From Control to Freedom Building Real Wealth Through Ownership with Tim Bratz

[0:03] Welcome back to the REI Agent. I’m here Welcome back to the REI Agent. I’m here Welcome back to the REI Agent. I’m here with Tim BRZ. Tim, thanks so much for with Tim BRZ. Tim, thanks so much for with Tim BRZ. Tim, thanks so much for joining us today. joining us today. joining us today. >> Hey man, excited to be here. Give us uh >> Hey man, excited to be here. Give us uh >> Hey man, excited to be here. Give us uh like a elevator pitch or a bird’s eye like a elevator pitch or a bird’s eye like a elevator pitch or a bird’s eye view of who you are and what you do in view of who you are and what you do in view of who you are and what you do in real estate. real estate. real estate. >> Oh man. Um been in real estate since >> Oh man. Um been in real estate since >> Oh man. Um been in real estate since 2005. Been investing in real estate 2005. Been investing in real estate 2005. Been investing in real estate since 2009. Been buying apartment since 2009. Been buying apartment since 2009. Been buying apartment buildings and commercial real estate buildings and commercial real estate

[0:23] buildings and commercial real estate since 2012. Scaled that up to almost since 2012. Scaled that up to almost since 2012. Scaled that up to almost 5,000 doors in my rental portfolio. uh 5,000 doors in my rental portfolio. uh 5,000 doors in my rental portfolio. uh currently sitting at right around 3,000 currently sitting at right around 3,000 currently sitting at right around 3,000 doors. All of that has turned into uh we doors. All of that has turned into uh we doors. All of that has turned into uh we do a little bit of coaching uh through a do a little bit of coaching uh through a do a little bit of coaching uh through a mastermind and then we also um just mastermind and then we also um just mastermind and then we also um just launched a property management software launched a property management software launched a property management software called Smart Management. It’s goes called Smart Management. It’s goes called Smart Management. It’s goes toe-to-toe against Yardi and Appfolio toe-to-toe against Yardi and Appfolio toe-to-toe against Yardi and Appfolio and Real Page and Rent Manager and

[0:46] and Real Page and Rent Manager and and Real Page and Rent Manager and Entrada and all the other ones that Entrada and all the other ones that Entrada and all the other ones that we’ve used before. Uh but it’s but it’s we’ve used before. Uh but it’s but it’s we’ve used before. Uh but it’s but it’s an all-in-one solution where it’s got an all-in-one solution where it’s got an all-in-one solution where it’s got accounting and all that kind of stuff as accounting and all that kind of stuff as accounting and all that kind of stuff as well as layered with artificial well as layered with artificial well as layered with artificial intelligence. So super excited about intelligence. So super excited about intelligence. So super excited about that. That just launched. Cool.

[0:58] that. That just launched. Cool. that. That just launched. Cool. >> Um, and then we still have the uh the >> Um, and then we still have the uh the >> Um, and then we still have the uh the rental portfolio. rental portfolio. rental portfolio. >> Yeah. Wow. Um, I I had an idea. I >> Yeah. Wow. Um, I I had an idea. I >> Yeah. Wow. Um, I I had an idea. I actually attended I think one of a a actually attended I think one of a a actually attended I think one of a a oneoff like I’m not in the mastermind, oneoff like I’m not in the mastermind, oneoff like I’m not in the mastermind, but I think I would attended like a but I think I would attended like a but I think I would attended like a one-off like deal analysis thing uh of one-off like deal analysis thing uh of one-off like deal analysis thing uh of yours a number of years ago. So, it’s yours a number of years ago. So, it’s yours a number of years ago. So, it’s going to be fun to talk to you. Um, and going to be fun to talk to you. Um, and going to be fun to talk to you. Um, and I think I get some of your uh some some

[1:16] I think I get some of your uh some some I think I get some of your uh some some properties every once in a while that do properties every once in a while that do properties every once in a while that do you still u email people like some some you still u email people like some some you still u email people like some some opportunities every once in a while? opportunities every once in a while? opportunities every once in a while? >> Yeah. Yeah, man. We’re uh you know, I >> Yeah. Yeah, man. We’re uh you know, I >> Yeah. Yeah, man. We’re uh you know, I mean, we’re always raising capital for mean, we’re always raising capital for mean, we’re always raising capital for deals and then um we’re buying and deals and then um we’re buying and deals and then um we’re buying and selling all the time. So, just kind of selling all the time. So, just kind of selling all the time. So, just kind of depending on what’s going on. It’s it’s depending on what’s going on. It’s it’s depending on what’s going on. It’s it’s a it’s a constant being in the a it’s a constant being in the a it’s a constant being in the investment world is a constant,

[1:35] investment world is a constant, investment world is a constant, >> you know, balance of deal flow along >> you know, balance of deal flow along >> you know, balance of deal flow along with money flow and just trying to make with money flow and just trying to make with money flow and just trying to make sure that you’re not too deal heavy and sure that you’re not too deal heavy and sure that you’re not too deal heavy and money shy or money heavy and deal shy, money shy or money heavy and deal shy, money shy or money heavy and deal shy, right? right? right? >> Yeah. I think uh one thing about being >> Yeah. I think uh one thing about being >> Yeah. I think uh one thing about being in the investing space is is yeah being in the investing space is is yeah being in the investing space is is yeah being cash poor can can often happen and uh cash poor can can often happen and uh cash poor can can often happen and uh you can have a lot of money going out to you can have a lot of money going out to you can have a lot of money going out to buy new stuff or uh for expenses etc. Um

[1:56] buy new stuff or uh for expenses etc. Um buy new stuff or uh for expenses etc. Um and yeah that’s a that’s a balance I’m and yeah that’s a that’s a balance I’m and yeah that’s a that’s a balance I’m sure that you you’ve had to learn over sure that you you’ve had to learn over sure that you you’ve had to learn over the years and it’s it’s not an automatic the years and it’s it’s not an automatic the years and it’s it’s not an automatic one for sure. one for sure. one for sure. >> Yep. The the the bet the best way to >> Yep. The the the bet the best way to >> Yep. The the the bet the best way to combat that is by learning how to raise combat that is by learning how to raise combat that is by learning how to raise private money. So, if you can raise private money. So, if you can raise private money. So, if you can raise capital and um and you know how to capital and um and you know how to capital and um and you know how to source private money and you know how to source private money and you know how to source private money and you know how to structure deals and you can utilize OPM,

[2:16] structure deals and you can utilize OPM, structure deals and you can utilize OPM, other people’s money um for your other people’s money um for your other people’s money um for your different projects, it it it helps uh different projects, it it it helps uh different projects, it it it helps uh limit the feast and famine cycles that limit the feast and famine cycles that limit the feast and famine cycles that otherwise real estate investors always otherwise real estate investors always otherwise real estate investors always experience. experience. experience. >> That makes sense. And I definitely >> That makes sense. And I definitely >> That makes sense. And I definitely wanted to to dive into that and and kind wanted to to dive into that and and kind wanted to to dive into that and and kind of some of the nuts and bolts about, you of some of the nuts and bolts about, you of some of the nuts and bolts about, you know, why that might be a good thing for know, why that might be a good thing for know, why that might be a good thing for somebody who would be considered a real

[2:34] somebody who would be considered a real somebody who would be considered a real estate professional like real estate estate professional like real estate estate professional like real estate agents. Uh but before I do that, let’s agents. Uh but before I do that, let’s agents. Uh but before I do that, let’s let’s talk about where you started. Did let’s talk about where you started. Did let’s talk about where you started. Did did you start off in the investment did you start off in the investment did you start off in the investment space? Um when you back what’ you say space? Um when you back what’ you say space? Um when you back what’ you say 2009 2009 2009 >> five. Yeah. So 2005 I um was going >> five. Yeah. So 2005 I um was going >> five. Yeah. So 2005 I um was going through college and I interned for a big through college and I interned for a big through college and I interned for a big home builder and I worked in the trades.

[2:50] home builder and I worked in the trades. home builder and I worked in the trades. I had like a painting company when I was I had like a painting company when I was I had like a painting company when I was in college where a couple my buddies in college where a couple my buddies in college where a couple my buddies worked for me. We painted houses. Um and worked for me. We painted houses. Um and worked for me. We painted houses. Um and then in 2007 I graduated from college then in 2007 I graduated from college then in 2007 I graduated from college and um moved out to New York City. I’m and um moved out to New York City. I’m and um moved out to New York City. I’m from Cleveland, Ohio originally. And so from Cleveland, Ohio originally. And so from Cleveland, Ohio originally. And so I moved out to New York and got my real I moved out to New York and got my real I moved out to New York and got my real estate license. And so I thought that’s estate license. And so I thought that’s estate license. And so I thought that’s what getting in real estate was. And so what getting in real estate was. And so

[3:09] what getting in real estate was. And so I got my real estate license, but I I got my real estate license, but I I got my real estate license, but I parked it with a boutique uh commercial parked it with a boutique uh commercial parked it with a boutique uh commercial brokerage. So we did mostly like brokerage. So we did mostly like brokerage. So we did mostly like commercial leasing and some investment commercial leasing and some investment commercial leasing and some investment sales. And that really opened me up. sales. And that really opened me up. sales. And that really opened me up. Like I I brokered a uh 400 foot lease to Like I I brokered a uh 400 foot lease to Like I I brokered a uh 400 foot lease to a falafel shop in Greenwich Village. And a falafel shop in Greenwich Village. And a falafel shop in Greenwich Village. And uh they signed a $10,000 a month lease uh they signed a $10,000 a month lease uh they signed a $10,000 a month lease on a on a 12-year lease term with 4% on a on a 12-year lease term with 4% on a on a 12-year lease term with 4% annual escalations. and you start you

[3:33] annual escalations. and you start you annual escalations. and you start you start doing the math on something like start doing the math on something like start doing the math on something like that and you’re like, “Dude, I need to that and you’re like, “Dude, I need to that and you’re like, “Dude, I need to be owning some real estate, not just be owning some real estate, not just be owning some real estate, not just brokering it.” brokering it.” brokering it.” >> Yeah. Yeah. For real. It’s crazy the >> Yeah. Yeah. For real. It’s crazy the >> Yeah. Yeah. For real. It’s crazy the amount of money. Um I I think I just amount of money. Um I I think I just amount of money. Um I I think I just watched a real of somebody showing their watched a real of somebody showing their watched a real of somebody showing their uh space and I think it was like $30,000 uh space and I think it was like $30,000 uh space and I think it was like $30,000 a month to rent in New York City.

[3:49] a month to rent in New York City. a month to rent in New York City. Something crazy. Something crazy. Something crazy. >> Wild, man. It’s wild. >> Wild, man. It’s wild. >> Wild, man. It’s wild. uh you know, I mean, you have you have a uh you know, I mean, you have you have a uh you know, I mean, you have you have a concentration of a lot of people there concentration of a lot of people there concentration of a lot of people there and so it’s not like that anywhere else and so it’s not like that anywhere else and so it’s not like that anywhere else in the country, but in the country, but in the country, but >> um the idea of residual income and the >> um the idea of residual income and the >> um the idea of residual income and the idea of doing the math and this idea of doing the math and this idea of doing the math and this landlord’s making $2 million over the landlord’s making $2 million over the landlord’s making $2 million over the next 12 years for doing something once.

[4:06] next 12 years for doing something once. next 12 years for doing something once. That concept is really what resonated That concept is really what resonated That concept is really what resonated like I need residual income. I need to like I need residual income. I need to like I need residual income. I need to go buy assets that combat inflation that go buy assets that combat inflation that go buy assets that combat inflation that I could put a tenant into. that tenant I could put a tenant into. that tenant I could put a tenant into. that tenant pays a monthly fee and it covers all my pays a monthly fee and it covers all my pays a monthly fee and it covers all my operating expenses, covers my debt operating expenses, covers my debt operating expenses, covers my debt service, pays down my mortgage, and service, pays down my mortgage, and service, pays down my mortgage, and potentially puts a couple bucks in my potentially puts a couple bucks in my potentially puts a couple bucks in my pocket. Like, that’s how real wealth pocket. Like, that’s how real wealth pocket. Like, that’s how real wealth gets built.

[4:28] gets built. gets built. >> Yeah. I mean, I think the the debt >> Yeah. I mean, I think the the debt >> Yeah. I mean, I think the the debt payoff is not one of the things that payoff is not one of the things that payoff is not one of the things that people often think about as much or it’s people often think about as much or it’s people often think about as much or it’s not like the maybe the first selling not like the maybe the first selling not like the maybe the first selling factor, but that’s pretty crazy. Like if factor, but that’s pretty crazy. Like if factor, but that’s pretty crazy. Like if you get to like a big scale, I mean, you get to like a big scale, I mean, you get to like a big scale, I mean, you’re you’re looking at I mean, you you’re you’re looking at I mean, you you’re you’re looking at I mean, you guys are probably well over hundreds of guys are probably well over hundreds of guys are probably well over hundreds of thousands of dollars or hundreds of thousands of dollars or hundreds of thousands of dollars or hundreds of thousands of dollars of debt payoff a

[4:45] thousands of dollars of debt payoff a thousands of dollars of debt payoff a year or I’m sorry, a month. Like it it year or I’m sorry, a month. Like it it year or I’m sorry, a month. Like it it it scales up like crazy. So, um yeah, it scales up like crazy. So, um yeah, it scales up like crazy. So, um yeah, it’s amazing. Uh and it’s amazing. Uh and it’s amazing. Uh and >> dude, that’s really where the real >> dude, that’s really where the real >> dude, that’s really where the real wealth is built. The wealth is built not wealth is built. The wealth is built not wealth is built. The wealth is built not in the positive cash flow. And you will in the positive cash flow. And you will in the positive cash flow. And you will not see any positive cash flow for not see any positive cash flow for not see any positive cash flow for probably the first 5 years that you own probably the first 5 years that you own probably the first 5 years that you own a rental property. The real cash flow a rental property. The real cash flow a rental property. The real cash flow comes after owning it for five to 10

[5:06] comes after owning it for five to 10 comes after owning it for five to 10 years and the rents have bumped up by years and the rents have bumped up by years and the rents have bumped up by two, three, four percent per year and two, three, four percent per year and two, three, four percent per year and you started paying down principal over you started paying down principal over you started paying down principal over that time too. And then you pick your that time too. And then you pick your that time too. And then you pick your head up, dude, in 10 years and you’re head up, dude, in 10 years and you’re head up, dude, in 10 years and you’re looking at how much equity you’ve built looking at how much equity you’ve built looking at how much equity you’ve built and then the amount of cash flow that and then the amount of cash flow that and then the amount of cash flow that comes in like that’s where the real comes in like that’s where the real comes in like that’s where the real magic happens. So you’ve got to be magic happens. So you’ve got to be magic happens. So you’ve got to be patient. You have to have a long-term

[5:26] patient. You have to have a long-term patient. You have to have a long-term vision in this stuff. vision in this stuff. vision in this stuff. >> Yeah. Yeah. And then and then hopefully >> Yeah. Yeah. And then and then hopefully >> Yeah. Yeah. And then and then hopefully there’s some appreciation there as well, there’s some appreciation there as well, there’s some appreciation there as well, which I know we’re not necessarily which I know we’re not necessarily which I know we’re not necessarily supposed to count on. Uh but no, that’s supposed to count on. Uh but no, that’s supposed to count on. Uh but no, that’s that’s awesome. So, uh you you broke that’s awesome. So, uh you you broke that’s awesome. So, uh you you broke that deal. You kind of had the light that deal. You kind of had the light that deal. You kind of had the light bulb moment of like, okay, I need to own bulb moment of like, okay, I need to own bulb moment of like, okay, I need to own some of this stuff to get on the other some of this stuff to get on the other some of this stuff to get on the other side of this this equation. Um and and

[5:43] side of this this equation. Um and and side of this this equation. Um and and yeah, really, I mean, you would be yeah, really, I mean, you would be yeah, really, I mean, you would be controlling that $30,000 or whatever you controlling that $30,000 or whatever you controlling that $30,000 or whatever you said, um uh a month. And that’s, you said, um uh a month. And that’s, you said, um uh a month. And that’s, you know, that’s some some power even if if know, that’s some some power even if if know, that’s some some power even if if a lot of it’s going to expenses, a lot a lot of it’s going to expenses, a lot a lot of it’s going to expenses, a lot of it’s going to the debt service, you of it’s going to the debt service, you of it’s going to the debt service, you kind of control that $30,000 rent check kind of control that $30,000 rent check kind of control that $30,000 rent check a month. So what was your next steps a month. So what was your next steps a month. So what was your next steps after that?

