Podcast appearances and mentions of james all

10.2 Summary: We kicked off our new series, James: All up in your business. James wrote a letter to share his wisdom with the scattered believers of the first century. In his letter, James didn't set out to share something new with his audience, but rather attempted to challenge how they lived. James starts off his entire letter by addressing that when we face trials of many kinds, it will test our faith; but if we persevere, our faith will be matured.

Lori, Jessie, Christian, and James ALL got their questions for Gary answered! We love hanging out with him and you do too! Check out more with Gary at gayspivey.com or call 1-800-827-GARY

Gran Podcast de Radio Baluverxa del mes de Marzo con todo el Surfing de este final de Invierno 2021, que es el siguiente: 1-Resumen Invierno 2021 2-James - All the colours of you 3-Comienza el mundial con 4 eventos en Australia 4-Jon Batiste - We Are 5-QS 3000 Vissla Central Coast 6-500 mangas de Adriano de Souza 7-Baby Queen - Estas Drogas 8-Rip Curl 3 años patrocinador finales WSL en Lowers 9-Middle Kids - Summer Hill 10-La vuelta del Red Bull Cape Fear 11-Slater lesionado y suplente para las olimpiadas 12-Imagine Dragons - Follow you 13-La cuarentena de los Pros en Australia 14-Wildcards para Newcastle 15-Roosevelt - See you again 16-Oakley nuevo patrocinador WSL 17-Keala Nenelly ganadora del Red Bull Magnitude 18-Elah Hale - Foolish 19-Pat O´Connell nuevo jefe de Florence Marine 20-Wolf Alice - El último hombre en la tierra 21-Se confirma el mundial de la ISA para junio 22-Paul Weller - Cosmic fringes

Episode Transcript: James: Hello, everyone, and welcome to another episode of the Web3 marking debate show. Today we will be debating content marketing versus SEO. I'm your co-host, James Banks, and I will be taking the SEO side of the ring. Joseph: And I'm Joseph Chesterton and I will be taking the content marketing side. James: All righty, well, let's get the show and debate started. So, Joseph, why does content marketing work better than SEO? Joseph: Content marketing is focused around creating, publishing and distributing content for a targeted audience online. With SEO, SEO actually can't happen without content marketing. So content marketing is the core for marketing to your audience. You could have the perfectly optimised SEO friendly website, but without content marketing, then what's the point? You're not reaching the people that you want to reach. So content marketing is clearly the better option. And on top of that, with content marketing, it's one of the ways to build your brand and to be able to, resonate and grow your audience. And finally on top of that, content marketing, you can see actionable results sooner getting in front of the people where your target market are. Whereas with SEO you have to wait until you've created the content then you can do the optimisations. That's my opinion on it. What's yours, James? James: Well thanks for concluding the show Joseph, we'll see you all in the next episode. Nah i'm kidding. Look. Yes content marketing and SEO are similar, but they're not exactly the same thing. They are different. SEO, ok let's say for example, why will you be doing both of these to begin with? Well, you probably the sole purpose is you want to be discovered. You want your target audience to discover you. Discover your website more than what is currently happening. That's why you would do either one of these two exercises. But here's the thing. You know, content marketing you could be doing videos, audio's, blogging and doing all this stuff and getting it on your website. But if your website is not set up, I.E. the backend, the frontend, the strategy of how your audience is searching to find and discover all of this great content that you're producing If you haven't considered this as part of your traditional SEO strategy, then your content marketing strategy can miss the point. Or you get your content bang on, but because you haven't actually looked and probably audited it and assessed your website from a technical functional UI/UX (User Interface/User Experience) perspective. All of this effort and energy and resources that's going into content marketing gets subdued because of these issues that would of been fixed and solved if you looked at your website from the lens of a traditional SEO campaign. That's why I believe that SEO is the one that should prelude content marketing because of the fact that, if done correctly, will solve these foundational issues that, once solved, will amplify the results of your content marketing efforts. Speaking about results Joseph, why would you say? Content marketing produces better results than SEO. Joseph: I kind of think we're comparing apples with oranges here. One typically starts on the website, then moves into social platforms, whereas the other one is predominantly on your website and moves into other areas. The ROI (Return on investment) is two different things, depending on what your ROI you're targeting. So content marketing works better when you're building a brand and you're trying to reach an audience that is in a certain location not on your website. So really, we need to determine what the ROI is if it is to grow your business than honestly, I think we can draw on this one. James: Well, I'm pretty sure this is the marketing debate Show Joseph. So there will be no fence sitting. There will be no drawing. Ha Ha Ha. Because here's the thing, because. Alright, when we talk about results, all right, let me bring back my original point. If content marking was aligned and precluded by an SEO search and strategy, you can then start attributing an ROI to your content marketing efforts. Because I'll give you an example. Really, really simple example. You create a blog post that blog post ranks well in organic search, the traffic from organic search to that blog post turns into a tangible conversion action such as someone reads it. They then opt in to read more. Perhaps they contact, perhaps they enquire. Perhaps they call, depending on what are the metrics of success that you are measuring for your business when you actually bring these two together, you can actually track and manage a tangible ROI from content marketing. If content marketing is purely just for brand building, then that's a different storey. The return on the ROI isn't necessarily directly lead-gen, it's different. The metrics are different. However, when we talk about results for small to medium businesses for driving growth by combining content marketing together with SEO. That allows you to then track the returns of your content marketing efforts, which can then be attributed to things such as return on an investment so on and so forth. Whatever marketing metric that you are using to gauge the success of your digital marketing strategy. So with that said, Joseph, which one's better for long term success? Joseph: I honestly believe that you actually need to do both to succeed online and to grow your business. I think the better long term strategy is content market and make sure that you're doing SEO. Probably not going to debate this one James. James: Well, it isn't really much of a debate because our point, we've been making this point for years is content marking Is SEO and SEO is content marketing. There really is no point in splitting hairs between these two things because they are in two of the same thing. Similar to what we said on our Google Ads versus SEO debate earlier on in the show. These play on each other. They can amplify and magnitude the results of each other if you combine the strategy together under the one centralist digital marketing campaign strategy. This is what we do for our clients, by the way, because we know that the magnitude of success is so much greater when you bring content marketing together with SEO. And this is what we recommend if you're considering going down either or options, why not do both? Both will allow you to improve your chances of succeeding and reaching your goals and objectives online through digital marketing. So that's a conclusion for the marketing debate show. Again, we will be discussing a really cool topic for the next episode which will be around the whole subject of Brand versus lead generation. So say tuned for that. But without further ado, thank you again for tuning into another marking debate show. We'll talk to you all real soon. If you would like to learn more about anything discussed in this episode then please visit our post at Web3 on Content Marketing VS SEO

In this episode of the Web3 Marketing Debate Show, we talk eCommerce. Arguably the two biggest platforms in eCommerce are WooCommerce and Shopify. We'll assess both platforms from the perspective of small to medium businesses who are considering setting up an eCommerce website or needing to add eCommerce to an existing one. Which platform is the best one for selling physical and digital product and which one is better suited for small to medium business. Listen ahead and we will share our insights in this eCommerce episode. Let the debate begin! WooCommerce VS Shopify Episode show notes James: Hey everyone. Welcome to the Web3 Marketing debate show. I am your co-host, James Banks Joseph: and I'm your co-host Joseph Chesterton. James: And today we'll be weighing in to an all time heavyweight debate, which is WooCommerce versus Shopify. Which one is better? I will be taking the Shopify ring of the corner in this debate. Joseph: and obviously I'm on the WooCommerce side. James: All right, Well, without further ado, let's start. So, which one is better for selling physical products? WooCommerce or Shopify? What's your opinion, Joe? Joseph: Okay, so first of all, WooCommerce. It's built on WordPress. It has a huge open source community made by the people that actually build WordPress whereas Shopify. It's all closed source and you can't actually modify your website to the exact needs that you require, whereas WooCommerce you can. To actually sell physical products. It's a seamless integration with your website. Selling physical products on your website is an end to end solution. It starts from customer coming to your website. Your products are listed on your website, not on a third party platform. The customer chooses the products they wanted buy, clicks add to cart. Person puts in their payment details and is able to pay on your website using payment gateways that you choose. If you're selling products that are physical products then you're obviously going to need shipping. So WooCommerce integrates really well with all the major shipping providers. With WooCommerce you can list an almost infinite number of physical products. Each product has its own product page with all the info that you would expect: description, gallery, variations and so forth. So yes, it's a very good platform for selling physical products. James: So you mention community. I mean, Shopify has probably one of the most, if not the most passionate community of eCommerce merchants in the world over 700,000 of them. Yeah okay, I might agree with you that there's more individual WooCommerce sites per se than Shopify. Data speaking, that is the truth. But are they active in the market? Are they passionately commerce, business people that are there to help each other out? I think a big part of it is the difference between open source versus close source, particularly around selling digital products, is Shopify has everything you need to do to basically get an online store to sell physical products up and running within five minutes or less. Good luck trying to do that with WooCommerce. You're going to be there for a lot longer, trying to figure out the right themes, trying to figure out the right plugin mix to make it work. And on top of that, you have also vulnerability. That open source has versus a close source. Secure platform, like Shopify does not have as much. So that's my point of view why Shopify is superior for selling physical products online. What's your counter argument to that? Joseph: Well, all platforms can be compromised, the fact, that it is a huge community building. The platform means that it's peer review, whereas who knows with Shopify, maybe it would be hacked in a second if someone just did some sort of exploit on the system. Okay, moving on. So it's clear that both platforms can sell physical products, but not everyone needs to sell physical products. What about digital products... James? James: Well Shopify, is not only excellent at selling physical products. It's also great for digital products. It has a whole slew of apps that can be integrated into your Shopify site to allow it to do things such as direct digital download sales, online course sales, selling MP3's, music for your musicians out there. Same with video. And the list goes on and on and on. It has got great community support. These arent sort of hackjob plugins that just some random throws up. These have been verified through Shopify, and they've got a great community support. So it is a fantastic platform for doing this. On WooCommerces front. It's more of a mixed soup off a huge variety of plug ins that all say they do the same thing, and often the case they don't. It's very difficult, in my opinion, to know what is the best way to sell products digitally through WordPress eCommerce such as WooCommerce. WooCommerce is you can switch off its inventory control, but it's still sitting there is still weighing the site down. It doesn't really function as well as a pure play digital products selling platform as opposed Shopify. It can be, it can't be flipped to do that and do it very well. Joseph: OK, so you're attacking, what, the free plugins on the WordPress plugin repository. Whereas, well actually there's a dedicated WooCommerce platform of reviewed plugins that will do exactly what you need with what you're after on your website. WooCommerce does digital products very well. Just as well, as physical products and the checkout process adapts to selling digital products very well. There isn't any need for inventory solutions, but if you do need to then sell products that require inventory, then WooCommerce can easily just integrate straight in. It's part of your website, so it looks like it's just another page on your website. You can integrate with things like memberships and selling courses and membership platforms so that it's a seamless experience for all your customers. James: All right, well, I'm sure the question everyone wants to know is, Why is WooCommerce better than Shopify for small and medium businesses? And in my opinion, is this is the thing is that no matter how hard you try with WooCommerce, you cannot get an eCommerce store up and running. That has a nice, decent design, is well developed. It doesn't break any of the coding and development rules that could hurt your site from things such as organic search ranking point of view. It has a turnkey checkout everything you need to know everything you need to get started and it's so simple to get one up and running. I think I've been able to do it in about two minutes flat and you just simply can't do that with WooCommerce. You know, WooCommerce, yes, it is quite an advanced, powerful tool, but you typically would need professional help. Or you really have to know what you're doing to pull off an effective well optimised online eCommerce store whereas Shopify takes away all of that hard thinking from you and gives you the ability to set it up yourself quickly and easily and get your products to market as fast as possible so you can start making money. That's what we're all here to do as business people. Joseph: Well, James chances are, with 30% websites already running WordPress, you don't actually need to set up a new