JF1799: An Investing Niche You Haven’t Heard Of: Owning & Managing Farm Land with Brian Luftman

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Brian and his company own and manage farm land, which they purchase along with investors. He will cover the main benefits of investing in farmland (cash flow and appreciation) as well as the secondary benefits. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“Anything that you’re spending money on, if it’s quality, there’s going to be someone who wants to pay more for it down the road than you paid for it” – Brian Luftman

 

Brian Luftman Real Estate Background:

  • Founder and President of American Farm Investors
  • AFI now manages thousands of cropland acres as an investment for accredited investors from 25 different states in the U.S.
  • Based in Lexington, KY
  • Say hi to him at https://americanfarminvestors.com/
  • Best Ever Book: The Art Of Leadership

 


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TRANSCRIPTION

Theo Hicks: Hi, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today I will be speaking with Brian Luftman. Brian, how are you doing today?

Brian Luftman: I’m doing well. How are you, Theo?

Theo Hicks: I’m doing fantastic. Thanks for coming on the show, and I’m looking forward to our conversation and learning more about your real estate background.

Brian is the founder and president of American Farm Investors (AFI), which manages thousands of cropland acres as an investment for accredited investors from 25 different states in the U.S. He is based out of Lexington, Kentucky, and you can say hi to him at americanfarminvestors.com.

Before we begin, can you tell us a little bit more about your background and what you’re focused on now?

Brian Luftman: Sure. My background is almost exclusively financial. I always wanted to be a trader in Chicago, and that’s what I did right out of college. I was a derivatives trader on the Chicago Mercantile Exchange; I traded cattle options.

Then how it parlayed into the farmland company that I run – I was looking for a passive farmland investment while I was still in Chicago, because I wanted an inflation protection and a real asset, that would be able to provide cashflow, and I couldn’t find anyone to help me buy into a farm, or to be a  private equity consultant, so to speak…

So I kind of filed that in the back of my mind and knew that that’s what I wanted to do after trading, and thus American Farm Investors was born. I now manage a lot of farmland acres for a lot of investors throughout the country.

Theo Hicks: For those that don’t necessarily know what cropland is and how it generates money and what’s done on that land – like me – would you mind quickly giving a high-level overview of the business plan?

Brian Luftman: Certainly. I’ll go back to the beginning on why I was interested in it in the first place – because it was really an inflation play; I wanted to bet on commodities, and I figured why not own land that grows commodities? You can invest in farmland in many different ways; you can buy an almond farm in California, or in Orange Grove in Florida, but I wanted to buy grain-producing farmland in the Midwest, because it’s pretty affordable. We buy land for 5k, 6k, 7k/acre. We produce corn, wheat, soybeans, industrial hemp… And basically, as an investor, you have the benefit of owning the underlying land, of course, and that goes up in value anywhere from 5% to 7% annually; if you look back 100 years, that’s the average, 5%-7%. It comes in waves; when there’s big inflationary cycles it goes up in a hurry, and then years like the last 10 years we haven’t seen much appreciation in farmland. So it’s kind of been stagnant, at least over the past five years. Then the cashflow is a component as well.

The real reason you invest in farms is for the appreciation, but the cashflow is tied to inflation. We produce corn, wheat, soybeans, and those are commodity crops. My investors get anywhere from 3% to 5% cashflow a year. That’s kind of the investment thesis.

The real thesis is if you believe that inflation is going to occur – and I believe it’s gonna possibly occur in a big way – this is a great way to bet on that, and be hedged for inflation.

Theo Hicks: Okay. Essentially, the primary objective is that inflation, and then a secondary benefit would be that cashflow you provide. So is the goal to eventually sell that land and then distribute a lump sum profit to your investors?

Brian Luftman: Sure. More or less. But most of the investors have a pretty long-term outlook on this. And if indeed inflation does occur, and commodity prices go up, and these farms are generating 5%, 6%, 7% returns, maybe they’ll just wanna hold on to the asset as a cash-producing asset.

There’s definitely the option to sell the properties down the road, but I don’t know; a lot of my investors are pretty long-term with this.

Theo Hicks: Okay. How do you underwrite these deals?

Brian Luftman: It’s very simple – we’re looking for the very best dirt, and you do a whole lot of assessment on how productive a farm will be. There’s a lot of tools that we can use in the industry. We use farmers a lot in the region, because farmers in that region all know where the best farms are, how to assess the properties, what pitfalls could occur, what type of capital expenditures might be coming down the pipeline when you buy a property.

We have a team of people that help us in analyzing these farms, and we haven’t really found many surprises. You’re really just buying farmland dirt, more or less. Sometimes in buildings there’s drainage involved, or logistics, but essentially it’s pretty simple, and the underwriting is how productive we think the farm will be over the next ten years.

Now, obviously, I do wanna add in that the location is an important component as well, because we’ve seen higher and better uses for some of our farms. We may be farming them now, but we think they might be developed down in the future; if that comes into play, we’re willing to pay a premium for stuff that’s on a busy road, or nearby development, because we know that that will help boost the return someday for the investors as well.

Theo Hicks: That’s interesting. I didn’t think about that. So you’ve kind of got multiple plays going on at once.

Brian Luftman: Correct. In some cases. Now, sometimes we buy a farm in the middle of nowhere that’s got very good productivity and we’re happy with that, knowing it’s gonna be a farm forever.

Theo Hicks: How do you find these deals?

Brian Luftman: Just hustling. I mean, I shouldn’t say it that way, but it’s just constantly digging, it’s cold-calling, it’s going to the PVA office (property value administrator) and seeing who owns what, driving around, networking with the farmers in the region that we wanna acquire land… And the farmers help us a lot. Our best tenant farmers — we use a lot of the farmers that grow corn and wheat for the bourbon industry here in Kentucky. A lot of our properties grow for Maker’s Mark, Jim Beam, Buffalo Trace Distilleries. These are some of the biggest ones in the country, and we provide corn and wheat for those.