[6:00] after that? after that? >> Yeah. So I couldn’t afford, you know, I >> Yeah. So I couldn’t afford, you know, I >> Yeah. So I couldn’t afford, you know, I was a punk 22-year-old kid, right? And was a punk 22-year-old kid, right? And was a punk 22-year-old kid, right? And so like I can’t afford anything in New so like I can’t afford anything in New so like I can’t afford anything in New York City. So somebody I want a better York City. So somebody I want a better York City. So somebody I want a better lifestyle anyways. I love visiting New lifestyle anyways. I love visiting New lifestyle anyways. I love visiting New York. It’s just not a place that I would York. It’s just not a place that I would York. It’s just not a place that I would I wanted to live. And so I moved down to I wanted to live. And so I moved down to I wanted to live. And so I moved down to Charleston, South Carolina. Heard some Charleston, South Carolina. Heard some Charleston, South Carolina. Heard some good things about Charleston. So came good things about Charleston. So came good things about Charleston. So came down here and uh started learning,

[6:20] down here and uh started learning, down here and uh started learning, attending courses, paying for the rich attending courses, paying for the rich attending courses, paying for the rich dad education stuff and um going down dad education stuff and um going down dad education stuff and um going down that rabbit hole of, you know, back then that rabbit hole of, you know, back then that rabbit hole of, you know, back then it was like blogs and um uh things like it was like blogs and um uh things like it was like blogs and um uh things like that that I was paying attention to and that that I was paying attention to and that that I was paying attention to and and learning from and uh get ready to and learning from and uh get ready to and learning from and uh get ready to jump into real estate. Then all of a jump into real estate. Then all of a jump into real estate. Then all of a sudden, dude, the entire uh carpet gets sudden, dude, the entire uh carpet gets sudden, dude, the entire uh carpet gets swept out on the real estate industry, swept out on the real estate industry, swept out on the real estate industry, right? the great financial collapse

[6:43] right? the great financial collapse right? the great financial collapse occurs and um occurs and um occurs and um >> and everybody points the finger at real >> and everybody points the finger at real >> and everybody points the finger at real estate as the reason it was occurring. estate as the reason it was occurring. estate as the reason it was occurring. So at 22 years old, 23 years old, I So at 22 years old, 23 years old, I So at 22 years old, 23 years old, I wasn’t going to be able to raise any wasn’t going to be able to raise any wasn’t going to be able to raise any money from anybody else. Banks weren’t money from anybody else. Banks weren’t money from anybody else. Banks weren’t lending to me. Um so it was it was a it lending to me. Um so it was it was a it lending to me. Um so it was it was a it was a blessing though because right when was a blessing though because right when was a blessing though because right when I showed up to the party, everybody’s I showed up to the party, everybody’s I showed up to the party, everybody’s running out the back door saying run

[7:05] running out the back door saying run running out the back door saying run from real estate. if I hadn’t like the from real estate. if I hadn’t like the from real estate. if I hadn’t like the timing was actually pretty good though timing was actually pretty good though timing was actually pretty good though because as difficult as it was that was because as difficult as it was that was because as difficult as it was that was easier to handle than maybe graduating easier to handle than maybe graduating easier to handle than maybe graduating two or three years sooner going through two or three years sooner going through two or three years sooner going through down the real estate rabbit hole not down the real estate rabbit hole not down the real estate rabbit hole not knowing enough to be an expert or have knowing enough to be an expert or have knowing enough to be an expert or have the the wherewithal to to not take out a the the wherewithal to to not take out a the the wherewithal to to not take out a no document loan or a stated income loan no document loan or a stated income loan no document loan or a stated income loan and just go and borrow millions of

[7:27] and just go and borrow millions of and just go and borrow millions of dollars and be completely bankrupt at dollars and be completely bankrupt at dollars and be completely bankrupt at the age of 25 or something, you know, the age of 25 or something, you know, the age of 25 or something, you know, like. So, I’m I’m glad that didn’t like. So, I’m I’m glad that didn’t like. So, I’m I’m glad that didn’t happen, and I’m glad I graduated when I happen, and I’m glad I graduated when I happen, and I’m glad I graduated when I did. And as difficult as it was, I did. And as difficult as it was, I did. And as difficult as it was, I learned a lot about creative financing. learned a lot about creative financing.

[7:39] learned a lot about creative financing. I learned a lot about how to source I learned a lot about how to source I learned a lot about how to source offmarket deal flow, negotiate, deep offmarket deal flow, negotiate, deep offmarket deal flow, negotiate, deep discounts, you know, bump it up just a discounts, you know, bump it up just a discounts, you know, bump it up just a little bit, maybe not all the way to little bit, maybe not all the way to little bit, maybe not all the way to retail price, just so I can get it sold retail price, just so I can get it sold retail price, just so I can get it sold faster. And, you know, that that quick faster. And, you know, that that quick faster. And, you know, that that quick nickel is better than slow dime kind of nickel is better than slow dime kind of nickel is better than slow dime kind of a thing. And just transact and transact.

[7:54] a thing. And just transact and transact. a thing. And just transact and transact. And the more transactions I did, the And the more transactions I did, the And the more transactions I did, the more confidence I had, the more people more confidence I had, the more people more confidence I had, the more people saw me transacting in real estate when saw me transacting in real estate when saw me transacting in real estate when nobody else is transacting in real nobody else is transacting in real nobody else is transacting in real estate or making money in real estate. estate or making money in real estate. estate or making money in real estate. They’re like, “What what the hell is They’re like, “What what the hell is They’re like, “What what the hell is going on with this kid?” going on with this kid?” going on with this kid?” >> And uh then all of a sudden people are >> And uh then all of a sudden people are >> And uh then all of a sudden people are like, “Well, dude, I got 50 grand or I like, “Well, dude, I got 50 grand or I like, “Well, dude, I got 50 grand or I have 100 grand or I have 25 grand that

[8:11] have 100 grand or I have 25 grand that have 100 grand or I have 25 grand that I’d love to invest with you into some I’d love to invest with you into some I’d love to invest with you into some real estate deals.” And um and when real estate deals.” And um and when real estate deals.” And um and when you’re buying properties for, you know, you’re buying properties for, you know, you’re buying properties for, you know, under $50,000 a door, like you can’t under $50,000 a door, like you can’t under $50,000 a door, like you can’t lose and they rent for $750 a month, you lose and they rent for $750 a month, you lose and they rent for $750 a month, you you literally can’t lose on stuff like you literally can’t lose on stuff like you literally can’t lose on stuff like that. So, uh so I I started building up that. So, uh so I I started building up that. So, uh so I I started building up a portfolio of single family homes, a portfolio of single family homes, a portfolio of single family homes, chasing shiny objects.

[8:32] chasing shiny objects. chasing shiny objects. >> Uh that wasn’t good like in other >> Uh that wasn’t good like in other >> Uh that wasn’t good like in other industries. got back into real estate by industries. got back into real estate by industries. got back into real estate by 2012 and um and just put my head down 2012 and um and just put my head down 2012 and um and just put my head down and started collecting houses and and and started collecting houses and and and started collecting houses and and then I got into multif family and then then I got into multif family and then then I got into multif family and then an 8-unit building came across my desk an 8-unit building came across my desk an 8-unit building came across my desk bankowned in 20 I think it was December bankowned in 20 I think it was December bankowned in 20 I think it was December of 2012. Um eight units I bought it for of 2012. Um eight units I bought it for of 2012. Um eight units I bought it for $32,000 $32,000 $32,000 and uh I put another 50 grand into it and uh I put another 50 grand into it and uh I put another 50 grand into it but I was all in for $10,000 a door and

[8:57] but I was all in for $10,000 a door and but I was all in for $10,000 a door and they were all rented for you know they were all rented for you know they were all rented for you know anywhere from $500 to $800 a month. It anywhere from $500 to $800 a month. It anywhere from $500 to $800 a month. It was C-class and it was was C-class and it was was C-class and it was >> sure >> sure >> sure >> dealing with drug addicts and >> dealing with drug addicts and >> dealing with drug addicts and and stuff like that. But um at the end and stuff like that. But um at the end and stuff like that. But um at the end of the day it was like I understood the of the day it was like I understood the of the day it was like I understood the idea of efficiency and I understood the idea of efficiency and I understood the idea of efficiency and I understood the idea of going to one property and idea of going to one property and idea of going to one property and looking at one foundation and paying one looking at one foundation and paying one looking at one foundation and paying one utility bill and paying one tax bill

[9:19] utility bill and paying one tax bill utility bill and paying one tax bill instead of having eight single family instead of having eight single family instead of having eight single family homes where I had eight foundations and homes where I had eight foundations and homes where I had eight foundations and eight roofs and eight uh closings and eight roofs and eight uh closings and eight roofs and eight uh closings and eight loans and eight uh tax bills. like eight loans and eight uh tax bills. like eight loans and eight uh tax bills. like just the the efficiencies that came with just the the efficiencies that came with just the the efficiencies that came with buying multif family really resonated buying multif family really resonated buying multif family really resonated with with me and so I was like this is with with me and so I was like this is with with me and so I was like this is where I want to be. So I I bought where I want to be. So I I bought where I want to be. So I I bought another 8 unit then I bought a 12 unit another 8 unit then I bought a 12 unit another 8 unit then I bought a 12 unit then I bought a uh 23 unit and then I

[9:40] then I bought a uh 23 unit and then I then I bought a uh 23 unit and then I bought a 31 unit and then I just kept on bought a 31 unit and then I just kept on bought a 31 unit and then I just kept on scaling up and over the course of the scaling up and over the course of the scaling up and over the course of the next three years I bought about 140 next three years I bought about 140 next three years I bought about 140 doors um and just managed it with me and doors um and just managed it with me and doors um and just managed it with me and and one other part-time employee. Tim, and one other part-time employee. Tim, and one other part-time employee. Tim, um, circle back to that first Apex. Um, um, circle back to that first Apex. Um, um, circle back to that first Apex. Um, those numbers are insane and people those numbers are insane and people those numbers are insane and people probably are like, “That’s a no-brainer.

[9:59] probably are like, “That’s a no-brainer. probably are like, “That’s a no-brainer. I wish those deals would happen now.” I wish those deals would happen now.” I wish those deals would happen now.” Um, but I’m guessing at that time it Um, but I’m guessing at that time it Um, but I’m guessing at that time it wasn’t like, you know, like like you had wasn’t like, you know, like like you had wasn’t like, you know, like like you had the confidence to continue through, but the confidence to continue through, but the confidence to continue through, but I’m guessing there probably was also I’m guessing there probably was also I’m guessing there probably was also some some reservations and I think it’s some some reservations and I think it’s some some reservations and I think it’s very common that people like feel like very common that people like feel like very common that people like feel like they’re overpaying or like it’s the they’re overpaying or like it’s the they’re overpaying or like it’s the deals were before. Uh, but it’s always deals were before. Uh, but it’s always deals were before. Uh, but it’s always in hindsight that you’d realize how good

[10:18] in hindsight that you’d realize how good in hindsight that you’d realize how good the deal was. You know what I mean? So, the deal was. You know what I mean? So, the deal was. You know what I mean? So, so think about it this way. Like today, so think about it this way. Like today, so think about it this way. Like today, yes, oh my gosh, I would have bought the yes, oh my gosh, I would have bought the yes, oh my gosh, I would have bought the whole planet if I could buy it at whole planet if I could buy it at whole planet if I could buy it at $10,000 door, right? Buy the Earth. Uh, $10,000 door, right? Buy the Earth. Uh, $10,000 door, right? Buy the Earth. Uh, here’s the difference. The market back here’s the difference. The market back here’s the difference. The market back then was not the market today. There was then was not the market today. There was then was not the market today. There was zero money. There was no banks lending zero money. There was no banks lending zero money. There was no banks lending on rental properties. There was no on rental properties. There was no on rental properties. There was no private investors. There were no hard

[10:39] private investors. There were no hard private investors. There were no hard money lenders loaning because they were money lenders loaning because they were money lenders loaning because they were all out of business, dude. They all lost all out of business, dude. They all lost all out of business, dude. They all lost everything. They were all going everything. They were all going everything. They were all going bankrupt. Um, literally there were no bankrupt. Um, literally there were no bankrupt. Um, literally there were no buyers for real estate and there were no buyers for real estate and there were no buyers for real estate and there were no investors or lenders for real estate and investors or lenders for real estate and investors or lenders for real estate and the the decline in values was the the decline in values was the the decline in values was precipitous from 20 2008 to 2012. Values precipitous from 20 2008 to 2012. Values precipitous from 20 2008 to 2012. Values kept on dropping by 20% every single kept on dropping by 20% every single kept on dropping by 20% every single year uh across some of these markets.

