JF2697: How to Live a Balanced Life – The Investor Lifestyle | Actively Passive Investing Show with Travis Watts

Maintaining a good work-life-balance can be difficult to accomplish. In this episode, Travis shares the lessons he’s learned trying to navigate a good balance between work and the other aspects of his life, such as health, relationships, and more.

Want more real estate advice? We think you’ll like this episode: JF2627: 5 Ways to Align Your Investments to Achieve Your Goals | Actively Passive Investing Show 67

Check out past episodes of the Actively Passive Investing Show.

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

 

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2690: How to Network at Conferences – The Best Tips For 2022 | Actively Passive Investing Show with Travis Watts

Attending conferences and events is one of the best ways to expand your network. But how do you make sure you make the most out of your experience? In this episode, Travis shares the critical elements to networking at conferences and how to create your own game plan for your next event.

Looking for your next real estate conference? Join us in Denver, Colorado at the Gaylord Rockies Convention Center from February 24th-26th for the Best Ever Conference! Register here: www.besteverconference.com

Want more real estate advice? We think you’ll like this episode: JF2668: 3 Ways to Grow Your Business at a Networking Event with Ben Lapidus

Check out past episodes of the Actively Passive Investing Show.

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

 

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2683: How to Evaluate Risk in Multifamily Apartments 2022 | Actively Passive Investing Show with Travis Watts

There are a lot of variables to consider when selecting a deal, which means there is a lot that could go wrong with your potential investments. Today, Travis Watts outlines three risk areas investors should investigate before closing on a multifamily deal.

Want more? We think you’ll like this episode: JF1386: How Do You Remove As Much Risk As Possible In Real Estate Investing? With Chad Doty

Check out past episodes of the Actively Passive Investing Show .

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Travis Watts: Hey everybody and welcome back to The Actively Passive Investing Show. I’m your host, Travis watts, and appreciate you guys’ tuning in. We are back in the studio here today recording this episode on how risky is multifamily in 2022, as we enter the new year. A quick little background on this. Risk should always be top of mind as an investor and I think it’s understated, I think it’s an underserved topic in the industry. Today we’re going to talk about risk as it pertains to multifamily, but I’ve got some really good insights to share with you on some due diligence, so I think you’re going to get a lot of value out of this episode. It’s going to be a bit longer than the last couple. Without further ado, let’s just go ahead and dive right in.

The first thing I want to talk about is the business strategy itself. Just saying “Is multifamily risky?” is kind of like saying, “Is real estate risky?” What exactly are we talking about, commercial, retail, single-family, flips, development? There are all kinds of aspects here. Let’s pinpoint what we talked about all the time on the show, which is value-add real estate in the multifamily sector.

The big difference here when we talk about value-add is to understand one key fundamental, and that’s that the value of multifamily apartments is primarily based around the net operating income. That’s the income the property generates after you pay all your expenses, taxes, debts, and things like this. How do you get net operating income to rise? Well, it has a lot to do with rent and rent growth. What are you buying a property at today? What are the current rents? What do you think you can get the rent to? This is all part of the strategy surrounding value-add. Let’s talk about a cap rate. I’ve described the cap rate in a few different versions in previous episodes,; but I’ll give you a new way to look at cap rate. Hopefully, it’s not too confusing. One, a cap rate is simply just a gauge to see how hot the real estate that we’re talking about is.

If you’ve got a two, three, or four cap, that is suggesting a really hot market or a really hot asset, anything that’s trading in that range. If we’re talking an 8%, 9%, 10% cap rate in 2022, we’re talking about a very soft market, an area that maybe folks aren’t really wanting to move to or buy in for whatever reason. Something to keep in mind. But what cap rate also can be, it’s a multiplier.

Think about buying a multifamily asset at a four capitalization rate. Basically, a four cap is like saying this, if we buy a property — this is just generally speaking, example purposes only. Obviously, it’s not a tried and true exact formula here. If we buy a property at a four cap, it’s a 100-unit or whatever, it produces a million dollars per year in net operating income; the four cap suggests a 25X or 25 times multiplier to purchase price. In other words, someone’s going to say, “Okay, you have a property that generates a million bucks a year. The purchase price will be 25 times that.” Just simply put. So what would that be? $25 million for a purchase price, just generally speaking, just hear me out, that’s how it works from a high level. Not an exact science.

The thing with value-add in the thing with stabilized cash flowing projects is as long as you keep the income up and the expenses under control, there’s a lot more predictability in that kind of play. It can be a lot less speculative than doing new development, where you have to say “Construction costs are this today, but it’s actually going to be three years down the road by the time we complete everything. So hopefully, prices are X, Y, and Z in the future, and hopefully, the market does A, B, and C to help us out.” But that’s speculating an awful lot, in a space that, quite frankly, you don’t have much control over, what government policy is, what the Federal Reserve decides to do, and anything else that may pop up in between in terms of inflation, pricing, wages, lack of inventory, etc. This is why I always say that cash flow is king. This is why I’m not such a fan anymore of flipping houses, although I used to do that. It’s also the same reason that I don’t buy stocks as a buy-low-sell-high kind of mentality or strategy. I think it’s very practical and very useful just to accept that market conditions are widely out of our control, good news in the media, bad news in the media.

So instead of buying a stock at $10 a share, then hoping that one day it’s $15 a share, and then hopefully I can sell. It’s an awful lot of hope. But instead, what I would do is I would buy a dividend-producing stock, ideally at a discount as the markets just pulled back 10, 20, 30%, so I have a lesser chance of it going down even further at that point.

But the important component is, it’s not about the price, it’s not about buying it at 10, or 15, or eight, or nine, or seven. What it’s about is the fact that it’s producing positive cash flow, or a dividend in this case, because we’re talking about a stock.

In other words, it’s a lot less speculative if I can take a company that’s been paying a dividend out for 10, 20, 30 years and say, “Well, they’ve never missed a payment. Or at least 90% of the time, they’ve never missed a payment even through the ups and downs and through the recession, so I have a lot more certainty and predictability on whether or not I’m going to actually receive a dividend from this company.” That has a lot more control to it than saying, “I think I’m buying it at $8 or $9 a share and I believe it’s going to go to $13 or $14.” That’s just crystal ball territory that nobody really has. But some people like to think that they do have a crystal ball.

A few episodes ago, I talked about the lost decade. This was from January of the year 2000 to December of the year 2009, that’s just about a decade of time right there. Had you just bought into the stock market, generally speaking, with an S&P 500 index, which is not a cash flow, or a passive income, or dividend kind of play, even though it’s got a small one attached to it – it’s really a buy-low-sell-high mentality. It’s that you’re going to buy the general stock market and then hope that over time it goes up. But the fact is, during the lost decade, you would have bought in January 2000, it would have trickled down with the dot-com bust, and then 9/11 happened, and then we had a recovery, and then we had the great recession where you would have gone down again, and then we had a recovery where you went up again. But the fact is, 10 years go by and you’re left with really nothing. So you kind of got eaten up by inflation, more or less, and you had no cash flow, nothing to put in your pocket month to month. That’s why I’m not such a fan of just buy-low-sell-high and speculating. Not to suggest that you or anybody else shouldn’t do that, I’m just sharing my opinions, my perspective with you, in hopes that it can help you make more informed decisions.

Okay, that is kind of the big-picture philosophy. That’s from a high level that was talking about strategy and business plan. Let’s dive into the three risk areas that I often talk about. On to the market risk. First, I’ll share a quick story with you that I invested in at least two deals –it could have been three at this point– where, quite frankly, the market itself kind of saved the overall business plan and made investors profitable. In other words, I invested in these deals where the operator didn’t do necessarily a good job at all at executing on the business plan doing what they said they were going to do. The deal was just kind of average and so-so, it was basically just a market price deal and nothing too special. But the market itself was booming, and it was a great high growth area. I’ll pinpoint a few things to look for in a market here in a minute. But essentially, we all got out profitably by the market bailing us out, not with the other two components, the operator in the deal itself being a big contributor to our overall success.

Break: [00:08:40][00:10:18]

Travis Watts: There are really three main areas that I look at when I’m vetting out a market from a macro level that I think is really important to consider. One is jobs. That’s how many jobs are there? Who are the employers? Is the market diversified by industry? I’ve spoken a lot about Dallas in the past being that no one industry comprises more than 20% of the job market. I don’t know if that’s still true today, it may be even better stats than that. But the fact is, it’s not a Detroit, Michigan [unintelligible [10:48] recession, where it’s really just one industry lifting the market, and if that one industry goes down, then everybody’s hurt. Then I look at are people moving in or moving out of the market? Not every market, as you know, is created equal. There’s an exit happening in parts of Los Angeles and San Francisco, more people are moving out than moving in, rents are stagnating, and in some cases declining in those areas. How many people are there in general? How many are moving in versus moving out? This is all just public information that you can look up online. You can probably ask the syndicator or the operator for this data if they didn’t provide it to you in the proforma. I also look at what’s the absorption rate in the market. In other words, take a look at average occupancies and things like that. What is the overall absorption rate? You can find this by the way through CBRE, Marcus and Millichap, there’s a lot of, again, public information that you and I have access to that will tell you this data.

Next is wages. What are your tenants actually earning? Obviously, the common thing that we look at is how much are they earning on average at this property. But also look at the three-mile, five-mile, 10-mile radius of jobs, look at average incomes in the area, and just decide if you’re going to be charging 1500 a month in rent. Is that adequate for your tenant who’s going to be living there, or is that a stretch or a push, and at the very, very highest end of the affordability spectrum for that three, five, and 10-mile radius? I also look at the same topic, are the jobs recession resistant? In other words, at the property or in the surrounding area, do you have medical facilities, doctors, nurses, and things like that? Or is it cruise ships? Are you right next to Cape Canaveral in Orlando or Miami right there at the port? You got to look at what that industry is comprised of and who’s actually working what jobs. Trying to decide, are the wages safe especially in volatile times like today, with viruses going around, with different industries having to shut down, and all these crazy regulations that we have. You need to know that your tenants are going to be able to continuously pay the rent and that you have a diversified employment base among residents at the property.

Moving on to the operator risk. As an investor, the primary metric or statistic that I look at from an operator’s perspective as I’m doing my due diligence is what is their track record? Is this business model that they’re showing me what they usually do? Is it the norm for them? Is that their specialty? Or is it something that they’re experimenting around with and have never done before? In other words, if an operator’s done 40 deals just like this one over and over successfully and they can show me that data, even if a couple of the properties underperformed but in the wide majority they’ve outperformed or performed expectations, that really goes a long way. Versus just saying, “Look, we’re new to the business and we really hope this is all going to work out. We’ve never done it before but give us your money and let’s see what happens.” That’s a big red flag, at least to me, something to consider. I’m not going to go through all the different line items of vetting out an operator here on this episode because we’ve covered it so many times in different episodes. So check out some of the 2020 episodes that we did on how to vet an operator, a market, and a sponsor. I will point out a couple more things for you real quick right here, which is get references both from the operator. Say, “Hey, do you have any investors that can speak to having some experience investing with you.” But also try to branch out of that if you can. Try to get on forums, Google, and attend any kind of real estate meetup groups, try to meet people who are already invested with these groups.

Guys, I can tell you, word of mouth referral is powerful. The way I’ve found a lot of operators that I partner with today is just through word-of-mouth references. It’s not always because I requested a word-of-mouth reference, it’s usually because I’m talking to someone and they said, “Hey, you ever invested with so and so?” “Yeah, I’ve done four or five deals with them and just had a really positive experience.” It usually kind of starts with that. A little bit of interest, then I do my due diligence, I interview them, then I’m on their deal list, and then I ended up partnering if it kind of matches my criteria. And then I would do a gut check analysis. I think this is really critical and It’s very simple to do. I’m just talking about googling the operator, I’m talking about going on to YouTube, Facebook, LinkedIn, and social media sources. I love to look at videos, I love to watch interviews, and I’m just trying to get a gut check of who are these operators as people, in philosophy, in competency. Are they widely known? Are they out there in the industry? Or again, are they just getting started? Or is there no public information on them at all? Some of these items could be a red flag for you so definitely watch out. If something doesn’t align or you just think, “There’s something off about this person. I can’t really pinpoint it but I’m not really comfortable with what they’re saying or how they answered that question.”

Last, but not least, get on the phone with the operators. If you can meet them in person, even better, but if not, get on Zoom, get on a phone call, and ask your questions. This can be very revealing. Again, like I often say, I’m not looking for the “right answer”, I’m looking for an answer that just makes logical sense. I’m just looking to know they’ve thought things through, that they’re competent in what they’re talking about, and I’m just trying to get an overall gut check that my money is going to be in good hands and not “Oh, hey, good question. Hadn’t even really thought about a recession happening. I don’t know. I don’t think that’s going to happen.” That might be a red flag.

Alright, moving on to the last of the three risk points, in my perspective, in my opinion, and that is the deal itself. Again, just my own opinion, that the deal is 25% of your risk, the market is 25% of your risk, the operator is 50% of your risk. The bottom line is that if you have a good operator, someone who’s experienced and who has a track record, they probably know what they’re doing first of all. They’re probably going to find a good deal and a good market, they’re going to know how to vet a good market and how to vet a good deal. They don’t want to spoil their track record, obviously, plus, they’re co-investing in the deal and everything else. You still must do your due diligence. This is kind of one of those trust but verify thing, so let’s dive into that.

When an operator is doing a deal, I don’t care what operator we are talking about, they want to show you the highlights of the deal and they want to highlight all the best features. They want to show you all the pros, they want to talk about how great everything is, but they’re probably unlikely to show you any negativity or any stats that really don’t justify their business plan. As I’m looking at proformas, I’m tuning into webinars, and I’m thinking about maybe investing in this deal, I’m kind of making notes of what wasn’t covered. I kind of start off as they’re talking, I wonder what’s the cap rate here? What’s the reversion cap rate? How conservative are they underwriting the T12? Are they giving me a sensitivity analysis? These questions, and as I go through, I read, and I listen, I’m marking off my list the answers. What I’m left with, I’m kind of circling, then I’m going to set up a call, I’m going to ask those “difficult questions.” I encourage everybody listening to ask difficult questions as part of critical due diligence. The last thing you want to do is to invest $100,000 and then find out three months later, something wasn’t disclosed or that you didn’t understand something fully, and now you’re locked in for five to seven years.

I’ll share with you guys a really quick story, this was a few years back. There was a deal that I’m listening to the webinar, I’m browsing through the proforma, and everything looks good. The numbers look good, it seems very conservative, the deal seems solid, just seems like an overall great opportunity so I’m really leaning towards investing. After the presentation’s done, I hop on Google Maps, and I just take a little drive-by of this property. What I find is that directly to the left of this property is a really old, rundown mobile home park. Now, nothing wrong with mobile home parks, in fact, I used to live in a mobile home park growing up and I invest in mobile home parks today. But this particular mobile home park was really, really rundown. I mean, it was in terrible shape. The only thing that divided this park from this apartment community was a six to seven-foot concrete brick wall between the parking areas. I thought “Oh my gosh. That wasn’t even talked about in the webinar. That wasn’t even shown on the pictures.” Here they are, showing all the interiors and what they’re going to do for unit renovations, and not even talking about the elephant in the room, so to speak, which is right to the left of the property. Long story short, I decided not to invest in that deal. But this is the kind of due diligence that I’m talking about.

Break: [00:19:23][00:22:19]

Travis Watts: …marketing, it can really hurt your drive-by traffic. You can do all the curb appeal enhancements as you want, new plants, new signage, new lighting, but people aren’t going to miss that as they drive out every single day, in and out of that property, what’s just to the left. Look at school ratings, absolutely. That’s often not talked about on a lot of webinars that I see, it’s that trust but verify. If they make a generalization like “Yeah, great schools, lots of families here.” Just go do your homework, get on Zillow, it’s really easy to go look that kind of stuff up. Look up crime stats, public information, do the drive-by as I mentioned on Google Maps. If you can, the best way is to visit properties in person. I always learned so much about it, and it’s just the common-sense factors, the gut check. When you’re pulling in, what’s the feel, and what’s the appeal? As you talk with the property management company, what’s your general feedback? How does the clubhouse look? Just stuff like that. Are people being responsive on the property? Is there graffiti all over the sign? Are there broken lights all over the place? It really tells you a lot about the area that you’re not really going to see in a proforma.

The goal and doing your due diligence, again, is trust but verify. You’re trying to seek out what’s not being talked about in the webinar or the presentation. Again, just jot down your questions. “Hey, what about that neighboring property XYZ? Is that going to be an issue or do you foresee any problems with that? What gives this particular property that competitive edge compared to the one that’s right next door that seems to be doing great? Is there anything that this property has to offer that they don’t?” Maybe two or three swimming pools instead of one, maybe a better gym, or maybe it’s some of the value-add plans that they’re going to be implementing that’s going to far exceed what neighboring properties have to offer. All that stuff is really great info to have. If you find a bad review on a school, “Hey, I noticed that the school next door is rated at three out of 10. Do you know anything about that? Or is that kind of a red flag for you guys in any way? How do you think that plays into the resale of this property or the value that it has today?”

I know I kind of alluded to this earlier, but a stress test or a sensitivity analysis is basically something that the underwriting team generally does. They say, “Well, if interest rates go up, this is kind of the effect to the investors.” Or “If occupancy falls down from 95 to 85, this is the effect that would have on the cash flow to our LP investors.” That’s just something you probably are going to have to ask for separately. It’s usually not included in your standard webinar presentation or something like that. Certainly not in a PPM, private placement memorandum. So make sure that you’re asking for stuff like this if the numbers are really critical to you, or if you feel like maybe they’re not being so conservative with the underwriting. This will tell you a lot about a property. A lot of times, I’ll see really great looking proformas but then I won’t see things like them disclosing, “Hey, we’re buying this at a four cap,” and that’s all they say about it. They don’t tell you about stabilization upon the cap rate, they don’t tell you about their projected exit cap rate. We’ve talked about this a lot, but for buying a property at a four cap, I like to see a five cap in the future projected.

Now, I don’t actually want to see that happen. That means the softening of the market, which means a lesser purchase price generally speaking, but it’s a way to be conservative when you’re underwriting and something to look for. If they do a presentation and just say, “Hey, we’re buying it at a four cap, end of the story,” I’ll always ask the question, “What about the exit cap? What do you think that might be in the future?” If they say, “Four and a half, five, five and a half, six,” that’s being conservative. If they say, “Oh, the same. Four or lower. Three, two, one,” red flag for me. It’s just showing that they’re being very aggressive. It’s kind of like predicting interest rates. Do you want someone to predict the interest rates are going to keep going down, down, down forever until we go negative interest rates? Is that being conservative or is it more conservative to say, “Well, interest rates might be going up at some point in the future. Hopefully, they don’t. But if they do, we’ve already factored that into this business plan.”