So our farmers are big-time, and they’ve got a big footprint, they farm multiple counties, and they know all the landowners. [unintelligible [00:08:06].20] when they wanna expand, they don’t really necessarily have the capital to buy more farmland, but they wanna farm more farmland; so they call me, they say “Brian, you buy it. We’ll farm it.” So it’s a good relationship we have with all those tenant farmers in the region.

Theo Hicks: Are you raising capital for these deals, or are you funding them yourself?

Brian Luftman: Mainly raising capital for them, but I invest personally in every deal that we have ever done, and I will continue to do that. I like to have skin in the game along with the investors, and I’m a partner in the deal like everyone else. And they’re on a deal-by-deal basis. So we don’t do a fund, we like doing each deal — whenever we find a  farm or multiple farms in a region, we’ll put a deal together around it. It will have one finite group of partners, and they all know who each other are. Not intimately, but they know their names and how to contact each other.

It’s just that really simple way to do business, and that way it’s a majority do if we ever need to make any decisions on the property, and it’s not necessarily that we control the deal outright as the manager. It allows it to be more like a partnership deal. But they all look to our firm for all the guidance on what to do and when to do it… But there are mechanisms in place where they could even remove us as the manager, even though we put the deal together,

Theo Hicks: Okay. So do you have the same investors who will invest in every deal, or are you kind of going out and finding new investors? Either way, whether the same ones or new ones, how are you finding these investors? Is there anything unique about presenting farm deals, as opposed to some other real estate investment that you’re raising capital for?

Brian Luftman: Sure. A lot of it is people doing their own Google searches and searching out “private equity farmland manager.” I don’t really have any competition in this space. There’s a few other firms that do this, but very few will do it for the lower minimums, like we do. For that matter, if someone’s looking for what we do, we’re kind of the answer. There’s not many other companies; if someone wanted to invest say 50k or 100k or 200k into a farmland deal, there’s very few options.

So with people searching it out themselves – which we love; those are the most loyal clients… They found us, we didn’t sell it to them; they wanted to put farmland in their portfolio, and they’d done the thinking and the work to understand why they wanted farmland, and they came to the same conclusion that I did – they wanted inflation protection, a real asset, they wanted a non-correlating asset; something that will do well when the economy is doing poorly.

So those are really loyal customers and clients, and they actually tell their friends. So it’s been a little bit of a network effect on how people — not a network effect, but just kind of a web that’s growing of the people that like to invest in these deals. Does that make sense?

Theo Hicks: Yeah, that makes sense. I know for Joe’s syndication business that’s his number one way of getting new investors – that referral network.

Brian Luftman: Right. Obviously, we do public relations a little bit; we had an article in U.S.A. Today, the money section, a couple years ago… That got some really good outreach and a lot of people learned about us through that. Then podcasts like this, so I appreciate you having me on. I think if it strikes a chord with one of your listeners, they can call and maybe they’ll become a loyal client if they like it. It’s not for everybody, farmland investing; it’s a low return.

People can get much better than the 3% cash return in the market, I’m sure. Many of the podcasts that I’ve listened to on Joe’s and your podcast have much higher returns that ours, but ours fits a niche, for a reason, and we have people looking for us, too.

Theo Hicks: Yeah, I actually have a neighbor who — I’m not necessarily sure what the company name is, but he works for a pretty big bank, and he works on their farm division… So he buys land down here in the Florida area, and in the Midwest, too. So now I’ve got more information and I can talk to him about that, because I know what I’m talking about now.

Brian Luftman: Absolutely. You can teach him some stuff.

Theo Hicks: There you go. So do you mind walking us through specifics – the acquisition costs, just any numbers surrounding a recent deal, your best deal, or your first deal, and kind of just walk us through some of the numbers.

Brian Luftman: Sure. It’s really simple. Basically, our first deal looked a whole lot like our recent deal, and I’m really proud of that. We structured this perfectly right out of the gate, and we’ve just kind of hit the Copy button [unintelligible [00:12:04].08] to do each one… Because it’s really simple – we buy a farm that we hope will cash-flow a gross return of somewhere between 4% and 5%. We used to do better than that when grain prices were higher, but they’re not right now. Coin and wheat and soybeans prices are very low, for multiple reasons. There just hasn’t been inflation, commodity prices are down in general. Oil – I mean, you’re paying below $3, below $2,50 in some cases at the pump right now, and that’s a deal. So our cashflow is not really great. But the 4% gross, and then basically our expenses out of that – we don’t even take 75 basis points as a manager fee… And then there’s other costs associated, and then that return ends up being about a 3%, if that makes sense. So it’s as simple as that. If we did a ten million dollar deal, we can lease those acres out to farmers to generate about $400,000 worth of income; all the fees, and costs, and legal, and everything else amounts about 100k, and then 300k is distributed to the investors. Does that make it as simple as possible for you?

Theo Hicks: Yeah, that is simple and straightforward.

Brian Luftman: Yeah. So if someone invests a half million dollars in that deal, they own 5% of it, they would get 5% of the 300k, and it all works out. And then they’d get 5% of the upside on the sale.

Theo Hicks: Are you buying this with all cash, or is there a bank involved?

Brian Luftman: Yes, all cash. We like it that way, it’s incredibly simple. There’s a little bit of a doomsday component when you invest in a farm. It takes a person that’s a little bit thinking on the doomsday component, like “Hey, if everything else fails, I’ve got a real asset.” Those type of folks – that’s not all of our clients, but they like to have an asset with no mortgage debt on it whatsoever, and own it outright.

Theo Hicks: You’ve gotta know your customer.

Brian Luftman: Exactly.

Theo Hicks: Alright Brian, what’s your best real estate investing advice ever?