[11:04] year uh across some of these markets. year uh across some of these markets. And it was like, oh my gosh, you’re just And it was like, oh my gosh, you’re just And it was like, oh my gosh, you’re just going to try to catch a falling knife going to try to catch a falling knife going to try to catch a falling knife back then. And and it’s like, well, you back then. And and it’s like, well, you back then. And and it’s like, well, you know, eventually you sit back and you know, eventually you sit back and you know, eventually you sit back and you don’t get emotional over the thing. and don’t get emotional over the thing. and don’t get emotional over the thing. and you’re like, you know what, this looks you’re like, you know what, this looks you’re like, you know what, this looks like a pretty good deal. Like, I can’t I like a pretty good deal. Like, I can’t I like a pretty good deal. Like, I can’t I can’t lose that bad. But I will I will can’t lose that bad. But I will I will can’t lose that bad. But I will I will say like I sold that I think three or say like I sold that I think three or say like I sold that I think three or four years later. And dude, the most I

[11:22] four years later. And dude, the most I four years later. And dude, the most I got for it was like a 100 I think I sold got for it was like a 100 I think I sold got for it was like a 100 I think I sold it for 125. So like, yeah, great. I I it for 125. So like, yeah, great. I I it for 125. So like, yeah, great. I I made a I was into it for $80,000. I sold made a I was into it for $80,000. I sold made a I was into it for $80,000. I sold it for 125 grand, but I had owned it for it for 125 grand, but I had owned it for it for 125 grand, but I had owned it for four years in this dump of an area and I four years in this dump of an area and I four years in this dump of an area and I made $40,000 on it, you know? So it’s made $40,000 on it, you know? So it’s made $40,000 on it, you know? So it’s like uh it didn’t really the values like uh it didn’t really the values like uh it didn’t really the values didn’t really start jumping up until didn’t really start jumping up until didn’t really start jumping up until 2018 20 really 2019 2020 2021 and then 2018 20 really 2019 2020 2021 and then 2018 20 really 2019 2020 2021 and then it was like multif family was on fire

[11:47] it was like multif family was on fire it was like multif family was on fire and then it fell off a cliff again in 23 and then it fell off a cliff again in 23 and then it fell off a cliff again in 23 24 25 because of interest rates. 24 25 because of interest rates. 24 25 because of interest rates. >> Yeah. No >> Yeah. No >> Yeah. No >> insurance costs and everything else and >> insurance costs and everything else and >> insurance costs and everything else and bad management. when you when you were bad management. when you when you were bad management. when you when you were talking about timing of getting into it, talking about timing of getting into it, talking about timing of getting into it, uh you know, that’s the first thing I uh you know, that’s the first thing I uh you know, that’s the first thing I thought of is like, yeah, you could have thought of is like, yeah, you could have thought of is like, yeah, you could have started at 2020 or, you know, something started at 2020 or, you know, something started at 2020 or, you know, something around there, gotten really uh

[12:05] around there, gotten really uh around there, gotten really uh aggressive and and built a huge aggressive and and built a huge aggressive and and built a huge portfolio with bridge debt, um and then portfolio with bridge debt, um and then portfolio with bridge debt, um and then faced the interest rates changing um faced the interest rates changing um faced the interest rates changing um which a lot of people which a lot of people which a lot of people >> and then >> and then >> and then >> Yeah. Yeah. Um I mean, while we’re >> Yeah. Yeah. Um I mean, while we’re >> Yeah. Yeah. Um I mean, while we’re there, like how how has this uh the there, like how how has this uh the there, like how how has this uh the change of interest rates and the like change of interest rates and the like change of interest rates and the like insurance costs, all that kind of stuff insurance costs, all that kind of stuff insurance costs, all that kind of stuff impacted you? your your all’s portfolio, impacted you? your your all’s portfolio, impacted you? your your all’s portfolio, >> dude. Every everybody in real estate,

[12:28] >> dude. Every everybody in real estate, >> dude. Every everybody in real estate, everybody in multif family, everybody in everybody in multif family, everybody in everybody in multif family, everybody in commercial real estate is just taking commercial real estate is just taking commercial real estate is just taking arrows left and right right now. arrows left and right right now. arrows left and right right now. >> Um, and for the past three years, they >> Um, and for the past three years, they >> Um, and for the past three years, they have been. have been. have been. >> It has been absolutely brutal. It hasn’t >> It has been absolutely brutal. It hasn’t >> It has been absolutely brutal. It hasn’t been a just an interest rate. I know been a just an interest rate. I know been a just an interest rate. I know everybody points at interest rates. That everybody points at interest rates. That everybody points at interest rates. That really was the uh maybe the exacerbation really was the uh maybe the exacerbation really was the uh maybe the exacerbation of the the the the impetus of like, oh

[12:47] of the the the the impetus of like, oh of the the the the impetus of like, oh man, like let’s pay attention and man, like let’s pay attention and man, like let’s pay attention and interest rates are changing and interest rates are changing and interest rates are changing and valuations are changing. But dude, valuations are changing. But dude, valuations are changing. But dude, insurance tripled and quadrupled in some insurance tripled and quadrupled in some insurance tripled and quadrupled in some markets that I’m in, like in in Houston, markets that I’m in, like in in Houston, markets that I’m in, like in in Houston, Texas, and in Louisiana, and in even in Texas, and in Louisiana, and in even in Texas, and in Louisiana, and in even in like the middle of Georgia, these storms like the middle of Georgia, these storms like the middle of Georgia, these storms that hit the Gulf Coast, and then they that hit the Gulf Coast, and then they that hit the Gulf Coast, and then they come over Georgia and they dump and they come over Georgia and they dump and they come over Georgia and they dump and they tear off roofs and like the insurance

[13:07] tear off roofs and like the insurance tear off roofs and like the insurance tripled there. And and that’s not tripled there. And and that’s not tripled there. And and that’s not something that goes away. That’s not something that goes away. That’s not something that goes away. That’s not like an interest rate that rises and like an interest rate that rises and like an interest rate that rises and falls. Like insurance just just gets falls. Like insurance just just gets falls. Like insurance just just gets more and more expensive. Um and that and more and more expensive. Um and that and more and more expensive. Um and that and it adversely impacts the uh the net it adversely impacts the uh the net it adversely impacts the uh the net operating income in a massive way which operating income in a massive way which operating income in a massive way which impacts the valuation, right?

[13:22] impacts the valuation, right? impacts the valuation, right? >> Uh labor costs gone through the roof, >> Uh labor costs gone through the roof, >> Uh labor costs gone through the roof, right? Supply chain still messed up and right? Supply chain still messed up and right? Supply chain still messed up and all materials and supplies are more all materials and supplies are more all materials and supplies are more expensive. Energy costs are more expensive. Energy costs are more expensive. Energy costs are more expensive. Utility costs are more expensive. Utility costs are more expensive. Utility costs are more expensive. But dude, you know what’s expensive. But dude, you know what’s expensive. But dude, you know what’s evaporated more my net worth and more evaporated more my net worth and more evaporated more my net worth and more property value than all of those things property value than all of those things property value than all of those things combined is bad third party management.

[13:40] combined is bad third party management. combined is bad third party management. Like just just bad management. people Like just just bad management. people Like just just bad management. people who and and companies where we have a who and and companies where we have a who and and companies where we have a property and it’s worth $5 million, $10 property and it’s worth $5 million, $10 property and it’s worth $5 million, $10 million, $60 million, $2 million, million, $60 million, $2 million, million, $60 million, $2 million, doesn’t matter. And you put somebody in doesn’t matter. And you put somebody in doesn’t matter. And you put somebody in charge of it to manage your charge of it to manage your charge of it to manage your multi-million dollar business and you multi-million dollar business and you multi-million dollar business and you only pay them50 grand a year, 40 grand a only pay them50 grand a year, 40 grand a only pay them50 grand a year, 40 grand a year, whatever, as a as a salary. And year, whatever, as a as a salary. And year, whatever, as a as a salary. And you expect them to accurately do that.

[14:04] you expect them to accurately do that. you expect them to accurately do that. And even if it’s layered with thirdparty And even if it’s layered with thirdparty And even if it’s layered with thirdparty property management, you expect them it property management, you expect them it property management, you expect them it being their business to do it. And and being their business to do it. And and being their business to do it. And and even if you hop on phone calls with them even if you hop on phone calls with them even if you hop on phone calls with them uh from an asset management perspective, uh from an asset management perspective, uh from an asset management perspective, which we do on a weekly basis to make which we do on a weekly basis to make which we do on a weekly basis to make sure the needle is moving forward, guess sure the needle is moving forward, guess sure the needle is moving forward, guess what, man? You’re getting data that is what, man? You’re getting data that is what, man? You’re getting data that is either inaccurate or it’s delayed either inaccurate or it’s delayed

[14:23] either inaccurate or it’s delayed dramatically, right? Like I wait until dramatically, right? Like I wait until dramatically, right? Like I wait until the 15th of the month to get the the 15th of the month to get the the 15th of the month to get the previous month’s financials. It’s like previous month’s financials. It’s like previous month’s financials. It’s like driving a car looking in a rearview driving a car looking in a rearview driving a car looking in a rearview mirror, right? Trying to drive forward mirror, right? Trying to drive forward mirror, right? Trying to drive forward looking only backward. It’s like how how looking only backward. It’s like how how looking only backward. It’s like how how can you accurately and and uh can you accurately and and uh can you accurately and and uh productively manage a rental property if productively manage a rental property if productively manage a rental property if you’re always working off of bad data you’re always working off of bad data you’re always working off of bad data and bad and slow data uh and not and bad and slow data uh and not

[14:46] and bad and slow data uh and not transparent data. Like I can’t tell you transparent data. Like I can’t tell you transparent data. Like I can’t tell you how many times I’ve fired third party how many times I’ve fired third party how many times I’ve fired third party management and found hundreds of management and found hundreds of management and found hundreds of thousands of dollars of unpaid payables, thousands of dollars of unpaid payables, thousands of dollars of unpaid payables, aged payables, um that were never aged payables, um that were never aged payables, um that were never disclosed on the financial reports. Like disclosed on the financial reports. Like disclosed on the financial reports. Like dude, you know, if the water bill’s not dude, you know, if the water bill’s not dude, you know, if the water bill’s not paid, right? Like these are things that paid, right? Like these are things that paid, right? Like these are things that aren’t just like some vendor contract.

[15:04] aren’t just like some vendor contract. aren’t just like some vendor contract. It’s just and and it’s across the board It’s just and and it’s across the board It’s just and and it’s across the board all the time, which is one of the all the time, which is one of the all the time, which is one of the impetuses of why we um started smart impetuses of why we um started smart impetuses of why we um started smart management, our property management management, our property management management, our property management software and developed that whole thing software and developed that whole thing software and developed that whole thing to to expose bad third-party management to to expose bad third-party management to to expose bad third-party management and to empower good third party and to empower good third party and to empower good third party management and to empower owners to take management and to empower owners to take management and to empower owners to take over management in-house. And so that’s over management in-house. And so that’s over management in-house. And so that’s been a big part of the past few years of

[15:27] been a big part of the past few years of been a big part of the past few years of just like, dude, I can’t let these just like, dude, I can’t let these just like, dude, I can’t let these layers get in the way of, you know, layers get in the way of, you know, layers get in the way of, you know, here’s where the revenue is and here’s here’s where the revenue is and here’s here’s where the revenue is and here’s where our our ownership team was. And where our our ownership team was. And where our our ownership team was. And there were, you know, different there were, you know, different there were, you know, different different uh site level management team, different uh site level management team, different uh site level management team, third party management, regional third party management, regional third party management, regional managers, then the asset management managers, then the asset management managers, then the asset management team, my sea level executive team, and team, my sea level executive team, and team, my sea level executive team, and then me. It’s like, dude, if you are

[15:47] then me. It’s like, dude, if you are then me. It’s like, dude, if you are dealing with just chaos in business, you dealing with just chaos in business, you dealing with just chaos in business, you need to eliminate as many of those need to eliminate as many of those need to eliminate as many of those layers. ownership and leadership needs layers. ownership and leadership needs layers. ownership and leadership needs to get as close to the customer base as to get as close to the customer base as to get as close to the customer base as possible. So, we got rid of all third possible. So, we got rid of all third possible. So, we got rid of all third party management and like literally me party management and like literally me party management and like literally me and my team are on um calls with the and my team are on um calls with the and my team are on um calls with the site level team who’s direct then to the site level team who’s direct then to the site level team who’s direct then to the uh to the tenant base. And so, we’ve uh to the tenant base. And so, we’ve uh to the tenant base. And so, we’ve built it out all in house. We put all

[16:11] built it out all in house. We put all built it out all in house. We put all new SOPs and uh uh metrics and things new SOPs and uh uh metrics and things new SOPs and uh uh metrics and things like that together and put in place and like that together and put in place and like that together and put in place and and just tightened up and controlled the and just tightened up and controlled the and just tightened up and controlled the controllables, right? There’s a lot of controllables, right? There’s a lot of controllables, right? There’s a lot of things outside of our control. The end things outside of our control. The end things outside of our control. The end of the day, man, what can you control?

[16:23] of the day, man, what can you control? of the day, man, what can you control? And that will give you will make you And that will give you will make you And that will give you will make you feel like less of a victim and more feel like less of a victim and more feel like less of a victim and more empowered. empowered. empowered. >> Oh, that makes a ton of sense. And I >> Oh, that makes a ton of sense. And I >> Oh, that makes a ton of sense. And I guess maybe we should in case people guess maybe we should in case people guess maybe we should in case people don’t really understand the the way uh don’t really understand the the way uh don’t really understand the the way uh this world works with cap rates, um NOI, this world works with cap rates, um NOI, this world works with cap rates, um NOI, that kind of stuff. Uh do you want to that kind of stuff. Uh do you want to that kind of stuff. Uh do you want to give us a quick kind of rundown as to give us a quick kind of rundown as to give us a quick kind of rundown as to why this is so critical, why making sure why this is so critical, why making sure

[16:42] why this is so critical, why making sure that your expenses are are manage? that your expenses are are manage? that your expenses are are manage? >> So, so a lot of realtors, a lot of real >> So, so a lot of realtors, a lot of real >> So, so a lot of realtors, a lot of real estate agents that watch this, right? estate agents that watch this, right? estate agents that watch this, right? Um, so when you go through real estate Um, so when you go through real estate Um, so when you go through real estate class, you you’re taught how to value class, you you’re taught how to value class, you you’re taught how to value properties in three different ways. One properties in three different ways. One properties in three different ways. One is the cost approach to build something.

[16:58] is the cost approach to build something. is the cost approach to build something. Another is the comparable approach of I Another is the comparable approach of I Another is the comparable approach of I have a three-bedroom, two bath house have a three-bedroom, two bath house have a three-bedroom, two bath house right here that’s 1,500 ft² and the right here that’s 1,500 ft² and the right here that’s 1,500 ft² and the house across the street just sold for house across the street just sold for house across the street just sold for $300,000 and it’s threebed, two bath and $300,000 and it’s threebed, two bath and $300,000 and it’s threebed, two bath and 1,600 ft². So mine’s probably worth 280, 1,600 ft². So mine’s probably worth 280, 1,600 ft². So mine’s probably worth 280, 290 or whatever, right? So that’s a 290 or whatever, right? So that’s a 290 or whatever, right? So that’s a comparable approach based on other comparable approach based on other comparable approach based on other things that have sold. And then the things that have sold. And then the things that have sold. And then the third one is the income approach. This

[17:20] third one is the income approach. This third one is the income approach. This is how businesses are valued and this is is how businesses are valued and this is is how businesses are valued and this is how commercial real estate is valued. So how commercial real estate is valued. So how commercial real estate is valued. So all that matters here is what is the all that matters here is what is the all that matters here is what is the income minus all the operating expenses, income minus all the operating expenses, income minus all the operating expenses, taxes, insurance, utilities, taxes, insurance, utilities, taxes, insurance, utilities, maintenance, management and it leaves maintenance, management and it leaves maintenance, management and it leaves you with a net operating income, right?