The last thing I want to point out here about the deal itself is, again, under the philosophy of “trust but verify,” go to places like apartments.com and actually look for yourself at the comps. I know they usually will show you comps and the overview, but they’re handpicking the comps that they want to show you, the operator, so it’s better to do your own due diligence. If the business model is, “Hey, we’re buying this property. It’s got a lot of two bed two baths, they’re currently rented at $1,100 a month, they’re not renovated units, and the comps are 1400 per month in the area.” If that’s what said, if that’s what the business plan is, hop on apartments.com, go look at actual comps in the area, in the three, five, 10-mile radius, look at two bedroom two baths, and see if they’re actually renting at 1400 or greater for a very comparable property. It is not a comp to suggest “Hey, we’re buying a 1975 property and we’re going to raise rents to 1400 when a brand-new built A-class luxury apartment community is renting at 1400 a month two bed two baths.” That’s not a comp even though it’s the same square footage, two bed two baths, I tell you.

Obviously, a prospective renter is not going to go rent the 1975 unit if they can go rent a 2022 built unit for the same price. You really got to read between the lines there and think how conservative is this. Maybe the other older properties are renting at 1400 or 1500 or 1600, in which case, that’s a very conservative assumption. But maybe they’re only running at 1200 and maybe they’ve already been renovated. That’s a big red flag. If you’ve got renovated units running at 1200 and this business plan is to raise rents to 1400, you may not get it. That means you may not get the overall projections and that means all the numbers kind of go out the wayside. Do your own homework. That’s what I wanted to cover in this episode is some of the risk points going into 2022. We have to be more diligent than ever, as investors we need to be doing our own homework.

You can always reach out to me if you have further questions, travis@ashcroftcapital.com, joefairless.com, social media, I’m always happy to help with any questions you have. I appreciate you guys so much as always for reaching out. Well, let’s connect on LinkedIn, let’s connect on Bigger Pockets. Let’s connect on Facebook, on Instagram, @passiveinvestortips. I’m always here to be a resource for you guys. Thanks so much and we will see you next week in another episode of The Actively Passive Show. I’m Travis Watts. Have a Best Ever week.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2676: One Secret To Successful Investing – How The Rich Get Richer | Actively Passive Investing Show with Travis Watts

In Travis Watt’s experience coaching and mentoring others in passive investing, he finds that there is one fundamental piece of advice that many investors fail to follow. In this episode, Travis shares his personal philosophy combined with Robert Kiyosaki’s method from Rich Dad Poor Dad for approaching asset and liability management.

Want more? We think you’ll like this episode: JF2468: Following the Cash in Asset Management with Dave Sherbal

Check out past episodes of the Actively Passive Investing Show here: bit.ly/ActivelyPassiveInvestingShow.

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Travis Watts:  Hey, everybody. Welcome back to another episode of The Actively Passive Investing Show. I’m your host, Travis Watts. Just like last week, I am shooting a video on the fly on one of my walks around the neighborhood. I should call these segments Walks About Real Estate, or Real Estate Talk with Travis, I don’t know; some Mr. Rogers kind of crap. But anyway, sometimes I get these moments of clarity when I’m exercising or walking and that’s what happened today, just like last week.

I was thinking about a fundamental piece of the puzzle when it comes to investing. A lot of my friends and family have reached out over the years saying, “Hey, what is it you do? I want to get involved. I want to do what you do. How do I get to where you are?” Whatever it is, I’m always happy to share, I’m always happy to help, to coach, to support, encourage, and educate, all these things. But the reality is, after doing so, I find that the majority of folks have one thing backward, and that’s what we’re talking about today – is what that foundational piece to the puzzle is that a lot of people seem to miss for whatever reason. And I don’t want you to make the same mistake. So that’s what we’re talking about in today’s episode.

I will tell you right up front, this is a combination of Robert Kiyosaki… I refer to him a lot in these episodes. The author of Rich Dad Poor Dad, the founder of the Rich Dad company. It is part of Robert’s philosophy, but it is also part of my own philosophy that we’re talking about. So it’s kind of a mash, a merge.

You’re not going to find this content quite like this stated anywhere else. So with that — I’ll sit down over here, so I don’t get too out of breath. I’m not the most in-shape person. Let me sit down and talk to you about this just for a minute. Here’s the thing – Robert Kiyosaki, I learned this years ago from him, a great message… He’s great about teaching the fundamentals of investing and finance and this kind of education. He said, basically, buy assets to pay for your liabilities. To me, trying to think back and remember off all the things I read, there wasn’t a lot of great extraction from that, there wasn’t a lot of “Here’s exactly what I mean by that message, a, b, c, d.” That’s what I’m doing for you here today, is trying to break that down in a more simplified and understandable way.

Break: [00:02:53][00:04:32]

Travis Watts:  This is how I approach liabilities and assets in my own life, and what’s worked for me, and what I think is very powerful that I want to share with you. Let’s say, for example purposes, that you want to buy a new car. Generally speaking, if you’re going to buy a new car, there are three ways to do it. You pay all cash, you lease a car, or you make a down payment, you finance the car, and then you make payments every month, which is much like a lease. Let’s break down my interpretation of what Robert Kiyosaki was trying to say and what I’d do personally in those three scenarios. Here’s how I look at it.

If I want to buy a new car and — and just for example purposes and simple math because I’m bad at math– $50,000 is the car purchase price. So if I’m going to pay all cash, this is my rule to myself – I have to have an investment in my portfolio that I am selling this year, this year that we’re talking about, whether it’s 2021 or 2022, that I can sell right now, like stocks, bonds, and mutual funds that are liquid, or that is selling, like a syndication or something, where I’m going to get at least $50,000 in a long-term capital gain or short-term capital gain to pay for the liability. So the investment was made first, it already did what it did, and now I have to be able to extract a gain to offset 100% of the purchase price of my liability, which is the car. Now, that may be a pretty big ladder for some people, to come up on the fly with $50,000 or whatever to buy a car.

Let’s say I want to finance the car. So I’m going to make a small down payment and then I’m going to have monthly payments thereafter. The same principle for the down payment, but see, it’s going to be a far less hurdle. Let’s say the same car 50 grand, I need to put $10,000 down; that’s 20%. So now I just needed an investment where I can extract $10,000. And then for the payment that I’ll have every month – again for simple math because I’m bad at it – the payment is going to be $500 per month. Then I need an investment in my portfolio that produces cash flow, positive passive income on a monthly basis that covers the $500 payment that I’m going to have. What would that look like?

Let’s use real estate as an example, because it’s a real estate show that we’re on. So if I put $75,000, if I go invest that amount of money into a piece of real estate – single-family, multifamily, syndication, do it yourself, whatever – I need to have at least $500 per month. That would be what? 8% return on an annualized basis, 75,000 times 8% I think is $500. Again, I’m bad at math; just bear with me in this example. That’s what I would have to do in order to make my payment every month.

Break: [00:07:31][00:10:28]

Travis Watts:  So the last example is leasing the vehicle. We’ll say that the payment is $500 per month, same example, same concept. I need an investment — in this case, it doesn’t have to have any kind of gain. I need no kind of capital gain at this point. I just need to first take my money and invest it in something that produces cash flow or passive income, that on a monthly basis will give me more than $500, so that I can make the payment for my liability, and I don’t have to eat away or sacrifice my principal.

These family members, these friends, whoever it is that’s saying “I want to do what you do, blah, blah, blah” and I educate and I share what I can to help, and then the next thing I know they’re rolling up in some brand-new car or they’re on some exotic luxury vacation, and I say “Hey man, amazing car. It looks great. How was that vacation? It looked like fun. How’s the investing stuff going?” “Oh, yeah. I just don’t have the money to do it right now. But eventually, I will. At that point, I’ll reach out to you.” Nine times out of ten, that’s kind of the answer that I get back.

You and I both know the reality is they’re never going to get the money together to do it, until they get serious about the fundamentals of assets and liabilities.

Robert Kiyosaki says an asset is anything that puts money in your pocket every month, and a liability is something that takes money out of your pocket every month. So know the difference, know that as a fundamental investing key. Hopefully, you guys found some insights in this little message here today. I know it’s a really short episode, but I wanted to get right to the point, share that with you in a way I’ve never shared that with anybody, and help clarify what that message is all about. And at least, if nothing else, it gives you something to think about.

The whole idea – my fundamental philosophy, is using passive income and cash flow to enhance or pay for your lifestyle. It all comes down to that fundamental; so know the fundamentals. We’ll see you next week on The Actively Passive Investing Show. Thank you, guys, so much for tuning in.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2669: Why You Should Chase Opportunity, Not Passion | Actively Passive Investing Show with Travis Watts

We typically hear that if we follow our passions, that will naturally lead us to success. However, in today’s episode, Travis questions the validity of this advice. What if you turn out to be bad at your passion? Or, what if you lose steam for your passion–what are you left with then? Take a walk with Travis as he discusses the idea of chasing your passion vs. chasing an opportunity.

Want more? We think you’ll like this episode: JF2407: Find Your Real Estate Passion with Kristen Ray

Check out past episodes of the Actively Passive Investing Show here: bit.ly/ActivelyPassiveInvestingShow.

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Travis Watts: Hey everybody and welcome to another episode of The Actively Passive Investing Show. I’m your host, Travis watts. If you’re tuning in on audio-only, I’m sorry about the audio. Case in point right there. I’m on a walk today, and sometimes I get these moments of inspiration, these little epiphanies… And I want to share them and it’s best to do it at the moment and not days later, as I forget what my point was in sharing the message. I appreciate you being flexible with that. If you’re tuning in on YouTube, you can enjoy this beautiful walk with me. Again, apologies if you’re tuning in on audio.

Today I wanted to talk about kind of a unique message. Here we are in December, you wouldn’t know it. Where I am here today in Florida, it looks like mid-summer. But I had this epiphany and I was thinking back, been doing a lot of self-reflection… Here we are at kind of the end of the year in 2021 and I was thinking about chasing your passion versus chasing opportunity.

A really interesting story… I grew up with people telling me to find my passion, get good at it, follow my dreams, pursue my passion – all the generic advice that you get from adults, peers, and whatnot. I did that, you guys, I actually took that advice. My passion back when was music. I was a drummer, I was a singer in bands, and I wanted to work with musicians, I wanted to open a recording studio, I wanted to go tour, I wanted to do Broadway work, work in theaters, I want to do all of it. I pursued my passion from junior high, high school, college, and post-college, slightly post-college. That was my passion, was doing that kind of stuff. And it was fun, but what I failed to realize is, quite frankly, I wasn’t very good at drumming, I wasn’t very good, certainly not good at singing… I wasn’t good at business, I wasn’t good at all this stuff. Yes, I could have gotten better at it but as I really immersed myself into the business, as I did an internship, as I actually moved to New York City, as I actually got to networking with people who had been doing this for a very long time, I quickly fell out of love and kind of lost my passion for what it was I was pursuing. And it was really going to be going against the grain, so to speak. This was 2008 and 2009 as I was going through college, so I’m coming out of the tail end of the recession. No one’s hiring, everybody’s laying off, people with 30 years of experience aren’t getting jobs… Then here I am, somebody with very little skill set, no real-world experience, trying to enter the job market in a highly competitive space that requires a lot of connections, and who you know, and what you know, and all this kind of stuff. And I made a decision; I had a little quarter-life crisis, so to speak, I decided I’m going to move back to Colorado where I was raised, and I’m going to find an opportunity.

And one of those opportunities – I ended up finding two that I decided to pursue, rather than pursuing my passion. The first was entering the world of the oil industry. So there was a big problem – Colorado was blowing up with oil production, and they couldn’t find enough people to do manual labor, be away from home, work 100 hours per week, outside in the elements, swinging sledgehammers. I guess that makes sense, especially in today’s world. I still don’t know how they find people who are willing to do that kind of stuff. But anyway, I took one of those jobs, because I knew that I wanted to get into real estate, which was the second opportunity.

Break: [00:04:37][00:06:16]

Travis Watts: Real estate in my market was about 40% off from the previous price levels just a year or two prior to this time, pre-recession. So with that, I certainly wasn’t passionate about the oil industry; I knew nothing about the oil industry. I certainly wasn’t passionate about working in negative 20-degree weather swinging a sledgehammer. But it was the best earning opportunity that I could find. And I knew one thing back then – this is the way that my mind worked, was I needed to make more money if I want to get in the real estate game.

I didn’t know anything about syndications, or raising money from other people, or any of that kind of stuff, all I knew was I wanted to buy up more and more real estate at a discount and I needed some pretty big money to do it. So I did make a lot of sacrifices and be very frugal. I’ve shared a lot of these stories in previous episodes. But long story short, I pursued the opportunity, and the opportunity at that time was working a job I really wasn’t passionate about, for the money. I’m not recommending you or anybody else do that specifically, but that’s an example of what I mean by pursuing an opportunity.

The second was, as I mentioned – real estate’s 40% off, I want to get in the game, and I wanted to start accumulating cash flow. So at the time, I knew nothing about real estate either. I had never invested in real estate, and didn’t probably even really understand fully the tax advantages and the full meaning of cash flow, but it certainly wasn’t a passion of mine; it was just an opportunity, that prices are depressed. Did you know — a side note really quick; I just learned this the other day… In the great real estate recession in the United States, the average national rent only dropped $100 per month on multifamily. On apartments, the average rents were $1,300 a month going into the recession, and then dropped to about $1,200. That’s pretty crazy to think about. If you or I owned a single-family home and we went through one of the worst recessions that we’ve ever had in US history that was specific to real estate, and all we had to sacrifice was $100 per month on our rental – not too bad. Obviously, some markets were beaten up worse than others, like Las Vegas, Miami, there were really hard-hit markets where I’m sure those statistics… That’s not accurate to there. But that’s just the national scale and something to think about.

So I knew one thing, I wanted to pursue real estate for the cash flow, not for the equity upside. Quite frankly, in 2009, when I entered the real estate market, a lot of people say “Oh, great timing.” I was catching a falling knife, so to speak. Everyone was telling me not to buy real estate. Quite frankly, real estate prices were still dropping. The market didn’t start to recover, at least where I was, to probably late 2011, somewhere in 2012. That’s where it really got a nice up-kick and started reversing, that’s where I started flipping houses and changing my strategy, which is another example of chasing the opportunity, not passion. I certainly wasn’t passionate about flipping houses. I hated every second about it, but it just made a lot of sense. I was buying these homes, some homes I was buying and doing almost nothing to, renting them out for about a year, and selling them. A couple of those, I nearly doubled my money. It was really just a crazy opportunity, but certainly not being a drummer in a band.

So the point that I want to make here is –this is what’s interesting… Even though I wasn’t passionate about the oil field, for example, and I certainly wasn’t, I ended up finding a passion in the oil field, because it was paying me well. And what that meant to me was that I could buy more real estate, which was my ultimate goal.

So the oilfield started helping me achieve my goals, therefore, I got passionate about getting good at what I was doing, so that I could get bigger bonuses, I could work more overtime hours, and all these things, so that I could acquire more real estate. That was really the purpose. I ended up getting very passionate about something that, at first, I had no passion for, whatsoever. Let’s say that you’re doing something that you’re not very passionate about; just making this up for example purposes, but let’s say that you’re a programming engineer IT professional, you don’t really have a passion for that, and you’re just kind of doing it for the money… Well, here’s the thing – you could, for example, invest in cash-flowing real estate, and over time, build up enough cash flow to leave that job and to pursue something that you actually want to pursue.

For example — we’ll use my example. If I still had, today, a passion for being a drummer in a band, or a singer, or I wanted to tour, or I wanted to go open a recording studio, or something like that – which by the way, that’s not my passion anymore. But if it were, I would now have the ability to go pursue that kind of stuff without having to worry about the financial side of it, because I have enough cash flow to cover my lifestyle and my living expenses.

Break: [00:11:25][00:14:22]

Travis Watts: My big picture philosophy, you guys, which I’m sure I’ve shared before, is I believe people should pursue overall long-term thinking here when you’re achieving your goals… Pursue the things that you love, but then outsource the things that you don’t love. The best way I’ve found to do that is through investing in cash flow and through investing in real estate. But the investing game, to me, is very simple. It is that you invest in things that produce passive income or cash flow. You use that to enhance your lifestyle; 101 at its basic bones, that’s really what I believe in, that’s really what I do, and that’s really what I teach.

So with that in mind, you guys –I know this was kind of a shorter little offbeat snippet episode… But really consider that you can find passion in things you may not be passionate about. Like, what I do today is I found that I’m actually passionate about coaching people, about educating people. I don’t do coaching as a paid service, I’m just saying I do this to give back and to help people, because that’s what I’m truly passionate about. If I find something in life that works, I want to share it with other people. That’s just me and that’s always been the case. I don’t care if it’s a weight loss program, or a workout program, or a new car, whatever it is, if I find something that I see as a true value to others, or to me rather, I want to share that with others.

But anyway, for what it’s worth, the message is don’t pursue your passion, rather pursue the opportunity. Do I think real estate is still a good opportunity in 2021 going on 2022? I do. The primary reason, the amount of money that’s been printed in the system I don’t think is a reflection of the current pricing that we see on real estate. I still think there’s some room to go there. But I’m not a big advocate for buy-low/sell-high anyway, so I still think multifamily real estate has a competitive yield compared to other asset classes. In other words, if I could only make 6% cash flow on real estate today, but I could go put my money in the bank at 8%, I certainly wouldn’t be an investor in multifamily, I would go put my money in the bank. But today I get nothing by putting my money in the bank. I get nearly nothing out of bonds, or CD’s, or anything like that. For what it’s worth, I still think we have some room to go. But you know what? That’s my opinion, it doesn’t really matter. You do you, but I wanted to share my thoughts on this and hopefully you guys found it valuable. Thanks for tuning in. As always, we’ll see you next time on The Actively Passive Investing Show. Have a great day.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2661: 4 Simple Ways to Vet a Syndication Operator | Actively Passive Investing Show with Travis Watts

What makes a syndication operator or general partnership reputable? How do you make sure you’re working with a competent team that will lead you to success? And how do you establish your own credibility and authority? Today, Travis Watts presents four painless ways to vet future groups and how you can use these methods to boost your own credibility.

Want more? We think you’ll like this episode: JF2424: What Can Go Wrong Investing in Syndications? | Actively Passive Show with Theo Hicks & Travis Watts

Check out past episodes of the Actively Passive Investing Show here: bit.ly/ActivelyPassiveInvestingShow.

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Travis Watts: Hey everybody. Welcome back to another episode of The Actively Passive Investing Show. I am your host, Travis Watts. This week, what we’re talking about is what makes a syndication operator or a general partner reputable. We’ve definitely hit on this topic before in kind of more vague ways. But today, we’re going to go into a lot more in detail. I want to outline four categories for you, whether you’re an active investor, or a syndicator, or operator yourself, or whether you’re a passive investor, like me, just looking for groups to partner with. We’re going to go into what makes a group reputable.

Now, you may have heard this saying before, especially if you are an active investor or syndicator. If the deal is good enough, the money will come. I call false. I don’t think that’s true at all. Why wouldn’t that be true? Here’s why. If an operator has a low probability of actually being able to execute on the business plan, or if they’re just not a very trustworthy individual or group, then what good are the projected returns? The money is not going to show up just because you put some fake numbers in front of a bunch of people. There has to be a little more substance to it. Let’s go ahead and dive right in. I want to talk about the first category, which is exposure and transparencies. Let’s talk a little bit about that.