Brian Luftman: It’s simple, I think it’s quality. That can boil down to the quality location, or quality building, or quality farmland. It doesn’t matter what you’re in. And that doesn’t even have to be for real estate; in anything that you’re spending money on, if you own something that is quality, there’s gonna be someone who wants to pay more for it down the road than you paid for it… And I’ve put such a premium on buying the very best of farmland, because I’ve seen it already. We’ll overpay for something because it’s in a phenomenal location, and the next thing you know, someone wants it more than I did.

Theo Hicks: Simple, but very powerful advice. Are you ready for the Best Ever Lightning Round?

Brian Luftman: Yeah, I am.

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:14:35].27] to [00:15:21].21]

Theo Hicks: Alright, what’s the best ever book you’ve recently read?

Brian Luftman: A friend told me to read Max De Pree’s The Art of Leadership, which is an old book… And I was sunk into it with one of the first lines, which said “The first responsibility of a leader is to define reality, and the last is to say thank you.” I loved it. I was like “That’s so elegant; really just boiling it down to defining reality is so important in life, and so few people have that art or that skill, so… I really like that book. It was powerful.

Theo Hicks: If your business collapsed today, what would you do next?

Brian Luftman: I’d start a new business. I’m so entrepreneurial… I just love starting businesses, and I would find whatever was next very quickly, because I love running my own business, and doing it my way, and trying to add value to other people as well.

Theo Hicks: If you were starting in farmland investing today and you had little or no capital, how would you grow that business?

Brian Luftman: I guess I’d do exactly what I did ten years ago, which is… I didn’t have much capital to do it, but you find a great property that you can put a deal around  – and I think this goes for anything in real estate… If someone wanted to get into commercial private equity purchasing to build a big commercial private equity fund, all you’ve gotta do is find the first really good deal, get excited about it, and then start selling it to people that have a little bit more money than you do, and the next thing you know, you’re up and running. That’s what I did with farms, and I think that’s a great recipe for success in real estate. I think it’s “Find a great deal, and then get people excited about it to invest with you.”

Theo Hicks: What is the worst deal you’ve done?

Brian Luftman: I guess the smaller deals… I get excited about finding value in something that’s small, and I’m excited about it because it’s a good value, but it ends up being more of a nuisance. I’ve bought a couple of smaller farms, and they’ve been good performers, but they’ve taken a lot more of my time than the bigger ones have, and financially speaking or time-wise it wasn’t necessarily worthwhile… So I’ve tried to stay a little bit bigger and tried to focus on spending time in the right way.

Theo Hicks: And lastly, what is the best ever place to reach you?

Brian Luftman: It’s gotta be my website, americanfarminvestors.com. My email is on there, and I welcome anyone. If you ever have a farmland question or wanna learn more about this, just shoot me an email and I will respond. That’s the best way to get me.

Theo Hicks: Alrighty, Brian. Thanks for coming on. This has been a very fascinating conversation, learning the ins and outs of investing in farmland… Just to kind of quickly summarize what we discussed – we talked about just the overall business plan of investing in farmland, which is it’s primarily an inflation play, where you’re investing in land that grows commodities, in your case farmland that’s producing grains. We talked about, on average, the value of the land has grown 5%-7% each year historically.

And then secondarily it’s the cashflow play, which is between 3% and 5% each year. We talked about how you underwrite the deals – essentially, you’re looking at how productive the dirt is gonna be over the next ten years, and you rely on farmers, because they’re the most knowledgeable of the business, so they help you with the analysis.

We’ve talked about how you find a deal, and you said it comes down to hustling – cold-calling, going to the PVA office, networking with farmers, and obviously having farmers who know you reach out and say “Hey, you buy this land and we’ll farm it.”

We talked about how you raise capital for farmland deals – you don’t do [unintelligible [00:18:39].04] it’s more of a deal-by-deal basis. The most loyal customers are the ones who are doing that Google search and are actually looking for those kind of investments. You don’t really have much competition in this space, so if they google search, then you’re the answer. You also find investors through those referrals, and then some PR – you had an article in U.S.A. Today, and you also go on podcasts.

Then we discussed your first deal, which as you said, is very similar to your most recent deal; it’s kind of a copy and paste strategy, where you buy farmland that will have a gross return of 4%-5% each year. You buy a ten million dollar property, you gross about 400k; after about 100k in expenses, you’re left with 300k in cashflow. And you do not do banks, you buy these properties all cash.

Then lastly, you gave your best ever advice for real estate investing – and just life in general – which is if you’re spending money on something, make sure it’s high quality, because someone’s gonna pay more for it down the road if it’s that high quality.

Again, Brian, thanks for coming on the show today, speaking with us about farmland investing. Thanks to everyone who listened. Have a best ever day, and we’ll talk to you soon.

Brian Luftman: Thanks, Theo.

Tony Delk and Joe Fairless

JF1099: Using Basketball Lessons From Coaches like Rick Pitino to be Successful After Basketball – with Former UK Great Tony Delk

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Basketball great Tony Delk stopped by to tell us about lessons learned in the NBA and at UK. From choosing friends, vetting investments, importance of having a strong support system and family, and more best ever advice. Tune in to hear how he was able to get through his worst year ever, and coming out better on the other side. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet: [spp-tweet tweet=”It’s always difficult  “]

Tony Delk Background:
-Former 10-year NBA veteran and University of Kentucky All-American
-Former college assistant coach, most recently for the New Mexico State Aggies men’s basketball team.
-ESPN/SEC Network College Basketball Analyst since 2014
-Team leader of the 1996 University of Kentucky Wildcats team that won 1996 NCAA Men’s Division I Basketball Championship Game.
-After college, he played for seven NBA teams over ten seasons.
-President of the Taylor Delk Sickle Cell Foundation, which is named after his daughter, who has sickle-cell disease.
-Delk’s “00” Kentucky jersey was retired in Rupp Arena on Feb. 20, 2015.