[17:36] you with a net operating income, right? you with a net operating income, right? This is how much I net at the end of the This is how much I net at the end of the This is how much I net at the end of the year or at the end of the Yeah. At the year or at the end of the Yeah. At the year or at the end of the Yeah. At the end of the year of this net, your value end of the year of this net, your value end of the year of this net, your value of that property is a multiple of that. of that property is a multiple of that. of that property is a multiple of that. That’s the cap rate valuation. So, a cap That’s the cap rate valuation. So, a cap That’s the cap rate valuation. So, a cap rate is like, listen, uh you’re you’re rate is like, listen, uh you’re you’re rate is like, listen, uh you’re you’re netting $60,000 a year uh on your netting $60,000 a year uh on your netting $60,000 a year uh on your apartment complex. The going cap rate apartment complex. The going cap rate apartment complex. The going cap rate for apartment buildings in Cleveland, for apartment buildings in Cleveland, for apartment buildings in Cleveland, Ohio is um a 6% cap rate. So, you take

[18:01] Ohio is um a 6% cap rate. So, you take Ohio is um a 6% cap rate. So, you take 60,000 divided by 6 and it leaves you 60,000 divided by 6 and it leaves you 60,000 divided by 6 and it leaves you with a valuation of $1 million. So, your with a valuation of $1 million. So, your with a valuation of $1 million. So, your property would typically appraise for property would typically appraise for property would typically appraise for around $1 million in the commercial around $1 million in the commercial around $1 million in the commercial world based on the income approach. And world based on the income approach. And world based on the income approach. And so that is what impacts valuation. So so that is what impacts valuation. So so that is what impacts valuation. So I’ll give you an example on that net I’ll give you an example on that net I’ll give you an example on that net income of $60,000. Let’s say I was able income of $60,000. Let’s say I was able income of $60,000. Let’s say I was able to implement some sort of a um valet to implement some sort of a um valet to implement some sort of a um valet trash, right? And maybe this is a

[18:28] trash, right? And maybe this is a trash, right? And maybe this is a 10-unit building on a 10-unit apartment 10-unit building on a 10-unit apartment 10-unit building on a 10-unit apartment complex and I implemented valet trash. complex and I implemented valet trash. complex and I implemented valet trash. Valley trash is like when they come and Valley trash is like when they come and Valley trash is like when they come and they take your trash from your front they take your trash from your front they take your trash from your front door and they they take it out to the door and they they take it out to the door and they they take it out to the street and they take the garbage cans street and they take the garbage cans street and they take the garbage cans out. You don’t have to deal with any of out. You don’t have to deal with any of out. You don’t have to deal with any of that. And uh and maybe I can implement that. And uh and maybe I can implement that. And uh and maybe I can implement valet trash for 15 bucks a month per valet trash for 15 bucks a month per valet trash for 15 bucks a month per tenant. And out of my 10 tenants, I’m

[18:46] tenant. And out of my 10 tenants, I’m tenant. And out of my 10 tenants, I’m going to do some quick math. $15 time 12 going to do some quick math. $15 time 12 going to do some quick math. $15 time 12 months time 10 tenants brings in $1,800 months time 10 tenants brings in $1,800 months time 10 tenants brings in $1,800 additional income that we didn’t have additional income that we didn’t have additional income that we didn’t have before we had valet trash. And this is before we had valet trash. And this is before we had valet trash. And this is in addition to rents. So I bring in in addition to rents. So I bring in in addition to rents. So I bring in $1,800 of additional net income that $1,800 of additional net income that $1,800 of additional net income that goes straight to the bottom line.

[19:03] goes straight to the bottom line. goes straight to the bottom line. There’s no additional expense. It’s just There’s no additional expense. It’s just There’s no additional expense. It’s just like my maintenance guy who’s already like my maintenance guy who’s already like my maintenance guy who’s already there and he just takes it out twice a there and he just takes it out twice a there and he just takes it out twice a week or whatever it is. $1,800 of cash week or whatever it is. $1,800 of cash week or whatever it is. $1,800 of cash flow. That’s that’s exciting. What gets flow. That’s that’s exciting. What gets flow. That’s that’s exciting. What gets more exciting is at a 6% cap rate, I’m more exciting is at a 6% cap rate, I’m more exciting is at a 6% cap rate, I’m sorry, divided by 0.06, not6, divided by sorry, divided by 0.06, not6, divided by sorry, divided by 0.06, not6, divided by 006, 006, 006, >> right?

[19:19] >> right? >> right? >> Adds $30,000 >> Adds $30,000 >> Adds $30,000 to the valuation of that apartment to the valuation of that apartment to the valuation of that apartment complex. All by just adding a $15 a complex. All by just adding a $15 a complex. All by just adding a $15 a month additional revenue stream to the month additional revenue stream to the month additional revenue stream to the property. And so you can see how all of property. And so you can see how all of property. And so you can see how all of a sudden like little things start a sudden like little things start a sudden like little things start compounding in a positive way if you’re compounding in a positive way if you’re compounding in a positive way if you’re generating more revenue or able to generating more revenue or able to generating more revenue or able to reduce your expenses. And the flip side reduce your expenses. And the flip side reduce your expenses. And the flip side of that coin or the other side of that of that coin or the other side of that of that coin or the other side of that pendulum is that if expenses go up, it

[19:45] pendulum is that if expenses go up, it pendulum is that if expenses go up, it can dramatically dramatically adversely can dramatically dramatically adversely can dramatically dramatically adversely impact your net income and your uh your impact your net income and your uh your impact your net income and your uh your valuation. And that’s what’s happened valuation. And that’s what’s happened valuation. And that’s what’s happened over the past three years is as interest over the past three years is as interest over the past three years is as interest rates or not interest rates, expenses rates or not interest rates, expenses rates or not interest rates, expenses have increased. You know, it’s let’s say have increased. You know, it’s let’s say have increased. You know, it’s let’s say your your uh property taxes go up, you your your uh property taxes go up, you your your uh property taxes go up, you know, your property taxes on a building know, your property taxes on a building know, your property taxes on a building that size would be like $20,000. Let’s that size would be like $20,000. Let’s

[20:06] that size would be like $20,000. Let’s say they increase by 15%. Right? So say they increase by 15%. Right? So say they increase by 15%. Right? So $20,000 times 1.15 goes up by $3,000. $20,000 times 1.15 goes up by $3,000. $20,000 times 1.15 goes up by $3,000. $3,000 a year divided by a 6% cap rate $3,000 a year divided by a 6% cap rate $3,000 a year divided by a 6% cap rate reduces the value by $50,000. So now you reduces the value by $50,000. So now you reduces the value by $50,000. So now you can’t sell that apartment building for a can’t sell that apartment building for a can’t sell that apartment building for a million bucks. Now you have to sell that million bucks. Now you have to sell that million bucks. Now you have to sell that apartment building for uh 950 grand. All apartment building for uh 950 grand. All apartment building for uh 950 grand. All because property taxes bumped up just because property taxes bumped up just because property taxes bumped up just naturally got reassessed every 5 years naturally got reassessed every 5 years naturally got reassessed every 5 years and that’s what happened. Like dude, so

[20:32] and that’s what happened. Like dude, so and that’s what happened. Like dude, so imagine what happens if your insurance imagine what happens if your insurance imagine what happens if your insurance doubles. Imagine what happens if your doubles. Imagine what happens if your doubles. Imagine what happens if your utilities increase by 30%. Imagine what utilities increase by 30%. Imagine what utilities increase by 30%. Imagine what happens when uh labor increases and happens when uh labor increases and happens when uh labor increases and material costs increase. Just dude, it’s material costs increase. Just dude, it’s material costs increase. Just dude, it’s like you’re getting arrows from every like you’re getting arrows from every like you’re getting arrows from every single direction and all of a sudden single direction and all of a sudden single direction and all of a sudden these properties go from being worth these properties go from being worth these properties go from being worth millions of dollars or like 10 million millions of dollars or like 10 million millions of dollars or like 10 million bucks to all of a sudden it’s worth $6

[20:53] bucks to all of a sudden it’s worth $6 bucks to all of a sudden it’s worth $6 million and you’re like, “Oh my gosh.” million and you’re like, “Oh my gosh.” million and you’re like, “Oh my gosh.” >> And and a big part of what dictates the >> And and a big part of what dictates the >> And and a big part of what dictates the cap rate is interest rates. So that’s cap rate is interest rates. So that’s cap rate is interest rates. So that’s why interest rates play a part because why interest rates play a part because why interest rates play a part because usually you want to spread between what usually you want to spread between what usually you want to spread between what your cap rate a cap rate is also known your cap rate a cap rate is also known your cap rate a cap rate is also known as like an unleveraged yield. It’s like as like an unleveraged yield. It’s like as like an unleveraged yield. It’s like if I bought this million-doll property if I bought this million-doll property if I bought this million-doll property with cash, my yield, my net my my my with cash, my yield, my net my my my

[21:15] with cash, my yield, my net my my my return on my investment is would would return on my investment is would would return on my investment is would would be 6% a 6% cap rate. And so if I’m going be 6% a 6% cap rate. And so if I’m going be 6% a 6% cap rate. And so if I’m going to go put leverage on it, if I’m going to go put leverage on it, if I’m going to go put leverage on it, if I’m going to go get a loan for it, typically the to go get a loan for it, typically the to go get a loan for it, typically the lender, you know, uh you’d want interest lender, you know, uh you’d want interest lender, you know, uh you’d want interest rates. there’s probably a spread of rates. there’s probably a spread of rates. there’s probably a spread of somewhere between 1 to two percentage somewhere between 1 to two percentage somewhere between 1 to two percentage points on on that. So, this is a 6% cap points on on that. So, this is a 6% cap points on on that. So, this is a 6% cap rate when interest rates were four or rate when interest rates were four or rate when interest rates were four or 5%. Today, with interest rates being 6%,

[21:38] 5%. Today, with interest rates being 6%, 5%. Today, with interest rates being 6%, you’re looking at a 7 or 8% cap rate you’re looking at a 7 or 8% cap rate you’re looking at a 7 or 8% cap rate valuation. So, on that same $60,000 of valuation. So, on that same $60,000 of valuation. So, on that same $60,000 of net income, uh, at an 8% cap rate net income, uh, at an 8% cap rate net income, uh, at an 8% cap rate valuation, right, instead of a 6% cap valuation, right, instead of a 6% cap valuation, right, instead of a 6% cap rate valuation, brings your value down rate valuation, brings your value down rate valuation, brings your value down by 25% by $250,000. by 25% by $250,000. by 25% by $250,000. That is why so many uh, you know, That is why so many uh, you know, That is why so many uh, you know, commercial investors are walking around commercial investors are walking around commercial investors are walking around today with like, oh my god, just beaten today with like, oh my god, just beaten today with like, oh my god, just beaten and bruised because not only are the and bruised because not only are the

[22:06] and bruised because not only are the NOIs, the net incomes lower, but the NOIs, the net incomes lower, but the NOIs, the net incomes lower, but the valuation, it’s just every direction, valuation, it’s just every direction, valuation, it’s just every direction, man. we’ve gotten hit. And so it’s been man. we’ve gotten hit. And so it’s been man. we’ve gotten hit. And so it’s been um it’s been a pretty tough market for um it’s been a pretty tough market for um it’s been a pretty tough market for the past three years. But the past three years. But the past three years. But >> that being said, for somebody who’s like >> that being said, for somebody who’s like >> that being said, for somebody who’s like new saying, I want nothing to do with new saying, I want nothing to do with new saying, I want nothing to do with multif family, like when there’s blood multif family, like when there’s blood multif family, like when there’s blood in the streets, that’s the time to buy, in the streets, that’s the time to buy, in the streets, that’s the time to buy, right? That’s when the opportunities

[22:25] right? That’s when the opportunities right? That’s when the opportunities are. And there’s a lot of jaded and are. And there’s a lot of jaded and are. And there’s a lot of jaded and tired and beaten and bruised uh tired and beaten and bruised uh tired and beaten and bruised uh operators that just want portfolios off operators that just want portfolios off operators that just want portfolios off their books and they’re willing to take their books and they’re willing to take their books and they’re willing to take a big loss. And it’s a great time to be a big loss. And it’s a great time to be a big loss. And it’s a great time to be able to step in and buy discounted able to step in and buy discounted able to step in and buy discounted multif family properties. And so, um, multif family properties. And so, um, multif family properties. And so, um, the other thing is, man, um, I don’t the other thing is, man, um, I don’t the other thing is, man, um, I don’t want to ramble too long, but want to ramble too long, but want to ramble too long, but >> no, >> no, >> no, >> I I see the the market really turning

[22:48] >> I I see the the market really turning >> I I see the the market really turning and being very positive for multif and being very positive for multif and being very positive for multif family for the second half of this family for the second half of this family for the second half of this decade. If you take a look at housing decade. If you take a look at housing decade. If you take a look at housing statistics, we are 4 million housing statistics, we are 4 million housing statistics, we are 4 million housing units short of supply of what we need in units short of supply of what we need in units short of supply of what we need in the United States right now. And you’ve the United States right now. And you’ve the United States right now. And you’ve seen flat rents and yeah, well, if it’s seen flat rents and yeah, well, if it’s seen flat rents and yeah, well, if it’s been so, you know, there’s so many been so, you know, there’s so many been so, you know, there’s so many housing units short, how come rents housing units short, how come rents housing units short, how come rents aren’t higher? How come valuations are

[23:07] aren’t higher? How come valuations are aren’t higher? How come valuations are blah blah blah this or that? Well, blah blah blah this or that? Well, blah blah blah this or that? Well, there’s been a lot of deliveries of new there’s been a lot of deliveries of new there’s been a lot of deliveries of new product happening in 2023, 2024, and product happening in 2023, 2024, and product happening in 2023, 2024, and 2025. These are things, developments, 2025. These are things, developments, 2025. These are things, developments, build to rent, you name it, that were uh build to rent, you name it, that were uh build to rent, you name it, that were uh acquired and started in 2020, 2021, and acquired and started in 2020, 2021, and acquired and started in 2020, 2021, and 2022.

[23:24] 2022. 2022. >> And so then it takes 24 to 36 months to >> And so then it takes 24 to 36 months to >> And so then it takes 24 to 36 months to cycle and actually deliver these things. cycle and actually deliver these things. cycle and actually deliver these things. And so you’ve seen consistent um housing And so you’ve seen consistent um housing And so you’ve seen consistent um housing deliveries over the past 3 years. That deliveries over the past 3 years. That deliveries over the past 3 years. That stops in 2026. Why? Because as soon as stops in 2026. Why? Because as soon as stops in 2026. Why? Because as soon as interest rates started skyrocketing in interest rates started skyrocketing in interest rates started skyrocketing in 22 and 23, these builders started going 22 and 23, these builders started going 22 and 23, these builders started going pencils down and they stopped pencils down and they stopped pencils down and they stopped underwriting deals. They stopped banking underwriting deals. They stopped banking underwriting deals. They stopped banking land. They stopped taking on the risk

[23:46] land. They stopped taking on the risk land. They stopped taking on the risk because they didn’t know what they could because they didn’t know what they could because they didn’t know what they could sell these. Most builders don’t build to sell these. Most builders don’t build to sell these. Most builders don’t build to hold. Most build to sell and they are hold. Most build to sell and they are hold. Most build to sell and they are impacted directly based on the federal impacted directly based on the federal impacted directly based on the federal funds rate. So, u their cost of money to funds rate. So, u their cost of money to funds rate. So, u their cost of money to build things starts going up and it build things starts going up and it build things starts going up and it starts going up uh substantially steeper starts going up uh substantially steeper starts going up uh substantially steeper than it’s ever been seen since the than it’s ever been seen since the than it’s ever been seen since the creation of the Federal Reserve. And so creation of the Federal Reserve. And so creation of the Federal Reserve. And so they’re like, I’m I’m not building

[24:07] they’re like, I’m I’m not building they’re like, I’m I’m not building anything, right? Like I’m just going to anything, right? Like I’m just going to anything, right? Like I’m just going to be let me sit back, finish what I have be let me sit back, finish what I have be let me sit back, finish what I have in the pipeline, and then we’ll watch to in the pipeline, and then we’ll watch to in the pipeline, and then we’ll watch to see how things play out. And so these see how things play out. And so these see how things play out. And so these builders aren’t delivering anything in builders aren’t delivering anything in builders aren’t delivering anything in 26, 27, and 28. If they started today, 26, 27, and 28. If they started today, 26, 27, and 28. If they started today, the soonest they’d deliver would be end the soonest they’d deliver would be end the soonest they’d deliver would be end of 28, early 29. And so like we need of 28, early 29. And so like we need of 28, early 29. And so like we need another million housing units a year. So another million housing units a year. So another million housing units a year. So in the next 36 months, we’re going to