Investors, at the end of the day, want to work with people that they know, like, and trust. We’ve talked about that here before on the show. But more importantly, if I’m an LP, a limited partner investor, I’m a passive investor, and I’m looking for groups. The first thing I’m probably going to do is get on a Google search or somewhere online and start trying to find these syndication groups. I’m probably going to be on YouTube, social media outlets, blogs, and forums, maybe Bigger Pockets or something like that. These are going to be my starting places. If you’re active, think about that. You want to have some kind of online presence because most people are online when they’re finding operators to partner with. I always think it’s a good idea to have a thought leadership platform, maybe having your own podcast, your own forum, your own community, so to speak. I see everybody’s got Facebook groups or LinkedIn groups. I think it’s all generally a good idea because it puts you in a position of authority if you’re an active individual, and you’re helping bring a lot of conversation, transparency, and hopefully adding value to others through your outlets and through your platform.

Video is always my preference, always has been my preference, I think. We live in 2021 going on 2022 and I think video speaks volumes for transparency. If you’re active, I would really consider video. It’s something I’m personally working on as part of a very big mission for working with Joe Fairless, over at Ashcroft Capital, and doing a lot more video production for 2022. I want to get in the units and the apartments that we’re buying, I want to talk about renovations from beginning to end, and I really want to show a lot more of the transparency on visual. It’s one thing to send someone a before and after photo, it’s quite another to go walking through an actual property. Let’s meet the crew, here’s the manager who’s on-site, and here’s some of the construction crew in here, let’s meet the maintenance staff. It just adds a whole ‘nother dynamic and layer. If you can do video, do it professionally, do it right. I would recommend everybody do video. That’s a little bit about exposure and transparency.

The bottom line is you want to have an online presence, you want to be out there, you don’t want it to be; you hear about a group, you go research them, they don’t have a website, they’re not anywhere to be found, they’ve never written any blogs or books, they’re not on YouTube, they’re not on social media. A lot of people just simply won’t move forward if that’s the case, speaking from an LP perspective. So totally cool if you want to use that approach, just saying it’s going to be even harder to raise capital. And it’s going to be harder for investors to do their due diligence because, after all, if we all invest with people who we know, like, and trust, how are we supposed to know someone, like someone, or trust someone if we can’t even find anything out about them? It’s pretty much impossible. You’re really working against the grain, so to speak, if you’re not going to leverage the online platforms and online presence.

Break: [00:05:22][00:06:55]

Travis Watts: Let’s talk a little bit about track record and experience. Because at the end of the day, this is probably the most important aspect that you really have, as far as your due diligence goes. What is your track record? How many times have you done these types of deals? What does your success or your losses look like? What I always tell the newer groups that are in the space, who I’ve certainly partnered on deals with, doing their first, second, or third deals is, “Look, if you don’t have the experience yourself, maybe you want to partner with someone who does.” Have a co-general partner, have a co-sponsor on your deal, or have a coach or mentor that’s part of your network or program that you can kind of lean on and leverage and say, “Look, we’re working with ABC over here who’s got 30 years’ experience doing this.” A lot of mentorship programs that exist today will allow you to leverage their brand when you’re putting deals under contract. You can say “I’m part of this ecosystem, I’m part of this network, I’m part of this group.” So that can go a long way too. Just make sure that you relay that to your investors, that you are part of a network that has a very positive reputation in the space if you yourself don’t have your own track record.

My general rule of thumb these days is I like to partner with groups that are beyond their first, second, and ideally, third deals so that they’ve actually gone through the process a few times, worked out their kinks, and now they’re kind of rocking and rolling. I will tell you from firsthand experience that if you’re saying I only want to work with groups that have 20 to 30-year track record and I’ve done hundreds of deals, good luck getting on their list. They probably won’t let you in because they have too many investors waiting on a deal and not enough deals to present. It can be very tricky to partner with some of the very experienced firms. On the flip side of that too, a lot of these really experienced firms will end up going public or doing what’s called a REIT roll-up. Anyway, they’ll be publicly traded or doing some other kind of institutional capital strategy at this point so you may not be able to partner with them anyway. The sweet spot, in my opinion, is to ride the wave, where the group’s just gaining their momentum and stability, and they’ve still got some room to run. Hopefully, you can invest in many deals with them, those deals turnover, you do more deals, and you’ve got a nice 10 to 15-year track record that you can kind of go through with them, alongside them.

Another thing, just kind of skipping back real quick, that I left out is the track record and experience of the property management group that you’re going to be using on the property, or if you’re a passive investor, that the operator is going to be using, leverage their track record and expertise because you guys, after all, day to day, week to week, month to month, who’s actually managing the day to day operations of the property. You’ve got some oversight from the asset management group, from the general partnership, but really, it’s the property management group. You really want to put a lot of emphasis on their track record and their ability to execute a business plan. One of the best ways to do your due diligence, in my experience, is to visit a property that this particular property management company has already been managing. Walk in like you’re a prospective renter and just see. Is the team there responsive? Does someone greet you when you walk through the door? Are they nice? Are they polite? Are they willing to show you the units? How do the units look? How is the place kept up? Is it dirty? Is it trashy? What’s their marketing like? This is again, visual. We’re all mostly visual learners at the end of the day. This can be a great way to understand how a team is going to operate on the property you are going to put your hard money into.

The last topic that I’m going to put under this category of track record and experiences is the general partnership putting their own money into the deal. That’s something I look for as part of my criteria. “How much” is kind of subjective. If it’s a very experienced group, they’re probably going to put a little more capital in. If it’s a group doing their first deal, they may not have a ton of capital to put in. But the bottom line is, I want to know that if things go south, the general partnership has skin in the game at the same level that I do. So they are, in other words, buying into the limited partnership shares with the same terms that I have so that if they can’t meet the preferred return, they’re not getting paid either, stuff like that. It’s just simply an alignment of interest.

The next category I want to talk about is the power of word-of-mouth referrals, word of mouth references. I can tell you from working years and years in investor relations, in numerous capacities, this is the number one best source for finding new investors and for finding leads. Here’s an audio or a visual example for you. Imagine you’re at home, you’re watching TV, and here pops up an infomercial. This infomercial says “Buy our miracle pill and you’ll lose 10 pounds over the next two weeks. Order now.” How likely are you to pick up your phone or get online and go order that product? If, of course, you were wanting to lose 10 pounds and that was your goal. Versus, you have a long-term friend or a family member that says “You know what? This is really crazy. But a true story, I got this miracle diet pill. I actually lost 10 pounds over the next two weeks. It’s incredible. I didn’t expect it to work but it actually did. You should check it out.” How likely are you to check it out now, now that it came from a trusted source? Again, somebody that you know, like, and trust. It’s powerful, you guys. It’s really, really powerful when someone can say “I’ve been investing with this group for many years. This has been my experience. It has been very positive. They’re very transparent. They’re great about communication. They’ve always under promised and over-delivered.” It’s a very, very big thing. Something to be considered.

Break: [00:12:56][00:15:50]

Travis Watts: Another thing is, on the same topic, as you’re going through your due diligence, if you’ve ever read online reviews, how likely do you think it is someone’s going to write a review online that the general public can see if they got screwed out of a product or a situation, or they got hosed in some way, versus someone who bought a product or a service and just sort of received what they expected more or less? Well, no, there’s far more negativity online than there is positivity. The likelihood that someone writes something negative by getting hosed is like 10X. All of that to suggest that if there’s a bad actor in the space, if there’s a bad sponsor out there, you’re probably going to be able to dig up some dirt on that relatively easy. Just through a Google search, or getting on some forums, or just talking around at conferences, or events or meetups. You’ll probably discover that maybe there’s a handful of groups you may not want to partner with. Do your due diligence.

What I want to close out with here is kind of our fourth category is, your goals and your interest. My number one rule of thumb is to ensure that the operator or the GP is aligned with my own goals, my own philosophy, and my own interests. In other words, if my end goal is to have multiple passive income streams through cash flowing real estate and I want to live on that income, I’m probably looking for operators in the space that are purchasing stabilized apartment communities that are cash flowing right out of the gate, that have preferred returns that may be due monthly distributions, things like that. I try to reverse engineer in order to meet my goals. I’ll give you a simple math example. If my goal is that I want $100,000 per year in passive income within the next five years, that’s my timeframe, then there’s a couple of ways I could look at this. If I had 1.5 million to go deploy and invest, I could maybe say “Okay, I want to diversify among about 10 different deals. That’s about 105,000 per deal. If each of these deals could average about a 7% cash flow, give or take, that would give me about $100,000 per year in income.”

But remember that my time horizon was five years to hit this goal. Let’s say I don’t have 1.5 million to deploy right away, maybe I have 900,000 today that I could start with and I want to work towards my goal. I might diversify the 900k among 10 different deals, and instead, I might look at maybe the IRR, the internal rate of return projections. If I could average about a 15% IRR among my portfolio, then in theory at least, in about five years, give or take, that 900,000 could turn into 1.5 million as these deals sell-off, if I’m looking for deals that typically sell in a three to five-year timeframe. Then I would have the 1.5 to then go put to work at 7% cash flow to get my 100,000 per year. There are different ways I’m not giving anybody any financial advice or strategy. These are example purposes only, something to think about. How can you reverse engineer to get to your goals? It starts with simply identifying your goals. What kind of lifestyle do you want to have? Why you’re investing in the first place? What it’s really all about. You’re 42% more likely to achieve a goal if you actually write it down. Share your goals with family, friends, or a spouse, whatever you feel comfortable with. Figure out what you want in life, reverse engineer the strategy, set some goals, and take action.

There are four practical takeaways from this episode. Thank you, guys, as always for tuning in. This is Travis Watts, host of The Actively Passive Show. I hope you found some value in this episode. Always happy to hear from you guys. Reach out, LinkedIn, Facebook, joefairless.com, email travis@ashcroftcapital.com. I’ll see you guys next week on another episode of The Actively Passive Show. Have a Best Ever week. Thanks so much.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2655: The Lost Decade and How to Avoid 0% Returns on Your Investments | Actively Passive Investing Show with Travis Watts

Were you taught that smart investing must always follow the “buy low, sell high” structure? In today’s episode, Travis Watts shares why this mentality may not be the best choice when it comes to investing due to situations like the Lost Decade. The Lost Decade was a span of time between 2000 and 2009 where the market fluctuated so much over the years, and ended with a recession, that most people had 0% returns on their investments after ten years. This episode will discuss why this occurred and how you can potentially prevent that outcome from happening to you.

Want more? We think you’ll like this episode: JF2305: How To Prepare For Economic Recession | Actively Passive Investing Show With Theo Hicks & Travis Watts

Check out past episodes of the Actively Passive Investing Show here: bit.ly/ActivelyPassiveInvestingShow.

 

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Travis Watts: Hey, everybody. Welcome back to another episode of The Actively Passive Investing Show. I’m your host, Travis watts. I have a very interesting topic to share with you today. What we’re talking about as the lost decade and how to avoid 0% returns. Allow me to elaborate. I was doing a webinar here recently to a group of physicians and medical professionals, and I added this as a subsection to my presentation, because I just thought it was interesting. I was going through some data, and for anybody who’s, let’s say, 40 years old or older, I’m sure you remember this painful period of time in the stock market. If you were in the stock market, whether that was through your IRA, 401k, brokerage account, or basically any vehicle tied to the performance of the stock market, for those not so familiar with the lost decade, this is around January of the year 2000 through December of 2009. Basically, the reason they call it the last decade is if you had invested in January of 2000 in, say, the S&P 500 index, or the stock market broadly, you would have ended up with nearly a 0% return over about a 10-year period. The reason why is we were at the top of a market cycle. We had the dot-com bust, so the markets trickled down for several years after the year 2000. Then we had a recovery and the market started coming up almost back to breakeven, and then we hit the great recession, and the markets took a nosedive once again. Everyone would have been at a loss, had you invested back in 2000. Then we had a recovery, of course, post-2009. But the bottom line is that 10 years went by with very little to no cash flow, and very little to no net worth change or valuation in your portfolio. So the reason this happened – not the economic reasons and the policy reasons, but the reason from a high-level that this would have been the outcome for you or I is because we were using a buy low/sell high investing mentality.

I’m not suggesting that there’s anything wrong with that in particular, but raise your hand if that’s how you were taught about investing… Whether that was through school, colleagues, friends, parents, whatever. It was this idea that “Oh, yeah. I understand investing. I buy a stock at 10, I hope it goes to 15. If and when it does, I sell it, and boom. I made a profit.” This is how a lot of people think of investing, this is why so many people are speculating on the crypto space because they think, they predict, that they’re going to buy today and that one day, it’s going to be a 10x return, because historically, that has happened in that space. But it doesn’t always happen. Sometimes people buy into Bitcoin at 60k and then it goes to 30k. You can go the other direction with it. But long story short, that’s why, and I want to share with you an alternative way of thinking. What if you would, instead of doing the whole stock market thing in index funds, you would have invested in multifamily apartments.

Here’s a couple of interesting stats to consider. I want to be as fair and unbiased as possible. Check this out. Multifamily real estate investments have provided an average annualized return of about 9.75% from 1992 to 2018 according to CBRE research. That’s the data that they chose for that. We know in 2019, ’20, and ’21 multifamily has continued performing great so I’m sure that wouldn’t change too much if we had that data in that statistic. Equally so, the S&P 500 for the past 90 years, because we have a lot more research on that, was around 9.8% annualized return all things considered. So you would look at these numbers potentially and say, “Well, there’s not a lot of difference there. So why not just invest in the stock market?” In other words, what’s the advantage of investing in multifamily? Volatility. We’ve talked about it a lot on the show, but I can’t say it enough. Volatility is probably the number one thing that sets stocks apart from private real estate. Again, according to CBRE, the standard deviation for multifamily returns is around 7.75%. And according to Seeking Alpha research, the standard deviation of the S&P 500 is around 19.7%.

Let’s break that down. If you’re not familiar with standard deviation, I want to define that in my definition. Get on Google and you can go read paragraphs and paragraphs and paragraphs about what standard deviation means, what it is, and how it’s calculated, but here’s the bottom line – it’s a measure of volatility. It’s the amount of variation from an asset’s true value. In other words, if the book value of a stock is let’s say $10 per share, but it’s currently trading at $20 per share or $8 per share, this is the deviation away from its actual value. With those two stats in mind, you can see that stocks have twice –actually a little bit more than twice– the standard deviation of private multifamily real estate. So the prices fluctuate more, they crash harder, they boom bigger. All of that is summed up and could be categorized as general volatility.

Break: [00:06:01][00:07:34]

Travis Watts: Something to keep in mind is that stocks, statistically speaking, when we’ve had recessions in the US – they’ve lost about 33% of their value during times of recession. Which means they may not be the best vehicle for preserving your capital. There’s been a lot of news and headlines for years that maybe we’re at the top of a market cycle. The truth is that nobody really knows that, and there are so many things out of our hands with policies, government, the Fed, stimulus, and all these things that you are I have no control over, neither do the talking heads on TV nor any guru in the space. That doesn’t stop people from making their predictions. But I’ll be the first to tell you, I don’t have a crystal ball and I have no predictions for you. So I say “Who knows.” That’s my best guess at the future. But it’s crazy, you guys. Something like 80% of fund managers in the public markets and Wall Street licensed professionals, this is what they do, day in day out, full-time for careers – 80% underperform the S&P 500 index over a five-year timeframe. That’s insane. That tells you that if true professionals can’t time the markets accurately or choose which investments will outperform or be best, then what chance do you or I have? I don’t know. You may feel differently about it. I used to feel differently about it when it came to syndications. I used to think this individual deal is going to outperform that deal, so I’m going to go heavier on it. And it turns out, I wasn’t always correct on that.

And I love this saying — a lot of people get coined as originating the saying. I don’t know who the originator is, but “Time in the market beats timing the market.” Something to think about and consider as you go through your investing journey.

So the heart of this conversation – why focus on cash flow? Or what if you focused on cash flow and passive income, and not buy low sell high in capital gains, and trying to flip things, and all of that. As we talked about in the last decade, you would have had basically a 0% return more or less over a 10-year period investing that way. Consider this. Let’s say you or I, for example purposes, invested –just making up numbers here– $100,000 in the year 2000 in multifamily apartments, generally speaking. It doesn’t have to be one deal, it could be your whole portfolio of different deals, whatever. Now, I want to paint this picture as conservatively as I can. So let’s say that the cash flow that was distributed to investors, you and I, was only 6% per year.

By the way, if anyone knows the statistics and the facts of multifamily during those timeframes, it was much higher, generally speaking. But I’m going to keep it conservative. That means that we would be collecting $6,000 per year in cash flow off our $100,000 investment, times 10 years. So at the end of 10 years, you and I would have effectively $60,000 collected from cash flow on our investment, regardless of the price fluctuations in the market; regardless of the stock market, first of all, regardless of whether we had bought into an apartment building at 20 million, now it’s 25 million, or we bought in at 20 million, and now it’s 15 million. But I want to paint a couple of examples here of what advantage multifamily has over single-family, because more people are familiar with single-family investing, which I did for many, many years, and then I transitioned over to multifamily.

So here’s the unfortunate truth about single-family. I could go out and buy an amazing property in an amazing location, single-family, and put the world’s best renter in there; and this renter, they take care of my place, they’re upgrading my place, they’re paying above-market rents in my place, I’m able to raise my rents 5% a year every single year with them.

Alright, things are great. But guess what? If all my neighbors have foreclosures and short sales, and they’re selling below market values for whatever reason, as we saw in the Great Recession, I lose money on the deal overall. In other words, if I want to exit my deal, the lenders and the appraisers of the world when it comes to single-family can care less about my tenant or how much rent I’m collecting off my property. It really would make no difference, because they go off of comps, comparable sales, in the surrounding area. So single-family investing as a strategy, generally speaking, is buy low, sell high. That’s true for wholesaling properties, that’s true for fix and flipping properties; that’s even true, in my opinion, for buy and hold. Because again, if you ever need to exit or get out, it’s all going to be based on the comps. And even though you collected a great cash flow, if you’ve got to exit and take a loss, it was a buy low, sell high strategy.

Break: [00:12:58][00:15:46]

Travis Watts: Multifamily, on the other hand, is treated much more like a professional business, like a commercial company. They look at net operating income as the primary factor in the valuation of the property. A few reasons for this. One, what if there are no comps in the area that could be supported off the price that you’re asking? For example, you’re investing in a brand-new built luxury high rise, built in 2021, 30 stories high, 400 units, in an old section of some downtown sector. Where all your comps are one in two-level buildings, they’re 80 units, and they were built in 1930. That’s not a comp; so there may not be any 2021, 30 story buildings to go look at. Instead, they’re going to say “What are you getting in rents, in income, and what are your expenses?” and someone’s going to come in and buy that from you at a multiple of what your net operating income is. So said another way, the rents and the cash flow in the passive income are the primary factor and focus to multifamily investing. With single-family, it’s more about buy low, sell high and what the property is worth, and the cash flow and passive income is a secondary consideration. That is probably the biggest difference between the two strategies.