platform to just sell products online. You can use WooCommerce and integrate directly into your existing website. You don't need to change the entire website, just to sell products. WooCommerce is free to get started. You can do everything that you need to sell products online and it will integrate into your WordPress website just fine. Of course, there's thousands of plugins and things that you can install on your website to increase the amount of flexibility and control on your website, but those are optional paid extra, so you don't need to use them if you don't need them. WooCommerce grows with your business. You're not locked into plans that increase. The problem with Shopify is that as your shop grows, you then have to pay more for all the hosting and platform, whereas with WooCommerce as it's way more flexible and will allow you to scale at a greater rate. James: I think to bring this all together, ultimately both are good, both are very good eCommerce platforms. You can create a successful eCommerce site on either one of them. Either would WooCommerce or Shopify ultimately it boils down and typically our advice is that how do you plan on actually running your eCommerce business. Is eCommerce more of say, like a side extension to your core business, which isn't eCommerce. As Joseph mentioned, typically in that case, the business would probably already be on WordPress. So then extending the existing WordPress site to include WooCommerce to allow for eCommerce sales is often the best way to do it because then you don't have to respin the business. You don't have to relearn how to use a separate platform and then manage a completely separate platform on top of our existing content management system, which just becomes a maintenance and management nightmare long term as organisations grow. However, if you're a pure play eCommerce store and, you know, you're wanting to run and manage the store yourself with the minimal design and development help and you have a relatively straightforward store, no crazy custom integrations that requires sort of custom development. Usually in that case, Shopify is the better solution, particularly for businesses that are starting up. There's Shopify plus, of course, which is for your mid to enterprise level clients. That's a whole other thing we won't get into. But ultimately it boils down to what is the right tool for the right job for your business. If you need any help and assistance and understanding which one will be best for your business, that's what we're here to do. So reach out to us. Web3.com.au. Get in touch and will happily advise you on what will be the best way to get your business selling online and what would be the best way to execute it online. Any final comments on your end Joe? Joseph: Nup. James: Haha, Well, that's a wrap. We'll see you again on the Web3 Marketing debate show real soon. Discover more at https://web3.com.au/woocommerce-vs-shopify/

James:  Hi, audience and listeners. This is James Kandasamy from Achieve Wealth Through Value-add Real Estate Investing Podcast. Today I have Ryan Gibson from Spartan Investment Group. It's an investment group that focuses a lot on Self-storage. They have almost 4,000 units. They have a lot of units in DFW area and a few other States. I think Ryan's going to talk about in a short while, and they recently started to [00:32unclear] in a mobile home parks, which we'll touch upon in a short while. Hey Ryan, welcome to the show. Ryan: Thanks, James, for having me. It's fun to get on your show. It's great. James: Yeah, absolutely. Absolutely. So why not you tell about yourself and your company, things that I've missed out? Ryan: Yeah, so we are based in Golden, Colorado, and we buy existing and develop self-storage properties. And we do all of our properties and projects through syndication. So we raised capital from private investors and we go out and buy storages that we can buy and get existing cashflow on. And then we can eventually either expand them or just improve operations to make additional income. We also build self-storage from the ground up and we do a little bit of RV park investing as well, but storage is the primary focus. So, you know, previously, we were land developers and built condos and flipped houses and focused on storage mostly just because of the recession resistancy, you know, during downtimes. And when we were first looking at the industry, that really is what you know, attracted us to jump into the business. Was the, you know, kind of how it performed during the last two recessions. James: Got it, got it. Yeah. I mean, I did a lot of research of different asset classes. I wrote it in my book as well. Like how many asset class, six asset class for the past 15 years and just on my own, this is not from Marcus and Millichap or this is not from CoStar.  I looked at all the asset class and was looking at all the past 15 years report, which that's a report called Integra Realty Resources. That's the report that all the commissioner pays us a report to, that's the organization. And I was looking at self-storage and multifamily and all that. I was surprised to see that self-storage did do well the past 15 years, even during the downturn. I know at the beginning, you know, 15 years back, they didn't really allocate a specific asset class for it, but they did talk about it. And in general, I didn't see any downturn, even though every other asset class goes up and down. So that's very interesting. And why do you think is that? Ryan: Because it relies on life events and life events never stop happening. No, I'm serious. You get divorced, typically, stuff goes in storage. You renovate your house, stuff goes into storage. In times of good times, stuff goes into storage and times and the bad time, stuff goes into storage. When you get downsized, when you move, when your job relocates, when there's a disruption in the market that triggers self-storage events. And added onto that, businesses use it because not everybody can park their work truck in their HOA driveway, if they're in a covenant restricted community and not everybody can have all their utilities and supplies in their house. And so, you know, simpliest way to say it, you know, for an extra 50 bucks a month, imagine having a whole other room in your house. And that's really been a big driver for demand and self-storage.  We like it because unlike other asset classes, when a customer comes in, we have a lien against all of their stuff. So if they don't pay, we can auction that off for a profit. So, you know, the revenue loss is much lower for you know, the potential when a tenant doesn't pay. With COVID and everything, there was still a rental rate, great increases. We still had high occupancy. We still can host auctions and have people move out if they don't pay. We held back on that in a couple of properties and a couple of markets, but for the most part, you know, we didn't have the government restrictions that a lot of other asset classes had on that kind of stuff. James: Got it. Well, I mean, I'm sure the audience is thinking why not James jump on self-storage. So but let me tell you why I didn't, you can always debate this. So one thing I didn't jump on self-storage at that time. I mean, of course, for me, focus is very important. I mean, every asset class has so many nuances in it. I mean, it's not easy, even though self-storage is like four walls and there's nothing in it, but there's a difficulty in finding the deal and difficulty in executing the business plan and turn around and, you know, disposition and all that. So, I mean, but I didn't do it because at that time there was not much of nonrecourse loan available, I think, unless you go really low on the leverage. So how is that right now? Ryan: You can get a non-recourse right now on ground-up construction James: On ground-up construction. Okay. Got it. What about on the... Ryan: Oh, and of course you know, that would be rare in our industry. Of course, on buying existing self-storage properties, non-recourse is widely available. James: Got it. Okay. So now it's available right now, at what leverage level? Ryan: It just depends. I think we just tied up a deal that around 70 to 75% non-recourse institutional loan. So, you know, it just depends on the lender. Depends on the deal. Depends on the play. James: Oh yeah. I had a friend who was like 85 years old. He's a broker, but he's a very healthy guy. And he said he started multifamily and moved on to storage and he owns a lot of storage unit and I was calling him and he said, maybe at that time, he said, yeah, it's hard to find non-recourse loans. The other challenge in storage is, you know, I mean, anybody can build a new self-storage development in front of your storage unit. It's very easy to build Ryan: Maybe. Yeah. So, you could say that as a general statement, that wouldn't apply everywhere. So there's a lot of moratoriums on storage. There is a lot of restrictions. Some communities don't have zoning for it. Some cities quite frankly, would not allow you to use it at all. So, you know, it just depends on where you are. Some jurisdictions it's, Oh yeah, come build it. No problem at all. So you just need, you know, it just depends on the market. You know, we have markets where there's no zoning and we could build whatever we wanted and there are markets where it's taken us 40 years to get a permit. So it really just depends. And then there are some markets where you get your permit and then they slap a moratorium on there and you can't build your storage anymore. That's happened out here in Washington and a few places.  So you really got to pay attention. And, you know, and I think really if someone was like, what's the one thing that I could take away from talking to a storage operator? It's the market study. It really comes down to: do you have the demand and is there the supply of people and demand essentially in the market to fill up your property or execute your business plan? It's huge. You know, someone might say, is storage a good play? I don't know, make up a city, Austin, Texas and I will say, well, generally, no, it's not, it's actually a terrible market, no offense, but it might be good on one side of the town and catastrophic on the other side. It's a three-mile business so it's like whatever's happening around in that immediate micro-market is really what it comes down to. So some markets are generally better, some markets are generally worse, but at the end of the day, it's right in that five, 10 minute drive time of the property. In the market study, that makes the difference. James: So, all your details that you're telling me right now, that's why I say there are so much of nuances in any asset class that outsiders may not know. I mean, it's easy to say, you know, it's easy to build but there's so much of a market research knowledge that, you know, only the operators who are specialized in it knows about it. So, and I do have a lot of respect for every asset class operators. There are definitely people who are really good at that. So let's walk through a deal in self-storage.  So not in terms of deal underwriting, but let's look at the demographic of that storage. Let's say you found land in a city. Walk us through the steps you would take to say whether this is a good site for a self-storage facility? Ryan: So a couple of things. The first thing I would look at is what's the population. So I would drop in on the facility, we have data and maps that will show us the drive times. And then based on those drive times, we'd get the population within the drive times of the property. And then we would look at saturation levels. James: And what are the drive times? Minutes? Ryan: Yeah, four minutes. I think we use eight minutes and 15 minutes. Think of it this way. If you're in an urban core, you're not going to drive 15 minutes across town, you're going to drive eight minutes so that there's relevancy to where you are in the market. But what we look at is, you know, we'll look at what are the comparable rent comps to what our subject facility is charged. So, you know, we might be getting $15 a square foot on the average but it's important to know kind of what type of facilities those are: three-story glass, Class A facilities, are they first-generation roll-up metal buildings, you know, big difference. Is it non-climate controlled is it climate controlled and in that market, is it a hot market, like a warm climate that likes self-storage to be climate controlled? Or is it a market that prefers drive-up or, you know, climate control would be overkill and people would be unwilling to pay the extra money for that.  So we look at price per square foot, you know, probably just like multifamily. And then, for Spartan, we look at the ability to add onto that property, you know, can we expand it and what is the existing dirt that's there? What is it? Is it flat gravel? Are there stormwater requirements, setbacks, easements restrictions, how usable is that land, and how much would it take to get the land pad ready? Cause we're developers. I mean, we take properties and develop them into bigger... James: What about zoning? Ryan: Zoning is important. That's kind of a little bit further down on the checklist. The top thing is demand. Cause you know, you could have, Oh, this is a zone for self-storage. And of course, everybody knew that. And then everybody built, a bunch of storage is there and there's no demand. James: But is it easy to change as zoning from, let's say in multifamily to self-storage?  Ryan: Ah, that's a loaded question.  James: Maybe not multifamily. I know residential has a lot of high priority in terms of city development. Let's say, commercial office building, commercial land to self-storage. Ryan: I mean, it depends. I know you don't like the word, it depends, but it depends. So like if you are looking in a market where, you know, we entitled the self-storage project in a city that had no zoning for storage. So everything was a conditional use permit. Everything was a public hearing. The public had come in, the city had to make a recommendation to a hearing examiner. Huge process. We've taken a residential land and rezoned it into commercial so we could build self-storage. We had to go in front of the board of county commissioners. We had to go in front of, you know, there had to be room for public comment. There was opposition, but we were successful and got the land entitled, but every jurisdiction is just a little bit different. We've bought properties that are zoned for storage and we've gotten the entitlements and they can take anywhere from two to six months to get it,  it's a building permit, you know, depending on how fast you're pushing and assuming no closures in the city and things like that. It just runs the gamut. You know, as I said, I have colleagues in the industry that have bought property, they got the entitlements. So yeah, you can build storage here. And then the city puts a moratorium on storage and now they can't build anything. So they bought this land, they got the entitlements, they've spent all this money, now they can't even build it.  James: How do you prevent that kind of thing from happening? Ryan: You don't. James: Because you've already bought the land.  Ryan: I mean, you could negotiate the contract to close upon building permits, but then you've got to find a willing seller and you know, of course, that's always a negotiation.  James: It's too messy, I guess. Ryan: But yeah, when you develop, I mean, it can be riskier and there's a potential for a bigger return but you also introduce a lot more risks. So yeah. I mean, is it easy to do? It can be, and it can be very difficult to the point of being impossible so it really just depends.  