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Joe Fairless: Best ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluffy stuff. We’ve spoken to lots of successful real estate investors and entrepreneurs, from Emmitt Smith (Hall of Fame football player) to Barbara Corcoran (Shark Tank) and a whole bunch of others, and I’m pleased to say we have a basketball stud in the house. How are you doing, Tony Delk?

Tony Delk: I am doing well, thanks for having me on, Joe.

Joe Fairless: My pleasure, nice to have you on the show. Obviously, best ever listeners, you know Tony Delk, but in case you’re not a basketball fan, here’s his bio, very briefly. He is a University of Kentucky grad, he was an All-American there; he is also a member of the school’s Athletic Hall of Fame. He helped the team win a national title in 1996, and then he went on to have 10 successful years in the NBA. 3-4 years ago he joined the ESPN SEC Network as a basketball analyst. He also is the president of the Taylor Delk Sickle Cell Foundation, and he is involved in a lot of other entrepreneurial endeavors.
With that being said, Tony, do you wanna give the Best Ever listeners a little bit more about your background and some of the projects you’re working on right now?

Tony Delk: Most definitely. I’m from a small town, Brownsville, Tennessee, born in 1974. And to come out of that small town speaks volume for not only the town I come from, but for my foundation of having great parents that were married for over 50 years, brothers and sisters who brought me up and treated me as their own. They were 15-20 years older than I was, so I had a good foundation from brothers and sisters, mom and dad, and just the town embraced me as a kid. Brought up in that small town of Brownsville, Tennessee I learned a lot; having older parents that went through a lot, it allowed me to understand the importance of hard work.

Then leaving Brownsville, going to the University of Kentucky, playing there for coach Pitino was probably one of my definitely top two coaches that I played for. He taught me the game – the mental aspect, as well as the physical aspect, and he prepared me for life after basketball. So we not only went in looking at me being an 18-year-old kid, but what can I do once I finish playing basketball? We discussed that and talked about that at length, and when I became a senior, he set me up with a really good business manager who’s been my business manager since 1996. It’s just been a lot of good things that have happened over my span of not only playing basketball, but on this Earth.

Joe Fairless: Let’s talk about some of the things you’ve mentioned… You said that when you were at Kentucky, Rick Pitino the coach helped prepare you mentally and physically for life, not only during basketball, but then after basketball. What are some of the things that were either taught to you or that you experienced that helped prepare you?

Tony Delk: I think the most important thing that he taught me was not to let money define who you are as an individual, and to stay humble. That’s something that having older parents, but also parents that didn’t require a lot, it kept me humble. Once I was able to make a lot of money, it didn’t change who I was as an individual. I think there’s so many layers that players get away from once the money comes, and the fame and the traveling, being on TV… It really changes who the individual is, but I always say if you have a good foundation, you keep a good circle of friends around you – that’s something else that I learned from him early… His circle of friends became our circle of friends. That’s what I enjoyed most about him. He didn’t allow us to go out and meet new friends that were adults that could take us away from being who we were, or give us money, or give us a thing that we needed at that time, but he made us work for it. So everything was earned. He always made a statement that when something is given, it can be taken away, but when it’s earned, it’s yours. I’ve always taken that motto to wherever I’ve gone. Even when I speak to the kids, I always tell them – listen, the most important thing is hard work. You have to put so many hours in… And when you put those hours in, it’s earned, it’s not given to you. If I give you a starting position and you didn’t earn it, a player can come in and beat you out at that position, and then that teaches you about life. Life is about competition, and the earlier you know that, the better you’re gonna be as you transition out of whatever career you’re in. You’re really prepared for whatever challenges that will take place.

Joe Fairless: You mentioned the circle of friends, and clearly this is applicable to any entrepreneur or real estate investor, that’s why I say in us, too… So let’s talk about in your situation – how do you determine who your circle of friends that you wanna surround yourself will be?

Tony Delk: Well, I think for guys that make it to the NBA, NFL, major league baseball, hockey, whatever profession that you go into – it’s always hard to figure out “Which friends do I take with me as I go along this journey of life?” I like to look at guys and consider them to be assets. Liabilities are the ones that are constantly going out, they never get the check, they’re always mooching off you, they want free clothes, they want free gear, they never pay for gas… They like everything if it comes free to them. But I like that friend that I know is willing to get out and work, because at some point in time — let’s say I’m 18, I go to college, I finish, I’m 21-22, and now my life begins, so I don’t need to be taking care of other people that are not my kids.

The most important thing is my friends that I grew up with from maybe 5 years old up until now, they are still my friends to this day, and there’s three guys that I talk to probably once or twice a week, and nothing’s ever changed. We’ve gone on to become parents and gone on to different careers, but what we’ve always kept is a great friendship, and they never need anything from me. So I think the friends that you consider to be assets are the ones that never ask you anything, and when you do, you know they’re gonna give it back, or they really need it.

We always established that relationship that if any of us ever made it – and I was the fortunate one to make it – that my line, my phone, you can always reach me. Those guys know that no matter where I play basketball, if they come and see me, they bought their tickets, they’re coming to town… I said “Listen, get to the town, to whatever city I’m in, and I’ll take care of everything else. I just need you to at least make some commitment, to find something.” That’s what they’ve done, and like I said, they’ve been my critics, but also they’ve been guys that have been truthful. When you have a circle of friends, you need to have friends that hold you accountable.

Joe Fairless: I love that.

Tony Delk: You mentioned earlier Rick Pitino was number one or two on the coaches you said you learned the most from – I don’t wanna put words in your mouth, but I think that’s what you said. Who’s the other coach?