The key to buying multifamily or investing in multifamily properties is to know that you can at least maintain your rents… By the way, on a side note, talking about maintaining rents. Did you guys know that, statistically, multifamily rents during the Great Recession, during this huge real estate collapse and downturn, went from a national average of 1350 a month leading up to the recession, that’s per unit rent, to 1250? That was the big collapse, $100 per month on a multifamily property. Just keep that in mind for perspective. Back to what I was saying. To successfully invest or buy multifamily real estate, you want to make sure that you can be cashflow positive, even if you’re not able to push the rents, and hopefully there’s even some margin if rents go down or soften up. But generally speaking, rents will go up. I think the national average is about 3.5% a year. But generally speaking, they go up as much if not a little higher than inflation. Right now, we’re seeing about 5% national inflation, that’s running a bit hot. Historically speaking, the Fed’s goal is to keep it around 2%.

But regardless, if rents go up 2% to 5% a year, multifamily valuations go up as well, even if the single-family home market softens and then we start seeing 20% discounts on single-family homes. That is secondary to investing in multifamily apartments. The same thing is true with the stock market. The publicly-traded REITs in the stock market, in general, fell 30% give or take in March of 2020 when COVID was just outrageous and crazy. Well, guess what guys? Private multifamily deals was not transacting at 30% discounts during the same timeframe. The volatility was not there. That was market volatility in the public markets, not in the private sector. What I encourage you guys to think about is just this idea that if I invest for passive income or cash flow, I don’t have to worry so much about what exactly the valuation, or the comps, or the comparables, are at any given time, if you’re just sole focus on creating passive income streams. I’ve asked this question before on social media, I may have mentioned it here on the show as well. Would you rather have $5 million in cash in the bank and no investments? Or would you rather have $30,000 per month coming in in passive income, but a $0 net worth?

Everyone’s going to have a different take, and again, I’m not telling anyone what’s right or wrong or what to do. I would choose the cash flow and that means that I put a lot less emphasis on net worth in that situation. But we’re all different. What’s right for you isn’t necessarily right for me, and vice versa. I’m not a financial planner or strategist so please always seek licensed professional advice. But with that, I really thought this extraction was worth sharing here on the show. I hope you guys found some value in it and learned a couple of new things. Again, my goal is just to share what I see as a mindset. Several people reach out every episode, and I love hearing from you guys. You can reach me at joefairless.com or travis@ashcroftcapital.com, or a lot of people reach out on LinkedIn. I’d love to get your thoughts. Leave a comment below. Happy to share, happy to be a resource. I’m no guru in the space, I don’t know what you would call me, I’m a thought leader, I’m one opinion out there. And if any of this resonates with you, I’d love to hear about it. Thank you, guys, for tuning in. We’ll see you next time on The Actively Passive Investing Show. Take care. Have a Best Ever week.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2652: CEO Reveals Exclusive Look on Managing a Multi-Generational Real Estate Investment Firm with Daniel N. Farber

Who makes the decisions in a family-run business? What metrics are used to evaluate the CEO? What kind of challenges do they face? Daniel N. Farber helps answer all these questions in today’s episode by pulling back the curtain on what being a CEO for this type of investing firm is like. From what his KPIs are to who he reports to, Daniel gives the Best Ever listeners an insider look at how this multi-generational real estate investment firm is run.

Daniel N. Farber Real Estate Background

  • CEO of HLC Equity 
  • HLC Equity is a multi-generational real estate investment firm that has owned and operated real estate in over 25 states throughout the USA, having owned and managed over 7 million gross square feet of commercial, residential, and development land.
  • Prior to real estate, he served in the Israel Defense Forces as a Staff Sergeant in an elite infantry unit.
  • Based in Pittsburgh, PA 

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the Best Real Estate Investing Advice Ever Show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast where we only talk about the best advice ever, we don’t get into any fluffy stuff. With us today, Daniel Farber. How are you doing, Daniel?

Daniel Farber: Very good. How are you, Joe? Thanks for having me.

Joe Fairless: I’m glad to hear that, I’m well, and you’re welcome. I’m grateful that you’re on the show. A little bit about Daniel – he’s the CEO of HLC Equity. HLC Equity is a multi-generational real estate firm. They’ve owned and operated real estate in over 25 states, and they’ve owned and managed over 7 million gross square feet of commercial residential and development land. His company is based in Pittsburgh, Pennsylvania. They invest, as I mentioned, all over the US. With that being said, Daniel, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Daniel Farber: Sure, definitely, 100%. So real quick on the personal side for me… I actually never thought that I was going to go into real estate, and much less a family business. I kind of started out in my career through journalism and then going kind of the diplomatic route, eventually becoming a strategic consultant to high-tech companies and some political organizations. Through that, I kind of touched upon business and several different factors that got me much more interested in going that route. That’s kind of where one thing led to another, and I got eventually involved in real estate first and then eventually into the family business, which is where I am today.

As you said, HLC equity is a multi-generational real estate investment company. We are a company that has gone through various iterations, having been around for decades. Basically, founded by Herman Lipsitz, who was my grandfather. He was just an ambitious entrepreneur, a child of the depression, just an all-around great, hardworking guy. He had a distribution business in the morning, a law practice in the afternoon, and with the proceeds, he would buy real estate in the evening. It was at a time when it was a little bit different of a market than it is today, so I guess you could do that, even though I often think about how did he do that when a fax machine was considered innovative. But he did it.

So basically, throughout the period of time, there was everything from land and development and residential shopping centers. Eventually, as he got older, really the strong focus became more neighborhood shopping centers, and eventually, just net leased assets was really a bulk of the kind of company holding.

That went for some period of time, until eventually, as I got into the business, and some other folks got into the business, we really wanted to make a shift and we said “How are we going to grow this thing? How are we going to take what we have and to grow it?” So what we’ve done is really shifted into the multifamily space, done a lot more in the multifamily space over the last, call it, seven to eight years… And then also, while our company used to be primarily just kind of deal by deal with partners, Pari Passu, or else just on our own, we built out the infrastructure and the wherewithal to be able to be stewards of investor capital and bring in investors of all shapes and sizes. That leads us to kind of where we are today.

Joe Fairless: It’s a multi-generational real estate firm, as you mentioned, and you are the CEO. I’m curious about the structure. Who do you report to as the CEO?

Daniel Farber: You have a very good question. Part of our growth was bringing in obviously really great people. We have a committee that’s kind of our executive committee, so that’s the management, and then we have the family, and we separate the two. At the end of the day, decisions are made by the family, but with heavy weight by the executive committee.

Joe Fairless: Interesting. Okay. How many people are on the executive committee?

Daniel Farber: Five.

Joe Fairless: Five people are on the executive committee. And how many people have votes in the family?

Daniel Farber: There’s three, at the end of the day, but they’re weighted in different ways. The actual ownership is somewhat proprietary, just because it’s family, but it’s weighted in different ways. But there are really three votes all at all.

Joe Fairless: Okay. What are the responsibilities of the executive committee, those five people who are not family members?

Daniel Farber: It’s really team members that we brought in, from CFO, head of operations, head of asset management, and head of investor relations.

Joe Fairless: Okay, I’m with you. So they’re not board members, they’re active employees in the business who make up a committee. And since they are on the ground and know the business, that’s why the family takes their opinion into account.

Daniel Farber: Yeah. Not just take into account, but very seriously. I’ll give you an example. Let’s say we have some sort of building structural issue in a property in Dallas, which is typical for some properties in Dallas, as you know. Our head of operations and our head of asset management – they’re going to know much better what the situation is, and their opinions, for us, matter much more, because they’re on the ground, as you said. Much more than like if it was just important executives with fancy titles. That’s why their opinions count more when it comes to just daily operating this stuff.

Joe Fairless: What are the metrics by which you’re evaluated as CEO?

Daniel Farber: We actually use a system from the Scaling Up Program, if you’re familiar with it. Every quarter we have KPIs, and everybody on the team has KPIs, down to — everybody. Based off of it, for hitting those KPIs, that is definitely what I’m judged on. There are other factors obviously also, but that’s kind of how we really, from a numbers standpoint, keep track of it.

Break: [00:06:09][00:07:42]

Joe Fairless: Just to get an idea of your responsibilities, what are your KPIs for this quarter?

Daniel Farber: Annually, there’s a certain amount of acquisitions that we want to hit and there’s a certain amount of investor acquisitions that we want to create new relationships. Just as an example, one would be, per quarter, we want to do our kind of sweet spot acquisition, which is anywhere between 20 to 70 million dollar purchase price. That’s an example of, if we hit that. But then it goes to marketing and how much content we’re putting out, hence podcasts… There’s how many investors come into our portal operationally, are we hitting all of our KPIs? So on and so forth. It really touches every division.

Joe Fairless: What are your new investor goals per quarter?

Daniel Farber: Right now, we’re shooting for 40 new signups per quarter. We pretty much have hit that.

Joe Fairless: Nice, congrats. Well, no need to do any more marketing. You’re good for this quarter.

Daniel Farber: No.

Joe Fairless: [laughs] I’m kidding.

Daniel Farber: That’s the point.

Joe Fairless: I know.

Daniel Farber: I don’t know if we’re shooting too low, or the folks that are in charge of that are just doing an amazing job… But I’m happy that we hit it.

Joe Fairless: Is a sign-up someone who signs up for your portal and shows interest? Or is that someone who actually puts money in a deal of yours?

Daniel Farber: Great question. No, the 40 is that we build a relationship with them by them signing up.

Joe Fairless: So 40 new people who fund, invest money with you per quarter?

Daniel Farber: Yeah. You’re asking a really good question, because there’s a huge difference between somebody who signs up and somebody who invests. And I don’t mean it in the sense that there are so many people who can sign up and very few invest. I mean it in the sense that it’s touchpoints. So I’ve had conversations with folks, and it has led to nothing for three to four years, but then in year five, it has led to something significant, whether it’s a large investment, a large partnership, or whatever it may be. So it’s very hard to quantify that stuff. I think it’s actually maybe a little bit too transactional to say like, “Okay, you got them in. Did they invest?” Obviously, you have to have forward momentum. We talked about this a lot, because it comes down to networking also. At the end of the day, we just want to build meaningful relationships with great people that we can work with over the long term. So if they invest that quarter, or two quarters, or in five years, or not at all, that’s just a matter of [unintelligible [10:03] if you get what I’m saying.

Joe Fairless: Mm-hmm. What have you seen is your conversion rate from people who sign up to learn more to people who actually fund?

Daniel Farber: I don’t have an exact number for you, honestly. I would need to kind of dig deeper, because we actually just completed a transaction in which we saw, thankfully, a lot of traction, and that literally just closed this week.

Joe Fairless: Congrats.

Daniel Farber: Thank you very much. I think that in order to get a real solid number, I would need to get back to you on that. I don’t have the exact rate as of the last kind of quarter.

Joe Fairless: Taking a look at the people who did fund the new leads, what are the top three lead sources for those individuals?

Daniel Farber: I would say the top lead sources…

Joe Fairless:  Where did they come from?

Daniel Farber: No, I got you. I’m just trying to think. So we fund these deals in different ways. We have relationships with wealth management groups that bring their clients into our deals, and those are significant checks usually. We have our own friends and family-accredited investors who bring in anywhere between 100 to 500,000. Then we have our own HLC Direct which is our direct to investor platform. Those are really our three routes. We do work with some private equity groups when it gets to the larger deals as well.

Joe Fairless: Got it. Okay, fair enough. So going back to the goal of 40 new people who are funding…

Daniel Farber: Our social media platform is not as robust as many others and it’s probably an area we should put more focus on. We definitely get a lot of traction to our newsletter. So we get people to sign up to our newsletter, a lot of times that does come from social media, but it also comes through other venues which I can discuss. Through that newsletter, frequently, we get a lot of signups onto our investor portal. We run a Global Real Estate and Technology Summit, and I can get into what that’s all about. But interestingly, the most amount of kind of signups to our newsletter comes from that.

Joe Fairless: Okay. How many people on your newsletter?

Daniel Farber: I believe we have roughly 3500.

Joe Fairless: Wow, that’s a good chunk of people. Let’s talk about this. The reason why I asked these questions is most of the listeners are active investors, and they’re looking to do similar things or are currently doing similar things.

Daniel Farber: I think it’s great questions. I don’t have all the answers because it’s stuff that we’re constantly switching. Because I don’t think that there is the magic formula. I think different groups kind of like to attract in different ways, but I’m definitely happy to discuss it.

Joe Fairless: Just for my own clarification, a couple of things. HLC Direct, you said that’s direct to investor platform. What’s the difference between that and just working directly with friends and family?

Daniel Farber: This allows us to expand. Our whole thing is we want to expand our relationships and we want it to be direct with us. The more direct we can be, I just feel, the stronger the relationship. Forget about the broker fees, or if you work with other platforms there are fees, that’s not really what I’m interested in. What I’m interested in is having direct relationships with investors. So it’s allowed us to grow that because people are either receiving our newsletter or seeing stuff on social media. They frequently like what they see and so they sign up for our platform for HLC Direct. Through that we’re able to build more relationships.

Joe Fairless: I get that. But what I’m trying to understand is you mentioned the three groups, wealth management groups, friends and family, and HLC Direct. So what’s the difference between friends and family and HLC Direct?

Daniel Farber: Friends and family are people that I would say that we have relationships with, and we’ve had relationships with for some time. The traditional friends and family route. HLC Direct is exactly what I said of the lead source. This goes back to your question, the lead source being either a newsletter, or social media, or some other form of third-party ways of getting to them. Again, we have our summit, which is helpful as well.

Joe Fairless: Got it. Okay. The Summit, Global Real Estate and Technology Summit, when’s the last time you did it and how many people attended?

Daniel Farber: First of all, it’s global because we actually don’t do it in the US. Even though we’re fully US-based, we actually host this in Israel. The last time we did it was in 2019. We were obviously in the planning stages of 2020, and then we were unable to do it. We hope to do it this coming spring or summer. The last event that we had, we keep it an international but pretty high-level event. The focus is on quality over quantity. We have 350 people, I think, the last time, we have several sponsors, we have everybody there from the family offices, VCs that are interested in investing in technology, technology companies, real estate owners, and operators. It’s really in order to build an ecosystem around this phenomenon that is now mainstream. But when we started it, it was less so of the convergence of real estate and technology.

Joe Fairless: Are you hosting it this year?

Daniel Farber: I very much hope that we will be able to. Hopefully in the beginning of June. Are you coming?

Joe Fairless: How can I and others learn more where do we go?

Daniel Farber: 100%. On hlcequity.com, under Our Brands, one of the brands is Proptech 360, that is the event. Or you can just Google Proptech 360 Israel and it’ll come up.

Joe Fairless: Nice. As CEO, you said you’ve got the acquisitions, focus, new investor focus, among other things also, what’s been the most recent challenge that you’ve had?

Daniel Farber: I think that the challenge is by far the acquisitions environment, the competition, and just finding deals. I guess we got spoiled buying deals in Denver and Dallas for seven or eight cap. The readjustment in mentality, that’s hard, and also just getting comfortable in making sure that you’re buying right because real estate is all about the buy. That’s very challenging to be confident in today.

Joe Fairless: Taking a step back, what’s your best real estate investing advice ever?

Daniel Farber: I think I just said it, the buy really matters. Because from there, you have so much room if you can buy right. I really do think that that is great. The next one is just buy stuff that you can hold for a long time. Because I’ve seen, over the decades, if you’re able to buy right, and then you’re able to hold, you can do well. It appreciates, you can depreciate, you can refinance, you can do lots of great stuff, and it really is powerful.

Joe Fairless: Let’s pretend tomorrow, you’ve got a closing, would you rather be buying a 300 unit or selling it tomorrow?

Daniel Farber: I would rather be buying it.

Joe Fairless: Why?

Daniel Farber: Because I’m sure, similar to you, every single day I have people knocking on our door saying we have this great off-market offer, we’re going to offer you a premium, and so on and so forth. Then the question is, right away, what are we going to buy? I think that in my opinion, again, we just bought a brand new 330-unit deal and we have other deals under contract. Obviously, it’s a great seller’s market but at the same time, if you’re thinking long term, which is what we always try to do, at the end of the day, holding hard assets right now, I think, is going to be beneficial.

Joe Fairless: What deal have you made the most amount of money on?

Daniel Farber: You know, it’s funny. The deals that we make the most amount of money on are deals that we do on our own, and there are what I call quirky deals. We don’t do them with investors because it’s more risk than we’re willing to take on responsibility for investor capital unless they’re highly sophisticated and are willing to basically lose it all. We do the best on deals where we don’t care about the cap rate. But we know there’s some sort of intrinsic short-term value that distorts what the cap rate is. We’ve done deals in Brooklyn, New York where we bought smaller multifamily buildings for, call it a going in of one and a half to two cap. But we were able to add value in specific ways on that deal, we kind of knew it going in, and we went around and sold it for great returns a year or a year and a half after that.

Joe Fairless: What was the value-add play there?

Daniel Farber: With that specific deal, we knew that we could buy certain stabilized tenants, we knew that there were renovations that we could make. This was going back in 2012, we could see that the market there was just becoming super hot. So a mixture of our tenant buyouts that we were able to do our renovations, and then the market taking off was helpful in that. But again, like going in, it’s not a sure thing. It’s very nerve-racking buying in a low cap like that. We did something very similar, and this wasn’t multifamily. But we did something very similar right around April, as COVID is hitting. We’re contacted by a broker to buy an occupied Veterans Association Clinic. Here on the deal was there was one year left, the upside was it was a development deal, and assuming that the VA left, there was development rights to build 80 to 90 units. We looked at the deal and we said, “Okay. The VA, they’re paying way less than they should. If we want to, we can develop it even though we’re not developers. We could partner with a developer and build a bunch of multifamily units in this prime neighborhood.” But going in, again, we were paying a two cap. In the end, we ended up being able to work out a deal with the VA, which was my preferred route because it was safer. We got a brand new 10-year lease with the government, around three times higher than what our original rent was. We were able to over double our money within a year, and then not sell, and finance it, and just enjoy. Those types of deals are the deals that we do the best on financially, but that’s not where our focus is in terms of growing our business.

Joe Fairless: On the flip side, how much have you lost as far as the most money you’ve lost on one deal?

Daniel Farber: For me personally, since I’ve been heavily involved in the business, on our new acquisitions, there have not been any. I don’t say that because I think they were amazing, just that we’re lucky because it can happen. Definitely, with the firm, especially in the shopping center business which is a whole other animal, there have been occasions where let’s say a major tenant leaves and that causes a huge financial hit. The exact largest one I can’t point to, but it definitely has happened. Frankly, if it’s a group that’s been around for a long time, then they should have some sort of losses, or else they haven’t been doing enough real estate.

Joe Fairless: We’re doing a lightning round. Are you ready for the Best Ever lightning round?

Daniel Farber: I hope so.

Joe Fairless: I know you are. Alright, first a quick word for our Best Ever partners.

Break: [00:20:34][00:23:22]

Joe Fairless: What is the Best Ever way you like to give back to the community?

Daniel Farber: Because I’m so involved in real estate in a built environment, I’m involved with an organization that’s very similar to Habitat for Humanity. I just really think that that’s something that speaks to me because we’re able to provide decent housing to people who really need it.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?