James: So when you guys raised the money from your investors, have you already done that, let's say for a [13:57unclear]  project. Have you already done that part or are you are still looking at that entitlement? Ryan: Yeah, we've really learned our lessons through the year. So you know, we bought a storage property and when the rezone of the land from, you know, so you have kind of a couple of different phases of development when you're doing like the paperwork to get it ready to go vertical. So the last thing you get is their building permit. So your building permit is pretty straight down the fairway; that is meeting building codes, getting your building permit, not a lot of risk in that - a risk, but there's not a lot of risks. But the phase just before that might be your entitlement so that you can actually do what you want to do, or might even be some type of site plan development where the city has to approve your site plan but you don't necessarily have your drawings done for the buildings they've just approved. Okay. Building here, building here, building here, this is your height. This is your step back. This is how much square footage you're going to deliver and a site plan approval. And then you have the zoning that might be before that. And it might already be zoned that that might be your first step. You know, do I meet the zoning if I don't, I might have to rezone that could take years. So, you know, we just kind of look at the projects and negotiate with the seller to buy the property. You know, when it hit a point where we're comfortable with closing on the land, and then we negotiate the purchase and sales agreement as such, and then we do the raise in accordance with how we feel our comfort level to be. Because we don't want to raise the money until we know we can do what we want to do. And you know, we've really refined our processes for that over the years to know that, Hey, we can close. And we've gotten better at negotiating. Like how can you expect me to buy this land and I don't even know I can do what I want do with it? If it's a hot market, you know, make a decision; you either want it, or you don't. If it's a property that's been sitting on the market for a year, you can come up with some pretty creative ways to keep the property tied up while you go through that process. James: So how many percents of these 4,000 units were developed versus how many were bought from....? Ryan: 25% James: 25% newly developed. Okay. Are you guys more trending towards development rather than buying? Ryan: That's a great question. I would probably say we're buying more than we are developing right now for no reason other than our development pipeline is full enough. Development is expensive and development requires a lot of cash and you don't want too many of them going on at one time. So we have two very large, about $22 million right now with development. Actually, no, we probably have about $30 million in development right now and that's about our comfort level. That's our spend for 2020 for development and we really don't want to get much past that. We also only develop in the states that we live in so Washington and Colorado. Adding onto a property is not a big deal, but we don't like to do ground-up development where we go through the whole process if we live out of state, because inevitably if you want to get things done, you gotta be down at the county, down at the city hall, down at the office, all the time. You're going down there all the time. Oh, you want this? Okay. No problem. James: Otherwise, it's going to just take forever to get a project done. Ryan: And who wants to fly an hour and a half somewhere to drop off a piece of paper and then fly back? I mean, it's just not efficient. So we just like to be in town.  I can't tell you how many times I've gone down there to, you know, shake the trees and get progress. James: Yeah. I've done a small land development beside my apartment. We were converting it. We were combining the adjacent plot of land into the apartment. And that itself was a lot of work already. But the city was supportive and it went through well by just the amount of paperwork, the amount of bureaucratic process that you have to go through. So, absolutely. What about a demographic? I mean, we talked about demographics. How do you say that this particular submarket is a good demographic for a good self-storage business? Ryan: We like at least 1% growth. We like to see trending growth. We like to see 50,000 income. We like to see saturation levels like a seven square foot per utilization for storage. James: How do you get that data? Seven square feet per utilization? Ryan: We have Radius Plus and we use a couple of different programs. Radius and there's one other program that James: So Radius is a software for self-storage investors? Ryan: Yes. James: Okay. For them to see the demand, I guess. Ryan: If you gave me an address, within 20 minutes, I could tell you what's the drive time around it. I could tell you the demographics. I could tell you the demand. I could tell you all the permits in the pipeline. So that's another thing. This is great. I can tell you everybody who's building, everybody who's applied, who's canceled, who is coming. And then of course we do our boots on the ground research where we go knock on doors and go to the city and ask them like, Oh, Hey, you know, is anybody else? Oh yeah, John, you know, he was over here last week. You know, that doesn't show up on record but the intent. And then you go talk to John and you say, Hey, you're really going to do this because we're thinking about doing it too. And we've got into situations like that and you know, either we've given up or they give up or whatever, and we just move on to a different market if the market can't supply all that additional. James: So does the self-storage purchase involves stringent requirements or stringent terms like what multi-families like day one, hard money, you know, very tight on inspection, do due diligence process? Ryan: It's extremely competitive. And it might be as competitive or more competitive as multifamily. Because when people think of storage, they're like, Oh, I've never really heard of that. I don't know what that is. And then they do multifamily and they're like multifamily is really hard. You know, there's always people doing it and Oh my God, there's so much competition. Maybe I'll go try storage because it'll be less competitive. And then they go over to storage and they're like, Oh, there's a lot of people that do this. But what the difference is there are so many multifamily properties in the United States. Self-storage, you can't even hold a candle to the wind. I mean there are 50,000 facilities total in the entire United States. So yeah, when you're talking about competition, if you're looking at a property that's a million dollars or less, no problem. You can go bid on it as a mom and pop.  When you go a million to maybe 6 million that you can reposition or that, you know, show some signs of a mom and pop operations, you're competing against the best of them. You know, the all-cash, close in 30 days, 60 days, whatever it might be. But generally what we do is we do about 10% earnest money deposit...sorry, not 10%. On a $6 million facility, we might put up anywhere from 25 to 50K. And that doesn't go hard until due diligence is completed and signed off on. James: Oh, okay. So that's not bad. It's not like day one hard money, like what's happening in multifamily, right? Ryan: No. And if we were in that space, we wouldn't play that game. So yeah, whether you think it or not, you're competing with yourself at that point. You're worried about losing that money. I mean, we have a 100% contract-to-close ratio, so everything that we've put under contract we've purchased. I mean, we had a bank pull out three days before closing, we went and raised a private loan. We did our own deal. So we've done everything to really help get the deal closed and we've got that reputation to close. And I think that people value our relationship a lot more than they do necessarily how much earnest money we put up. And we've had a broker bring us a lot of deals and just keeps bringing us deals because we make it real simple on them. You know, it's a very simple process with us. We get everything on the table. We are very transparent and as you know, in multifamily that'll go a long way. Any business, right? James: Yeah. That's true. That's true. Yeah. I mean, brokers, love people who are easy to deal with. Because you know, this is just multimillion-dollar deals and you do not want to have a tough person to work with when you're going to such a big transaction. So at a very high level, what are the value add that you usually do in self-storage? Ryan: Cameras for security, rental rate increases. James: So what, you put a camera and you get higher rental rate or it's just...? Ryan: People walk in and they want to feel secure. So our target customer is a 70-year-old woman, that's who rents our properties. So when they walk to your property, is it dark, are there cameras, is it secure? Does it feel like the fence is going to fall over? So we take the properties, we'll put in a new fence, we'll put in new cameras, we'll paint all the doors, we'll replace doors, we'll rehab the office, we'll put in notary services, we'll put in ice and vending machines.  James: Why do you need a notary service in a self-storage facility?  Ryan: Convenience. So we like to be a shop of convenience. So if somebody has got an Etsy, Amazon, they have a home-based business and they can come to our storage facility, they can drop their FedEx/UPS deliveries off at one of our properties. They can get their items notarized. They can ship, they can store. We even have a car wash at one of our properties. So, we try to be a place of convenience for people. Not that we were going to make any money on it. It's just a place where people can go and know that I rent my Uhaul truck to move my goods somewhere. At your property, I can notarize my documents, I can store my belongings, I can do a lot of different things to transact and do my business obligations. And so what we try to be kind of a helpful facility. Not all of our facility does that because not every facility even has an office. But the ones that do, you know, we sell retail. We start, you know, people pay cash, we get rid of cash payments and we go to as many automated payments as possible. We enforce the lease. You know, a lot of these facilities we take over, tenants might not even be on adequate leases. So without being on an adequate lease, you don't have an adequate lien against their belongings. You can't do an auction.  James: Have you guys done auctions? Ryan: All the time. James:  It's like Storage Wars on TV, right?  Ryan: Yeah. Yeah.  James: That really happens? Ryan: Yeah. The semantics are true or the actual process is true, but the way that it's carried out is not true. So nobody goes in person, you know, there are some old school places that still kind of do that, but we do them online. So you can go to selfstorageauctions.net, you can register. And then in your neighborhood, there could be a storage auction and you get alerted like, Oh, Hey, this unit is going up for auction. You can kind of log into your account and see, Oh, what's in there. James: All right. I can see all our audience and listeners are doing that right now. I didn't even know that. What was the website? Ryan: I think it's selfstorageauctions.net. And so as a company, what we do is we say, you know, that the storage auctions is revenue producing or whatever. They're not really revenue-producing. They're basically just to get you to get out and get a new customer in. Like we clear out the, you know, and it's the threat of losing your stuff, right? If you don't pay, you lose your stuff. James: So it's like an eviction process, I guess.  Ryan: Right.  James: Except the government can put the moratorium like what they did in multifamily right now. Ryan: The government hasn't touched us. So usually within 30 to 60 days, if you're not...so let's say, your rent is due today. If you haven't been paid in five days, you get a late fee and your unit gets locked automatically. So the gate code that lets you into our properties, the revenue management system will automatically turn the gate off.  James: Really? [26:40crosstalk]  Ryan: We over-lock your unit. You can't even get into your unit.  James: You don't pay your rent and after five days, it locks by itself? Ryan: Just like that. And then we'll over-lock you. So we'll put a red lock on your unit as well. Some of our properties will have the smart locks where it'll lock behind the door so you can't get in, you can't get into your stuff. So if you don't pay after five days, you're automatically locked out. So we liked that. We don't have to really manage that too hard. I mean, there's, you know, we have property managers are onsite staff that deals with that, but the gate code, that's automatic. And then once you pay it, we'll let you back in. But if you don't pay, you're locked out. So now you don't have access to your stuff and after 30 days we do our notices, our legal notices and then, we can take pictures of your property, do our publications and then it goes on this website and then people can buy your stuff.  And then you know, any earned income from that auction goes directly to us first, to recoup the costs of whatever the tenant owed us and then any costs of legal fees associated with it. And then anything that's left over after all of our money has been recouped, goes to the tenant, you know, cause they gotta be compensated for their stuff. So, we get paid first and then, but most importantly, we get our unit back and in multifamily or residential, they might trash the place. They're gonna do whatever they do. In storage, I mean, you can try to trash the place, but I mean, it's a box. And you know, we just sweep it out. They moved their stuff out and they're gone. And then, you know, for us, we just get our unit back and we let our customers know when they book, you know, Hey, sign up for our online auctions. You know, so they can bid on stuff and they can also know that, Hey, we do online auctions.  So a lot of places we take over, I mean, the delinquencies are a mess when we take over and that's a way to increase value. So we took over property last year, for example. And I just heard from our management that, you know, auctions were like, I mean, there were people that were 180 days delinquent and the manager just wasn't collecting on the units, they just weren't enforcing the rules. So we'll come in and we'll just follow the rules. You know, your lease says this, if you don't pay with this, you go to auction, you know, and then we make money on late fees. And some facilities that we take over don't charge late fees. I mean, if you don't pay on time, you should get charged a late fee. So there's a lot of different things we can do. You know, and plus we'll repaint, we'll redo the doors. Some doors of the old cabinet doors, you know, to open up the lock, the storage locker, we'll put the roll-up doors on them. We'll improve the lighting, we'll redo the asphalt, whatever it might be, we just get it nicer so that the customer feels safe and secure and they feel like they're getting good value for their money.  James: Got it. Got it. Got it. All right. Why don't you tell our audience how to get hold of you and your company?  Ryan: Yeah, sure. So my email is Ryan@spartan-investors.com. Our website is spartan-investors.com.  James: Awesome. Thanks for coming in and adding tons of value to our listeners and audience. Thank you.  Ryan: Yeah, you're welcome. It was nice meeting you, by the way.    