[24:28] in the next 36 months, we’re going to in the next 36 months, we’re going to find ourselves 7 million housing units find ourselves 7 million housing units find ourselves 7 million housing units short of what’s needed. On top of that, short of what’s needed. On top of that, short of what’s needed. On top of that, if they do start building, building if they do start building, building if they do start building, building costs have skyrocketed. You can’t build costs have skyrocketed. You can’t build costs have skyrocketed. You can’t build a single family home for less than a single family home for less than a single family home for less than $300,000 today. You can’t build a multif $300,000 today. You can’t build a multif $300,000 today. You can’t build a multif family apartment for less than probably family apartment for less than probably family apartment for less than probably $150 to $200,000 per door. And so like $150 to $200,000 per door. And so like $150 to $200,000 per door. And so like anything that’s new construction that anything that’s new construction that anything that’s new construction that would be delivered three years from now

[24:51] would be delivered three years from now would be delivered three years from now is going to be luxury or at least up is going to be luxury or at least up is going to be luxury or at least up higher end. And that’s not where the higher end. And that’s not where the higher end. And that’s not where the housing uh issues are. The housing housing uh issues are. The housing housing uh issues are. The housing issues are an affordable housing and issues are an affordable housing and issues are an affordable housing and there’s nothing that can be built uh for there’s nothing that can be built uh for there’s nothing that can be built uh for a reasonable price point in order to to a reasonable price point in order to to a reasonable price point in order to to justify this stuff. So what you’re going justify this stuff. So what you’re going justify this stuff. So what you’re going to see is a lot of investment into older to see is a lot of investment into older to see is a lot of investment into older housing stock, right? The 70s and 80s housing stock, right? The 70s and 80s housing stock, right? The 70s and 80s vintage type stuff. That’s candidly,

[25:14] vintage type stuff. That’s candidly, vintage type stuff. That’s candidly, dude, it’s in a better location than a dude, it’s in a better location than a dude, it’s in a better location than a lot of the newer stuff, right? It’s it’s lot of the newer stuff, right? It’s it’s lot of the newer stuff, right? It’s it’s more city center. It’s more urban. It’s more city center. It’s more urban. It’s more city center. It’s more urban. It’s more walkable. It’s more um and you’re more walkable. It’s more um and you’re more walkable. It’s more um and you’re going to see a lot of that stuff going to see a lot of that stuff going to see a lot of that stuff starting to turn and be renovated and um starting to turn and be renovated and um starting to turn and be renovated and um not only improved because you can buy not only improved because you can buy not only improved because you can buy that for 50 to $80,000 a door in a lot that for 50 to $80,000 a door in a lot that for 50 to $80,000 a door in a lot of markets. Uh I’m not talking like of markets. Uh I’m not talking like of markets. Uh I’m not talking like primary downtown New York or anything

[25:37] primary downtown New York or anything primary downtown New York or anything like that. talking like, you know, first like that. talking like, you know, first like that. talking like, you know, first ring suburbs and second ring uh second ring suburbs and second ring uh second ring suburbs and second ring uh second ring suburbs and rural areas, tertiary ring suburbs and rural areas, tertiary ring suburbs and rural areas, tertiary towns, secondary markets. Um but dude, towns, secondary markets. Um but dude, towns, secondary markets. Um but dude, you can go out and buy, you know, I I you can go out and buy, you know, I I you can go out and buy, you know, I I have an apartment building in have an apartment building in have an apartment building in Springfield, Illinois that we’re trying Springfield, Illinois that we’re trying Springfield, Illinois that we’re trying to sell it for $70,000 a door, right?

[25:52] to sell it for $70,000 a door, right? to sell it for $70,000 a door, right? You can go and buy that building, have You can go and buy that building, have You can go and buy that building, have 265 units, and it’s already renovated 265 units, and it’s already renovated 265 units, and it’s already renovated and just do a condo conversion and sell and just do a condo conversion and sell and just do a condo conversion and sell the units to the to the uh tenant base. the units to the to the uh tenant base. the units to the to the uh tenant base. They’re going to be able to save money They’re going to be able to save money They’re going to be able to save money on what they’re paying in rent on a on what they’re paying in rent on a on what they’re paying in rent on a monthly basis. The city wants to see monthly basis. The city wants to see monthly basis. The city wants to see home ownership and stickiness there. And home ownership and stickiness there. And home ownership and stickiness there. And you’re gonna be able to sell it for you’re gonna be able to sell it for you’re gonna be able to sell it for $110,000 or $120,000 a door as opposed

[26:16] $110,000 or $120,000 a door as opposed $110,000 or $120,000 a door as opposed to $70,000 a door. So like you’re going to $70,000 a door. So like you’re going to $70,000 a door. So like you’re going to see some real big spreads on that to see some real big spreads on that to see some real big spreads on that front. Um and you’re going to see even front. Um and you’re going to see even front. Um and you’re going to see even if you don’t do that, you’re going to if you don’t do that, you’re going to if you don’t do that, you’re going to see rent growth. every everything every see rent growth. every everything every see rent growth. every everything every analysis every you know thing that I’m analysis every you know thing that I’m analysis every you know thing that I’m reading and uh studying right now shows reading and uh studying right now shows reading and uh studying right now shows that rents although they’ve been flat that rents although they’ve been flat that rents although they’ve been flat for the past couple years are going to for the past couple years are going to for the past couple years are going to bump back to uh the standard 3 to 4% per

[26:36] bump back to uh the standard 3 to 4% per bump back to uh the standard 3 to 4% per year rent increases. year rent increases. year rent increases. >> Yeah. And that’s kind of where that >> Yeah. And that’s kind of where that >> Yeah. And that’s kind of where that multif family appreciation happens. Um multif family appreciation happens. Um multif family appreciation happens. Um like it’s based on in increasing of the like it’s based on in increasing of the like it’s based on in increasing of the uh the NOI right which can be through uh the NOI right which can be through uh the NOI right which can be through >> rent um increases over time. Um and the >> rent um increases over time. Um and the >> rent um increases over time. Um and the one one point I wanted to make too about one one point I wanted to make too about one one point I wanted to make too about what the examples you were giving what the examples you were giving what the examples you were giving earlier about the power u or the I mean earlier about the power u or the I mean earlier about the power u or the I mean the power good and bad of of the how the

[26:59] the power good and bad of of the how the the power good and bad of of the how the cap rates multiplied um is you know use cap rates multiplied um is you know use cap rates multiplied um is you know use 10 units right I mean so you’re talking 10 units right I mean so you’re talking 10 units right I mean so you’re talking about 100 200 300 400 doors and so about 100 200 300 400 doors and so about 100 200 300 400 doors and so obviously like if you take that 10 and obviously like if you take that 10 and obviously like if you take that 10 and multiply by 40 um that number is way multiply by 40 um that number is way multiply by 40 um that number is way bigger. Um, so it it can make those bigger. Um, so it it can make those bigger. Um, so it it can make those little $10, $15 a unit can make a huge little $10, $15 a unit can make a huge little $10, $15 a unit can make a huge difference. Um, in rent increases, in difference. Um, in rent increases, in difference. Um, in rent increases, in rent decreases, um, and and obviously rent decreases, um, and and obviously rent decreases, um, and and obviously all the other things that we just talked

[27:27] all the other things that we just talked all the other things that we just talked about. So, um, yeah, I’ve I’ve been about. So, um, yeah, I’ve I’ve been about. So, um, yeah, I’ve I’ve been thinking that timing could be pretty thinking that timing could be pretty thinking that timing could be pretty good because just like you said just now good because just like you said just now good because just like you said just now and then earlier as well is just like, and then earlier as well is just like, and then earlier as well is just like, you know, when there’s mass fear, um, you know, when there’s mass fear, um, you know, when there’s mass fear, um, when there’s when there’s blood in the when there’s when there’s blood in the when there’s when there’s blood in the streets, that kind of thing is is often streets, that kind of thing is is often streets, that kind of thing is is often when it’s a good time to get greedy, when it’s a good time to get greedy, when it’s a good time to get greedy, right? like it’s it’s usually playing right? like it’s it’s usually playing right? like it’s it’s usually playing against what the the mass psychology is

[27:46] against what the the mass psychology is against what the the mass psychology is is when some of the best decisions is when some of the best decisions is when some of the best decisions investing wise are made. Um and so yeah, investing wise are made. Um and so yeah, investing wise are made. Um and so yeah, it’s a it’s an interesting time. Um it’s a it’s an interesting time. Um it’s a it’s an interesting time. Um let’s quickly get into um kind of the let’s quickly get into um kind of the let’s quickly get into um kind of the power of being a real estate power of being a real estate power of being a real estate professional um investing in a professional um investing in a professional um investing in a syndication. So obviously Tim here is an syndication. So obviously Tim here is an syndication. So obviously Tim here is an expert at this stuff. He’s been doing expert at this stuff. He’s been doing expert at this stuff. He’s been doing this for a long time. He has a lot of this for a long time. He has a lot of this for a long time. He has a lot of different doors. He’s he’s seen a lot of

[28:07] different doors. He’s he’s seen a lot of different doors. He’s he’s seen a lot of different things, a lot of different different things, a lot of different different things, a lot of different cycles. Um, and to somebody who has not cycles. Um, and to somebody who has not cycles. Um, and to somebody who has not done any of this, uh, it’s going to be a done any of this, uh, it’s going to be a done any of this, uh, it’s going to be a big ass, go take down a a 265 unit in big ass, go take down a a 265 unit in big ass, go take down a a 265 unit in Springfield, Illinois or what, whatever Springfield, Illinois or what, whatever Springfield, Illinois or what, whatever you said. Um, but, um, there is the you said. Um, but, um, there is the you said. Um, but, um, there is the ability to invest passively, uh, through ability to invest passively, uh, through ability to invest passively, uh, through a syndication. So, can you talk about a syndication. So, can you talk about a syndication. So, can you talk about that a little bit, what that looks like, that a little bit, what that looks like, that a little bit, what that looks like, and then what some of the benefits would

[28:28] and then what some of the benefits would and then what some of the benefits would be to looking to invest? Yeah, I think I be to looking to invest? Yeah, I think I be to looking to invest? Yeah, I think I think a great question because one of think a great question because one of think a great question because one of the things that you’ll find or that I’ve the things that you’ll find or that I’ve the things that you’ll find or that I’ve seen in my career in real estate is seen in my career in real estate is seen in my career in real estate is everybody thinks they can become a real everybody thinks they can become a real everybody thinks they can become a real estate investor, right? Hey, I grew up estate investor, right? Hey, I grew up estate investor, right? Hey, I grew up in a house. I watch HGTV. I’m a realtor in a house. I watch HGTV. I’m a realtor in a house. I watch HGTV. I’m a realtor or I uh in the trades or I’m Anything or I uh in the trades or I’m Anything or I uh in the trades or I’m Anything you do, any new industry you get into is you do, any new industry you get into is

[28:48] you do, any new industry you get into is a new business you’re starting, right? a new business you’re starting, right? a new business you’re starting, right? Just cuz I go and eat cheeseburgers and Just cuz I go and eat cheeseburgers and Just cuz I go and eat cheeseburgers and drink a beer in a bar doesn’t mean I drink a beer in a bar doesn’t mean I drink a beer in a bar doesn’t mean I should own a restaurant, right? Doesn’t should own a restaurant, right? Doesn’t should own a restaurant, right? Doesn’t mean I’m qualified to do that. And I see mean I’m qualified to do that. And I see mean I’m qualified to do that. And I see so many people, smart entrepreneurs, get so many people, smart entrepreneurs, get so many people, smart entrepreneurs, get into real estate and they get their legs into real estate and they get their legs into real estate and they get their legs taken out, man. Um, it’s where I buy a taken out, man. Um, it’s where I buy a taken out, man. Um, it’s where I buy a lot of my deals from. Some of the best lot of my deals from. Some of the best lot of my deals from. Some of the best deals I’ve gotten are from, you know,

[29:08] deals I’ve gotten are from, you know, deals I’ve gotten are from, you know, Wall Street guys that make millions of Wall Street guys that make millions of Wall Street guys that make millions of dollars a year and they bought 600 dollars a year and they bought 600 dollars a year and they bought 600 apartments in Georgia. And then guess apartments in Georgia. And then guess apartments in Georgia. And then guess what? They didn’t know how to navigate what? They didn’t know how to navigate what? They didn’t know how to navigate the Georgia uh u tenant system, right? the Georgia uh u tenant system, right? the Georgia uh u tenant system, right? They didn’t know how to hire uh a They didn’t know how to hire uh a They didn’t know how to hire uh a contractor. They didn’t know how to hire contractor. They didn’t know how to hire contractor. They didn’t know how to hire a third party property manager. Or they a third party property manager. Or they a third party property manager. Or they they did, but they didn’t qualify them.

[29:27] they did, but they didn’t qualify them. they did, but they didn’t qualify them. They didn’t ask them the right They didn’t ask them the right They didn’t ask them the right questions. They just expected them to do questions. They just expected them to do questions. They just expected them to do what they were supposed to be doing. And what they were supposed to be doing. And what they were supposed to be doing. And um and all of a sudden, these properties um and all of a sudden, these properties um and all of a sudden, these properties started bleeding and it took them away started bleeding and it took them away started bleeding and it took them away from their primary job, took them away from their primary job, took them away from their primary job, took them away from their primary source of income in from their primary source of income in from their primary source of income in order to pay attention to this thing order to pay attention to this thing order to pay attention to this thing over here that’s losing money. And then over here that’s losing money. And then over here that’s losing money. And then all of a sudden, their primary business

[29:43] all of a sudden, their primary business all of a sudden, their primary business starts doing worse because they’re not starts doing worse because they’re not starts doing worse because they’re not paying attention to it, dude. And now paying attention to it, dude. And now paying attention to it, dude. And now they’re caught with a with a a a they’re caught with a with a a a they’re caught with a with a a a situation where they got to either fire situation where they got to either fire situation where they got to either fire the apartments or lose their primary the apartments or lose their primary the apartments or lose their primary business. and they always choose to fire business. and they always choose to fire business. and they always choose to fire sail the secondary or the thing that you sail the secondary or the thing that you sail the secondary or the thing that you know less about. Um, and so that that know less about. Um, and so that that know less about. Um, and so that that happens a lot a lot. And hey, I’m going happens a lot a lot. And hey, I’m going happens a lot a lot. And hey, I’m going to be different. No, you’re not, right?