Daniel Farber: I think the best way is either to connect with me on social media, which I’m always happy to connect with new people. Or to sign up for our newsletter and you’ll be able to see all of the activities that we’re doing. We don’t necessarily publish everything out on social media but we do put a lot more in our newsletter. You can do that by going to hlcequity.com, and just to connect, and you can see how to subscribe to our newsletter.

Joe Fairless: Your website will also be in the show notes for everyone. Daniel, thank you so much for being on the show and sharing…

Daniel Farber: I really appreciate it. This was great. Thanks for everything you do for the industry.

Joe Fairless: Yeah. Interviews like this are helpful for everybody involved. You gave some insightful information about your business and I sincerely appreciate that. I hope you have a Best Ever day and we’ll talk to you again soon.

Daniel Farber: Great, thanks a lot.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2651: Three Things All Syndicators Should Do to Protect Themselves When Making Deals with Rick Martin

Rick Martin caught the investing bug when he rented out his first house in 1998, helping to pay for film school. Rick continued to make deals while maintaining a full-time job, and just recently switched to syndicating full-time. From making good deals to choosing good partners, Rick reveals the most important lessons he’s learned over his 20+ years of CREI, including three things you can do to weather any storm as a syndicator. 

Rick Martin Real Estate Background

  • Been involved in real estate since 1998 and recently made the transition to a full-time career as a syndicator.
  • Founder of Fortress Federation Investments, which provides multifamily investment opportunities to its investors, helping them build wealth and multiple income streams.
  • Does both active and passive investing.
  • Portfolio: Throughout his career, he has bought and sold single-family and small multifamily. He still owns a fourplex, but otherwise, he is now invested both actively and passively in 1,992 multifamily units.
  • Based in Redondo Beach, CA.
  • You can find him at www.fortressfederation.com
  • Best Ever Book: Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork by Dan Sullivan

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guest, Rick Martin. Rick is joining us from Redondo Beach, California. He has been involved in real estate since 1998 and has recently transitioned into a full-time syndicator. Rick is both an active and a passive investor and has almost 2000 units. Rick, thank you for joining us. How are you today?

Rick Martin: I’m great, Ash. Thanks for having me.

Ash Patel: It’s our pleasure. Rick, before we get started, can you give the Best Ever listeners a little bit more about your background and what you’re focused on now?

Rick Martin: Way back in the day, around 1998 or so, I bought my first house. I was with a girlfriend, we were going to buy it together, she backed out, I moved forward. A year later, my career, my life took a change, so rather than selling it, I hung on to that thing and rented it. That was up in Seattle, Washington, and I’d gone off to film school up in Vancouver, BC. I was basically a broke student, but I was getting these rent checks, so that’s how the light bulb went off and I discovered passive investing. Really, it wasn’t that passive, because I hired a best friend to manage it and that led to all kinds of problems. But lesson learned.

Ash Patel: How did you progress in real estate from that one house? Did you just buy another house?

Rick Martin: My plan at that time was “I’m going to try to do this once a year.” But coming out of school, having debt from school, and whatnot, that didn’t quite work out. But I did continue to invest as I made my way down the coast. As I said, I was in Vancouver, and I ended up buying a place in Las Vegas, which at the time seemed like a home run, but that was 2004. Four years later, it didn’t look so good, but I held on to that baby.

Then I actually doubled down during the valleys of that recession. I bought some more in Vegas, and I bought some more in the Desert Hot Springs, because at that time I was living in Los Angeles and that was the place where we could go out. I partnered with a friend. It was really hard to get a loan, basically. We were working, we had good jobs, but it was really hard. The capital markets had sort of dried up so we were coming out of pocket, but paying very little for places. Then we put a little bit of money back into them and basically do the BRRRR before I learned about BRRRRing.

Ash Patel: This was all a side gig, right? You had a full-time job?

Rick Martin: Absolutely. It wasn’t like we were doing 20 homes a year. It was looked at that time like “Okay, this is going to be a part of my nest egg.” But then as I began to sell these things, they were really far exceeding my returns in the stock market, and I just really wanted to become more focused on real estate in general. Then toward 2016 or 2017, I continued doing the out-of-state thing. I picked a market, I was sort of trying to decide between Kansas City, Indianapolis and Birmingham, and I settled on Indianapolis and did some BRRRRs and some flips there. Again, I was still working full-time. I wasn’t really considering a career, just as one day this is going to help me retire earlier. Then I got involved in an online program about multifamily. I can’t remember, maybe it was the Best Ever podcast, but I learned about multifamily and thought this is the way to go.

I joined an online course that had a network, a Slack community, got to know several people within that community, then learned about syndication, and actually went passive for my first five. I’m happy to say those have done well, they’re doing well. I knew that I wanted to get involved more actively, so I became a general partner.

The areas I was most interested in at that time was the West, because I knew it the best. But I really wanted to get more involved in the Sout-Eeast, because I could see what was happening down there, as well as Texas. So South-East Texas is sort of where I set my sights. I was also looking in Tucson, Arizona, but logistically it was very difficult to hop on a plane, even Tucson which isn’t that far from Los Angeles. I was also involved in Columbus, so I was flying back to the Midwest trying to meet brokers that way. I thought something needed to change, at least for me, my lifestyle. I’m married, I got a couple of young kids, I couldn’t be hopping on a plane all the time. So I focused on partnerships and made some great relationships in the South-East and in Texas, and I co-sponsored alongside of those guys.

Ash Patel: Rick, early in your investing career, when you were doing these single-family houses, did your friends know what you were doing with investing in real estate?

Rick Martin: They were always just sort of impressed. I went to the University of Washington School of Business, but I had this scratch that I needed to itch. I tried pursuing music, because I was a musician from an early age. All the while I kind of kept my right brain going in investing; this is before I made that career change I spoke of earlier. They were always impressed, like “Wow, how are you doing this Mr. starving artist? You’re buying these houses; you’ve got a nice nest egg going.” I kind of tell them how I did it. But sometimes people have a hard time wrapping their heads around real estate.

Ash Patel: The reason I asked that question is had you taken on some of these friends as investors, you would have scaled sooner…

Rick Martin: Yeah, absolutely. I didn’t think in those terms. The whole using other people’s money thing had come to me much later in life. There are many things I would do differently or I would tell my younger self to do. But yeah, I was basically saving, and then when I partnered, we did bring in a third silent partner. But for the most part, it was our own money.

Ash Patel: And Rick, you mentioned Birmingham, Indianapolis, and what was the other market?

Rick Martin: Kansas City.

Ash Patel: Why did you pick those three, and then how did you settle on Indi?

Rick Martin: I wish I could say that I was studying underlying market fundamentals… But back at that time, I just sort of went with where the buzz was. I shot first and asked questions later. For me, personally, I thought Birmingham was a little flat in growth. There are some markets that were extremely hot, but I thought the barriers to entry were too difficult… And it came down to Kansas City and Indianapolis. And I did like the mix of appreciation and cash flow in Indianapolis. That’s where I started and that’s how I chose it. And then you can go back and you can check the fundamentals. It wasn’t until later that I really started researching underlying market fundamentals.

Break: [00:06:54][00:08:27]

Ash Patel: What year are we talking about that you did Indianapolis and Columbus? This is recently?

Rick Martin: 2016.

Ash Patel: Okay. And right now you’re focused on the South-East?

Rick Martin: South-East and Texas. So we have properties in Augusta, Georgia, we have three now in Sarasota Bradenton, Florida, one in Lubbock, Texas, and another in Webster, Texas which is like a Greater Houston suburb.

Ash Patel: Do you still shoot from the hip, or is there some analytics behind these now?

Rick Martin: No, there’s a lot of analytics. I’ll usually start by assessing what the downside risk is, definitely compare absorption rate based against vacancy and occupancy, see what’s going on there in terms of what’s driving the population. Take our Florida market, for instance – the average occupancy right there is 98% right now, which is pretty crazy. The last two years have had dramatic rent growth. We’re talking 27% year over year rent growth. So we don’t depend upon that. We’ll underwrite it with more of a 2%, 3%, 4%, and kind of consider that extra spike that we’re getting right now as gravy, the cherry on top.

Ash Patel: Rick, I see a lot of syndicators chasing deals with very low cap rates. What happens if interest rates rise,  what are your thoughts on that?

Rick Martin: Yeah, it can happen, and that’s sort of the downside risk I mentioned. I think everybody’s in fear of that. We keep waiting for the Fed to raise interest rates and see if cap rates are finally going to rise along with them. I don’t think you could stand on the sideline, but I do think you have to be very careful. Make sure — whether it’s a deal that you’re actively involved in or passively involved in, make sure that it’s very well-capitalized, make sure it has flexible financing, and make sure it has active cash flow. I think if you have those three things, you can weather any storm, and you can hold out for a better day to sell. I’ve hung on to certain deals for a long time…

Ash Patel: Just like your house in Vegas.

Rick Martin: Yeah, exactly. It’s a perfect example. I held out, I actually sold that thing for a profit, when it looked pretty sorry there for a while. So yeah, the flexible financing I think is a big one. You don’t want to be pushed out of a loan any sooner than you want to be.

Ash Patel: What does that mean, flexible financing?

Rick Martin: It’s tricky, because if you get into fixed long-term debt, that might not match your business plan. Let’s say your business plan, if it’s a value-add and you want to go in, you want to renovate units, maybe turn tenants over in a matter of 18 to 24 months, then you’re going to increase the value, you’re going to go back to the bank and possibly refinance, and pull investor capital out… You’re gonna be stuck in that loan because there are some pretty steep penalties that you’re going to have to pay on it. So you might want to get a floating rate. To some, that sounds risky. But there are things that you can build in to protect yourself. You can purchase a cap, so that the interest rate doesn’t rise any farther than, say, 5%. There are also forward-looking curves. There’s data that predicts what future interest rates are going to do. So you build that into your underwriting, and it accounts for rises in interest rates; therefore, you’re not left holding the bag when you — say you’re coming in at 2.8%, which is like some of the rates we’re getting today. And it’s floating — it might float on up to as high as 5% in a couple of years, you want to make sure that you have all that built into your underwriting.

Ash Patel: Got it? Rick, you’ve got almost 2,000 units. What does your team look like today?

Rick Martin: Actually over 2,200 now as of this call. We’re just closing on another deal. I have two sets of boots on the ground, because like I said, I do like the southeast and I do like Texas. In each one of those, we have an acquisitions person, and we have an asset management specialist in each one of those markets. In terms of marketing and due diligence, we all sort of team up on that, and then I oversee investor relations. I do quite a bit of content development, just to educate the investors, which I enjoy. Then we have some pretty sizable property management teams in place. We have a property management company in Florida, they have over 10,000 units. They know what they’re doing, they’ve been doing it for a while.

Ash Patel: Financials and legal?

Rick Martin: Financials and legal – we have pretty much the same attorney on each deal. So the PPM looks pretty similar, one over the other. We have accountants, we have bookkeeping; it’s quite a staff, from A through Z.

Ash Patel: What were some of the growing pains that you encountered as you’re coming up to 2,200 units?

Rick Martin: I think the toughest thing for me was breaking in to syndication. I didn’t realize it was going to be such a challenge. I was just kind of trying to find my way and see how I could fit in, where I could deliver the most value to people. Quite honestly, that’s what kind of led me into passively investing, which I do out of my solo 401k. I’d come close on a couple of LOIs, but I just wasn’t sealing the deal. And not only did I want to learn, but I wanted to start growing my wealth. So I started meeting with a few operators that I met through various conferences, and got to know them, got to like the way they worked. I also got a peek behind the curtain, kind of see how they communicate with their investors. Everybody does it differently. There’s a lot of content coming in every week, others are pretty quiet, and then a deal comes around. So everybody does it differently, and I can sort of learn from that, and I did, and I still do.

Ash Patel: What’s an example of a challenge that you had with an investor?

Rick Martin: That’s an excellent question. One person specifically comes to mind. He just didn’t want to be a part of an audience. And when your investor base grows, you have to look toward some way of managing that. So you look at a CRM. What’s that? Customer…

Ash Patel: Relations management.

Rick Martin: Relation management, thank you. Well, when I would send out maybe a blog article or some market information, maybe a video that I did, he didn’t like that. He unsubscribed; and he had just subscribed, and he seemed very interested. We’d had a conversation. So I said, “Hey, what’s wrong? What did I do?” He just told me, flat out, that he didn’t want to be a part of an audience. It’s challenging, because I always have to remember that guy. When I’m sending out important information, like a deal, for instance, I have to go “Oh yeah, I’ve got to contact that guy separately.” That’s okay, I’ll do it if that’s what he likes. But it’s just a matter of always remembering. Okay, I have to remember him. Then if other people do that, then it’s kind of hard to track.

Ash Patel: He’s got to have the cleanest inbox ever.

Rick Martin: He must. He’s very particular.

Ash Patel: Yeah. Interesting. What about a challenge that you’ve had with co-GPs or partners?

Rick Martin: I think the biggest thing is, initially, people have reached out to me and asked, would I like to participate in their deal, and I’m always flattered, but if the deal is happening within the next several months, I just can’t do it. I think the biggest thing is you just have to allow enough time to really get to know these people, and meet with them in person, and just make sure that your interests align, that you really do complement each other’s skillsets, and there are no quirks that might rub each other the wrong way. I’ve seen a lot of partnerships go South pretty quickly. I have a little bit of fear of getting into a permanent partnership, because I know that can happen… But I’ve been very fortunate with the level of communication, and I try to reciprocate, and I try to pass that on to my investors as well. So I’ve been lucky, they’ve been very transparent, and I try to do the same for them.

Break: [00:16:14][00:19:07]

Ash Patel: Rick, does that mean you don’t have any permanent partners in your company?

Rick Martin: I’ve come close a couple of times. And for whatever reason, it wasn’t going to work out. Right now, in a sense, I’m sort of a one-man-band. But I’m always on the hunt, I have a lot of great conversations, and I’m always open to that. But right now, Fortress Federation is working pretty well alongside the other partners. They’re pretty semi-permanent; we partner on every deal.

Ash Patel: But the doors open for anyone to do their own venture.

Rick Martin: How do you mean?

Ash Patel: I’m confused about what a permanent partner is, versus the partners that you have now.

Rick Martin: There are lead sponsors and there are co-sponsors. I consider my boots on the ground the lead sponsors, because they’re the ones that are actually operating the deal. So they would look at me as a co-sponsor. Now, I’m talking with someone and we’re talking about doing a deal together where we would be the leads, in Georgia. That person would become a part of Fortress Federation permanently. Like I say, I’ve had those conversations, but I’m very careful, and I think I’m leaning toward that, but at this time, I’m maintaining my co-sponsorship role.

Ash Patel: Historically, you’ve had partners on deals but not so much a partner in your entity, your Fortress company?

Rick Martin: Exactly.

Ash Patel: Got it. Okay. Interesting. Proceed with caution.

Rick Martin: Well, when I do partnerships with people, then everything is legally written out. There’s always an LLC that we enter together. So when I do vet a partner, it’s not as if it happens overnight. These are people that I consider, basically, friends. We hop on the phone and have conversations about things other than real estate as well.

Ash Patel: Rick, if you can go back and give your 20-year-old-self advice, what would it be?

Rick Martin: I think to scale faster. I think, for me, I didn’t really learn about the power of real estate until I listened to my first Bigger Pockets podcast. Bigger Pockets have been out for a long time. I wish I had opened myself up to greater resources. I wish I read more real estate books. I think podcasts were something pretty new. I think it would have been nice having the technology that we have today, but I think there were resources back then. Syndication has been around a long time. I would have started digging into other resources sooner.

Ash Patel: Rick, what is your best real estate investing advice ever?

Rick Martin: Don’t ever be afraid to walk away from a deal, no matter how much time and effort you put into it. It could be heartbreaking; you spent months and months underwriting, you’re flying to the market, you’re speaking with property managers, someone’s accepted your LOI… But you find something; if it’s a red flag, pay attention, and you’ll get another deal. It may take a lot of time, effort, blood, sweat, and tears again, but better to not lose your shirt than to do a bad deal.

Ash Patel: Have you been burned by following through on a deal that you shouldn’t have?

Rick Martin: I have really not. I’ve never lost investor money. But I did make sort of a dream investment where I bought a piece of land in Costa Rica. It was going to be my dream home. Again, I had a partner on that deal, and he sort of switched philosophies midway. We paid a lot of cash for that, and there really was no income coming in. We did this back in 2006. And when it became apparent that we weren’t going to get water, like we thought we were going to get water and electricity, it was just kind of burning a hole in our pocket. We had to sell it at a bit of a loss and walk away.

Ash Patel: I think that is important advice. Even if you’ve paid thousands for an appraisal, you have lender fees, title fees, if it’s not the right deal, you’ve got to walk away.

Rick Martin: You do, and it hurts. Sometimes people have money that’s gone hard and you can’t get that back either. But you really have to pay attention to the red flags.

Ash Patel: Don’t let your ego force you to continue.

Rick Martin: No. Or maybe you want it so bad… You’ve been wanting to get into this business for the longest time, or you really want to do a deal… Don’t let that overtake the facts.

Ash Patel: Yeah. Thank you for that. Rick, are you ready for the Best Ever lightning round?

Rick Martin: Heck, yeah.

Ash Patel: Let’s do it. Rick, what’s the Best Ever book you recently read?

Rick Martin: Recently, I would have to say Who, Not How, but I will plug the Best Ever book on syndication. I do think it’s a comprehensive resource.

Ash Patel: Awesome. Who, Not How – what impact did that have on you?

Rick Martin: Just not to try to do everything yourself. How refers to how I’m going to do this? What are the tactics I’m going to use, when you really should be leveraging other people who can maybe do it better, and free up your time to focus on big picture items that you should be focused on.

Ash Patel: Rick, what’s the Best Ever way you like to give back?

Rick Martin: I have a soft spot in my heart for kids without parents. I have a few places that I’d like to donate. I give out a lot of free content. One of my mantras is just add value no matter what, deliver good content, and don’t expect anything in return.

Ash Patel: I love it. Rick, how can the Best Ever listeners reach out to you?

Rick Martin: The best way is to go to www. fortressfederation.com. There’s a free resource that’s a quick start guide to investing in syndications.

Ash Patel: Awesome. Rick, thank you for sharing your story with us today. From being on the West Coast, buying a house you were supposed to buy with your girlfriend, that didn’t work out, but that kind of got you the real estate bug, and you’ve achieved a tremendous amount of success. Thank you for sharing your story with us.

Rick Martin: Thanks so much, Ash. It was a pleasure.

Ash Patel: Yeah, pleasure is ours. Best Ever listeners, thank you for joining us have a Best Ever day.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2650: How One College Grad Grew His Portfolio to 359 Units in 1.5 Years with Braeden Windham

During his senior year of college, Braeden Windham wasn’t sure what he wanted to do with his career. It wasn’t until he met his future partner at an event that he found direction. Handed a pile of books and a list of podcasts about CREI by his partner, Braeden spent the rest of the semester studying real estate investing and syndication. Fast forward a year and a half, and now Braeden is the Founding Partner of multifamily investment firm Well Capital. In this episode, Braeden talks about how clarity and transparency guided his success over the past year, along with a few lessons learned along the way.