James: Hey, audience and listeners. This is James Kandasamy from Achieve Wealth Through Value Add Real Estate Investing Podcast. Today I have Raj Tekchandani from the Boston area. Raj is a co-sponsor/KPGP in 650 units across Georgia, Florida, Kansas City, and Texas. Hey Raj, welcome to the show Raj: Thanks, James. Thank you for having me James:  Good. I'm happy to have you here because I want to talk about technology. You are a technology guy turned into a multifamily investor, right? Raj:  Absolutely, I can speak technology all day long James: Yeah, absolutely. So I want to make sure I give you an opportunity to explain some things that I missed out. So why don't you tell us about your story? How did you get started and how did you end up being a multifamily investor? Raj:  Sure, I will do that. So hi guys, I've been in technology for most of my career, I did Undergrad Computer Science, then I did an MBA in high-tech so purely technology-based and wanted to become the next big company founder. A lot of my jobs were mostly startups but when I realized that I'm sitting on a lot of options and not going anywhere, I said, I need to diversify and started looking into real estate investing that was not until 2012, but that was just a side gig. I still was fully devoted to my job, which was startups and it was in data analytic space and we're building a platform to connect all the data in the world together and put meaning into data, using something called a Data Lake. A lot of formal companies were using our software, financial services, but there was no real estate company using it. But anyway after I finished my five years with that company, my stocks options fully invested. I was like, okay, what is my next startup? And by this time I had started collecting my grants from the little investments I'd done. I had started investing in 2012 in one Condo in Orlando, Florida, and gradually went on to buy more because the prices were very attractive and I could see the prices going up and I said, let me just get in there, so I got in there, fortunately, had a good property manager that helped us take the worries or headache off our head and the cash flow was beautiful. So in about 2016, I said, okay, they need me to see this look and I bought actually a 15 unit multifamily near my house in Boston and I wanted to do more of that because I'd heard, you know, multifamily the whole economy is upscale. So I said, let's get into multifamily and that experience was interesting, to say the least. I had not too much knowledge about the underwritings and how to really look at expenses and that came in as a very expensive learning lesson for me in terms of multifamily. So from there on, I said, this is too much work, I can't do this. I found a good property manager and he quit and then found another one then he quit and it's like, this is too much. So I said, no passive investing is my way to do it, this whole active thing is not my thing and I'm still working full time on my job. So I started nesting passively with some investors. The first time I looked at a passive deal I was like that's too much, there are too many zeros in here, I can't do this but gradually as I understood, I took learning and took all the courses and reading blogs and podcasts and I got comfortable with investing passively and then a couple of passive investments and I was like, this is great, I have my nine condos, I have my fifteen hundred, which has now started giving me cash flow and now has passive investments. Interestingly, it was almost matching up to my startup salary. And I was like the options are great, but what if the options don't mature or do much? So I took a bet and I quit after five years of my job to do real estate full time and that's how I dig more into multifamily. But interestingly at that point, I had this idea of another startup, which didn't go too much far because I wanted to take these learning from data analytics into real estate and now that I'm doing multifamily and doing all this, I'm not seeing too many systems out there. It's still very, laborious jobs, the property management company is a lot of work on paper and even the underwriting was very painful. So I was like, what if there's an automated software machine learning data, whatever we have learned in technology to build that. So I met up with the person at MIT, Jennifer, she had done a Ph.D. in Real Estate Technologies, like Artificial Intelligence Machine Learning for Real Estate. I'm like wow this is a person that I James: Talk to right? Raj: Yeah, so I sat down with her and she went through her thesis with me. In fact, she was nice enough to explain her thesis; there are too many companies out there that are doing what I'm trying to do.  James: So what was the thesis about? Raj: The thesis was the use of machine learning and artificial intelligence in real estate  James: But is it real estate underwriting, or is it real estate analysis or--  Raj: --Real estate analysis  James: Is it for investment or is it-- Raj:  So she actually worked for MITs and Darwin program buying the advisory real estate James: Oh, okay. So they're basically looking at investing Raj: So they're looking at investing so mostly commercial real estate, eventually, from her thesis, she came into that, MITs fund. She was working there at that time. But in her research, she had looked at a lot of technology companies, right? From doing everything from sensitivity analysis to underwriting to figuring out where the locations thesis are, property management companies that are looking to do automation based on the [inaudible06:24] so a lot of machine learning in there. Actually, one of the companies that struck me at that time was in [inaudible06:33], which is what I had been thinking about, sort of how to automate underwriting and how to take all the data that's been sitting in, all these Yardi Matrix and all the places that been collecting data. How can we leverage that to say, okay, well, this is a property that I'm looking at in multifamily, this is the address and boom, we'll go and run into algorithms and come back and say red light, green light, yellow light based on all these factors and in [inaudible 07:02] was doing that, some of that, I talked to the CEO there and start using the platform. So I had some suggestions for them into building other plans and other features on the platform but at that point I said, you know what, I'm more of a user now, and they're not technologists, I want to use these technologies that are out there, I can talk about what features they need, like lease analysis. In one of the deals we went inside in the back and you're looking at 150 leases, one by one, what is matching up. There's no use of doing that, those leases should be fed into a system and outcomes, and these are the mismatches  James: The lease [inaudible 07:38] should be automated Raj: This is a tenant profile and based on this tenant profile and this property and this neighborhood, this tenant profile will be surviving through any downturn, that’s what you need to know on tenant profile I'm sure somebody will build it in there; I think [inaudible 07:55] was already thinking about doing that. Anyway, from that I said, okay, I'm going to stay as a user, I started using these technologies but then I got stuck more into the whole underwriting piece and managing the properties, finding the properties, I was like talking to brokers, now I'm talking to this and that's how I met a couple of good people through coaching programs that I said, okay, it's time to take the next step, move from passive to active, and see how the big things are done. I wanted to be closer to the action. So that's how I got into active investments James: Got it. I mean, that's a lot of things there. So I want to go a bit more in detail on that, but that's good. I mean, so right now you're a full-time real estate investor, right? Raj: Full time real estate investor. Yes. I mean always thinking of the next technology ideas James: Well, that's the problem with all these tech guys coming into real estate? I also think the same, let's automate this, and let’s create a system on this Raj:  Yeah. But I mean, I keep in touch, keep a pulse on that. So I don't know if you know about this organization called CRE tech- Commercial Real Estate Tech, middle of New York and they are looking at all these things, all kinds of who's doing what, which company is being funded. So I keep in touch with them. I'm a member of them, but just looking at ideas, someday somebody has come with a great idea that we are still a little behind than other industries in terms of use of technology James: Oh yeah. Real estate is so manual. I mean, there's not many people investing in technology and it's a bit tricky too because a lot of people component Raj: And I was told one day that, (AI) Artificial Intelligence, the biggest tool, billions of dollars are being traded in real estate based on excel spreadsheets. That is the technology of choice of all these big reads and fund managers and they're just doing Excel spreadsheets James:  Yeah. I don't know why the real estate is just so hard to automate in terms of location because even like, if you look at a street, one side of the street can be completely different valuation from the other side. And how do you tell that to the software? You can't tell them that people have different preferences going in Raj: Well, if you feel that, you can tell that by how many murders were on the left side of the street and how many murders on the right side [inaudible 10:16] I mean, I just think the crime rate, our school districts and there are so many factors you can pinpoint it. Now there's so much data being collected on all of this, right? You just have to leverage the data and every time a property gets sold, a property gets bought that data is entered into a system, right? The analysis entered into the system, even for an upgrade, all the data has been entered so you should be able to tell that if I put granite flooring in this, or I put up vinyl flooring in this, or whatever, this is the gorgeous fettuccine down the road, right? Because that's [inaudible 10:50] James:  I think that's what [inaudible 10:52] does, right? Sometimes they do a lot of underwriting, they try to predict what is the rent going to be, but I'm not sure how big they are. I know there were some people really excited about it, but some people really didn't like it. I saw it once; the tool looks good for a tacky, right? If you're a second, it looks like everything's done for you. But I don't know for me, I don't feel comfortable yet. Raj: I think there's nothing. So all that said, James, there is no equal end to be having boots on the ground. So this is what I've learned James: Well, for real estate, you have to go to the property, you have to do the cost yourself Raj: Exactly. So you'll do all, that saves you a lot of time, right, because you can do the cost, the real analysis is done when you're there and you're looking at the property because we walked away from a deal that had everything looked good on paper and technology tools and everything, because this one building down the slope, had some structural issues that we didn't know, I mean, no technology tool will tell you that turning on some like pillars that are like fake  James: Correct. There's no way to know. I mean, as I say, I love all these tools, but I don't know for me, I don't want to pay so much money for this tool unless it giving me an automated thing. Raj: That's where the progression has to happen. The more they have to get better and they have to get cheaper for that option. Otherwise, excel spreadsheets help people doing their report James: One day will, right? I mean, if you look at it right now, we need a buyer agent, we need a seller agent to do a house transaction and the reason for that is so much people touch, right? I mean, a seller needs to know that he's getting the best value for his product. Only people can see the house and decide whether it's a good house or not, right? It's a bit hard for computer AI to really say that this is a good house for this person, right? Maybe one day it will. Raj: It will. They'll cut short the time or for your needs maybe James: Correct. And I know a lot of startups were trying to do all this right there. I mean, every tech guy who was introduced into real estate in the behind them is [inaudible 12:53], oh, I can do a startup, even syndication people are trying to automate right? They're trying to rank the sponsors, they tried to give stars to sponsors and everybody is trying to do all this but as I said, it's very hard to give a star ranking to sponsor there are so many other things that are involved. I mean, one day probably, yes. But we are not there yet with the technology, the information we have so how do you feel? I mean, you and I are almost the same, right? I mean, we're always in the technology space and suddenly become real estate. Do you think you've wasted all that lifetime in tech space? Raj: No, not wasted. It's a game, it's life as it plays out, now where I am my biggest strength is my value for my time. I mean, I control my time in what I'm doing, when I was working tech job, I mean, you had management meetings on Friday afternoon. I was like an owl, now if you go look at my calendar, you'll never find a Friday afternoon open because I dropped it James: Okay. That's good. Yeah. I mean sometimes people who have studied so much in certain fields, I don't know. I do see some doctors moving from being a doctor to becoming a real estate investor. I mean, at the end of the day it's all about time, right. Time and how much [inaudible 14:13] Raj: I mean it’s time and it's what you enjoy. I mean, I also realized that a lot of what I do in real estate is marketing and I love marketing James: Nobody cares in the tech company Raj: Yeah. So when I'm even in my tech job, my last job was in marketing. So I was basically a demand generation for this data analytics back on rebuilding. So basically evangelizing technology for people that don't understand it, it's sort of marketing. So writing blogs, writing white papers, writing all this stuff, simplifying things for them. That's what I had become in my technology job also because nobody wants to hear the mumble-jumble of data lakes and