[30:04] to be different. No, you’re not, right? to be different. No, you’re not, right? Like unless you’re going to dedicate a Like unless you’re going to dedicate a Like unless you’re going to dedicate a full-time effort to whatever you’re full-time effort to whatever you’re full-time effort to whatever you’re going to do. And when I say full-time going to do. And when I say full-time going to do. And when I say full-time for 5 years, there’s books and studies for 5 years, there’s books and studies for 5 years, there’s books and studies on this, the 10,000 hour rule, you need on this, the 10,000 hour rule, you need on this, the 10,000 hour rule, you need to dedicate 10,000 hours to anything to to dedicate 10,000 hours to anything to to dedicate 10,000 hours to anything to become an expert at that thing. And so become an expert at that thing. And so become an expert at that thing. And so 10,000 hours, if you work 40 hours a 10,000 hours, if you work 40 hours a 10,000 hours, if you work 40 hours a week, 50 weeks a year, that’s 2,000 week, 50 weeks a year, that’s 2,000 week, 50 weeks a year, that’s 2,000 hours for one year. So 10,000 hours is 5

[30:25] hours for one year. So 10,000 hours is 5 hours for one year. So 10,000 hours is 5 years of time, full-time effort, in years of time, full-time effort, in years of time, full-time effort, in order to become an expert at something. order to become an expert at something. order to become an expert at something. So if you’re not willing to do that, I So if you’re not willing to do that, I So if you’re not willing to do that, I wouldn’t suggest dipping your toe in wouldn’t suggest dipping your toe in wouldn’t suggest dipping your toe in real estate, right? I wouldn’t suggest real estate, right? I wouldn’t suggest real estate, right? I wouldn’t suggest in anything. I wouldn’t I wouldn’t dip in anything. I wouldn’t I wouldn’t dip in anything. I wouldn’t I wouldn’t dip your toe in uh the trades businesses or your toe in uh the trades businesses or your toe in uh the trades businesses or buying a bluecollar HVAC company. Like buying a bluecollar HVAC company. Like buying a bluecollar HVAC company. Like you need to be allin and that’s the only you need to be allin and that’s the only you need to be allin and that’s the only way that you win in business. Um you

[30:46] way that you win in business. Um you way that you win in business. Um you know, serial entrepreneurs, man, when know, serial entrepreneurs, man, when know, serial entrepreneurs, man, when somebody tells me they’re a serial somebody tells me they’re a serial somebody tells me they’re a serial entrepreneur, I’m like, I bet they don’t entrepreneur, I’m like, I bet they don’t entrepreneur, I’m like, I bet they don’t make any money cuz they’re not focused make any money cuz they’re not focused make any money cuz they’re not focused on anything. Um, I’ve experienced it on anything. Um, I’ve experienced it on anything. Um, I’ve experienced it myself. So, like it’s I’m I’m not even myself. So, like it’s I’m I’m not even myself. So, like it’s I’m I’m not even making fun of people. It’s like I know making fun of people. It’s like I know making fun of people. It’s like I know this because I’ I’ve dealt with this, this because I’ I’ve dealt with this, this because I’ I’ve dealt with this, right? And um uh so anyways, if you’re right? And um uh so anyways, if you’re right? And um uh so anyways, if you’re looking to invest in real estate and you

[31:03] looking to invest in real estate and you looking to invest in real estate and you want to, you know, diversify your want to, you know, diversify your want to, you know, diversify your portfolio, portfolio, portfolio, >> I do think and I know like I I know a >> I do think and I know like I I know a >> I do think and I know like I I know a guy who owns a massive one of the guy who owns a massive one of the guy who owns a massive one of the largest uh financial advisors for largest uh financial advisors for largest uh financial advisors for individuals in the country. He has 160 individuals in the country. He has 160 individuals in the country. He has 160 clients and manages $42 billion average clients and manages $42 billion average clients and manages $42 billion average $250 million bucks per person that uh $250 million bucks per person that uh $250 million bucks per person that uh his clients have with them. And he says his clients have with them. And he says his clients have with them. And he says they they have a cross-section of 1/4 they they have a cross-section of 1/4

[31:26] they they have a cross-section of 1/4 1/4 of how they allocate their 1/4 of how they allocate their 1/4 of how they allocate their investments. 1/4 is in public equities, investments. 1/4 is in public equities, investments. 1/4 is in public equities, stock market. 1/4 is in private stock market. 1/4 is in private stock market. 1/4 is in private equities, privately owned businesses. equities, privately owned businesses. equities, privately owned businesses. 1/4 is in real estate. And then 1/4 is 1/4 is in real estate. And then 1/4 is 1/4 is in real estate. And then 1/4 is in some sort of dividend or in some sort of dividend or in some sort of dividend or interestbearing accounts. It’s good interestbearing accounts. It’s good interestbearing accounts. It’s good enough for me, right? Pretty pretty enough for me, right? Pretty pretty enough for me, right? Pretty pretty simple. Makes makes good sense. So, if simple. Makes makes good sense. So, if simple. Makes makes good sense. So, if you don’t have some exposure to real you don’t have some exposure to real you don’t have some exposure to real estate, like real estate does pretty

[31:51] estate, like real estate does pretty estate, like real estate does pretty well when there’s hyperinflation going well when there’s hyperinflation going well when there’s hyperinflation going on, right? Having fixed assets and on, right? Having fixed assets and on, right? Having fixed assets and businesses does pretty well when um when businesses does pretty well when um when businesses does pretty well when um when inflation skyrockets the way that it inflation skyrockets the way that it inflation skyrockets the way that it does and it’s going to continue to do. does and it’s going to continue to do. does and it’s going to continue to do. So, um you need some sort of exposure to So, um you need some sort of exposure to So, um you need some sort of exposure to real estate in your investment real estate in your investment real estate in your investment portfolio. And you can go buy a REIT or portfolio. And you can go buy a REIT or portfolio. And you can go buy a REIT or something like that through the stock something like that through the stock something like that through the stock market, but it’s going to be minimal

[32:09] market, but it’s going to be minimal market, but it’s going to be minimal returns. What I would say is find a returns. What I would say is find a returns. What I would say is find a great operator. Find somebody in your great operator. Find somebody in your great operator. Find somebody in your local market who’s active, who has local market who’s active, who has local market who’s active, who has experience, who knows what the heck experience, who knows what the heck experience, who knows what the heck they’re talking about, who’s been they’re talking about, who’s been they’re talking about, who’s been through, you know, been around the block through, you know, been around the block through, you know, been around the block a few times and um has some success a few times and um has some success a few times and um has some success stories and has some loser stories. Say, stories and has some loser stories. Say, stories and has some loser stories. Say, “Hey, tell what’s worst case scenario.

[32:28] “Hey, tell what’s worst case scenario. “Hey, tell what’s worst case scenario. Tell me about the worst deal you ever Tell me about the worst deal you ever Tell me about the worst deal you ever did. Tell me about the time you lost did. Tell me about the time you lost did. Tell me about the time you lost money.” Right? And have those money.” Right? And have those money.” Right? And have those conversations of how they navigated conversations of how they navigated conversations of how they navigated that. And you can look at investing with that. And you can look at investing with that. And you can look at investing with them in two different ways. one, you them in two different ways. one, you them in two different ways. one, you could just lend them money and they can could just lend them money and they can could just lend them money and they can go and flip houses or they can go and um go and flip houses or they can go and um go and flip houses or they can go and um flip small multif family buildings or or flip small multif family buildings or or flip small multif family buildings or or you can be kind of like a debt lender to

[32:48] you can be kind of like a debt lender to you can be kind of like a debt lender to them where they just pay you a fixed, them where they just pay you a fixed, them where they just pay you a fixed, you know, 6 8 10 12% return on your you know, 6 8 10 12% return on your you know, 6 8 10 12% return on your money. Predictable, no upside, no money. Predictable, no upside, no money. Predictable, no upside, no downside, just a predictable debt loan downside, just a predictable debt loan downside, just a predictable debt loan that you’re making to somebody. And uh that you’re making to somebody. And uh that you’re making to somebody. And uh and that’s a very real and very and that’s a very real and very and that’s a very real and very available opportunity to go and invest.

[33:04] available opportunity to go and invest. available opportunity to go and invest. Now, you want to make sure that you’re Now, you want to make sure that you’re Now, you want to make sure that you’re secured and all that kind of stuff. secured and all that kind of stuff. secured and all that kind of stuff. paperwork’s done done done right. Um but paperwork’s done done done right. Um but paperwork’s done done done right. Um but that’s a great way to generate good that’s a great way to generate good that’s a great way to generate good dividends and good interest income dividends and good interest income dividends and good interest income that’s far exceeds what you can get in that’s far exceeds what you can get in that’s far exceeds what you can get in the um in a money market or a CD. So the um in a money market or a CD. So the um in a money market or a CD. So that’s one.

[33:18] that’s one. that’s one. >> The other option is to be a a uh to >> The other option is to be a a uh to >> The other option is to be a a uh to invest as a limited partner in a invest as a limited partner in a invest as a limited partner in a syndication. What this means is syndication. What this means is syndication. What this means is >> uh let’s say I’m buying an apartment >> uh let’s say I’m buying an apartment >> uh let’s say I’m buying an apartment complex for um 5 million bucks and I’m complex for um 5 million bucks and I’m complex for um 5 million bucks and I’m going to go and raise a million dollars going to go and raise a million dollars going to go and raise a million dollars of money. I don’t need one person to of money. I don’t need one person to of money. I don’t need one person to write me a check for a million dollar.

[33:36] write me a check for a million dollar. write me a check for a million dollar. Maybe I’ll I’ll drop it to a $100,000 Maybe I’ll I’ll drop it to a $100,000 Maybe I’ll I’ll drop it to a $100,000 minimum investment. They write me a minimum investment. They write me a minimum investment. They write me a check for and I’ll bring in 10 investors check for and I’ll bring in 10 investors check for and I’ll bring in 10 investors at $100,000 a piece. These investors at $100,000 a piece. These investors at $100,000 a piece. These investors receive what’s called a preferred receive what’s called a preferred receive what’s called a preferred return. And then they also have equity return. And then they also have equity return. And then they also have equity ownership in the deal, right? So it ownership in the deal, right? So it ownership in the deal, right? So it might be 2% equity ownership for every might be 2% equity ownership for every might be 2% equity ownership for every $100,000 that they bring, but it they $100,000 that they bring, but it they $100,000 that they bring, but it they had they do have equity ownership. So

[33:58] had they do have equity ownership. So had they do have equity ownership. So they share in the depreciation, in the they share in the depreciation, in the they share in the depreciation, in the tax benefits, in the equity upside of tax benefits, in the equity upside of tax benefits, in the equity upside of the deal, and then there’s usually like the deal, and then there’s usually like the deal, and then there’s usually like we we usually do somewhere between an 8 we we usually do somewhere between an 8 we we usually do somewhere between an 8 to 10% preferred return. So when there’s to 10% preferred return. So when there’s to 10% preferred return. So when there’s cash flow in the property, they get the cash flow in the property, they get the cash flow in the property, they get the first money that goes back out. So it’s first money that goes back out. So it’s first money that goes back out. So it’s preferred to them and they get the first preferred to them and they get the first preferred to them and they get the first $8,000 that comes in um in excess cash $8,000 that comes in um in excess cash

[34:20] $8,000 that comes in um in excess cash flow. If there’s no cash flow or not not flow. If there’s no cash flow or not not flow. If there’s no cash flow or not not sufficient cash flow, they get paid out sufficient cash flow, they get paid out sufficient cash flow, they get paid out whatever we do have um and then the rest whatever we do have um and then the rest whatever we do have um and then the rest would just acrue. And then when there’s would just acrue. And then when there’s would just acrue. And then when there’s excess cash flow or when we sell or we excess cash flow or when we sell or we excess cash flow or when we sell or we refinance, all that gets caught up. And refinance, all that gets caught up. And refinance, all that gets caught up. And then after they make their 8% preferred then after they make their 8% preferred then after they make their 8% preferred return, then they have their equity return, then they have their equity return, then they have their equity split with us. And so, um, whatever the split with us. And so, um, whatever the split with us. And so, um, whatever the percentage is, let’s say they own, you

[34:40] percentage is, let’s say they own, you percentage is, let’s say they own, you know, 5% of this deal for every $100,000 know, 5% of this deal for every $100,000 know, 5% of this deal for every $100,000 that they brought and we profited by that they brought and we profited by that they brought and we profited by $300,000, they’d make $15,000 on top of $300,000, they’d make $15,000 on top of $300,000, they’d make $15,000 on top of their 8% annualized return. Um, so it’s their 8% annualized return. Um, so it’s their 8% annualized return. Um, so it’s a sweet deal for the investors. It’s a a sweet deal for the investors. It’s a a sweet deal for the investors. It’s a great way for them to participate and be great way for them to participate and be great way for them to participate and be involved in an apartment complex without involved in an apartment complex without involved in an apartment complex without having to be the expert and go through having to be the expert and go through having to be the expert and go through five years, 10,000 hours of of uh five years, 10,000 hours of of uh five years, 10,000 hours of of uh learning experience.

[35:05] learning experience. learning experience. >> Well, that like to execute uh >> Well, that like to execute uh >> Well, that like to execute uh successfully, but also just having to successfully, but also just having to successfully, but also just having to spend the time um on, you know, like I spend the time um on, you know, like I spend the time um on, you know, like I think some people will definitely not think some people will definitely not think some people will definitely not want to be, you know, getting calls want to be, you know, getting calls want to be, you know, getting calls about clogged toilets and that kind of about clogged toilets and that kind of about clogged toilets and that kind of stuff. if they’re rent if they’re stuff. if they’re rent if they’re stuff. if they’re rent if they’re investing in like just a single family investing in like just a single family investing in like just a single family uh you know townhouse or whatever for a uh you know townhouse or whatever for a uh you know townhouse or whatever for a rental uh they don’t want to have to

[35:23] rental uh they don’t want to have to rental uh they don’t want to have to deal with that kind of stuff. And so deal with that kind of stuff. And so deal with that kind of stuff. And so that’s that’s also baked in here. You’re that’s that’s also baked in here. You’re that’s that’s also baked in here. You’re not you’re not going to be uh you’re not you’re not going to be uh you’re not you’re not going to be uh you’re basically there’s a deal that’s basically there’s a deal that’s basically there’s a deal that’s presented to you. Um and and you’re presented to you. Um and and you’re presented to you. Um and and you’re going to decide if you wanted to do it going to decide if you wanted to do it going to decide if you wanted to do it or not. So there’s two factors here like or not. So there’s two factors here like or not. So there’s two factors here like you talked about. There’s the operator you talked about. There’s the operator you talked about. There’s the operator that’s the most important. Um and then that’s the most important. Um and then that’s the most important. Um and then second is that the deal itself. And so

[35:42] second is that the deal itself. And so second is that the deal itself. And so like there’s a good it’s a good idea to like there’s a good it’s a good idea to like there’s a good it’s a good idea to have some knowledge about how this all have some knowledge about how this all have some knowledge about how this all operates which you know you explained it operates which you know you explained it operates which you know you explained it really well listening to podcasts like really well listening to podcasts like really well listening to podcasts like this help um there’s there’s definitely this help um there’s there’s definitely this help um there’s there’s definitely a good idea to to understand that the a good idea to to understand that the a good idea to to understand that the how it’s going to work what’s the game how it’s going to work what’s the game how it’s going to work what’s the game plan what are we going to do here are we plan what are we going to do here are we plan what are we going to do here are we going to do a value ad are we going to going to do a value ad are we going to

[35:58] going to do a value ad are we going to make improve the NOI to with the cap make improve the NOI to with the cap make improve the NOI to with the cap rate magic we just talked about rate magic we just talked about rate magic we just talked about basically make the business more basically make the business more basically make the business more profitable to make the the property more profitable to make the the property more profitable to make the the property more valuable and then are we going to valuable and then are we going to valuable and then are we going to refinance um and hold ownership get refinance um and hold ownership get refinance um and hold ownership get money back hold ownership, are we going money back hold ownership, are we going money back hold ownership, are we going to sell um and then receive, you know, to sell um and then receive, you know, to sell um and then receive, you know, additional profit like you just additional profit like you just additional profit like you just explained. Um but but above and beyond explained. Um but but above and beyond explained. Um but but above and beyond all that, like there is the tax