Joe Fairless: I really enjoyed Scott Scowls. When I left Sacramento I was in a great situation, playing with the Kings, playing with the likes of Vlade Divac, Peja Stojakovic, Chris Webber… We had a really good team, and I enjoyed just playing with those guys, it was a family. It took me back to Kentucky, just how we played together. And what made coach Pitino so special – because I spent four years with him, so he got to know me in and out; the other coach was Scott Scowls. I only got about a year and a half with Scott Scowls, but he believed in the hard work. He was a role player like myself, but he allowed me and gave me an opportunity to go out there and play the game that I was capable of playing, and probably should have been playing if I was with the right coach. He allowed me to be a role player and wanted me to be a scorer, to play with freedom, to play hard on defense… So of all my coaches outside of coach Pitino — and I played for a lot of really good coaches, but Scott Scowles — when I left with this situation in Sacramento, it was gonna have to be a better situation for a coach that understood my game and allowed me to play my game.

Joe Fairless: Let’s talk about your game. What would you say as a basketball player would be the best part of your basketball game? There’s gonna be a couple of follow-up questions, so I’m not just curious, I have a purpose for this.

Tony Delk: I think the gift that I had early, even going back to middle school, was that I could always score the ball. That was a knack, and that was something that I loved to do. I did it well throughout my career. NBA was different because I was traded a lot and I really didn’t get the chance to showcase everything I could do offensively, but also you’re going in a situation where there are franchise players, and those players are paid a lot more money than I was getting paid. The system – they sell the seats, sell tickets, the fans come and watch… And I understood that. I understood my role. I wasn’t a guy that knew when I came in, “Oh, you know what? I wanna be the star player.” If it happened, it presented itself, I would have been more than willing to take on that challenge, but everybody position I was put in, I considered myself a role player. But when I was sent out there to be a starter, I could tread on both ends of the court, and that’s something that coach Pitino really brought me — it was the defensive side of basketball. He knew I was a prolific scorer in high school, but he always told me, “Listen, if you’re gonna have a career, you’ve gotta be able to play both sides of the ball.” He allowed me to play offense, but he really pressured me to play defense.

Joe Fairless: And that leads into my follow-up question… Knowing that — you said since middle school you’ve always been a scorer… Would you be best in the NBA if you focus more on your scoring, or more on the areas like defense (or whatever) that you’re not as naturally good at?

Tony Delk: When I got drafted by Charlotte Hornets, it was more to be a point guard… So that part of my game had not developed the way I needed it to. It came in the latter part of my career that I became a better distributor, someone that could play off the pick and rolls, someone who could play with the ball in my hand, make it play and being a facilitator to my teammates. But I think early on, even going through high school, I always played with the ball in my hand, so that was a transition that was hard even going to Kentucky my first year, playing with Jamal Mashburn, where everything went through him. As a freshman, I didn’t play much, so the first thing I was thinking about was “Hey, you know what? I need the ball in my hand to be successful. If I’m not touching the ball, Jamal Mashburn is getting all the touches, Travis Ford is getting all the touches… Here I am as a freshman and I’m watching my peers play, I’m like “Wow, my game can’t be that far off.” But also going back to coach Pitino, he taught me how to play without the ball. So he taught me how to play coming in as a scorer, but he also taught me how to play without the ball in my hand, to be effective using screens, being able to come off the pick and roll, stagger screens.

Then once I got to the NBA, my first season with Charlotte Hornets, they wanted me to be the point guard again, and once again, I went for a four-year stretch of being a shooting guard on the court, and now I have to get the ball to Vlade Divac, Glen Rice, Dell Curry, Anthony Mason, and I just wasn’t as comfortable as I was the latter part of my career. So that was me figuring out how to play that position. But when I left Sacramento to go play with Phoenix, I got a chance to watch Jason Kidd, who I thought was the best point guard I ever played with.

Joe Fairless: So now that you’re retired from the NBA and you’re an entrepreneur/businessman, where do you put your focus in terms of — there’s a lot of skillsets that are required to be an entrepreneur and to be successful in business… So do you take the approach of focusing on what you’re naturally good at, and then not focusing as much on the weaknesses, or do you want to try and work on all the things and you don’t go all in on your special skillset?

Tony Delk: Well, I think you work on all the aspects of becoming a good businessman. I think the most important thing was one of my partners — I’m the CEO of a company called [unintelligible [00:14:13].02] was named after my partner’s grandparents. He started a company in 1995. What he started doing was fabricating, and when he brought myself and a really good friend, he wanted us to come in and learn the business from his side, and kind of see how we worked. He said “The best advice I can give you – you need to know how the business runs.” That’s what I’ve been focused on with my business venture with Lawrence [unintelligible [00:14:37].08] What we’re doing is we’re a minority company, and we’re supplying material to different projects [unintelligible [00:14:45].00] So I’m learning what he knows and just getting the knowledge from him. He’s been a good mentor, a good business partner because he’s bringing me along slowly, and he always said “It’s better to get a bunch of singles, doubles and triples, and not always try to bet for the homerun.”

It’s a process that we’ve been going through, but it’s been fun just to learn how corporate America works, and him being a successful businessman for over 20 years, he’s someone I can pick up the phone at any point in time and call. He’s an honest person, and I know he’s been successful in his business. When you become an entrepreneur, you wanna make sure – like I said earlier – that you surround yourself with good people. You’re not gonna know everything about the business. That’s one of the reasons why if you look at the ownership team, you have a president GM, assistant GM – those positions that guys are in… And you have to know your role.

When he put me as the CEO, he’s like “Tony, I don’t need you to get deep in the weeds. Make sure before that happens we have a discussion, as well as a discussion with all the partners in this business venture.”

Joe Fairless: When you talk about the different lessons that you’ve learned so far, in both business and then also NBA and in college, it makes me wonder, while you were in the NBA, I suspect you were preparing for life after the NBA… And I’m asking this question for all the Best Ever listeners who have a full-time job right now and they want to either transition out of it or they’re looking for retirement… How did you prepare for life after your occupation in the NBA?