medication and all that stuff. It's like, bring it down. What does it do for me? And now he's the same thing, syndication and all what does it do for me? I mean, so marketing is basically attracting the right people and getting rid of people that you don't want in your system. So that's why even in capital raise or even the deals that we do it's very important to figure out who your customers are which in our case is investors and it took me a little while, my first four deals, I was like talking to everybody and anybody like, okay, this is what we have and I was like, no, that's not me finally figured out the people who are attracted to my deals, especially are tech executives, like me that have collected a decent paycheck, they have a decent amount of wealth, they want to diversify, they're paying a lot of taxes and they are paying [inaudible 15:50] that. So they want to learn about how real estate can help them with taxes, how real estate can help them diversify, a lot of them have invested completely in the stock market, which we have done that in the past and I've lost a lot of money in stock and that's why I never want to go back to stocks anymore and I'm trying to teach the same thing through my formal education. James: Yeah. Surprisingly not many people know about real estate. I know probably all the listeners here, they will. I mean, you are already learning and listening to podcasts about real estate, you already know, but it's very surprising to know how many people don't know about real estate and don't know what passive investing. I mean, people know that you can go buy a house and give it for rental, but nobody knows that I can put the money with a sponsor who will do the work every time Raj: They know real estate investing, they don't know realistic passive investing James: Correct Raj: Yeah, passive investors have become my passion James: Yeah. I mean, that's why I wrote my book too because not to introduce real estate to passive investors, I want them to be a bit smarter. I mean, sometimes when they got introduced to real estate, they think, wow, my God this is the best thing they just follow one way of thinking, right? So Raj: You just stole my line that's what I say, because, at smart capital, we make you smarter James: Okay, good. Because I mean, first, you get introduced to passive investing, second is how you become smarter, right? So let's talk about that. I mean, you said you have done some really cool stuff for passive investors and incorporating some technologies and all that Raj: Absolutely. I mean, again, nothing was planned. It just happened over time, my first deal, when I presented to some of my friends, they said, Raj take my $50,000. I'm not going to take your $50,000. You need to sit down with me, understand what it is James: Well, that's the problem with me. I don't like just taking money. I want you to understand the deal. Cause I believe it's a good deal Raj: I actually know the four friends that I had, I bought them tandoori chicken. I said, come sit with me and I'll explain to you what it means. So I bought wine and food. I said, look at this, I'm going to tell you what it is if you understand it and if you still want to invest, that's great. I want you to understand it because I can take the money and invest it, I mean, that's not a problem, that's the easiest thing for me, but I really want you to get smarter in my sense, you know, that's why smart capital and so that small group grew into a little bigger group and I created a meet up in the Boston area on just apartment investing and teaching what it is and growly slowly And I kept it small for a number of my first year I did it in my office in a conference room. They were like 35 chairs and who can come but we kept it very educational. That was the thing. We'll take a topic, we'll discuss the topic or make sure that anybody in the room is understanding and if there is somebody else experienced in the room, they're absolutely allowed to speak up and do so, kept it very educational, very different meet ups. A lot of people said, okay, Raj's meet up is educational so we're going to go there, and then I didn't have enough space so I took a bigger space now the membership in that whole meet up has grown to 600 plus people but we now get about 60, 70, 200 people monthly and I've kept it monthly and still, we talk about educational purposes There's no come have beer, learn about network and go back. That's not it. So to answer your point in doing so right, I've internally built some systems to make sure this is a smoother process for me. So in terms of the thought leadership platform, I have my meet up, I started doing blogs consistently. Obviously I'm active on Face book, LinkedIn, and really wherever else I can post my blogs. I also to become a member of the Forbes relisted council so I can do some technology related articles there and talk about what I'm thinking. So yeah, I've done all these things and now I have in a way that I've created this CRM and systems and attracting investors who, whatever platforms that they can get onto podcasts like this and talk more about what I've done in my past and just share my experiences, that's basically it. James: So how do you decide on doing a deal? Let's say someone brings you a deal, right? How do you decide this is a good deal, I really like it. What are the things that you look for? Raj: So the first thing I like, ideal deals only very few people. I mean, as partners, right? I mean, I'm not into numbers of deals and I don't count the number of doors. I don't do that. I like to enjoy myself, I mean, to [inaudible 20:30] my life, you're going to be just chasing money and [inaudible 20:33] James: You want to be peaceful too, right. Reinvesting the right sponsor because you can make an investment any-- Raj: --People that I enjoy, I mean, the deals will have good and bad times. One of our deals is we haven't done distribution, but I will say that I'll invest that deal again. I believe so much in the team that even because I'm so close to the deal and my investor is saying, Hey Raj, we haven't distributed work. I said it'll be fine. It's just because I trust the people that I work with and I could do another deal with them. So I’m very selective about who I work with, these are people from my coaching backgrounds, I've heard them say I hear them strength and they have to be complemented with my strength. So if I'm good at finding markets and I say, what, I'm going to invest in Orlando or Kansas City or whatever markets that I have in my head because I've done some research on data on that and obviously then underwriting should make sense but my number one criteria is the people that I work with and do I add value to them and they add value to me. So I will claim I'm not a good asset manager, I've never intended to be so I will always look for a very strong asset management on the team James: Got it. So you basically look for the sponsorship and how the team complements with you as well Raj: The dealership and the numbers should make sense, but that's true for everybody. You will not invest or be participating in the deal, that doesn't make sense James: Yeah. What do you look for in a very strong sponsorship team? That you really like? I mean, what personality, integrity or--? Raj: --Integrity, number one is integrity, right? I mean, the track record is okay, but I think track record, I've seen these guys done. I mean, it was not done like 15, 20 syndications, some of them have, but some of them are still early in the stage, they have done maybe two syndications before this one, but I've seen them through the coaching classes and going through with them to on due diligence trips. So I always go and make sure that I'm on part of, once we go sign up, form a structure, I'm going to get involved with all the due diligence and all everything. So I'd sit down with them and see what their work ethic is, how passionate they are about it, and will they stay committed with me? James: Got it. Very interesting. What about, on other things, in terms of the underwriting or in terms of market analysis, have you done any; have you incorporated any technology things into analyzing that? Raj: Yeah. I mean, I do my own technology things. I mean, I haven't written software for that, but I do look at a lot of data James: What kind of data do you look for? Raj: So, I mean, a standard feature, like population growth, job growth, and median income. We will also look at STEM jobs, right? I mean, I look at if it's a technology oriented job, are there or not because I mean, in these times the properties that are doing well, are people technology, company, people working from home, right? So all of that is important as well [inaudible 23:34] James: Got it. Very interesting. So is there any proud moment throughout this real estate career that you think oh, I did that and I feel really proud about it and you can never forget about it until the end? Raj: Well, the proud moment was I'm into partner with you on my first deal. I mean, that was a very proud moment. I told you right when the first time I looked at syndication when a friend of mine presented to me, he was on the GP side, I was on the limited partner side. He says "Raj I got the deal."  And I said, "What is this? This is like 300 units. I mean, there are too many zeros. There was no freaking way." So now when I did my first deal with that number of zeros, I mean, it was not 300, it was 152 units that deal was a very proud moment for me having gone through understanding what it means and then the other proud moment was to convince some of my investors to partner alongside with me right now that I learned this and I'm sort of sharing my education. I don't even call it capital raising. I'm giving them an opportunity to participate with us. I'm doing them a favor, sometimes I feel that way and that's one way to look at it and I'm saying no, every deal of mine for my side has the same investor. The first investor is always the same, that's me. So I'm going to invest in these deals, I've done the research; I've been to the property. Now I'm presenting it to you this deal, why I like it, and you're welcome to join along, so the proud moment was to getting that achievement, right? The first one and the second one becomes easy. And then the first one was the problem James: Got it. Awesome. Can you tell our audience how to get hold of you? Raj: Absolutely. I mean, I have a website, I'm very active on Facebook, but my website is smartcapitalmgmt.com. My email is raj@smartcapitalmgmt.com. Easy to use to get to me or LinkedIn. Facebook also is there James: Awesome. Thanks so much for coming. It's so refreshing to see how someone from the tech industry moved directly into a multifamily investor. I think a lot of people do, right? But there are still tons of people who don't, right? So it's just the thought process and sometimes the desire to technologize everything, sometimes it's hard, right? Real estate-- Raj: -- Why do you want to do that? I mean, you want to enjoy what you're doing, right? If building a technology company is your passion then real estate will not be the thing, but leveraging technology to get smarter is another issue James: Got it. Awesome. Well, thanks for coming. I'm sure everybody got tons of value Raj: Thank you, James. Thanks for having me James: All right. Good

James: Hey audience and listeners, this is James Kandasamy from Achieve Wealth Through Value Add Real Estate Investing Podcast. Today I have Rama Krishna from California. Rama has been focusing a lot on apartment purchases which is averaging around 30 to 40 a units and at the largest you have done were 59 units. So it's going to be very interesting especially for a lot of people who are trying to get into the game and also looking for like high cash flow as well, you're going to go detail on why sometimes the smaller deals makes a lot more money than larger deals. So hey Rama, welcome to the show.  Rama: Thank you James. Thank you for having me.  James: And one of the things that we want to talk about apart from going into Rama's strategies and businesses, we want to go into what asset manager can do during these Covid19 crisis that has been happening right now. Hopefully I can publish this podcast as soon as possible. But I'm sure it's going to be very relevant because it's going to take a few months for this crisis to subside I guess, it may take a few more quarters to fully subside. So Rama, did I miss out anything on your credentials?  Rama: No, not much I think. So just to kind of re-summarize, I am based out of California in the corporate Bay area of San Francisco, an IT professional. So just to recap like 90 seconds. I started like from real estate two years back started from single family homes and I always want to actually to do Real Estate but the problem is in Bay Area, really hot market. I cannot get any cash flow. It's kind of very hard to find deals and I didn't want to do out of state because I have a very stressful IT job here. I cannot travel out of state to do these things. I was postponing doing real estate for so long time, but three years back kind of pull the trigger, bought my two single family homes, one in Raleigh and Atlanta, that's where it started and quickly realized that I cannot scale with single family homes and got into multifamily, bought eight apartment complexes between 20 to 80 units. That's a more like a sweet spot for me. Like doing the deals. We can go further into that. One thing, we started, we didn't talk before is that construction projects, two new construction projects, 97 and 92 units in Raleigh, Durham, North Carolina. So they are like devalue adds, value adds and the new construction mostly into that existing apartments and new developments.  James: Got it. That's very interesting. I think we should just definitely talk about you and maybe do a separate podcast for the Covid19 asset management because there's so much of information that I want to get from you and I think the Covid19 thing is also very important. So that's going to be another podcast maybe before or after this. So let's go into details; the market that you have been focusing on that, I know we talk offline before this is Florida, Kansas City and Ohio, and you are sitting in California. At what point of your work, you are very stressful IT guy. I mean, I was a stressful IT guy too. What was that aha moment saying that hey, I better go buy something else or did you play around with stocks and realize stocks is not for you? So what was that aha moment that said that you need to go and focus on buying a multifamily apartments?  