33Speaker 01

  So, we, we look at any real estate through four lenses. The macro, micro, site, geopolitical, right? So, we always want to be aware, back when, when the, the money started to be infused into the economy, seven trillion, five trillion, if you read certain studies during the COVID era, it was super clear to us that with that type of capital, has to come inflation.

• 8:59Speaker 00

  Yeah.

• 8:59Speaker 01

  Right? We knew inflation was going to come. With inflation, must come a raise in interest rates. So, we knew that there would be an opportunity to cash out of some investments, which we did, and buy some land that was a little bit longer play and make certain investments and allow just the nature of the inflation to drive value, right? So, macro, we knew that two years before it happened, I had predicted to the month that rates would be cut in October during the election cycle. Understanding the Fed chair and the party that was in at that time, that was just the political thing that was going to happen. All of the numbers said it shouldn't happen, but we knew that that would happen. When

• 9:40Speaker 01

  you change administrations, we knew that the new administration, either one, housing policy and affordable, the crisis was on every debate. It was every talking point. So, we knew that there was going to be some robust legislation. We're starting to see that pass now that was going to come out. We knew that there would be a trend down in rates. Of course, there's been bumps along the way, but the trajectory to us is still pretty clear. We think there will be, I know there will be precipitous cuts. I'm very confident when I talk about it because I study it. Then we get into micro. What is the, the county that you're going to invest in, right? What are the things on the horizon? Not the jobs today. In this decentralized world,

• 10:22Speaker 01

  You don't have to be in center city anymore. Right? We look at things like Starlink and we understand now that there is incredibly fast internet available in rural America. We knew that post COVID, one of the good things that came is people got more in touch with the outdoors. They got more in touch with themselves. Right? This was a little bit of the good stuff that came out of it. There was going to be a decentralization from the big cities. So now we're at micro. Then you go to site. There's a million different factors. Is it at a traffic light if it's a commercial piece? Is there a dedicated left hand turn? Is it on the AM or PM side of the street? These are all things that we look at when we do the analysis. And again, the geopolitical as a backdrop is what drives all of it.

• 11:04Speaker 00

  So beautifully said. You can see why James is the voice of real estate investment and absolutely a source for everyone in order to invest and to learn from someone who's paid the dummy tax. Last thing real quickly, I have to ask because it's applicable to everything, the individual impact that AI is having. A lot of people don't discuss it within the context of real estate, but obviously it's having a huge impact. What should we be looking for? Or how should we be utilizing AI in order to increase our statistical success in the safest and best investment in America? That's real estate.

• 11:41Speaker 01

  AI is going to radically transform. It's already radically transforming real estate and every name job within five years. Everyone. So with that, people's habits change and as their habits change, their needs for real estate change. So we've gone very, very deep. We've, we've developed a number of proprietary systems, our own LLM and voice corpus. We've developed our own brand managers. Social currency is critically important today. All of that's being disrupted. So it is an exciting time, tremendous opportunity, but it requires a reinvestment and really doubling down and dedicated silos in a company to understand how fast agentic AI is, is changing so quickly. And it's exciting, but you've

• 12:26Speaker 01

  got to keep up with it. It's going to be profound.

• 12:30Speaker 00

  Investing in real estate is profound. The reason it is so important is from the constitution on the forming of our country, our laws in America, the very first laws to the laws passed today are to protect the landowner. And knowing that not only the tax benefits, but the legality of protection from the United States and so many different. And then of course, the leverage aspects of other investment. There's no other investment that they'll allow you to put three and a half percent down, 10% down or 20% down on that has an asset tied to it and secured. It is a fantastic opportunity. If you want to get to where you want to be, you got to find someone that's already there and ask

• 13:11Speaker 00

  them for directions. I suggest you ask our friend James Prendamano. Thank you very much for joining us, James. Check out the real investment, pre-real investment. And James, where can they find you?

• 13:27Speaker 01

  Prerealinvestments.com. The, we have a free academy. We're sharing all of this knowledge as part of the philanthropic stuff, but pretty easy to find. You know, I'm, I'm out there. I'm old school. So same sellers I've had for the last 30 years.

• 13:40Speaker 00

  A man after my own heart. This is David Meltzer here at the Sirius XM studios, live at the Wynn in Las Vegas with Office Hours.