Tony Delk: It’s always difficult, and I can go back to when I first signed with my financial guy, Rick [unintelligible [00:16:31].22]. He had this 15 or 20-year plan with my money. I’m thinking to myself, “I’m 21, 22… I’m gonna play basketball forever. How can I not play this game for the nxt 20-30 year?” So at that age you’re not really thinking about 35, 40, 45, 50, because you’re so young and you have a different mentality. Going back to my parents, we grew up poor; we didn’t have money, so my parents really couldn’t prepare me for being in the position to have a lot of money, or to be in the middle class to see how the workforce work, how corporate America works, how investment works… So all of that was learned on the fly for me.

Rick [unintelligible [00:17:09].11] who was a really good mentor, friend, financial guy – he was teaching me along the way about investing in something that’s gonna last 15-20 years… And not only that, but when you get done playing basketball. Because this is gonna end for everyone. That’s the million-dollar question – no matter how good you are, from Michael Jordan to LeBron at some point in time, Kevin Durant… It is for all of us. What’s the next transition that you can get into that’s important for you, but also gives you time to enjoy life? Because you’ve probably made a lot of money, you have devoted all the time to this particular sport because you really loved it… To get really good at something you really have to devote a lot of time, sacrifice time where you might wanna go out and hang out with the boys, the fellas, take trips, but you’re working on your craft. When it gets to the end — not even to the end… I knew at about 28 that in about five years I will be finished playing basketball, because my body was taking a beating.

Also I knew, “You know what? I gave 15-20-25 years to this sport from starting at five years old, and I’m getting tired of it, so I want to transition into something else.”

Joe Fairless: As far as your time goes for the amount of hours you work now, is it more or less than when you were in the NBA?

Tony Delk: Oh, a lot less. You have to work smart. You don’t keep working those same hours.

Joe Fairless: How many did you work in NBA?

Tony Delk: NBA? Man, I would say during the week and counting games probably about 30-40… Because I was a player and I loved being in the gym, so when the summertime season was done [unintelligible [00:18:39].26] we’d go into the playoff, and all of a sudden when I take a week off, I’m back playing basketball. I guess it was the love of the game, and if I could have maybe done it all over again, I would have rested my body. I would have maybe taken up golf as a hobby… I would have done something else to reserve these legs, because — even though I can go out and play now, the next day is when it’s the most painful.

When you’re getting towards the end of your career, and as I went out and watched some of the guys in the summer league, some of the guys who were better, what I saw from those guys is more maintenance; shooting, ball handling – just the fine points of the game, and not the physical contact. But I needed the physical contact to solidify me just being on the court, just being involved with the game. It was easy to go through drills and shoot and make shots, but I wanted to have a contact, and that’s why when we finished and it gets towards the end, you miss competitiveness, but also you miss the contact of playing and going against guys.

Joe Fairless: Based on your experience as achieving at a high level in your profession, as well as an entrepreneur and businessman, what is your best advice ever for real estate investors?

Tony Delk: I would say when you’re investing make sure you can drive to your investment. That’s something that I was taught early – you can become a millionaire just in your state, your city alone; you have to find the right land, you have to do your research. Once you do your research, you get with a realtor and you have a vision, and that vision doesn’t have to be 10-15 years, but even when I was taught early with my investments, the first thing someone told me was “When you make an investment, make sure you can drive to see how it’s operating on a day-to-day…” Because you can put your money into something, and before you know it, you will be involved with another project. But to see a project grow from start to finish, and particularly someday sell that project… That’s the goal of myself now as I get involved into different investments – I want equity in the company, just in case that company sells for, let’s say 150-200 million, I wanna have a percentage of it, so I can say “Hey, you know what? I benefitted from putting my own money in, but it’s also an investment for my family, my kids, maybe my grandkids. I have to look further than just where I’m at right now; I wanna think about “How can I create generational wealth for my family, being in the position that I’m in?” and it all starts with the opportunity and knowing the right people, and timing.

Joe Fairless: Last question on this front, then I wanna ask you about any challenging times you’ve come across… But on the right people part, you mentioned the assets and liabilities, which as real estate investors resonate with us very well (we totally get that) – is there anything else other than that that helps you screen team members out? Because I suspect now it’s an evolution of how you select which opportunities. I think people are going to attempt to show you that they will be an asset and they won’t mooch off of you… Whether or not that’s true or not, who knows…? But how do you screen that out now that you’re at a different level?

Tony Delk: Well, the level is the age factor. A loss at 20 is totally different than a loss at 40. A loss at 20 – I have time to recover, but at 40, you basically have accumulated everything leading up to this point; all of your money and all your investments – you have built that over time, so to go on and invest with someone, with your life’s savings and you’re 43, see something that’s gonna be profitable somewhere down the road and say “Hey, I’m excited about this adventure, this project. I’m gonna put all my money in” – you wanna think about it, because it’s not only about your right now, it’s about your family, it’s about your kids; it’s about maybe their kids. It’s like putting your family in a bad situation because you’re excited about an investment. So once again, it’s to research — it’s talking to the people, seeing “Have they gone bankrupt? What have they done? Have they been successful over time? Where are they at to this day?”

When you’re 20… I was excited about anything. Friends came with different ideas – a car wash, restaurants… All these great ideas, but guess what? No one came (the elephant in the room) with the money. I was the money man. So you would take an investment at 20 because you really don’t know a whole lot about it. You know it sells good, helping a friend out, “Let me do this. If I make money, great. If I don’t, not a big deal. Maybe I won’t have to deal with their friend anymore because he owes me debt now.” But as I’ve gotten older, I take my time. It’s a phone call, researching, talking to people… It’s more about understanding — you have an opportunity… There’s always gonna be opportunities out there, but which opportunity is the best for you at that time? And I always say, do something that you like and you love. If you love it, that means you’re gonna be all in; you’re gonna wanna see that project grow. That’s kind of how I wanna see my projects now. If I’m gonna be involved with it, I wanna be there to the day-to-day, but also I wanna talk to the people who’s running the company. And as I said earlier, I wanna be able to drive to the project and just maybe pop up on some people and not let them know I’m coming.