Rama: So I did two businesses, IT businesses, products and the consulting business. I did stocks, options and everything. It was a lot of active businesses, I need to be there, and I am really active, let’s say if somebody can start restaurants, like franchises, you need to be there in that actively. So you are there to be part of the business, then you cannot succeed in that. Even IT businesses or consulting or product development, everything is active here. Even where a lot of people have a lot of money from IT as freelancing or like full time jobs, but the problem is if they stop going Monday morning they cannot make money. That's the main part for me to getting into the Real Estate and then I bought these single family homes, I'm getting like $200, $300 for each single family home as a cash flow. But then I wanted to scale it, but at the same time I thought I cannot scale it. The problem with apartments at the time for me personally living in Bay area, these apartment complexes are so expensive. These are like 20, 30, 40, $50 million. I didn't even know that we can buy a apartment complexes. The two things, kind of the aha moment for me is we can buy apartments as a common man with syndication. Syndication is another thing. I was buying single family homes myself and I know a lot of my friends actually buying single family homes out of state. They buy in Texas, North California; they buy everywhere all the single family homes. But if you combined 10, 20, 30 people combined, we can actually buy larger complexes, larger commercial properties. That was a [05:17unclear] the syndication itself was an aha moment for me.  James: Was that from someone talking to you or from bigger pockets or you're talking about syndication or what happened? How did you find it out? Rama: I learned about this syndication with a webinar from Neil Baba, you know Neil? He was having this weekly or acting monthly multifamily fundamentals webinar. So two years back in November 2017, I had this is a webinar from him and the moment that I did the webinar, I first reached out to him Neil, I want to meet you, this is really good, this is crazy. Then met in a Starbucks in Fremont and I told him after this Neil I want to learn this thing. This is exactly what I wanted to do and he said there's a boot camp coming up. He would come in February and I said I'm going to sign up on that. That's when it kind of started, kind of working from single families to multi families.  James: Got it. What were the few key things in that discussion with Neil that you have was like, wow, this is suitable for me. What was your personal thing that you think that oh, this is very interesting for me. What are the aspects of syndication that was very attractive to you that you think [06:40unclear]. Rama: Three things, Oral apartments is a kind of a scale in the single family home model that what I'm thinking. I know the real estate passive income, but then I cannot buy a hundred, 200, 300 single family homes. The first thing is scale. The second thing is run as a business, like I did my IT businesses before. So apartments is also a business, you need to increase your income, decrease your expenses, and then efficiently run your operations. Make sure that you know everything like people management and you talk to your property managers and investors and your brokers and seeing like identifying this analysis, everything. Run it as a business. Third thing aspect is a syndication model itself. I have like hundreds of friends here and other acquaintances, old colleagues, a lot of people are high net worth individuals. If I can prove myself in this business, I can definitely syndicate and raise capital. So those are the three main aspects for me that kind of struck the card when was talking to him and also the fundamental thing, hey we can buy larger complexes like this. Like I was not even imagining the common man can buy apartments. Those are the three main aspects.  James: Got it. So now you're sitting in California, after you talk to Neil you come out and you already go to his boot camp. Why you went from California to Florida, Kansas City and Ohio? Which deal did you buy for us? Which state was that?  Rama: For my multifamily?  James: Yeah. Multifamily.  Rama: The first five deals, I bought it in Jacksonville, Florida.  James: Okay. Why Jacksonville, Florida? Why not Las Vegas or Utah or Texas? Or is it just that you landed there by luck? Rama: So I want to actually buy a multifamily in Raleigh, Durham and Atlanta because that's where I started. When I started researching about markets for my single family homes, with all the research I did, I picked these two markets, Raleigh and Durham.  James: Okay. What are the things you saw in Raleigh, Durham and Atlanta that were like awesome [08:49unclear].  Rama: Some of it I think was I'm reading all the articles and reading all the articles and everything with the technology stuff happening also there and jobs moving in, I didn't actually connect the dots at the time, When I did the boot camp from Neil then I was able to connect the dots and say hey, these are good markets. Then I was started offering on deals in North Carolina and Atlanta. Like none of them were pencilling out, like what is this? Even two, three years back it's not working out. I can't imagine now, maybe like with Corona, it's never kind of worked out for me because I never purchased in the last three years. When I started multifamily again I started looking into these two markets, Raleigh, Durham and Atlanta. I was offering ton of properties. I visited brokers’ network. Either the deals are like C minus, really bad locations or bad tenant profile. The income is bad, which numbers are working on but the thing is I don't know how to do the deals there or it's too expensive where it just didn't work out for me.  The vision for Jacksonville is when I was trying to expand markets from single family homes, I was looking at Austin and somehow actually got into Jacksonville because of the property manager or the property manager was actually offering, they do turnkey single families home as well. So I was talking to them doing due diligence, everything with them and making sure what kind of deal on single family homes that they can help me on, on rehabbing and the stuff. Then I suddenly like after talking to Neil, I said, guys, I'm not interested in single families. No, we have deals, this is like 60k and we have this 140k [10:39unclear] but they said okay we'll help you in multifamily as well. Let me know if you find any deals. We'll help you manage. That's when Jacksonville started and then they also kind of helped you and due diligence and everything. Then we'll look at a few deals together and we bought this 20 unit deal and that was on market actually, but it's the heavy lifting stuff like the roofs are bad, two, three units are down; it's really heavy lifting. I thought, okay, let me just get into it. The twenty unit is most like a cost of a one condo here. James: Looks so cheap when you look at California?    Rama: You know what I'm going to lose here, let me try it out but we made really good money on that. So definitely that's the good, I got the money from my friends and family first, not as syndication. It's more like a joint venture. A lot of my small multifamily is a joint venture. We can go into details how we've structured those. So that was very good deal. Look back right now. We did that and then quickly since I liked the market, I kind of learned about Jacksonville more. The more I know it's like a really hot market, then the found more deals in the end of that eight months to nine months and then they all are smaller, 20, 30, 12, 32 to 59. James: Syndication. I mean syndication; you can put larger money and buy a hundred plus unit or like some gurus say by start with a hundred plus. Why did you start with 20 and 30? And what is the driving motivation for that?  Rama: Neil actually encourages to start with small, he never said go more than a hundred units, but I'm part of a team of multifamily Mark Kinney. He suggest only a hundred plus units because of several reasons because you're putting effort on a 20 unit, it's the same as 200 units, go hundred plus. I totally believe it from a mentorship perspective, he's different. I did that because when I did my eight LLC taxes for last year and all the administrative work that goes behind these things. I would totally agree with Mark and also any other gurus out there that say go hundred plus units. I totally agree on that from effort standpoint. But there is money to be made in this 4,200 unit space as well. And a lot of people ignore it. There is definitely a possibility that you can put your operations hat there and your creative hat there to see how you can profit from it. You also know from the investor perspective as well.  James: Yeah correct. I started with the 45 units and I really love it just because you really learn a lot from smaller deals and you don't have to go much bigger deal and you forget, you cannot be like skipping elementary school and middle school and try to go direct to high school. I mean you can do it once in a while or when the market's so good but the fundamentals of real estate is really learned on the smaller deals, even with single family. You start with single family and you move to the smaller deals.  Rama: There are pros and cons. For example, the pros are you don't need to have payroll. The con is also the same thing. You don't have a staff and then your property manager may be sitting in some downtown office somewhere. They don't know what's happening at the 20 units or forty units. So you need to have very kind of a good property manager, even for a hundred plus units also you need a good property manager, but at least you have staff. If you can talk to them, hey, what's going on? Because the regional might not be at the site all the time. The regional might be like going once in a month, once in 10 days, whatever. But you have a staff day you can talk to, hey, what's going on leasing, what are the foot traffic? What are other strategies that you have always or do you have going on these units? Have you did the make ready? All of these things. There is a long [14:38unclear] clean you can talk to someone. But if there is a 59 unit somewhere in the west side of Jacksonville and my property managers sitting on downtown, they don't even know the pool guy's coming, they don't know that the lawn is not cut for the last two months. So there is good and bad, especially if you're doing out of state property manager, no asset management. That would be more difficult. But there are ways to mitigate that. Have a local partner in your deal that is onsite, on the ground goes once in a week or so.  James: Did you have a local partner there? Rama: One in Jacksonville but not in Kansas City and [15:2unclear] but now Jacksonville, I have changed my property managers, she's really hands on and she actually sits in one of our office. Jacksonville Unit has an office actually. So she's really good and now I can think of acquiring more properties in Jackson, I was thinking not be acquired more. But if you have really good property manager who is hands and kind of trustworthy, then you can definitely; these are really cash cows.  James: Yeah. I mean the people play the most important aspect in property management. It's a people business. So once you find a really good people, you are motivated. Rama: You are local or have a partner locally in the 40 to 80 unit game and it's definitely worthwhile to [16:08unclear]. James: Because it's not many people look at that space. I mean, the market was so hot right before, pre-Corona, I would say. Now we have to talk about pre-Corona and post-Corona.  Pre-Corona is so much of capital looking for deal and everybody just buy the bigger deals. Rama: Yeah, I do buy the deals in the three bands, James like 40 to 80, 80 to 160 and 160 above. 40 to 80 is where I do kind of deals with mostly JBS and then also syndicate patients deal where you don't need an onsite staff, we can operationalize and make sure that let's say if you have multiple 40 to 80 deals in the same market, you can actually have some scale within that. Have a maintenance person who I only see for properties. So 80 to 160 units where our focus primarily from a syndication perspective when we can have staff. 160 plus is an institutional level where the different companies move there, which I'm not going right now. But I would love to go 160 plus.  James: 160 plus, okay. I think that still does not answer [17:16unclear]. Rama: [17:17unclear] but at least you have a different set up [17:20unclear] James: Different level of people. Yeah, professional investors I would say maybe. That's good. Yeah. I mean so how did you structure this JB on the smaller side? Because you really don't have to do syndication for everything, I mean, if you have a few guys who are your family and friends who are willing to put some large money, you can just do a JB and explain to the audience how did you do that JB and syndication. Rama: Yeah, even if it is JV, I would want someone like they do perform some tasks. It's not that, you know, hey, like it's a JB and I'll do all the work. They allow us to have to do some work on that. Because they all structure James two options here. One, either I put less money and they put more money and everybody will have an equal share. Let's say I'm giving very rough example. I bought 50K and other people put 100K each or 200K each, whatever it is. And each of the 3% will be attached to person of the [18:15unclear]. James: Got it.  Rama: That's one option. The second option is I've also put 100K but all three people will put 100K into the deal, but I get 50%. They both get 25%. It's just very high level examples. Either I put less money in and take an equal percentage with the other investors or I put more money and take higher percentage. But same money as others.  