Braeden Windham Real Estate Background

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guest, Braeden Windham. Braeden is joining us from Dallas, Texas. He’s the founding partner of Well Capital which is a multifamily investment firm. He has one and a half years of real estate investing experience. Braeden has 359 units across three apartment complexes. Braeden, thank you for joining us and how are you today?

Braeden Windham: Thank you for having me. I’m doing well. How are you?

Ash Patel: I’m doing very well. It’s our pleasure. Braeden, before we get started, can you give the best of listeners a little bit more about your background and what you’re focused on now?

Braeden Windham: Absolutely. First off, thank you for having me. I’m excited about the conversation today. How I got into real estate… First work experience – I was a ranch hand at 16 or 17 years old. I really learned what it looked like to work really hard for my money, and I never really wanted to do that again. Fast-forward to college, I had an internship with a company that bought other healthcare companies. That was kind of my first, I guess, exposure to purchasing assets and what that could do for you. I guess I didn’t know how it really applied until my senior year of college. I really didn’t have a clue what I wanted to do professionally. I figured I didn’t really want a boss, but I thought maybe being a real estate agent was the closest thing I could get to that. I met my business partner actually at a church event, and he dumped five or six books in my lap and a bunch of podcasts. He was like “You need to go learn about real estate investing and syndication.” I had no idea what that was, but I just went all in, because I didn’t have much else to do. I think I had like two or three classes in my last semester. That’s kind of how I got started.

Since then, he hired me on out in Florida to actually do construction management work, where we were basically taking government grant money and managing on the construction of 500 or so projects. We really learned where our strengths and weaknesses were in our partnership. Since March of this year, I left that to just be syndicating full-time and investing in real estate. That’s a little bit about my background. Now we’re just focused on acquiring and repositioning assets in the southeast and the Midwest. Really anything over 100 units at this point.

Ash Patel: What a story. What the hell were you going to college for?

Braeden Windham: I was actually in finance, with a real estate background. I went into it and I had no idea what I wanted to do. I actually went to my real estate teacher to ask him about syndications, and he had no idea what it was. So I filled my ears with a bunch of podcasts at that time, just to self-motivate and learn about the industry.

Ash Patel: You should go back and teach a class on syndication.

Braeden Windham: They actually do have a syndicator that’s teaching the class now. If I could just go back three or four years, that’d be great.

Break: [00:03:20][00:04:53]

Ash Patel: Alright, so let’s back up a little bit. This person that you met, who was then your partner later on, you guys partnered together immediately and started working on these projects?

Braeden Windham: Yes. He had had a few Airbnb experiences, he had invested in some Airbnb properties, and then also had been exposed to development from a really young age, and his family had been involved in real estate. So he was a little bit ahead of me in that sense, and really knew more about the syndication space. I guess when I jumped in, I was gung-ho about it, and I was like, “Let’s go to the next event, if possible.” Because I was listening to actually Rod Khleif’s podcast, and he was having an event in LA. We flew out within three months of me learning about this stuff and I just invited them out. That was the first time we had ever hung out together, been in the same room together, was at that event. Just since then, we’ve been able to work together for probably close to a year just outside of real estate so we’ve really gotten to learn. He likes to say that he’s the gas and I’m the brakes, and I think that’s a really good metaphor for our partnership.

Ash Patel: Is he still a partner in your syndications?

Braeden Windham: Yeah, we founded Well Capital together. The origin of Well Capital is we were both giving to the same charity just on a personal level, and we woke up one day and we’re like, “Why don’t we make this a company-wide thing?” Because we gave to charity water and, basically, they take funds overseas to give people clean water who have never had it before. So we were just like “Why don’t we rebrand our company as Well Capital and just make it more about that than syndicating apartments?” I think that’s an easier conversation to have with whoever, passive investors or anyone you’re going to talk to. It’s an easy way to make the intro and make it more than about yourself, it’s more about other people.

Ash Patel: Braeden, what was your first syndication?

Braeden Windham: That was a 47-unit in South Texas. It was in Rockport, actually.

Ash Patel: What were the numbers on that deal?

Braeden Windham: We bought that for 2.3, we put about 1.2 million into it, and then right now, we’re going through a refi. A lot of lessons were learned on that first deal. We as a GP probably aren’t going to make much, but it’s a huge learning lesson. I think the appraised value was around 4.4 or 4.6, and that was 18 months ago, which is insane. So it just taught me a lot about what I should be doing, and what I can move forward and do better. I’m super thankful for the first deal.

Ash Patel: Why are you not going to make money? I see over a million dollars…

Braeden Windham: That’s a good question. That’s a loaded one. I think it really just comes down to — for me, it’s a lot of angst. First off, we just had a lot of, I would say inexperience, and we partnered for that inexperience, which is what a lot of people tell you to do. I completely agree. But you have to ask very tough questions up front, if I had any advice on that. So we got into it and just the rehab budget expanded, almost doubled. So we really shot ourselves in the foot when it comes to what we were going to make on that deal. And just not having the people in place to actually know what that rehab was going to cost… So we definitely learned from it.

Ash Patel: What were the hard lessons that you were talking about on this deal?

Braeden Windham: I repeat it all the time, it’s making sure that everything is in an email, everything is agreed upon, that there aren’t any “Oh, I thought you said this, or you were going to do this.” No, everything is in an email, everything’s clear and written out. And just having professionals walk with you on the front end is very important, in my opinion. Because me walking a unit at 21 or 22 years old, and a general contractor that’s done this for 50 plus years, walking in on the front end and telling me there are things behind these walls, or there are structural issues, or there are termites, those are things that I wouldn’t have unknown otherwise. I think just having professionals walk with you and asking the tough questions of those professionals… Whether that be co-GP, whether that be contractors, whether that be whoever that you’re going to have walk with you on a property, just making sure that they know what they’re doing and that their track record speaks for itself.

Ash Patel: With putting things in writing – is that more directed towards investors, contractors, lenders?

Braeden Windham: From my perspective, and where we have gotten I would say misled sometimes is definitely with co-GPS, and just making sure that whatever roles and responsibilities are spelled out, and if you’re going to be boots on the ground, you’re going to be boots on the ground. If you’re going to be doing all the asset management, then that’s going to be in writing. If you’ve got something in writing, then you can basically stick to it. Of course, just having the right documents in place for passive investors and any type of agreement with brokers or that type of thing, of course. But mostly that’s co-GP opportunities.

Ash Patel: In your deals, do GPs put investment capital in as well?

Braeden Windham: Yes. Every deal that we do, we aim to put in 10% of the capital, just to show that we have some type of skin in the game. I think that’s important, just to align interests more than anything.

Ash Patel: And what specific examples have you had with co-GPs when things weren’t in writing?

Braeden Windham: I think capital raise is a big one. I guess, on the front end, knowing who’s bringing what or who has the bandwidth to bring what to the deal, I think that’s important.

Ash Patel: Did you guys just kind of assume, “Hey, we’ve got a great team of GPs. We’ll get this done.”

Braeden Windham: Yeah. You’ll have somebody come in and tell you that they’ve done X amount of properties or X amount of units, and that they can raise the full thing, and take more of the equity for it, but that’s not always the case. So having something in writing definitely, looking back, would have helped to say, “No, no, no, this is what you said on the front end, and you’ve got to stick to it.” That’s definitely the biggest area.

And then just minor roles and responsibilities. Like, on our properties, we always believe that you should have somebody that’s in the area or boots on the ground. So just having what that actually means in a contract, just for that person… If that means going to the property once a week to take pictures of progress, then that’s what that means. And you put it in writing. Or if it’s just quarterly pictures, which for me, I would prefer weekly, especially if it’s a deeper position.

Ash Patel: Weekly pictures of the units?

Braeden Windham: Yeah. If we’re doing a major rehab, I would want to see from boots on the ground, that they’re actually in the area, that they can actually drive there within 10 to 15 minutes and take pictures with progress. If we’re doing construction on 10 units, we want to see updates, because you can’t always trust if a contractor is going to tell you that it’s complete or halfway complete. Their complete and your complete is not the same thing. Rent ready and complete is not the same thing. In my book, at least.

Ash Patel: Braeden, dealing with investors, what are some of the lessons you’ve learned with that?

Braeden Windham: I think the most important thing that I’ve learned is just being completely transparent with them. A lot of people will tell you that there’s a line that you should and shouldn’t say certain things. But I think if you have a good relationship with your investors and you let them know on the front end that “Hey, I’m going to give you the good, the bad, and the ugly”, then I think being transparent is the most important thing, at least for passive investors.

Break: [00:12:18][00:15:11]

Ash Patel: Have you had any issues with investors and you guys not being on the same page?

Braeden Windham: No. I think within Well Capital, our goal, moving forward at least, is to come out with a monthly update for investors, which I think is even better than quarterly, because a lot can happen in a quarter, especially when you’ve first taken over a project. But I think we’ve been pretty clear, I would just like to give them more updates than less. So that’s why we’re kind of going into a monthly more than a quarterly.

Ash Patel: One of the things you could do is — Joe Fairless does this. He gives us a one-pager for each investment, and then there’s a link for people that want to deep-dive into financials. Click on that and there’s a whole bunch of more information behind there. But for people that just want the high level, don’t waste my time, just give me “Are we good? Are we bad?” I like that approach a lot.

Braeden Windham: Is that a monthly or is that…

Ash Patel: He does it monthly.

Braeden Windham: I like that.

Ash Patel: He tells us what the occupancy is, how many units have been renovated, any notable highlights, good or bad, about the property… Then there’s a hyperlink at the bottom, and then there’s a portal where you could get as much information as you want.

Braeden Windham: I think that’s a great idea.

Ash Patel: Not everybody wants to read two-pagers.

Braeden Windham: No. I know some investors that don’t want to know the bad side. So maybe they just… There is a bad side on every property; whether or not you know it, there is. There are things that come up that you didn’t know are going to come up?

Ash Patel: Do you guys have a portal? Or is this just handwritten emails?

Braeden Windham: No, we have a portal now. When we started, we didn’t. But now we use InvestNext for our investor portal. That’s kind of where all of the information goes into.

Ash Patel: What bottlenecks were you experiencing that led you to use a portal?

Braeden Windham: I think it’s just efficiencies of having — for one, I guess every quarter, I’d have to sit down and make a handmade whether it be Canva or PowerPoint, handmade newsletter to go out. It was just kind of inefficient for the time I wanted to spend on it, and having something all on a portal where emails go out and distributions go out – it’s a pretty streamlined process. I think just the time it would take to get it all together, figure out what we wanted to say, and have the right type of documents in there… Just having everything in one place is awesome.

Ash Patel: What is your best real estate investing advice ever?

Braeden Windham: That’s a good one. I think I already said it, but putting it in an email is one of the Best Ever real estate advice that I have. Either put it in an email, or just make sure you’re asking tough questions on the front end of every transaction you do. Because I’d rather have tough questions upfront, than tough lessons on the back end.

Ash Patel: Yeah, and that’s a great example. I’ve got a broker that I’ve been dealing with on a deal. This guy literally doesn’t email at all. Everything’s on the phone. And then they’ll ask the same questions over and over again. It’s like, “Wait a minute. I know I told you, we’re good, move forward.” “No. You never said that.” “Oh my God. Please just use email.”

Braeden Windham: Sometimes it’s not even about not trusting somebody, it’s just a good thing to go back and look at. If roles and responsibilities were carved out in an email, then you can always go back and look at it. That would be the best advice I have for the audience.

Ash Patel: Braeden, are you ready for the Best Ever lightning round?

Braeden Windham: I am. I’m ready.

Ash Patel: Braeden, what’s the Best Ever book you’ve recently read?

Braeden Windham: Free to focus, by Michael Hyatt.

Ash Patel: What was your big takeaway?

Braeden Windham: For me, it was a weekly review, and just time-blocking, and making sure that you are very intentional with the time you’re spending… Because you can just get wrapped up in a ton of calls or something that you didn’t even mean to start working on, and then your day is gone, then your week is gone… Then you’re like, “Whoa, what do I do?” So just kind of keeping control of your time is the biggest takeaway from me.

Ash Patel: Braeden, what’s the Best Ever way you like to give back?

Braeden Windham: The best way I like to give back is through our co-sponsor charity. We give 10% of our gross income to Charity Water, where they take it overseas and give people clean water who’ve never had it before.

Ash Patel: Braeden, how can the Best Ever listeners reach out to you?

Braeden Windham: Two ways. Our website, which is wellcapitalinvest.com, and then we are also hosts on the Wealth and Water podcast; that’s on our LinkedIn. You can tune into that every Thursday.

Ash Patel: Awesome. Braeden, thank you so much for joining us today. From being a senior in college and not really having any direction other than not wanting to work for somebody, being a ranch hand learning how to work hard, to being a very successful real estate investor in a very short amount of time. Thank you for sharing your story.

Braeden Windham: Absolutely. Thank you for having me on. It was definitely a great conversation.

Ash Patel: Best Ever listeners, thank you for joining us and have a Best Ever day.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2649: The 4 Best Ways to Manage Your CRE Investments with Your Full-Time Job with Jaideep Balekar

It can be a struggle trying to break into commercial real estate investing when you have a full-time job that occupies most of your schedule. How do you even find the time to dive in, let alone keep up with your investments? Jaideep Balekar was in a similar situation when he started actively investing while working full-time as a cybersecurity consultant. In this episode, he shares his advice on how to navigate and persevere through these challenges.

Jaideep Balekar Real Estate Background

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guest, Jai Balekar. Jai is joining us from Cincinnati, Ohio. He works as a full-time cybersecurity consultant and is primarily an active real estate investor, but also has one syndication as well. Jai’s portfolio currently consists of 30 doors, and he’ll soon be adding 95 additional doors by the end of this year as a JV partner. Jai, thank you so much for joining us and how are you today?

Jaideep Balekar: Thank you so much for having me Ash. I’m doing fantastic. How are you?

Ash Patel: Wonderful, man. It’s our pleasure to have you here. Jai, before we get started, can you give the Best Ever listeners a little bit more about your background and what you’re focused on now?

Jaideep Balekar: Absolutely. Basically, the way I got started in real estate was I was always fascinated by real estate. I did a lot of reading, Bigger Pockets, books like that, a lot of books that a lot of people have read. Rich Dad Poor Dad is the first one that got me started. But I had a travel job, I’ve always had an IT job, and it kept me away from taking that leap of faith if you will. Then COVID happened and I started working remotely. Right before that, I had invested in my first investment property, which also happened to be a very heavy lift down to the studs renovation. So it kind of worked out. I know COVID had a big impact on many people’s lives, but it was a blessing for me because I was able to take some time away, not have to travel, and focus on real estate investments. That’s kind of how I got started. After that first project turned out well, that confidence was definitely bolstered, and I was just able to keep going deal after deal.

Ash Patel: You tell me about that first project. What was that?

Jaideep Balekar: Absolutely. So the first project was essentially two fourplexes or two quads, right next to each other, in Cincinnati. One thing that I was very confident about was where they were located. They’re very close to a neighborhood called Oakley in Cincinnati, which is more of a Class A location, with a lot of good restaurants, and a lot of millennials like to live in this area as well. It’s also right off of an interstate, so very close to downtown. Because I was kind of confident about the location, I’ve always heard from all the books and mentors, one thing that you cannot go wrong about is location. That’s one thing you cannot fix. You cannot force-appreciate an entire neighborhood and location. So I was like, “Okay.” These two houses were extremely scary. These were on MLS, by the way, and when I went to see these two quads, I saw a lot of people turning away. They were like, “Oh my god, this is just way too much knob and tube wiring, and stuff like that.”

But I took a chance I was like, “Okay, anything can be fixed.” The inspection came to be relatively okay in terms of the structural aspect of it. I was like, “Okay, the building is structurally okay. Everything else we’ll manage to fix.” Of course, one of the lessons learned is always to have a huge contingency on the rehab costs. That was my first major rehab and I had no idea how to estimate rehab costs. What I had estimated versus what it ended up really costing was three times as much. But all in all, it was a fantastic learning experience. I think I had, fortunately, enough buffer to actually cover those additional expenses in terms of rehab. Then I also ended up self-managing the property, and I still do, and that was another next layer of learning, if you will… That once you have actually stabilized the property, how do you run it more efficiently, as efficiently as possible to keep those cash flows up? So it’s been a great ride. That first deal was definitely one of my best ones.

Ash Patel: And you did this all on your own? You didn’t have partners on this deal?

Jaideep Balekar: That is correct. Yes.

Ash Patel: Can we dive into the numbers?

Jaideep Balekar: This was purchased in the late 2019 or late 2020 timeframe. We paid 400K for eight units, so 50k a door, then we paid about 200K in renovations, and about 20k to 25K in holding costs. All in, we were at about 625k for eight units. These properties were rented at 400 a door before the rehab, because they were severely distressed, so it was significantly below market rents. Once we fixed it all up, which was essentially all-new exterior, roofing, soffits, fascia, decking, new framing, asphalt, retaining walls, and an all-new interior. So that was new plumbing, new electric, new floors, you name it; new everything, basically. We were able to get the rents from 400 to $1,000 on average. So 2.5x rent increase. Initially of course, when I did that, I had a good idea that I will be able to push the rents, but I didn’t know I would be able to push the rents so much. It was a blessing in the end that I was able to actually exceed my projections.

Ash Patel: That’s great. What are these two properties worth now?

Jaideep Balekar: These are worth close to 800k.

Ash Patel: Okay. The joint venture that you’re working on now – can you tell us about that?

Jaideep Balekar: Sure. There’s a 32 unit that I’m working on with a partner I know through the real estate community and have been in touch with, an out-of-state investor. So my value proposition is to be boots on the ground, again, a deep value-add project. So I’ll be involved in overseeing the value-add component of it. It’s 32 units, mostly two bedrooms. Again, what we love about this deal is the location; it’s in College Hill. Just a few years ago, College Hill was a bit of a dicey neighborhood, but things are really looking good. A lot of new construction is appearing in all different areas of College Hill. So location and ability to push the rents post-renovation, and then ending up with a nice renovated building that won’t have a whole lot of problems in the next five to seven years. That’s really our business plan.

Ash Patel: You’re a GP on that 32-unit deal?

Jaideep Balekar: Yes.

Ash Patel: Are you investing capital as well?

Jaideep Balekar: I am investing very little capital. So a portion of the equity that I’m getting is in exchange for the sweat equity that I’m putting in, and a small portion is based on the cash that I’m putting in.

Ash Patel: Are you also bringing investors to this deal?

Jaideep Balekar: We only have two more investors, and they’re primarily putting in all the capital.

Ash Patel: Got it. And numbers on that deal? What’s the purchase price?

Jaideep Balekar: We are at 1.6 purchase, so 50k a door. We are roughly at about 10k a door for rehab, interior/exterior combined. This is more of a cosmetic rehab than a true gut job renovation. There’s no new plumbing or electrical required. But we are hoping to complete that project in 18 to 24 months, all of the rehab, and then push the current rents, which are about 600 a door, to 850 to 900 a door, which is what we are actually getting. So me and my partner, we both have other properties in College Hill, and we are getting those rents, so at least we know that we can meet those comps.