Joe Fairless: I’m gonna ask you the opposite question here in a little bit, but what’s the most ridiculous investment that you’ve made? You mentioned a car wash, where people don’t have the money and you fund it… What’s an investment gone wrong for you?

Tony Delk: The first investment that went wrong was me giving my brother — I think I gave my brother maybe 15k-20k [unintelligible [00:23:58].25] I was like, “You know what? He’s probably got a good idea. I wanna see my brother making money.” So I gave it to him. I made him sign a loan… It was like, “Hey, this is what I’m gonna pay you back…”, which I pretty much knew I wasn’t getting my money back. But he had this great idea about the car alarm. It’s like, “Hey, you know what? This car alarm – if people walk by and touch your car, this alarm is gonna go off.” It was a system that he came up with in 1996, and I’m thinking to myself “They’re already out. I know people have that already.” [laughter] But you know what? I didn’t wanna kill my brother’s dream. “Here’s the money.”

Long story short, three months down the road, I knew I wouldn’t get my money back. He never said anything about those alarms again, so I knew it was a failed investment by him… But it was basically me giving him some money for kind of being a mentor, a brother, and helping me out along the way.

Joe Fairless: Absolutely. And what a relatively speaking inexpensive lesson, if you learned it there and not on something much larger later down the road.

Tony Delk: Exactly.

Joe Fairless: Yeah, so you should actually thank him and maybe give him 15k more just because he saved you money in the long run.

Tony Delk: Well, you know what? To be honest with you he really did, because after that I knew that I wasn’t gonna invest with family and friends anymore. So you’re right, instead of him — like you said, it was a valuable lesson learned, but also I think when you have family and friends and you see them struggling to come up with good ideas, the good in me, I wanna help people. Because even if it turns out bad, I’m still gonna have a smile saying, “You know what? My higher power… I wasn’t in control of what it did and who I gave it to, but he was happy with me giving it freely.”

Joe Fairless: Absolutely. That’s a great story, thank you for that. Okay, so what’s a challenging time you’ve come across? Because everything’s not always rosy, right?

Tony Delk: No, it’s not. I think I would have to go back ten years when I was at the end of my career. As a matter of fact, I was playing overseas in Greece, and that was my last professional year. I’ll never forget getting a phone call from my niece; she called me and she told me my mom had gotten really sick. At that time I didn’t know to what degree she was sick; she said “You know what? You have to come home now.” So I’m leaving Greece, I had to fly back to New York, drive from New York to Memphis, drive from Memphis to a hospital that’s about an hour and a half from Memphis, and just really coming to my mother’s deathbed. I’ll never forget walking in and just seeing her waiting on me, because I was the last of her eight kids… She basically stayed around and she was like “Listen, I have to wait to see my baby.” It was probably the most trying time in my life, just to come in and be at my mother’s deathbed… But just to notice she was holding on, just waiting for me to get there, just letting me know of the sacrifice, the love and the commitment… When you have a strong mother like that, and to see her in that position — I would tell anyone, until you’ve lost a parent, you don’t know of the devastation of losing a mom, and just the connection that we had…

I would talk to my mom pretty much every day. As I got older, I became closer to her because I knew he was aging. When you become an adult, there are some things, you wanna pop off your parents, or call them and get some advice on… She never told me anything wrong. I loved that woman from the day I was born until the day she passed. That was tough.

Also, I was going through divorce at the time, I didn’t know if I was gonna finish basketball, my third child was born… So 2007 was a trying time for me, but God was with me throughout that whole ordeal. It started with my mom just giving me that foundation of believing in a higher power and just believing that God is gonna get you through anything.

Joe Fairless: Is faith the main thing that helped you and continues to help you through any trying times?

Tony Delk: It’s not even close how much I believe in God and just the importance of having a higher power that you can look up to that you can pray to at night, that you can talk to when you need someone to speak to. That started with my mom. I can remember coming home from college; on Saturday nights you might go out and have fun, but Sunday morning you’ve gotta get up and go to church. There’s no “Oh, you wanna sleep in until 11.” You came in the house whatever time Saturday or early Sunday morning, but whenever it was time to go to church, mom came and knocked on the door, woke me up, “I need you to go to church.”

I think having the foundation early in life and keeping me humble… But it started with just how much she believed in God and her commitment to the church we went to. She would go every Sunday, and she was a strong believer. As  I look back, when I was growing up, I didn’t think about it at the time, because you’re so young and all you’re thinking about “Wow, I have to go to church…” You’re only giving two hours to God on that Sunday, so you have to think about how much more time that’s needed to be committed or to be loyal to someone who is gonna watch out for you and take care of you whenever you need it.

Joe Fairless: Thank you for sharing that. Alright, we’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round? First, a quick word from our Best Ever partners.

Break: [00:29:02].26] to [00:30:03].06]

Joe Fairless: Alright, Tony, I have got some questions from Best Ever listeners who have some questions for you. You don’t have to be like rapid fire answers… So here we go.

I believe you went with seven NBA teams in ten years. One pro and one con for being with seven NBA teams in ten years.

Tony Delk: You get a chance to visit a lot of different cities, and when you move it doesn’t cost you anything to move. For me, just being in all the different parts of the country for free.

Joe Fairless: Okay. A con?

Tony Delk: New team mates, new systems, new players, you have to get acclimated with the city… As I moved, I was thinking about “Where am I going next?” After one year, “What’s the next destination? What city will I be in? What team will I play for?” But I’ll tell you the good thing about it  [unintelligible [00:30:47].27] are still with these teams, so whenever I pick up the phone I can call and I can get free gear.

Joe Fairless: [laughs] Speaking of cities, what’s the best ever NBA city to visit and why?