James: All these deals you're buying in these different cities is it all value add or de-value add or cash flowing? How's that?  Rama: Most are value add as some are de-value adds as well. I'm kind of going away cookie cutter stuff, but the cookie cutter stuff, I'd still do it. But for the long-term part. That is more kind of relevant for a JV structure because for syndication I need to perform two to five years, I need to exhibit. But if I find a deal, which is really kind of a long-term goal and that is also good for this model where I don't need to worry about performing something in three to five years, I can even take a bridge loan and refinance it and keep it for longer term to the cash flow that's fine. If you don't get to cash flow, that's also fine. At least you can get all the rehab money from the lender and renovate it fully and then go to a permanent loan and keep it for like another six to eight years or 10 years.  James: Do you finance with the bridge loan in the beginning itself?  Rama: Yes. Yeah. Half of the loans I deal with now are bridge loans.  James: Okay.  Rama: Half of them are Freddie Mac. But see this is a de-value add. I know I can get all the rehab budget from the bridge loan. James: Yeah, correct. De-value adds make sense for... Rama: And then refinance it.  James: Got it.  Rama: So it's like kind of a cookie cutter or a little bit like value adds, I go with Freddie Mac loans.  James: Got it. Yeah. I mean the smaller ones has less competition. Sometimes you make a lot more money because there's no payroll and some people like my 45 units people just like to stay in a smaller community because they don't like bigger and the people, a lot of residents like a smaller communities, they don't need all these amenities. They just say we want housing.   Rama: Yeah that's true and another trend is happening, the build to rent. They're doing a medium density bill to rent the whole complex is for Randwick. So they built a town home complex or a single family home complex only for rent because we will be rendered national for some, and especially this post-Corona, it will be delayed like three more years, people will not be looking at home ownership. But at the same time, they don't want to live in apartments. They can live in a town home community or the kind of a little bit less density, a single family home community, maybe more density, single family home community. They're okay with that, right? Because they still have the pride of ownership. You have a better tenant profile and they can also feel that they're living in a regular home than an apartment complex. So the build to rent a town home and a single family home concept is growing as well.  James: So let's say you get a deal; every day you get a deal right now, I mean you're getting into brokers I presume. So what are the sniff test do you do on the deal? Because sometimes they list too many deals?  Rama: Yeah. I have my 60 seconds rule, 60 minutes rule and I don't know, 60 days like I see the more you go, you're going to spend more time on this deal. So the first thing I do is go to the justice map or CoStar just to see them demographics. For what is the median income and demographics mix on this and how the income is growing in this area. If that is a bad area I just... James: So every deal, the 62nd is that few steps go to CoStar.  Rama: Yes first go to; no, I don't need the CoStar, District Map is free. Just go to justicemap.org, just put that address.  James: What's that website called?  Rama: Justicemap.org. James: Oh justice map, yeah, justicemap.org. Rama: Just go to that, put the address you will see the census block. What is the median income, what is the demographics mix and how the income is changing. Then you will see the first sniff test and then I'll see the rents. Nowadays what I'm seeing is the average rent, like around $750 or about; I'm not going to C minus, C property, C plus or B. So I can quickly take a deal out, 60 seconds or less. And then next step will be go to the bond writing and see what the rent projections are, go to Rentometer or any other, I can go CoStar or Rentometer and see what are the rents. Are they below the market or not because I don't care about the rent growth, what happened in the next five, six years, what is in place rents and what I can achieve the market. That is where I focus. Let's say if it is $75, $150, $200 below, then definitely if it's like a C plus, B area, 45K or 40K median income and the demographics mix is good and everything, then I definitely go to the next level and traditional spend six days or not. Then to go to the 60 days. James: That's probably including the best and final and all that. Rama: Yeah every step that you go 60 seconds, 60 minutes, 60 days you're going to waste your time, effort, money on a deal. You need to talk to programs you need to visit, it adds up the cost, time and effort, energy.  James: Yeah. It's crazy how much work you have to do on progressively. So is there a lot of competition even on the smaller deals? Rama: There will be. Yeah. And it sounds especially previously that lasted two years, this competition for everything. But the 40 to 80 unit spaces, James, the smaller people cannot buy those and they still want a track record and know everything. They don't want to give it the deal to anyone. The bigger people are not interested in this because and the same thing that you said it's too much work. Definitely there will be competition but if you do a JV structure and especially you can do a long-term goal or maybe a tentative exchange because on a largest syndication it'd be 20, 30, 40 people. It's going to difficult to convince everyone, hey, let's do a 10, 31 exchange. So on a smaller deal if I get a 42 unit I know the JV people, like we have five people, so once we got a bridge loan, we renovate, and we’ll sell. Say if somebody wants to know by this thing, we have a bigger pool of money in the pot for the 10, 31 now we can from 42 units they can go to 80 units and then they can move to 160 units. I can spin off three fourth, 10-31 exchanges like that and quickly it can go from 200 to 800 units within two to three years or four years.  James: That's interesting. You can start from small and just doing 10 31 and start increasing. Rama: Exactly, on syndication it's not kind of very difficult. I have 40 investors, like half of them, hey, I need my money back. I let them say, let's just enter the one. Okay. Then it'll be difficult to coordinate this.  James: Oh, right. Interesting. Yeah. I never done a 10 31 exchange up until now because I don't prefer it so much because I'm worried that it costs me to buy the wrong deals. Because all sellers love 10-31 buyers. Rama: TO be active, don't disclose that you're a 10-31 buyer. Have those deal flow, you need to be really active. Every time I have four to five, six deals, then I can pick the right one. Hey, I'm not going to go wrong on this because it's a B property, eighties construction. What are the criteria that you have? The rents are like a hundred dollars lower. I'm okay to even or pay 100K - 200K on this because on the 10-31 you want to certain the deal, you want certain to close it. So picking the right property and make sure you're doing the due diligence and then do the 10-31 because yeah. So worst case, you'd pay taxes and it's not like another wall. It's better than going in the bad deal.  James: Correct. Yeah, absolutely. Absolutely. Absolutely. So tell me about your value add strategy. Do you do interior, exterior and from deck and you define what's the most valuable value add that you have seen? Rama: No, I do de-value add, like if the roofs are leaking, like falling down we get a new roof and completely renovating the units to top-notch, [26:57unclear] dollars also into the C properties. I think the thing is weird to see the holistic picture. There is no one specific thing that I do, which is the most value add, just turning it on the property to create the maximum value out of this. Like if it is a exceeded deferred maintenance, the problem with deferred maintenance is you don't get any rent bump if I change my roof. But you need to make sure that you negotiate the deal. Okay. Hey, this has a roof issue and if you're paying the market price, but for a de-value add that doesn't make sense. If there is an exterior deferred maintenance I would love to know everything in place and only do the interior value add. That is the best thing to do if I can get, but I'm not afraid of de-value adds. I did full redevelopments also I'm doing new construction as well, so whatever the maximum value that you can out of the property on the rent. That is what I looked into it.  James: Got it. So that's very interesting. So tell me about yourself. I mean so you are an engineer and you are doing real estate right now, where do you see yourself in the next five to 10 years? Pre-Corona or post-Corona? Rama: If we didn't have the same conversation January James, I was thinking I would retire in 2020. Like I had two deals. I was about to go under contract at backdoor on one day I was at the deal also I'm at 80% on the fence to back out. Completely changes. So things like this, you go back to the square one, go back to the drawing board or go back to school. . Then rethink your strategies. Yeah, definitely. De-value adds and new construction. I want to get maximum value out of it. Cookie cutter. I'm like mostly ignoring, but if I can do long-term goal, I'm okay with cookie cutter. If not that I can get out three to five years and do this like kind of churn. It's just a lot of work. A lot of people think when you're just come into syndication or a multifamily, it is a passive income. This is not passive income at all, like zero. For investors, yes. So I would continue doing what I'm doing, but it'd be more conservative. The new rules. The rules have changed.  James: The rules have changed. Yeah.  Rama: The playing field changed. The game is changed. Everything is changed. But the fundamentals remain the same. We will be renters’ nation. The multifamily will not go away. People need place to live. The next one year will be a little bit at least six months to one year. It will be tough in the operations perspective, fully focusing on operations on what I have and I'll continue the story, but the story now will be much better. You will see what is the need for passive income now you know better. Things might change. People are getting laid off. So you need to get your passive income streams. The story becomes stronger now and nothing changed in that perspective. James: Correct. Correct. Also in the stocks market you can lose your money, but in a brick and mortar real estate, you don't really lose the money. Rama: The capital is reserved, you have a hard asset. You can go and touch, feel it, and then that's not going anywhere. You might have instead of 8% returns, you might have 2% returns or 1% returns, at least your capital is reserved. Stock markets you're bidding down like crazy there. You're losing half of your money or more than half of your money. So the story got better and maybe easier to pass on this thing. But there might be challenges raising capital in the next few months because people might have lost money in stock or lost their job, whatever it is. But eventually it will come back. The people will remember this. They know the value of passive income more than before. I'll continue the value adds, the de-value adds and new construction strategies into the multifamily.  James: Got it. Is there a proud moment in your life that you think you're really, really proud that you cannot forget? I mean, until now, I mean, of course you're going to do a lot more things right, but until now when you started this business. Rama: Yeah. The first 20 unit deal, when we actually renovated this thing, I really felt happy. It was actually really bad property. The roofs were really leaking and everything; the tenants were bad, the backyard, everything was all trashed and completely, we re-profiled this thing. We did maybe more than 70% returns on that. The manufacturer, that's one thing. Overall the transformation that you do kind of really was proud moment for me and also the land development deals that I'm doing. It was 18 months of effort for us to get these 97 units a town home project, we closed it in February. So I was really proud of that new development site.  James: Got it. So you're like moving from one domain to another domain. That must be a happy moment. Why did you move to development?  Rama: As I said, I like this North Carolina, Austin, Atlanta hot markets because I would rather do it in this market, but there are no deals out there in a sense too expensive. You know Austin? All seventies and eighties property itself is so expensive. I would rather build new but there are unknowns. There are risks for new construction. It's not that easy to hazard zone. James: [32:54unclear] building, if it's [32:57unclear]. Rama: Everybody will be building, it has its own staff but overall I want to be patient to find the right deals and find the right construction partners, find the right type of investors. Not everybody will be interested in new development. You want cash flow. You're not going to get cash flow. There are a lot of risk also. You might lose your capital also in that because there are no assets.  James: You have to go to so many entitlement process and city approvals and all that.  Rama: Exactly, there are red tapes involved, there are so many things involved but I would in a market like Austin or North Carolina I would rather to build than buy a seventies or eighties product. That was the main reason for me to get into new development because I liked the market, what I can do in this market because I love North Carolina, I love Austin, I love North Atlanta. What I can do in these markets from a Real Estate perspective, the only answer for me is the new development.  James: Got it. Interesting. So tell our audience how to get hold of you? Rama: Yeah, you can reach out on my website is zovest.com; you can reach out at rama@zovest.com and I'm active in a lot of Facebook groups, you can reach out to me there as well.  James: Awesome. Thanks Rama for coming in. Happy to have you here and happy that you add a lot of value to our listeners. Thank you.  Rama: Thank you, James. Thank you for having me.