[36:21] all that, like there is the tax all that, like there is the tax benefits, which is um huge. Like this is benefits, which is um huge. Like this is benefits, which is um huge. Like this is this could be almost considered um like this could be almost considered um like this could be almost considered um like a real estate 401k. Like if you’re a a real estate 401k. Like if you’re a a real estate 401k. Like if you’re a real estate agent, um you’re going to be real estate agent, um you’re going to be real estate agent, um you’re going to be doing an accelerated depreciation on doing an accelerated depreciation on doing an accelerated depreciation on these big assets where instead of most these big assets where instead of most these big assets where instead of most people listening would understand that people listening would understand that people listening would understand that like if you buy a house as a rental, you like if you buy a house as a rental, you like if you buy a house as a rental, you would typically take the the value of would typically take the the value of would typically take the the value of the property, divide it by 27 um years

[36:45] the property, divide it by 27 um years the property, divide it by 27 um years and then take that every year as and then take that every year as and then take that every year as depreciation. Um whereas in this kind of depreciation. Um whereas in this kind of depreciation. Um whereas in this kind of property, they would be looking at an property, they would be looking at an property, they would be looking at an accelerated appreciation schedule where accelerated appreciation schedule where accelerated appreciation schedule where everything the IRS has essentially like everything the IRS has essentially like everything the IRS has essentially like a a value or a year uh time frame for a a value or a year uh time frame for a a value or a year uh time frame for every little thing in the in the every little thing in the in the every little thing in the in the property. And so you’re going to be able property. And so you’re going to be able property. And so you’re going to be able to take a lot more at the beginning um a to take a lot more at the beginning um a to take a lot more at the beginning um a higher amount of depreciation at the

[37:07] higher amount of depreciation at the higher amount of depreciation at the beginning um which can result in a beginning um which can result in a beginning um which can result in a pretty nice uh tax benefit for uh the pretty nice uh tax benefit for uh the pretty nice uh tax benefit for uh the investor. So to put that all in plain investor. So to put that all in plain investor. So to put that all in plain English, I just like to give an example English, I just like to give an example English, I just like to give an example of something that I’ve invested in. It of something that I’ve invested in. It of something that I’ve invested in. It was a mobile home park. I was a limited was a mobile home park. I was a limited was a mobile home park. I was a limited partner. Um and uh put in $50,000 and uh partner. Um and uh put in $50,000 and uh partner. Um and uh put in $50,000 and uh the first year I was able to write off the first year I was able to write off the first year I was able to write off about $66,000 of my taxes. Um the second about $66,000 of my taxes. Um the second about $66,000 of my taxes. Um the second year it was another like 17 or something

[37:33] year it was another like 17 or something year it was another like 17 or something like that. Um so obviously that alone is like that. Um so obviously that alone is like that. Um so obviously that alone is pretty awesome, but it’s also been pretty awesome, but it’s also been pretty awesome, but it’s also been giving me a return. So far, the game giving me a return. So far, the game giving me a return. So far, the game plan for this one is to eventually do a plan for this one is to eventually do a plan for this one is to eventually do a cash out refinance where I would be kind cash out refinance where I would be kind cash out refinance where I would be kind of made whole and I would be um owning a of made whole and I would be um owning a of made whole and I would be um owning a portion of that that property on going portion of that that property on going portion of that that property on going on a very small portion, but still um so on a very small portion, but still um so on a very small portion, but still um so it’s it’s can be a really awesome it’s it’s can be a really awesome it’s it’s can be a really awesome no-brainer. Um and something that as a

[37:57] no-brainer. Um and something that as a no-brainer. Um and something that as a real estate professional, you can kind real estate professional, you can kind real estate professional, you can kind of offset your earned income, like your of offset your earned income, like your of offset your earned income, like your your um your commissions um with this your um your commissions um with this your um your commissions um with this kind of thing. If you’re not a real kind of thing. If you’re not a real kind of thing. If you’re not a real estate professional, and this is stuff estate professional, and this is stuff estate professional, and this is stuff you need to verify with your accountant. you need to verify with your accountant.

[38:10] you need to verify with your accountant. I’m not an accountant. This is just kind I’m not an accountant. This is just kind I’m not an accountant. This is just kind of what I’ve learned from talking to of what I’ve learned from talking to of what I’ve learned from talking to people. If you’re not a real estate people. If you’re not a real estate people. If you’re not a real estate professional, then um you wouldn’t be professional, then um you wouldn’t be professional, then um you wouldn’t be able to take that ride off against your able to take that ride off against your able to take that ride off against your earned income. Like if you’re a doctor, earned income. Like if you’re a doctor, earned income. Like if you’re a doctor, for example, you wouldn’t necessarily be for example, you wouldn’t necessarily be for example, you wouldn’t necessarily be able to ride off your your uh doctor able to ride off your your uh doctor able to ride off your your uh doctor wages with this kind of income. So, wages with this kind of income. So, wages with this kind of income. So, especially real estate agents should be

[38:27] especially real estate agents should be especially real estate agents should be listening to this. It could be an listening to this. It could be an listening to this. It could be an awesome opportunity for you to try to awesome opportunity for you to try to awesome opportunity for you to try to plug some money into something um every plug some money into something um every plug some money into something um every year, every other year. Um, and then year, every other year. Um, and then year, every other year. Um, and then that stuff as you know as the money that stuff as you know as the money that stuff as you know as the money comes back to you as like the plan is comes back to you as like the plan is comes back to you as like the plan is executed as the you know if if you’re executed as the you know if if you’re executed as the you know if if you’re selling it or if you’re refinancing you selling it or if you’re refinancing you selling it or if you’re refinancing you can then reinvest that capital into can then reinvest that capital into can then reinvest that capital into another project. So um it’s it’s

[38:48] another project. So um it’s it’s another project. So um it’s it’s powerful. It’s a it’s a can be a really powerful. It’s a it’s a can be a really powerful. It’s a it’s a can be a really good win-win. Certainly risk um that you good win-win. Certainly risk um that you good win-win. Certainly risk um that you could lose money that’s that’s happens could lose money that’s that’s happens could lose money that’s that’s happens as well. Um and like you said it’s been as well. Um and like you said it’s been as well. Um and like you said it’s been a tough tough couple years for the a tough tough couple years for the a tough tough couple years for the apartment investor. apartment investor. apartment investor. >> Yeah. One one of the other things that >> Yeah. One one of the other things that >> Yeah. One one of the other things that I’ll mention or just add on to that you I’ll mention or just add on to that you I’ll mention or just add on to that you did a great job explaining it is that did a great job explaining it is that did a great job explaining it is that even if you are not a real estate let’s

[39:09] even if you are not a real estate let’s even if you are not a real estate let’s say you are a wealthy doctor or a say you are a wealthy doctor or a say you are a wealthy doctor or a wealthy physician or white collar wealthy physician or white collar wealthy physician or white collar professional and you do make a lot of professional and you do make a lot of professional and you do make a lot of money somewhere um even if you are money somewhere um even if you are money somewhere um even if you are focused on that career the spouse could focused on that career the spouse could focused on that career the spouse could become a real estate professional. So, become a real estate professional. So, become a real estate professional. So, what I’ve seen a lot of my e-commerce what I’ve seen a lot of my e-commerce what I’ve seen a lot of my e-commerce buddies do or my a lot of my doctor buddies do or my a lot of my doctor buddies do or my a lot of my doctor buddies is that their their wife doesn’t buddies is that their their wife doesn’t buddies is that their their wife doesn’t work and so the wife becomes the real

[39:29] work and so the wife becomes the real work and so the wife becomes the real estate investor and maybe they buy a estate investor and maybe they buy a estate investor and maybe they buy a second home and they rent it out on second home and they rent it out on second home and they rent it out on Airbnb once in a while and uh and then Airbnb once in a while and uh and then Airbnb once in a while and uh and then she has her own LLC and they invest into she has her own LLC and they invest into she has her own LLC and they invest into that LLC. Then that LLC then invests in that LLC. Then that LLC then invests in that LLC. Then that LLC then invests in two different real estate um two different real estate um two different real estate um opportunities and maybe they own a opportunities and maybe they own a opportunities and maybe they own a couple properties themselves and then couple properties themselves and then couple properties themselves and then they invest in a couple different deals.

[39:48] they invest in a couple different deals. they invest in a couple different deals. But she becomes a full-time real estate But she becomes a full-time real estate But she becomes a full-time real estate professional by becoming a real when I professional by becoming a real when I professional by becoming a real when I say full-time it’s 750 hours per year. say full-time it’s 750 hours per year. say full-time it’s 750 hours per year. So, it’s only 15 hours per week that So, it’s only 15 hours per week that So, it’s only 15 hours per week that they have to like dedicate and and you they have to like dedicate and and you they have to like dedicate and and you know playing on Zillow and playing on know playing on Zillow and playing on know playing on Zillow and playing on Loopnet and Kexy and um walking an open Loopnet and Kexy and um walking an open Loopnet and Kexy and um walking an open house and driving to Home Depot like house and driving to Home Depot like house and driving to Home Depot like that all counts, right? So, that all counts, right? So, that all counts, right? So, >> it’s not hard to meet the the hours or

[40:13] >> it’s not hard to meet the the hours or >> it’s not hard to meet the the hours or or listening to a podcast or reading or listening to a podcast or reading or listening to a podcast or reading about something that all counts towards about something that all counts towards about something that all counts towards those hours. But if the if the spouse is those hours. But if the if the spouse is those hours. But if the if the spouse is a real estate professional and they’re a real estate professional and they’re a real estate professional and they’re married filing taxes jointly, the spouse married filing taxes jointly, the spouse married filing taxes jointly, the spouse is able to use their passive losses and is able to use their passive losses and is able to use their passive losses and and active losses and and active income and active losses and and active income and active losses and and active income and all those things. It all goes into and all those things. It all goes into and all those things. It all goes into the same bucket as active with the the same bucket as active with the

[40:34] the same bucket as active with the physician or white collar professionals physician or white collar professionals physician or white collar professionals income as well. So, uh this is a income as well. So, uh this is a income as well. So, uh this is a phenomenal way to and I’m not a not you phenomenal way to and I’m not a not you phenomenal way to and I’m not a not you know, you always have to make disclosure know, you always have to make disclosure know, you always have to make disclosure and stuff like I’m not a CPA. talk to and stuff like I’m not a CPA. talk to and stuff like I’m not a CPA. talk to your CPA about it. But it’s a fantastic your CPA about it. But it’s a fantastic your CPA about it. But it’s a fantastic way that I’ve seen a lot of people um be way that I’ve seen a lot of people um be way that I’ve seen a lot of people um be able to invest in real estate. And if if able to invest in real estate. And if if able to invest in real estate. And if if you’re making 600 grand a year, 800 you’re making 600 grand a year, 800 you’re making 600 grand a year, 800 grand a year, $ 1.5 million a year in

[40:56] grand a year, $ 1.5 million a year in grand a year, $ 1.5 million a year in some traditional white collar role or in some traditional white collar role or in some traditional white collar role or in your traditional business and uh and your traditional business and uh and your traditional business and uh and you’re just paying taxes on that, dude, you’re just paying taxes on that, dude, you’re just paying taxes on that, dude, that is your biggest expense. Not you that is your biggest expense. Not you that is your biggest expense. Not you you don’t need to be focused on making you don’t need to be focused on making you don’t need to be focused on making an extra 10% per year on your money. you an extra 10% per year on your money. you an extra 10% per year on your money. you need to reduce the 37% that you’re need to reduce the 37% that you’re need to reduce the 37% that you’re paying to taxes on the federal level.

[41:14] paying to taxes on the federal level. paying to taxes on the federal level. That’s going to make you and keep you That’s going to make you and keep you That’s going to make you and keep you and build you way more wealth than uh and build you way more wealth than uh and build you way more wealth than uh than anything else that you could be than anything else that you could be than anything else that you could be doing. And this is a great way strategy doing. And this is a great way strategy doing. And this is a great way strategy to attack that. to attack that. to attack that. >> And just one more thing on top of that >> And just one more thing on top of that >> And just one more thing on top of that that I love. Um you know, you might that I love. Um you know, you might that I love. Um you know, you might think that you that traditional white think that you that traditional white think that you that traditional white collar whatever doctor, they probably collar whatever doctor, they probably collar whatever doctor, they probably have opportunities to offset their taxes

[41:31] have opportunities to offset their taxes have opportunities to offset their taxes by investing in in retirement funds. Um by investing in in retirement funds. Um by investing in in retirement funds. Um but you got to wait till retirement to but you got to wait till retirement to but you got to wait till retirement to see any of that. And that’s one of the see any of that. And that’s one of the see any of that. And that’s one of the beauties of this is like it’s it’s kind beauties of this is like it’s it’s kind beauties of this is like it’s it’s kind of you get the tax benefits but then you of you get the tax benefits but then you of you get the tax benefits but then you also you’re going to get quarterly also you’re going to get quarterly also you’re going to get quarterly dividends likely. I don’t I people might dividends likely. I don’t I people might dividends likely. I don’t I people might structure that differently but quarterly structure that differently but quarterly structure that differently but quarterly dividends you’re going to get whatever dividends you’re going to get whatever

[41:48] dividends you’re going to get whatever in five years whatever when the when the in five years whatever when the when the in five years whatever when the when the plan is executed you’re going to get plan is executed you’re going to get plan is executed you’re going to get money back then that you can use. Um so money back then that you can use. Um so money back then that you can use. Um so uh that’s one of the things like there uh that’s one of the things like there uh that’s one of the things like there are like and this is another option you are like and this is another option you are like and this is another option you could take you can convert a a Roth IRA could take you can convert a a Roth IRA could take you can convert a a Roth IRA into a self-directed IRA to to invest in into a self-directed IRA to to invest in into a self-directed IRA to to invest in these kind of things as well. uh which these kind of things as well. uh which these kind of things as well. uh which is is definitely a good opportunity, but is is definitely a good opportunity, but is is definitely a good opportunity, but um one of the problems I’ve had with

[42:08] um one of the problems I’ve had with um one of the problems I’ve had with some of the like plans of doing some of the like plans of doing some of the like plans of doing everything self-directed IRA is that everything self-directed IRA is that everything self-directed IRA is that like again I’m going to have to wait like again I’m going to have to wait like again I’m going to have to wait until I retire to to really use I’m until I retire to to really use I’m until I retire to to really use I’m building up this great nest egg for then building up this great nest egg for then building up this great nest egg for then but like I also kind of want to have the but like I also kind of want to have the but like I also kind of want to have the ability to to be able to buy stuff or do ability to to be able to buy stuff or do ability to to be able to buy stuff or do whatever I want with the capital now.