Tony Delk: That’s a tough one, but I’ve gotta put Miami. You’ve gotta love Miami. The scenery, the weather… Just being able to get out on the beach if you need to, the nightlife is glorious… I love warm weather.

My second favorite city would have to be Phoenix. I love Phoenix. Phoenix is a place that when I left Sacramento, it was going to a place where I always wanted to live; I love the desert, I like the atmosphere, and [unintelligible [00:31:29].23] now you get to see the cactus, the dessert, stucco homes… I enjoy being in Phoenix. The city that most players love to go to – Miami.

Joe Fairless: You might remotely strangle me when I ask you this question – best ever SEC to root for not named Kentucky?

Tony Delk: You know what? That’s tough, and I’m gonna tell you, the reason why I will say at that time Florida Gators would be Billy Donovan. Billy Donovan was the guy that started to recruit me as a sophomore out of Haywood High School in Brownsville, Tennessee. So if it wasn’t for Billy Donovan, I never would have gone to Kentucky, so I have to say Florida Gators. He was the one that got me  [unintelligible [00:32:11].04] Kentucky. He was a brother to me when I wasn’t playing, and he was also a mentor, a friend, and someone who I knew was gonna be a great coach, because of his work ethic and his love for the game of basketball. So it would have to be the Florida Gators.

Joe Fairless: Best ever SEC town to visit?

Tony Delk: I would have to say — I like Nashville. I think Nashville even to this day, with  [unintelligible [00:32:34].23] has always been a city that’s grown over years, they have great restaurants, and plus it’s my home state… So I have to go with my home state. I will say Nashville.

Joe Fairless: Most challenging part of being a basketball analyst?

Tony Delk: You know what? Not being so biased when it comes to Kentucky. Because you wanna see your alma mater do well, but also you have to speak the truth when the truth needs to be spoken. Big Blue Nation don’t always accept the truth when it comes to Kentucky. I think that’s the hardest thing for me, just trying to — the balance between being an analyst and also being a Kentucky fan. That’s [unintelligible [00:33:19].00] when I’m in studio.

Joe Fairless: Best ever investment you’ve made so far?

Tony Delk: Best investment I’ve ever made… I think probably John’s Pizza has done well for me for about 15 years now, and counting. At the time, I really wasn’t a big Papa John’s fan. Once again, as I say, you might not like the pizza, you just have to know how the business runs, and if it makes you money, just let it make money the way it’s doing, and whether you eat the pizza or not, who cares?

But that was a great investment that I made early in my career, and I’m still benefitting off of that to this date.

Joe Fairless: What’s the best ever project you’re working on right now?

Tony Delk: I actually have two projects I’m working on. One with my girlfriend Nicole [unintelligible [00:34:00].08] we haven’t totally committed yet in this wine industry; I’m doing my research, but I’m very interested in the potential that it has with my name behind it, but also just being to brand it… I’m right in the South-East, so I’m excited about that opportunity that’s ahead of me. The IMAC Regeneration Center that we’ll probably be opening sometime next year in Lexington, Kentucky, with my name behind it – another project that I’m extremely excited about, as it helps out the middle class, the older generation with stem cells, Platelet Plasma, chiropractic [unintelligible [00:34:35].20] There’s so many different things that’s under one roof with the IMAC Regeneration Center that we’re really excited.

I got a chance just last week to go to the Ozzie Smith IMAC Regeneration Center in St. Louis, and then the David Price Regeneration Center in Nashville. So just seeing how those two projects are working, from the employees to the owner, the founder Matt Wallis… Just having a great conversation over the last week with good people, meeting their families… That’s what you have to do when you get yourself involved with projects – get to know the people, family, friends. You need to talk to those people, because I wanna be connected not only because of the money, but I like to know that it’s family-oriented and it’s something that’s gonna benefit all the people involved. If you don’t take care of your employees, they don’t take care of your clients.

Joe Fairless: Great business advice, that’s for sure. Tony, how can the Best Ever listeners either learn more about what you’ve got going on, or follow what you’re doing? Where can we send them?

Tony Delk: Twitter, @tldelk00. That’s where you’re gonna find me at, I’m on Twitter. I do tweet back occasionally. I love to retweet… [laughter] If I see a good quote, I’m definitely gonna retweet it. I think if this goes along, I’m planning on doing a lot more tweeting and maybe shooting some videos in these training camps, being a mentor… I wanna have some footage and give my Twitter followers some content and what I’m doing, and let them know that I’m still relevant, I still love the game of basketball, I love teaching it… I’m trying to be the best entrepreneur that I can possibly be for the year 2017 going into the future.

Joe Fairless: Well, lots of life lessons that you shared with us, thank you. I’m very grateful, and I know the Best Ever listeners are really grateful for you spending some time with us.

Tony Delk: Thanks man, and maybe we can do this again down the road.

Joe Fairless: Yeah, I love it. A couple things that really stood out to me… One is just the foundation that you come from – you mentioned your parents were married for over 50 years, and how you’ve gone through – like most people – challenging times. You shared a couple, I’m sure there are many others that we didn’t have time to share… But having the foundation, and then how as your career has evolved and you made more money, how you had to identify the right people to bring with you… And I love the assets and liabilities – it’s so straightforward… Just assets and liabilities – are they adding value to the relationship in their relationship with you?

Tony Delk: Dating, too. Don’t forget that [unintelligible [00:37:02].00] whenever you’re dating, trying to find that wife-to-be – is that asset or liability?

Joe Fairless: That’s true. There’s a pun there, but I’ll leave that alone. And then with the best advice that you’ve got in terms of running businesses – know how the business runs… You don’t need to know all aspects of it, but know how the business runs, and I love the philosophy of “If something is given to you, it can be taken away. If it’s earned, it’s yours.” Thanks for being on the show. I have you have a best ever day, and we’ll talk to you soon.

Tony Delk: I appreciate it.

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