Ash Patel: Seems like a great deal, Jai. How did you guys find this?

Jaideep Balekar: This was off-market. It came through a broker but I think this individual who got we got the deal from, his main business is a construction company, he does some brokering on the side and he has his network of investors he sends deals out to. So we got that deal from him. I live very close to College Hill, immediately within the hour; I went and did swing by, took some pictures, and I’m like, “Let’s put an offer.” Because time is everything. I’m sure if we didn’t get back to him in a few hours, he would have sent it to somebody else and somebody else would have locked it up.

Ash Patel: How long was your due diligence on this project?

Jaideep Balekar: Due diligence took a little longer than anticipated. I think we had asked for 21 days, but it took longer because it was a mom-and-pop seller. So the records were not all in order. We had a lot of missing leases, so we had to get an Estoppel agreement signed. All of that took a little bit longer, it almost took 45 days. But we are glad that the due diligence period is behind us now, and we are set to close in about 10 days’ time.

Ash Patel: Did your earnest money go hard immediately?

Jaideep Balekar: No, it went hard after the DD period was done. But in some markets, you have to do hard EMD on day one. At least in Cincinnati, it’s not that crazy yet, for the most part.

Ash Patel: So this is a typical GP-LP structure with investors?

Jaideep Balekar: Yes, it is a GP-LP structure. But being the JV, there is no preferred returns or hurdles, if you will. It’s just a Class A, Class B equity, and simple line split.

Break: [00:09:17][00:10:50]

Ash Patel: You work a full-time job. Are you back to traveling?

Jaideep Balekar: I think I will be back to traveling very soon here.

Ash Patel: How do you manage gut rehabs with working a full-time IT job?

Jaideep Balekar: It’s definitely difficult and very stressful. I’m not going to lie about that. Although the last couple of years of my investing journey has been the best couple of years of my life, at the same time, they’ve also been the most stressful years of my life. But if you’re truly enjoying it, then it’s fine. I’m okay with the stress. Initially, in the first few projects where we were doing smaller properties, I built my own teams of plumbers, electricians, HVAC, GCs. I was coordinating all the dependencies between them, I was hauling material myself and making sure materials are on site when they need it, stuff like that. But that was taking up way too much of my time.

At that point, it made sense, because I got to learn a lot, I got to learn how much the material truly costs. So if tomorrow somebody tells me that plywood is $100 a sheet, I would know that they’re BS-ing. Those aspects were a few aspects that I wanted to get a hang of. But going forward, to manage 30 to 65 or even bigger deals, I’m partnering up with… As a matter of fact, just last evening, I had a meeting with a GC [unintelligible [00:12:10].29] they have all trades in house. We are willing to pay them 5% to 10% in construction management fees for better efficiency, being able to source the materials at wholesale pricing, and things like that. That way, I can focus on investor relationships and finding deals or acquisitions.

Ash Patel: Okay, so you’re the boots on the ground for this 32-unit acquisition. What’s your role going to be? What does boots on the ground entail?

Jaideep Balekar: Right. Now, given that I’m not the project manager on the rehab, I’m more of an oversight person, my role is going to be, if things are not going well, swing by every day, and make sure they are going well in terms of the rehab. If things are going fairly well, swing by at least twice every week to still provide that oversight. That way, folks on the ground know that there is somebody, an owner, who is actually here keeping an eye on all the work. That keeps everybody honest and on schedule, essentially. So that’s my main role. But my role is not to get all the materials and literally be there for day-to-day management. That’s my role on the 32-unit.

Ash Patel: Got it. Jai, a lot of people that work full-time jobs contemplate whether they should get started in real estate. Deep down, they may be making excuses, “I’ll wait for the next downturn, the next recession”, or “Maybe I’ll do this when I retire.” What’s your advice to that person who’s on the fence, works a full-time job, and is thinking about investing in real estate?

Jaideep Balekar: That’s a great question, Ash. I think there are multiple ways of investing in real estate. You could invest passively as a limited partner in a syndication, and that’s almost as easy as investing in stocks or bonds. It’s a very passive investment. I would say, if you’re really worried about how much time it’s going to take and if you’re a very busy professional, then that’s a good way to start. But for me, because real estate always fascinated me, the operations, and the ins and outs of it fascinated me more than just cash flows or the money, I wanted to be an active investor. If you want to be an active investor, if you’re just waiting to take that plunge, I think it’s really taking the chance on yourself too, understanding how big of a motivation you have. What are you really investing in real estate for?

For me again, like I said, it was not just the money in cash flows, but it was really freedom of time, having control over my schedule, rather than being stuck in Zoom calls every day, and even if my wife brings me lunch, I can’t eat it, because I’m on a Zoom call. I didn’t want to live that life for the next 30 years. So that was my motivation, having freedom of location, and really trying to build a life that you don’t need a vacation from. That was the end goal. If that means having to compromise and downsize for a couple of years, that was a choice that me and my wife made collectively and I’m so glad we did it. I think it’s really truly understanding what your motivation is.

Ash Patel: Can you talk more about the compromises? Because a lot of this sounds very appealing. Freedom of time, freedom of location… But at what price? This is what often doesn’t get discussed. We see all of these successful people, the cars, the boats, the lifestyle that they live, but there’s a price that a lot of us pay early on. And you’re paying that now; I mean, you’re working full time, you’ve got your plate full with real estate. So give people a little bit of that struggle, just so it’s a true depiction of what it’s like starting out in real estate.

Jaideep Balekar: Absolutely. I think the struggle is on two fronts. Sometimes, of course, if you are flushed with cash, then on the financial side, you might not struggle. But most people are starting out just as I am, and you don’t have unlimited capital behind you. The other aspect is time, and that’s probably the bigger struggle. Time management becomes crucial when you’re trying to juggle multiple different things, and especially if you already have family and kids, it becomes even more crucial. So I think the biggest challenge has been time management, being able to time block, and block time evenings and weekends, so that all of these things, like reviewing operating agreements, leases, doing your due diligence – all of that is done correctly and properly. When you’re starting out, you don’t really have a team, it’s all on you.

If you miss one thing, you might get penalized for it pretty heavily. You miss something on that deal.

So I think one aspect is time and being able to compromise on your free time, on your Netflix time, and dedicating that time to real estate. That willingness has to be there. And number two, I think if you’re willing to compromise a little bit in terms of how you’re spending your money or your lifestyle, that can help propel your real estate journey as well. Because we used to live in a single-family home in a suburb, and we definitely had way more room than we needed. It was a very comfortable lifestyle, but we made a choice that we will sell this house, get all the capital out, and invest in investment real estate. We are now house hacking in a four-family.

Now, going from a relatively big single-family home with a yard to sharing walls with people, there is a compromise. I won’t lie about that. But again, it’s really about what your end goal is, and are you willing to do really anything to get there. Truly, it’s not even like I’m not living on the streets; it’s still a pretty comfortable lifestyle. But you have to be willing to give away some of the creature comforts of your life. Maybe sell that BMW you have and get a Corolla hybrid, save money on gas and stuff like that; cut down your liability, get rid of the expensive watches that you bought when you immediately got a job and started getting those paychecks. That has happened to me, I was just always looking for stuff to buy. But now we just passed Black Friday. I didn’t even open a deal site or anything. Because I know that I don’t want to buy any more materialistic stuff and I want to focus my investments truly on building liabilities.

So I think it’s really the personal choices that you make every day. Eating at home instead of eating out every day, as an example – that has a huge impact by the end of the year. You’ll be surprised how much you end up saving, which now can be used to buy passive income-generating assets.

Ash Patel: Amazing insight. Thank you for sharing that with me and the Best Ever listeners. Make no mistake about it, Jai has a very successful career in cybersecurity consulting. He should be enjoying a lot of the fruits of the years that he’s put in, and he’s making all these sacrifices. So I love hearing that mindset. Thanks again for sharing that. Jai, you’ve got a syndication investment as well. Was that before you actively invested or after?

Jaideep Balekar: That was actually already after I had started to invest actively. The rationale for that investment was, one, I’ve always heard; investing in a syndication is where you get paid to learn. I do want to throw in a caveat there though. When you invest in a syndication, the learning is fairly limited. Because as an LP, you get these quarterly distributions and quarterly reports, but you’re not really involved in the day-to-day operations. But that was my initial, I would say, reason for investing in that syndication as an LP. Two, I also wanted to see that how does a big deal go down? How does the due diligence happen, agency lending, and so on? This property also happens to be local, in Cincinnati MSA. So at least when the rehabs are going on and stabilization is going on, I can always swing by. It’s not like in Phoenix or somewhere else where I haven’t even seen the property. But those were some of the aspects.

The person that I’ve invested with is a great guy, John Kasmin. I still have faith in John, and I wanted to invest in a deal with John. Given an option, I could have always invested that money in my own deal, in an active investment, but I wanted to invest in John’s deal. That was another motivation that I had.

Ash Patel: I appreciate that as well, because when you give your money to somebody else to hold, grow, invest, you understand the mindset of your own investors. They’re putting a lot of faith into you, with their hard-earned money. I think it’s very important to grasp the mindset of the investors. I think a lot of syndicators should also invest passively in other people’s deals as well, for that reason.

Jaideep Balekar: Absolutely.

Ash Patel: What’s the hardest lesson you’ve learned in all of this investment?

Jaideep Balekar: I think the hardest lesson, I would say, is just the importance of having reserves. Right now, we are in a great market, but the importance of having good reserves is going to be highlighted whenever a market correction does happen. We all know it will happen, nobody knows when. But when that does happen, people who are over-leveraged and have less reserves, they’re going to have a hard time. I’ve talked to a lot of lenders who have commercial lending experience of 25 plus years, and one question that I always ask is “What was your lesson learned from 2008?” Some of the lessons learned that they share – they’re experienced people, they have seen how the financial industry suffered and the real estate industry suffered… And I take that and implement that with the way I operate.

On all of my properties, at least six months of BT reserves, CapEx reserves, and repairs reserves on top of that. I keep a lot of reserves for all of my properties. Sure, I could invest that somewhere else and start doubling that money. But for me, peace of mind and a good night’s sleep is way more important than doubling every dollar that I have in my pocket. I think reserves are, I would say–

Ash Patel: How do you get financed? Is it just traditional lending?

Jaideep Balekar: Depending on the location and the condition of the asset. We are now looking at a 13-unit that is extremely heavily distressed. There’s really nothing, not even studs in the property, just load-bearing walls at this point. So for a property like that, I’m looking at private lenders like Lima One Capital. If it’s a stabilized property that meets certain debt service coverage ratios, DSCR ratios, then I’m working with a lot of the local banks, if it’s under a million-dollar loan balance, if it doesn’t qualify for an agency. Then we’re also looking at agency options, where the loan balance is big enough for agency loans, post-stabilization.

Break: [00:22:56][00:25:49]

Ash Patel: When you present yourself and your deal to a lender, do you bring your portfolio with you? Do you have a binder or folder that showcases the deals that you’ve done?

Jaideep Balekar: Yes.

Ash Patel: Do you emphasize that you’ve got six months of reserves for each property?

Jaideep Balekar: I do. Adn when then the lenders hear that, they just love it. I’ll share a story. I’m currently working with a local lender on the 63-unit. Most of my investors or capital partners are all Bay Area folks. Initially, I could just sense that right off the bat, he just wanted to turn our deal down. You guys come in and you buy property here in Cincinnati, but you have no idea how to operate the property. Lenders have gotten burned by out-of-state investors overpaying for properties here in Cincinnati. So that was the initial response. But then we were like, “Okay, let’s schedule a coffee meeting and meet up.”

When we met, we talked about how we run our properties, how we run the rehabs, how much we have in the reserves, and I talked about my portfolio, how I had stabilized, and what were the pre and post rents. When he heard that entire story, that was it, that sold the deal, and we just got approved on the loan. The terms were beautiful, better than we expected. When it comes to local banks and local lenders, it’s really about that relationship. If you can actually provide them with the confidence that you can successfully take this deal down and operate it well.

Ash Patel: I learned that much later than I should have. But having that narrative or that story is so important. For years, I would just send my lender, “Hey, here’s the next deal. Here’s the contract. When can we close?” I had enough of a relationship with them that they would always follow through. But when I started writing a narrative, it was so much easier and faster to get that approved. The board would hear this — it’s not just “Here’s another deal Ash is doing.” It’s like, “Oh, what a cool story. Okay, yeah, awesome. Let’s go.” It also makes you more memorable to both the lender and the decision-makers. So yeah, kudos for doing that, man. Jai, what is your best real estate investing advice ever?

Jaideep Balekar: I think really — again, this is something that probably everyone has heard a million times… But the biggest hurdle is getting started. A lot of people get stuck in analysis paralysis, they do a lot of reading and research, but they never get started. I think even if it’s a JV deal where you’re doing a very small portion and you’re getting equity just for bringing in the capital, or even if it’s an LP as a syndication like I just said, just jump in. I think that once you jump in, it becomes a lot easier. My first deal was the hardest; I learned the most in that deal. But after that, everything became almost like an assembly line. I already had my team set up, I knew where to source the materials from, and I had some lessons learned that I was able to implement in deal number two. But once you do that first deal and jump in, it becomes a lot smoother then onwards. I think jumping in is the biggest hurdle. So just get over it and start investing in real estate.

Ash Patel: Jai, your first two four-unit buildings – you did all by yourself. You’ve subsequently had partners on deals. Would you recommend people on their first deal work with a partner, or do it alone?

Jaideep Balekar: I would say it never hurts to work with partners. You also want to be careful about who you’re partnering with. But if you know you have the right partner, a friend you grew up with, someone you trust, you always learn way more when you work in a partnership, and now you don’t have to do it all. You can play to your strengths and your partner can play to his or her strengths. I’m personally –you know that well, Ash– I’m not a detail-oriented person. I’m more of a high-level big picture. But for these deals, I had to dive into the numbers, I just had to. Because if I missed something, it would cost me a lot of money. But I didn’t enjoy it. So when you work in a partnership, the stuff that you don’t enjoy, you can have your partner do it who has perhaps complementary skill sets. So I always recommend working with partners. In my mind, that’s the only way to scale.

Ash Patel: I agree as well. Jai, are you ready for the Best Ever lightning round?

Jaideep Balekar: Absolutely. Let’s do it.

Ash Patel: Jai, what’s the Best Ever book you’ve recently read?

Jaideep Balekar: Recently, I would say Who, Not How. That’s been my recent read. I’m reading Rocket Fuel now, and they’ve both been phenomenal books. Both of these books have had a tremendous impact on my mindset in terms of how I think about teams, delegation, and playing to each other’s’ skillsets.

Ash Patel: Disclosure, Best Ever listeners, Jai and I are friends. We both live in Cincinnati and those are two books that changed my investing. I recommended those to Jai. What’s the biggest takeaway you had from those books?

Jaideep Balekar: I think the biggest takeaway from those books is recognizing the fact that a lot of times realistic investors have that mindset starting out, especially the do-it-all ones. That you can do something in the best possible way and nobody else can do it better than you. I think when I started working with people, I realized that there are many aspects of this business that others can do it way better than me. Then why am I spending time focusing on those things especially on top of which when I don’t even enjoy doing those things? I think that was the biggest aha moment for me from both of these books. And really finding your who is not just about delegation because people talk a lot about delegation.

It’s not just giving work away, but you are helping them and they are helping you. It’s more of a mutual. Because for them, you are their who, and for me, they are my who. Because they are not probably good at visioning and I come in and play that role. But they are probably really good with details and execution, and that way they are my who. It’s very much a partnership mutually beneficial relationship. I think that’s how you got to see business partnerships. That was the big aha.

Ash Patel: Great. Jai, what’s the Best Ever way you like to give back?

Jaideep Balekar: Best Ever way I like to give back is in two terms really. I think giving back time is more valuable than just giving away donations. So I also donate 10% of all our profits to a charity in India that focuses on the education of kids in poverty-ridden areas. I also really try my best to have as many calls as possible with people who are starting out in real estate, and share whatever I’ve learned to help them get started. I truly enjoy doing that. I love having those conversations. I’m hoping that the time I dedicate to these folks will help them tomorrow to become good mature real estate investors.

Ash Patel: Jai, how can the Best Ever listeners reach out to you?

Jaideep Balekar: The easiest way to get hold of me is via Facebook or by email. On Facebook, my first name, my real name is Jaideep, and my last name Balekar. I’m very active on Facebook and also email which is info@compoundingcapitalgroup.com.

Jai, thank you again for sharing your story with us today. The struggles of having a full-time job and growing a very successful real estate company. Thank you again for sharing that.

Jaideep Balekar: Thank you so much for having me, Ash. It’s always a pleasure speaking with you. I really appreciate the opportunity.

Ash Patel: Best Ever listeners, thank you for joining us, and have a Best Ever day.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin

JF2648: Why You Should Reevaluate What It Means to Be Rich | Actively Passive Investing Show with Travis Watts

What does “rich” mean to you? When you picture a rich person, do you imagine yachts, tropical vacations, or a lavish collection of sports cars? In this episode, Travis Watts provides a different perspective on what being rich really means in terms of having to work vs. choosing to work, freedom of time, and freedom of location.

Check out past episodes of the Actively Passive Investing Show here: bit.ly/ActivelyPassiveInvestingShow.

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Travis Watts: Welcome everybody to another episode of the Actively Passive Investing Show. I’m your host, Travis Watts. As always, I truly appreciate you guys being here every week to tune in, learn more, and hopefully get a unique perspective. Today, this is just top of mind because I was listening here recently. I was out in Miami at a real estate conference, I was listening to a conversation between a couple of gentlemen there and they were talking about the term rich. There’s a lot of confusion around it. I know I’ve highlighted some of this in previous episodes, but I really want to make a full episode about what it means to be rich.

Today in this episode, we’re talking about having the freedom to choose to work. You want to work because you enjoy whatever it is, not because you have the obligation, or because you have to work, or you have to go put in another 30 to 40 years climbing the corporate ladder, whatever it may be in your case. Additionally, we’re just talking about, in a general sense, waking up each morning without having financial worries because you know that your finances are in order, there’s nothing that you physically need to do. Last is just about having that general feeling that the money that you’ve already made, that you’ve already paid taxes on, that money is out there making you richer whether or not you choose to work. We’re going to dive a lot deeper. I know that was pretty high level, but let’s take it step by step.

I want to start by asking you a simple question. I want you to imagine, right now, a rich person. What does that look like? Some of you might see somebody sipping champagne on a yacht. Some you might envision he or she with their spouse, a bunch of kids, and close family around them. Maybe they’re all wearing that picturesque white clothing and those Tommy Bahama hats. Only joking. There’s a lot of marketing out there to portray and maybe what rich looks like. One image that probably didn’t come to mind when I said think of a rich person is someone working 80 hours per week where they have no free time to do anything other than going to bed, wake up, and go back to work. But unfortunately, in our culture, the hustle, the grind, and the work harder is a common theme.