[42:23] whatever I want with the capital now. whatever I want with the capital now. And that’s what’s the beauty of And that’s what’s the beauty of And that’s what’s the beauty of >> Yeah, it’s it’s different types of >> Yeah, it’s it’s different types of >> Yeah, it’s it’s different types of money, right? like how patient is your money, right? like how patient is your money, right? like how patient is your money? Your cash, you probably want to money? Your cash, you probably want to money? Your cash, you probably want to turn that a lot more and be able to turn that a lot more and be able to turn that a lot more and be able to transact on that stuff a little bit transact on that stuff a little bit transact on that stuff a little bit more. And by the way, 401ks and and IRA more. And by the way, 401ks and and IRA more. And by the way, 401ks and and IRA can’t take depreciation. So, there’s can’t take depreciation. So, there’s can’t take depreciation. So, there’s probably different types of deals that probably different types of deals that probably different types of deals that maybe you just lend and it’s like a

[42:42] maybe you just lend and it’s like a maybe you just lend and it’s like a patient 5year, 7-year, 10year play. I patient 5year, 7-year, 10year play. I patient 5year, 7-year, 10year play. I don’t really care because I can’t touch don’t really care because I can’t touch don’t really care because I can’t touch it for that long. So, maybe you’re going it for that long. So, maybe you’re going it for that long. So, maybe you’re going and buying some uh some stock that has and buying some uh some stock that has and buying some uh some stock that has way bigger upside long term and you way bigger upside long term and you way bigger upside long term and you don’t need that money right now. like don’t need that money right now. like don’t need that money right now. like that’s that’s a play for that kind of that’s that’s a play for that kind of that’s that’s a play for that kind of money. Keep your cash for like these money. Keep your cash for like these money. Keep your cash for like these heavy depreciation type deals and things heavy depreciation type deals and things heavy depreciation type deals and things like that.

[43:02] like that. like that. >> Um that can help you offset your uh your >> Um that can help you offset your uh your >> Um that can help you offset your uh your active income. active income. active income. >> It’s a good point. I didn’t realize that >> It’s a good point. I didn’t realize that >> It’s a good point. I didn’t realize that about the that I had thought about the about the that I had thought about the about the that I had thought about the depreciation aspect of the Roth. depreciation aspect of the Roth. depreciation aspect of the Roth. >> Um hey um I do want to transition this. >> Um hey um I do want to transition this. >> Um hey um I do want to transition this. I know your time is valuable. You you’ve I know your time is valuable. You you’ve I know your time is valuable. You you’ve had a this has been awesome so far. So had a this has been awesome so far. So had a this has been awesome so far. So thank you so much.

[43:18] thank you so much. thank you so much. >> But I do want to ask if you have a >> But I do want to ask if you have a >> But I do want to ask if you have a golden nugget uh for our listeners to golden nugget uh for our listeners to golden nugget uh for our listeners to share. share. share. >> Oh man. I would say one of the biggest >> Oh man. I would say one of the biggest >> Oh man. I would say one of the biggest lessons learned over the past three lessons learned over the past three lessons learned over the past three years is you’re going to take arrows. years is you’re going to take arrows. years is you’re going to take arrows. You’re going to like tough things going You’re going to like tough things going You’re going to like tough things going to happen in business. If you always to happen in business. If you always to happen in business. If you always blame other things, then you’re always blame other things, then you’re always blame other things, then you’re always going to feel like a victim and you’re going to feel like a victim and you’re going to feel like a victim and you’re always going to feel out of control and

[43:38] always going to feel out of control and always going to feel out of control and helpless. You got to take 100% ownership helpless. You got to take 100% ownership helpless. You got to take 100% ownership over your situation and focus on the over your situation and focus on the over your situation and focus on the controllables, right? Control the controllables, right? Control the controllables, right? Control the controllables. What are the things you controllables. What are the things you controllables. What are the things you can do to positively impact your can do to positively impact your can do to positively impact your property? what are the things you can do property? what are the things you can do property? what are the things you can do to positively impact your operation, to positively impact your operation, to positively impact your operation, your business, your team um in order to your business, your team um in order to your business, your team um in order to do better things. So, like, you know, we do better things. So, like, you know, we do better things. So, like, you know, we got really creative in finding new ways

[43:59] got really creative in finding new ways got really creative in finding new ways to generate revenue at our apartment to generate revenue at our apartment to generate revenue at our apartment complexes to then offset the increase in complexes to then offset the increase in complexes to then offset the increase in expenses. Uh insurance increase expenses. Uh insurance increase expenses. Uh insurance increase dramatically. Well, we said, “Hey, dramatically. Well, we said, “Hey, dramatically. Well, we said, “Hey, instead of having um going through a instead of having um going through a instead of having um going through a traditional insurance broker, we’re traditional insurance broker, we’re traditional insurance broker, we’re going to go and put our own master going to go and put our own master going to go and put our own master insurance policy in place. that’ll save insurance policy in place. that’ll save insurance policy in place. that’ll save us probably around 30% on our insurance us probably around 30% on our insurance us probably around 30% on our insurance premiums on an annual basis, right? Like

[44:19] premiums on an annual basis, right? Like premiums on an annual basis, right? Like we did we started doing things um at our we did we started doing things um at our we did we started doing things um at our apartment complex. Utilities started apartment complex. Utilities started apartment complex. Utilities started increasing. Well, I I did some research increasing. Well, I I did some research increasing. Well, I I did some research and we found there’s a company that will and we found there’s a company that will and we found there’s a company that will remove all the bubbles that come from remove all the bubbles that come from remove all the bubbles that come from the water company through the water the water company through the water the water company through the water meter that you’re paying for air that’s meter that you’re paying for air that’s meter that you’re paying for air that’s coming through the water line of the coming through the water line of the coming through the water line of the water man. And they install this thing water man. And they install this thing water man. And they install this thing on there and they they pull all the

[44:40] on there and they they pull all the on there and they they pull all the bubbles out so it’s just pure water bubbles out so it’s just pure water bubbles out so it’s just pure water coming through. now and you’re not coming through. now and you’re not coming through. now and you’re not paying for those air bubbles which paying for those air bubbles which paying for those air bubbles which reduced our water bill by about 15%. reduced our water bill by about 15%. reduced our water bill by about 15%. Um not only that but then we put Um not only that but then we put Um not only that but then we put airation in back into the apartments to airation in back into the apartments to airation in back into the apartments to to rebubbleize it, right? And uh um and to rebubbleize it, right? And uh um and to rebubbleize it, right? And uh um and to reduce, you know, the water flow by to reduce, you know, the water flow by to reduce, you know, the water flow by tenants by putting lowflow water tenants by putting lowflow water tenants by putting lowflow water fixtures, showerheads, faucets, uh fixtures, showerheads, faucets, uh

[45:04] fixtures, showerheads, faucets, uh sinks, all that kind of stuff in toilets sinks, all that kind of stuff in toilets sinks, all that kind of stuff in toilets and uh and that reduced it by another and uh and that reduced it by another and uh and that reduced it by another 30%. So, it’s like doing things like 30%. So, it’s like doing things like 30%. So, it’s like doing things like this of controlling the controllables. this of controlling the controllables. this of controlling the controllables. We’re actually ahead in our in our water We’re actually ahead in our in our water We’re actually ahead in our in our water expenses, then we’re paying less today. expenses, then we’re paying less today.

[45:18] expenses, then we’re paying less today. Even though water prices have gone up in Even though water prices have gone up in Even though water prices have gone up in some of the markets that we’re in, we’re some of the markets that we’re in, we’re some of the markets that we’re in, we’re paying less because we did these things, paying less because we did these things, paying less because we did these things, right? And so, when you start right? And so, when you start right? And so, when you start controlling the controllables, man, um controlling the controllables, man, um controlling the controllables, man, um gives you a lot more confidence and a gives you a lot more confidence and a gives you a lot more confidence and a lot more posture when you’re when you’re lot more posture when you’re when you’re lot more posture when you’re when you’re uh attacking the business the way that uh attacking the business the way that uh attacking the business the way that uh we’ve been attacked, right? You can uh we’ve been attacked, right? You can uh we’ve been attacked, right? You can you can posture back up against a lot of

[45:36] you can posture back up against a lot of you can posture back up against a lot of those things. those things. those things. >> I love it. I think that mindset is so >> I love it. I think that mindset is so >> I love it. I think that mindset is so fundamental. Um and one of the the yeah fundamental. Um and one of the the yeah fundamental. Um and one of the the yeah one of the biggest differentiators one of the biggest differentiators one of the biggest differentiators between um somebody’s going to yeah be between um somebody’s going to yeah be between um somebody’s going to yeah be successful in in life is just yeah successful in in life is just yeah successful in in life is just yeah taking I think people are scared of taking I think people are scared of taking I think people are scared of taking ownership uh because then it’s taking ownership uh because then it’s taking ownership uh because then it’s all on them. Um, but I think that’s it’s all on them. Um, but I think that’s it’s all on them. Um, but I think that’s it’s really a liberating thing once you do really a liberating thing once you do

[45:59] really a liberating thing once you do kind of like you just said like I mean kind of like you just said like I mean kind of like you just said like I mean you know you might be out of it now if you know you might be out of it now if you know you might be out of it now if you just blamed everybody else. Um, but you just blamed everybody else. Um, but you just blamed everybody else. Um, but instead you’ve taken control and the instead you’ve taken control and the instead you’ve taken control and the situation and and are are moving situation and and are are moving situation and and are are moving forward. Um, now what about a favorite forward. Um, now what about a favorite forward. Um, now what about a favorite book, a fundamental book you think book, a fundamental book you think book, a fundamental book you think everybody should read or just one that everybody should read or just one that everybody should read or just one that you currently are really enjoying?

[46:16] you currently are really enjoying? you currently are really enjoying? >> Yeah, man. A book that um has made a big >> Yeah, man. A book that um has made a big >> Yeah, man. A book that um has made a big impact on my life that I gift probably impact on my life that I gift probably impact on my life that I gift probably more than any other book is called 12 more than any other book is called 12 more than any other book is called 12 Pillars by Jim Ran. Um Jim Ran’s like Pillars by Jim Ran. Um Jim Ran’s like Pillars by Jim Ran. Um Jim Ran’s like one of the foremost thought leaders of one of the foremost thought leaders of one of the foremost thought leaders of our time and uh it’s where Tony Robbins our time and uh it’s where Tony Robbins our time and uh it’s where Tony Robbins got all his stuff from and uh he’s no got all his stuff from and uh he’s no got all his stuff from and uh he’s no longer alive. He passed away I think in longer alive. He passed away I think in longer alive. He passed away I think in 2010 but um the guy’s a stud and has 2010 but um the guy’s a stud and has

[46:37] 2010 but um the guy’s a stud and has like such a simple understanding of a like such a simple understanding of a like such a simple understanding of a way of explaining um complex things that way of explaining um complex things that way of explaining um complex things that really resonates with me. And so he’s really resonates with me. And so he’s really resonates with me. And so he’s got a book called 12 pillars. It’s like got a book called 12 pillars. It’s like got a book called 12 pillars. It’s like 70 60 pages long or it’s so easy of a 70 60 pages long or it’s so easy of a 70 60 pages long or it’s so easy of a read. you’ll sit down for one or two uh read. you’ll sit down for one or two uh read. you’ll sit down for one or two uh sittings and read through the entire sittings and read through the entire sittings and read through the entire thing and you’ll sit there with a thing and you’ll sit there with a thing and you’ll sit there with a highlighter because you’ll highlight highlighter because you’ll highlight highlighter because you’ll highlight every single chapter. Um but it’s really

[46:57] every single chapter. Um but it’s really every single chapter. Um but it’s really it’s really built on like how to build a it’s really built on like how to build a it’s really built on like how to build a great life, right? And how to um design great life, right? And how to um design great life, right? And how to um design your life and the things that you should your life and the things that you should your life and the things that you should be focused on, the things that are be focused on, the things that are be focused on, the things that are really important, the skills that you really important, the skills that you really important, the skills that you need to learn in order to uh be need to learn in order to uh be need to learn in order to uh be successful across all different facets successful across all different facets successful across all different facets and and um of your life. Uh these are and and um of your life. Uh these are and and um of your life. Uh these are the things that really you should be the things that really you should be the things that really you should be focused on. The 12 pillars if you will.

[47:18] focused on. The 12 pillars if you will. focused on. The 12 pillars if you will. And so uh it’s really really good, And so uh it’s really really good, And so uh it’s really really good, really simple yet super profound. really simple yet super profound. really simple yet super profound. >> I love it. We I feel like we need >> I love it. We I feel like we need >> I love it. We I feel like we need another podcast episode just to talk another podcast episode just to talk another podcast episode just to talk about uh the other things in life as about uh the other things in life as about uh the other things in life as well with you cuz I’m Yeah. Be curious well with you cuz I’m Yeah. Be curious well with you cuz I’m Yeah. Be curious to hear more about the family life and to hear more about the family life and to hear more about the family life and and all that kind of stuff. Health, and all that kind of stuff. Health, and all that kind of stuff. Health, wealth, uh family. It’s all kind of wealth, uh family. It’s all kind of wealth, uh family. It’s all kind of inter interconnected this this crazy

[47:36] inter interconnected this this crazy inter interconnected this this crazy life we live. Um Tim, what about if life we live. Um Tim, what about if life we live. Um Tim, what about if anybody wants to follow you um on social anybody wants to follow you um on social anybody wants to follow you um on social media, reach out to you in any other media, reach out to you in any other media, reach out to you in any other ways, is there or you mentioned a ways, is there or you mentioned a ways, is there or you mentioned a mastermind. Where where can people find mastermind. Where where can people find mastermind. Where where can people find more about you? more about you? more about you? >> Yeah, just uh connect with me on social >> Yeah, just uh connect with me on social >> Yeah, just uh connect with me on social media, Tim BRZ. Um I’m I’m available media, Tim BRZ. Um I’m I’m available media, Tim BRZ. Um I’m I’m available there putting out content all the time, there putting out content all the time, there putting out content all the time, trying to help people by just delivering

[47:58] trying to help people by just delivering trying to help people by just delivering as much value as I possibly can on as much value as I possibly can on as much value as I possibly can on social media. So, just hit me up there, social media. So, just hit me up there, social media. So, just hit me up there, shoot me a message, and um yeah, if shoot me a message, and um yeah, if shoot me a message, and um yeah, if you’re interested in like we we don’t you’re interested in like we we don’t you’re interested in like we we don’t really have a lot of coaching type stuff really have a lot of coaching type stuff really have a lot of coaching type stuff anymore. We do we do have a mastermind anymore. We do we do have a mastermind anymore. We do we do have a mastermind that’s higher level for people with that’s higher level for people with that’s higher level for people with bigger portfolios. Um we work with bigger portfolios. Um we work with bigger portfolios. Um we work with investors all the time. So, if you’re investors all the time. So, if you’re investors all the time. So, if you’re looking to put some money in play, happy

[48:17] looking to put some money in play, happy looking to put some money in play, happy to chat with you or at least direct you to chat with you or at least direct you to chat with you or at least direct you in the right um place in order to do in the right um place in order to do in the right um place in order to do some some of that stuff and uh just be a some some of that stuff and uh just be a some some of that stuff and uh just be a resource. So, I appreciate it, man. resource. So, I appreciate it, man. resource. So, I appreciate it, man. Thanks for having me. Thanks for having me. Thanks for having me. >> Yeah, Tim, thanks so much for being on. >> Yeah, Tim, thanks so much for being on.

[48:28] >> Yeah, Tim, thanks so much for being on. Thanks for listening to the REI Agent. Thanks for listening to the REI Agent. Thanks for listening to the REI Agent. >> If you enjoyed this episode, hit >> If you enjoyed this episode, hit >> If you enjoyed this episode, hit subscribe to catch new shows every week. subscribe to catch new shows every week. subscribe to catch new shows every week. >> Visit REI agent.com for more content. >> Visit REI agent.com for more content. >> Visit REI agent.com for more content. >> Until next time, keep building the life >> Until next time, keep building the life >> Until next time, keep building the life you want.

[48:40] you want. you want. >> All content in the show is not >> All content in the show is not >> All content in the show is not investment advice or mental health investment advice or mental health investment advice or mental health therapy. It is intended for therapy. It is intended for therapy. It is intended for entertainment purposes