Let’s break rich down in three different ways. I want to talk about financial, that’s the most obvious, I also want to talk about time, and then I want to talk about location. Alright, so let’s kick it off with financial. Money isn’t everything but it is a key component to the topic of being rich, it obviously plays a role. Like Robert Kiyosaki always points out in Rich Dad Poor Dad and other books and podcasts, rich has more to do with income than it does net worth. Here’s what I mean. In an example purpose, let’s say you or I, we have a two-million-dollar home and a one-million-dollar exotic sports car, just to use kind of a silly example. Let’s say that we financed or we leased these, we leased the vehicle and we finance the property. So we have $2 million in bad debt. It’s bad debt because these are liabilities depending on your definition of those at least. I think it’d be tough to argue that the car is not a liability. But in any case, $3 million was the purchase price of the car and the home, two million is what we owe in debt.

What this means is I have to have more assets other than this house and this car in order to have a positive net worth. If I had a couple of million bucks in cash in the bank and I still had that scenario with the home and car finance, I would be positive. So 101 is not to have bad debt, not to be sinking in liability debt, and to have an actual positive net worth regardless if you define rich as income or net worth. My point is that you still need to have a positive net worth overall either way. Ask yourself this question. This is kind of question number two. Would you rather have $5 million in cash sitting in the bank free and clear after paying taxes or would you rather have $400,000 per year in passive income for the rest of your life? Of course, assuming that this isn’t like a heavily taxed kind of income, so much like real estate where you’ve got some tax advantages to hopefully offset the 400k.

But still, that passive income is what actually, in my opinion, creates financial independence. By the way, if I had $5 million in the bank and I went to go make some investments that yield passive income, and I could get an 8% a year cash flow yield, that would be 400,000 per year. That’s kind of how I came up with that example. In one scenario, you’re not invested, in the other, you are. But when you’re invested, you may not have liquidity. Even though you have five million in investments, you may not be able to pull that out and go use it for whatever, buy a house in cash, go buy a sports car, and do exotic travel. You may not have big chunks of liquidity but you would have 400,000 rolling in per year. Again, for me, it’s about the lifestyle so we’re going to talk about that more here in a minute. Now, one thing I want to point out here is building financial independence and financial freedom if you’re a single individual is much easier than perhaps if you have 10 kids.

I would say for a lot of people, the focus isn’t necessarily to build up lots of passive income to offset lifestyle expenses when they have five kids. I totally understand if you’re a working individual or couple, that’s extremely difficult. So instead, what some people might think about is building up some assets that will later become what I would refer to as generational wealth. These are just assets you would pass down to your children over time. So we’ll use the example of real estate, maybe you’re buying some single-family homes, or some multifamily properties, or some vacation rentals, or whatever they are, you may hold those long term, pass away one day, and then your children inherit those homes. Actually, the other day, one of our neighbors has been evidently buying up the block. This guy owned four or five homes real close to where we live. I think he has three kids, so three of them are allocated to his children.

They’re going to basically inherit those homes and be able to use them however they wish. The other couple that he owns is going to be rentals, and then I think there might actually be a sixth. But in either case, he’s thinking about generational wealth. He’s building up the assets now, he’s paying them off over time, or I should say his tenants are paying off the mortgage when they pay the rent, then one day, hopefully, they’re all free and clear and as children get the step-up basis, come in and get to enjoy that. So different ways to approach it, just saying that when I was a single individual, I wasn’t even dating, and I didn’t have any pets, I had zero obligations, I was able to quickly build up passive income through single-family investing to where I had more passive income than I had lifestyle expenses. Technically, you could say that was financial freedom or independence, even though the numbers weren’t huge.

What I wasn’t factoring in in my early 20s or mid-20s was one day I will have kids and a family, theoretically or hopefully, and those numbers are drastically going to change. Alright, moving on to number two. I want to talk a little bit about time. This is a current theme to my mission, my purpose, what I speak out about at events. Freedom over your time is another element to perhaps being rich or one way you might define it. It has more to do with lifestyle. A lot of people, especially in the United States –I was one of these people years ago– get caught up in the success cycle is what I call it. I wrote a really long blog post about this, how do you climb the corporate ladder, you get all the skill sets, then you pivot, you launch your own business –just using these as examples– and then maybe you take that business public. The bottom line is you’ve made a ton of money, but you’re locked into the success cycle where it’s more, it’s more, it’s more, my cars are depreciating, I need new ones, my house isn’t big enough, I need a bigger one. Once you get the house and the cars then it’s “I need a second home.” Then once you get the second home, you need a yacht. Once you get a yacht, you need a jet. Once you get a jet, it just never ends.

You’re just trapped in this success loop. Statistically speaking, a lot of folks that have a lot of these luxuries, or what some might say liabilities, aren’t actually any happier than some people that are just dirt poor in other countries, or even here in the United States. Statistically, it’s really crazy how that works. You don’t want to get caught up and just make money, make money, money like I used to do in the oil industry because I burned out, and I burned out pretty fast over a series of just several years. I can’t imagine doing something like that for 30 to 40 years. I think you’d have some serious mental and health concerns at that point. The path to riches can’t involve nonstop work seven days a week.

Break: [00:09:51][00:11:24]

Travis Watts: Another thing to think about is all the richest people in the world, they all leverage and utilize some form of passive investing. Whether it means that they own companies that they don’t actually run, maybe they’re a board member, or not even that, or it’s real estate, it’s hands-off, and it’s passive like we’re going to talk about. But the bottom line is we all have the same amount of time, every day, every week, every month, every year. So how is it that some people can make $10 million per year in income while others struggle and make 30,000 per year working minimum wage jobs plus overtime? Some of the most hardworking people I know, friends, acquaintances, within my own family, they are harder working than I am, guaranteed hands down. I give them that any day of the week. But they are not getting ahead financially. Why? It took me about six years to fully grasp the concept and the benefit of leveraging other people’s time, expertise, resources. There are always going to be people out there that want to do it themselves. They want to be the person, they want to be the decision-maker, they want to find the deal, they want to do the underwriting, they want to manage the business, and that is excellent.

These could be CEOs of companies, these could be general partners or sponsors in the syndication space. But there’s also a lot of folks that say, “You know what? I like what you’re doing. I think you’re doing it great. I just want to piggyback off your success. I just want to share in your profits.” These are investors. These are passive investors, whether we’re talking about, again, the CEO at the fortune 500 company running one of the big-name brands. You and I can choose to buy into that stock, and we can share in their dividends, their profit-sharing, and their earnings. Whether we’re talking about syndications where the general partners are doing all the work, in leverage, putting professional property management and contractors on-site, and renovating. You and I can choose, if we wish, to just partner in that deal. Not have to manage the tenants, not have to do any of the hands-on labor, so that we can scale, so that we can build up our passive income streams, our portfolio, and our wealth without taking additional time to the theme of time.

The bottom line is that passive investments require very little of your hands-on time and commitment. Most often they can be managed, so to speak, “managed actively passive” from anywhere on the globe. I am invested in all these different syndications and all these different passive deals, I could be in Thailand right now, it wouldn’t make any difference. I don’t need to see these properties, I don’t need to be on the properties, I don’t have to show up for board meetings, I’m just an investor, and I have the choice to live how I want to live and where I want to live. It doesn’t matter, I know I keep using real estate as an example. This could be, again, stocks, dividends, interest, royalties, you could be a hard money lender, you could be all these different things. The point is, whatever investment we’re talking about, it needs to be truly passive. I’m not talking about buying a turnkey single-family property where some management company is already on-site and there’s already a tenant. That’s still active because you’re still going to have to make a lot of decisions and you’re still basically running the show.

You’re going to have to decide if you want to sell the property, refinance the property, repair the roof, patch the roof, replace the roof, there’s a lot of decisions that have to go into all this so you are still actively involved in the business. You’re more like a CEO. You’ve got folks below you kind of running the day-to-day, but you’re the high-level decision-maker, you are still active. So don’t confuse the two, I’m talking about truly passive investments. So what’s the big overarching benefit here? To me, you get to spend more time on the things you love –that’s different for all of us, friends, family, charity, church, whatever– and you get to outsource or focus less of your time on the things you don’t love. Here recently, my wife and I were doing a little bit of gardening stuff. I just realized I hate it. I mean, I hate it, like every element. Like trying to understand the different types of plants, get the right feed, and the right potting soil, plant it right, and water it all the time. I hate it.

There are some things I just want to outsource. I just want to say, “Hey, look. I’ve got the passive income, let me hire a landscaper.” I’ll say, “Hey, here’s the big picture. I want a bunch of greenery here, a little bit of mix of color over there. Alright, take it away. Thanks.” That’s where I want to be as far as landscaping is concerned. Then, in turn, I want to spend more time with my family and with my wife. As I’ve mentioned before, we’re expecting our firstborn here just around the corner. I want to be home with our firstborn, I want to actually have one on one time, be able to help out my wife, and be able to help out family members. That’s just me, though, we’re all different. But think about the things that bring the most fulfillment and joy to you in your life and think about being able to spend more time doing that. Maybe you hate doing the dishes or cleaning your house, or whatever it is, you can outsource that through passive income. That’s the only thing, it’s about time. That was number two, time.

Now I want to talk about location. With location, I mentioned that when you have these passive investments, you can live anywhere. You could travel all the time if you want to take two, three, four weeks off a month off, whatever. You have the choice to be able to do that. Unlike having the nine to five jobs with the two weeks of vacation per year, unlike having 25 single-family homes in a 10-mile radius where you’re trying to run around like a chicken with your head cut off like I used to do. It was crazy. It was crazy, you guys. It was just crazy. Of course, in my opinion, obviously, one of the best ways to passively invest and free up your time is through real estate. That is my preference, that is what I do, of course, that’s my bias because that’s where I’ve found success. But that doesn’t mean that’s right for you or that that’s the path you should take. That’s just the path I’ve found most lucrative.

Another quote that I absolutely love and I know I’ve shared it before here on the show. It’s Robert Helms from the Real Estate Guys podcast. I remember so many years ago, listening to that show. Robert says “Live where you want to live, but invest where the numbers make sense.” Here’s the deal, you might live in an outstanding market today, you might live in –I don’t know– Tampa, Florida, Jacksonville, Florida. These markets are seeing 12% to 13% rent increases right now. Single-family homes are just out of this world, everyone from New York, New Jersey is moving down there, it’s just insane, it’s blowing up. That’s fantastic in 2021, assuming that you own or invest in these assets. Hear me out though, 10 years from now, there could be a big political change, there could be a new government.

The state of Florida could say, “Hey, we’re a zero-tax state. We’re going to start rolling out a 10% state tax.” All of a sudden, everyone in Florida is going to pack up, they’re going to head out to maybe Texas who’s still a zero-tax state, and everyone’s going to be moving that way. Markets change, and markets evolve. I was fortunate to be investing from 2009 to about 2015 out in the front range of Colorado, kind of between Denver and Fort Collins. It was a great time, the market was booming, we were getting double-digit appreciation, it was just fantastic. But it’s hitting a slowdown much like you’re seeing in say, San Francisco or Santa Clara. Different markets out in California, they’re stagnant, some are even in decline right now. Just because you live in San Francisco and there was the golden era there where you were getting 15% appreciation per year.

That’s not always sustainable long-term. So if you’re in one of those markets, fantastic, and that could really work to your advantage. But if you’re starting to stagnate or decline, or you think “Hey, this market’s too hot,” this is what the beauty is to investing in real estate syndications, or even REITs –which I’ll share with you in just a minute– where you could be invested in properties all over the United States, for that matter, all over the world, even get some international diversification also. So let’s take a look at a few different ways to invest in real estate publicly and privately for passive income. First, you have crowdfunding. The bottom line here is that throughout history, there have always been investors that have funded business projects. So when you relate that to real estate, this is kind of what crowdfunding is. You put a deal out there either to the public or through a platform, and you say, “Look, we need 20 million bucks to go buy this big apartment deal that we think we’re going do A, B, and C to. We’re going to get these kinds of returns out.” Then you go get 100, 200, 300, 500 people to go invest and give some money to contribute to that deal.

That’s one way that the investors, the limited partners, or whatever the structure is, they are hands-off, they are passive, that’s a way for you and me to generate passive income. Generally speaking, with crowdfunding, there are really two types of ways you can invest. You can invest in the property itself, so you’re an equity holder. If the value of the property goes up, hopefully, you’re sharing in those profits plus collecting some cash flow along the way. Then you can also invest in mortgages on properties. As the mortgage gets paid, you get a percentage of that interest that comes in. There are different ways to invest. There’s debt and there’s equity from a high level.

Break: [00:20:42][00:23:35]

Travis Watts: Another way to participate in the real estate game for passive income is to be a hard money lender or note lender. There are so many fix and flippers out there, there are so many developers out there, there are so many people doing different things in real estate. They need capital usually on a short-term basis so there are things called, for example, like a bridge loan, which would be a shorter-term debt loan to someone. It’s kind of just bridging the gap. It’s like we need the deal today, we plan on getting permanent long-term financing in six months, but in order to actually tie this asset up, we need a hard money loan. Some folks are willing to pay higher yields, maybe they’ll pay you 8%, 9%, 10% for short-term money that you lend to them to get the deal rocking and rolling so to speak. I’ve done this, I usually do this more in a diversified manner.

Of course, not a financial adviser planner so please always seek a licensed advisor. I’m just saying I’ve done this through funds that are professionals at being hard money lenders. I’m investing in a fund or a pool, so to speak, where they’ve got 1000 of these loans –just for example purposes– spread out among all these different developers, flippers, and projects so that if any one of them decides they have to default, that is not going to crush my cash flow or my portfolio and I’m going to see a very marginal change in that. But again, you can do single notes, one deal, one partner, one transaction, here’s 100k, you can do it that way. Or you can invest in funds where you’re a little more diversified. But either way, lending is another way to get involved in real estate.

REITs, real estate investment trusts, they can be public, they can be private. We’ve talked a decent amount on the show about REITs. A REIT’s really just a special type of investment trust that’s dedicated to acquiring property. It’s usually commercial property because this is more or less, it’s Wall Street money, or it’s tens of millions of dollars, hundreds of millions of dollars in some cases. So you’re owning some shares of what, in turn, owns a bunch of these properties. REITs can be comprised of mobile home parks, or self-storage, or multifamily, or mortgages, there are so many different things. You definitely want to read and study into this and decide what asset class best suits you. This can be a liquid auction if it’s publicly traded, which means that there’s a public market to buy and sell so you could invest today. Then if in a week you need your money back, you could place a sell order, theoretically, get out in a matter of seconds, and get your money back. That’s a really nice feature.

But do keep in mind, if it’s in the publicly traded market, you’re subject to the volatility, the ups and downs, and swings of the market. If everything crashes like we saw on March of 2020, that could also be your portfolio full of REITs. Even though maybe the REITs are still performing well, they still might be dragged down by the overall market. Keep that in mind kind of as a pro and con. But this is usually great for small amounts of capital. I’ve mentioned before, my nephews have brokerage accounts. They’re between ages 16 and 19. This is how they’re getting involved with real estate with very little money. Even if they’ve got 100 bucks to go invest because they got a check for their birthday or whatever it was, they can go buy 10 shares of a $10 per share REIT or something like that. At least they’re going to get passive income and build the philosophy and the mindset of investing.

Last but not least, my personal favorite and what we talked about all the time on the show is real estate syndications or real estate private placements. Very similar to REITs, just on the private scale, so a little less volatile, a little more stable and consistent, generally speaking. But hey, there are risks and there are cons, such as syndications often they’re not liquid. When I go put 50k into a syndication, I may not see that money for five to seven years sometimes so I need to be okay parting with that. Kind of like we talked about at the beginning of this episode, where I said $5 million in the bank, or 400,000 a year in passive income. The trade-off is if you choose the income, then you don’t have the liquidity. But if you choose the liquidity, then you may not have quite the passive income or any passive income. That’s just the choice you’ll have to make. But syndications are great. You got the sponsor and general partner going out finding the deal, underwriting, managing, they’re being the asset manager, they’re raising the capital, they’re basically active investors.

Then you’ve got the LPs, limited partners like myself. I’m a hands-off investor, I’m a passive investor, along with hundreds of other people to fund the deal. Keeping in mind, as I said earlier, most if not all the richest people in the world have some form of passive investment or passive investing in their portfolio. When it comes to building wealth passively, you’re going to have to figure out what works for you. Listen to some other episodes that I’ve created on picking different asset types, or how to vet a deal, a market, a sponsor, whether to be active, or whether to be passive. There’s a lot of decisions that have to be made. I applaud you for being here to expand your mind and context, hopefully, some new information or new thoughts. To me, the key is to balance the risk and reward ratio. Is it possible I could go make some kind of investment out there and maybe double my money overnight? There are investments like that, but there’s usually a chance that in that same investment, I could lose all my money. It’s kind of like going to the horse races and putting 100k on a horse.

I could get an outstanding almost instant return, but I might lose all my money too. So it’s a balance between that and saying, “I don’t want to take any risk at all. I want the safest thing on the planet.” Okay, products like that generally exist, insured bank deposits and stuff like that. But I might also get 0.1% interest per year on that investment. Is that going to get me to my goals? It’s trying to find that equilibrium to say, “Alright, I’m getting a healthy overall return and I don’t feel like I’m taking too much risk while doing so. That suits me well for my goals, my lifestyle, and what I’m trying to achieve.” That’s what you got to think about for you. What does rich mean to you and what is it you’re really trying to achieve? There is Minority Mindset out on YouTube if you haven’t checked this channel out. It’s great. He goes out and talks to the general public about money, finance, and real estate. He’s asking people, “How much money do you need to feel completely financially secure?” Or whatever, different questions like this. It’s comical, you guys, it’s so funny. “I need five billion dollars in the bank.” Or “I need 10 million a year.”

It’s so goofy because when you sit down and you just think, how much does a house cost either to rent, to buy, mortgage, whatever? How much are two or three cars? Insurance, maintenance, upkeep, purchase price, lease payment, whatever. You can eat so much food in a month, you can only turn on your tap water so much and pay the utility. There are only so much resources that you can practically use. When you really run the numbers, you will probably find out that retirement could be here sooner versus later. It’s usually not such a huge 10 million in the bank. From a perspective, go look at stats and facts. How many people really have 10 million dollars? How many people are actually happy and retired with a whole lot less? I’m just saying, really find out and focus on what brings you happiness and fulfillment. Focus on what you want to spend your time on, the things you love, then write a list of things you hate and don’t like doing, and you’ll find out –like in my case, landscaping or gardening for example– that could be as little as a hundred bucks a month and I can completely outsource it.

I can never have to do that again in my entire life, for a hundred dollars per month. So to me, that is a heck of an ROI because it just brings me down when I have to do it. I digress from the subject. Thank you, guys, for being here, as always. Thank you for tuning in. I’m Travis Watts. This is the Actively Passive Investing Show. We were talking about what does rich mean to you? What’s the definition? Hopefully you guys found some enjoyment. As always, reach out. I’m on social media, joefairless.com, travis@ashcroftcapital.com. Connect, let’s learn, let’s chat. I’ll see you next week at the show. Thank you so much. Bye.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

Follow Me:  
FacebooktwitterlinkedinrssyoutubeinstagramFacebooktwitterlinkedinrssyoutubeinstagram


Share this:  
FacebooktwitterpinterestlinkedinFacebooktwitterpinterestlinkedin
Joe Fairless