James: Hey audience and listeners, this is James Kandasamy from Achieve Wealth True Value Add Real Estate Investing Podcast. Today I'm happy to get Ivan Barratt into our show. Ivan is a multifamily owner-manager syndicator who specializes in large apartment complexes in the Midwest and he has been doing it since 2015 with over $18 million in equity, with more than 3000 units as the primary GP. And he has grown his company, which is Barratt Asset Management to be best in class two time inc 5,000 private equity and management firm. And he focuses a lot on equity, finance, acquisitions, and companies' strategies. So currently managing over 300 million in assets, comprised of almost 3,500 units. Hey Ivan, welcome to the show Ivan: James, so good to see you, dude. I always love talking to you man. It's good to be on the show officially. James: Absolutely. I know we postponed it a few times so this is going to be very, very valuable to me and to my listeners as well. And so, Ivan, let's get started. How did you get started, right? Let's quickly go through it. How did you get started and how did you end up with $300 million in assets under management? Ivan: Yeah. You know, for me it all started with one duplex that I house-hacked back in 2000. I'd wanted to be in real estate my whole life. My dad is in real estate. He was an attorney, always owned rental properties on the side. A couple of entrepreneurial uncles on both sides of my family that owned apartments, gas stations, car washes, all kinds of businesses. So at a really early age, I wanted to be an entrepreneur and I wanted real estate because I thought, gosh, why would I want a real job when I could just go out on a lot of property and do whatever I want and watch the rent cheques just come in. So I went to school, went to college, went through business school, got a degree in real estate finance, got out, house-hacked a duplex. For the first eight years, I worked for a mentor in mostly development, but also property asset management. All kinds of different jobs that I got to have that I got to where I working for this real estate developer. And most importantly, I got a front-row seat to the great financial crash in 2008 at a really young age, a huge gift. I learned. I wasn't as smart as I thought. I learned that I was doing real estate the wrong way and that's when I really started modeling multifamily companies. Because I'd always wanted to own apartments, but I also saw that in a downturn, those multifamily companies got bigger, they got stronger, they acquired more assets because of the way they were financed. And so that really was the impetus to get me started in my own pursuits. Then I actually started in 2010 as a property management company first because I knew that if I could figure out the property management game and doing that for others, that when it was time to buy bigger deals for myself, I would have a higher likelihood of success of execution. So I started buying a few small deals at the same time, was managing for other clients. Anything I could get my hands on where I didn't have to carry a gun and I was doing everything. Started from the bottom, then started being able to buy larger apartment deals. And when I say large, I mean, my first apartment deal was six units and about 35 and a 30. Then I said I'd never do another small deal again and I bought 15 cause it was just too good to pass up. And then from there, I started syndicating. I did my first syndication of 60 units and I bought 112 and all the while, still managing for other people as well. That was really how we grew the company in those early days. Once we got to onsite staff size properties, there was really no turning back, pretty addictive. Fast forward to today, we still do some management for others but we mostly manage our own assets now. And we are far and above are our biggest clients. And that's the shorter version of where I come from and how I got here. James: Got it, got it. So is this 3,500 units, is it all you? I mean, your company or you guys do fee manager part of it or how does that? Ivan: Yeah, so I own about 3000 units. We're down to about 500 units that we manage for others, it's not really a focus moving forward. We still have a few close partnerships that we like managing for. But really the way I've built and designed my company is not to be a profit center of property management, more to be an execution machine for my own wealth strategy. And so I think you and I've talked about this before, you know, on the property management side, I could be Scrooge and I could really be tight and I could probably make a 15% margin but instead, we focus those dollars into our culture, our people, growing leaders within the organization, having fun. Property management is not easy. You know, having great events and really trying to create this beautiful machine of people that want to come to work, want to do a good job, want to stick around a while and believe in what we're doing. We call it the band fam. James: Awesome. Awesome. So let's go deep into the, you know, how you got started and it's just so interesting, right? I mean, you had that vision to start from property management first and then added assets, which is, you know, how like even like Ken McElroy started, right. He started being a property manager first. Ivan: Ken McElroy was a huge influence in my career. Yeah. Huge influence. I read his book very early on and that was one of the key influences for starting my management company and figuring that out first. James: Yeah. And I think he had mentioned it many times. I mean, for the audience who doesn't know who's Ken McElroy. He is one of the largest owners of multifamily in the US. I mean, he is an advisor to Robert Kiyosaki and he's a big guy, well-known guy, a well-respected guy in the multifamily industry. And he mentioned very clearly in his book, right? I mean, to get started, you probably want to work for someone or go work as a property manager. And I don't think so many people are following it because people think it's just buying assets and letting it ride through a, it's okay. But what did you learn from that experience? And starting from property management and going into as an owner as well. Ivan: You know, this is 2011, 2012, I've got 70 units and I am everything. I'm the busboy, the cook, the maitre D. I'm the leasing agent. I'm the property manager. I'm the rent collector. I had a little bookkeeper that came in every other week cause I didn't want to screw that up. So I literally did everything first and learned to be efficient with it and also learn, you know, strengths and weaknesses and made a lot of mistakes. I've finally just decided early on that I knew I was gonna make a lot of mistakes and that was just part of it. I finally figured that out in my mid twenties, that being an entrepreneur is a lot about failing forward, making mistakes and learning from those mistakes and not quitting. It's not a calm, okay sort of method, but it's the backstory to a lot of successful entrepreneurs. So I just copied what those who had been there before me had done. James: Got it. Got it. And I mentioned it in my book, I mean, across all commercial real estate, multifamily is a really, really good asset class but the hardest part in multifamily is property management, right? I mean, managing that 300 or 100 units income stream from different people is just the hardest. I mean, you'd rather buy an office, have three tenants, professional tenants and you're done. Ivan: Yeah. Multifamily is the best asset class for return on investment on the planet until you move in the people. James: Yeah. Until you move into the hard job of multifamily, which is basically the property management and, you know, you'll figure it out. You'll figure it out beginning in itself that, you know, property managers, I mean, you want to start from property management and going into asset management. I mean, you and I know that you really don't make money in property management. It's basically a time-consuming job. Ivan: The most important one, but very, very time-consuming. The most important job, James: Absolutely, the most important and we do it for control, right. For control of our value... Ivan: Oh, absolutely. I couldn't imagine hiring a third-party manager for my own assets. It's just the way we do things and the amount of control we have, the ability to move pieces around. For instance, we had one property that was suffering a little bit. We were still trying to get the right management team in place. We took our best leasing agent in the entire company and we moved her across the state to do her thing at an asset that needed her assistance. And that's very easily done when you control the management side of it. If you're out there and you're just another number to a third-party company that's a far more difficult solution to get. They're not necessarily going to give you their best people or move around their best people. James: Yeah. And I also think property management is the best way to make deals, numbers work in this market cycle, right? Where the market, it's not like appreciating like what it used to be in the past five years. Ivan: You're giving away my best secrets, James. James: I know. Ivan: How we get our value-add picture to work is a big part of it is being able to manage these units efficiently and knowing exactly what it's going to cost to run them and finding inefficiencies and reducing expenses. It's one of the three legs on the stool right now for making deals, achieve target returns. No question. James: Absolutely, absolutely. I think that's very important for...that's why we do vertical integration. Because deals at this stage of the market cycle, where everything is overpaid and people are bidding for high prices for everything and it's just so hard to do, you know, if you're doing it third-party. Ivan: No question. James: So, yeah, I mean, to be frank with you, in the last one month, I have like four guys, four friends who are syndicators, who never had a third party. I mean never had their own property management. They called me for a meeting. They say, Hey, how can we do our own property management company? And I asked why and they said, Oh, you know, all these guys are not good. All this third party, what I told you guys like two years ago, right? And I say, do not do it. But they say, no, we are going to do it. Right? So I mean, yeah, if the market is 150% and your property management is 70% capable, market is 150%, your property management company capabilities are mask off by the market. Right? But if it's the other way around, right now, I don't think the market's at 150% probably is 90 80% right? But now you know, everybody's getting undressed on how capable they are. Now, everybody's like scrambling to go and say, now they're seeing all the weaknesses of all the third-party property management companies. Right. Ivan: Agreed. James: Yeah, absolutely. Absolutely. So come back to deals that you buy in the Midwest. So is it you are in Midwest and is that why you buy in that market? Ivan: Well, I'm lucky. I live in a place that's really great to invest in right now. Midwest, it's steady. The markets we look at have been growing on average 3% a year for 35 years. They don't boom, but they don't bust either. And so, we like a lot of these tertiary and secondary markets in the Midwest that have also successfully decoupled from the Roosevelt economies of old and have government education. Health care is big. There's some blooming in the tech space, R and D, there's some big insurance companies, financial services. So there are these markets like Indy is a great example that hasn't quite seen the boom that some other markets have, but they've just continued to steadily grow, which is really good on a five to seven-year hold period if you can find the right assets inside those markets. James: Yeah. Midwest I mean, I'm not sure where I read it, but essentially the whole Midwest is very stable in terms of economy, right? Ivan: Yeah, it really has become that way. And also in the B, B plus rental cohort, the percentage of rent income is still in the mid to high 20% range versus a lot of hotter markets where it's higher than that. So I would see that as a sign that there's still room to grow rents if you're good at picking growing submarkets within those markets. James: Got it, got it. Yeah. If you're able to identify the submarkets within the market itself.  Ivan: The submarket within the submarket, within the submarket, right? James: Well that's what real estate is.  Ivan: Hyperlocal.  James: Hyperlocal. Yeah. And I'm sure you being local, you would be able to know a lot of areas on your own and then you'd be able to figure it out things. So what are the States are you investing right now in Midwest city? Ivan: So far we're in Indiana, Ohio, Illinois, we've got lots of submarkets in these areas that we are targeting. And then from there, there are certainly other States we've got our eye on, here in the Midwest as well. James: So, the deals that you are getting from this Midwest, is it through brokers or how are you guys, through relationships or how's that? Ivan: At our level...so our typical deal is going to be somewhere in the 30 to $40 million range and all those assets are controlled by the brokers. If you try to circumvent them and start going direct to sellers, they're really not going to keep you on their deal flow list. So we use the brokers to our advantage and we get a lot of off-market deal flow from our beloved brokers. We've closed a lot of transactions with them. They know we're a great company to do business with. We never retrade, we close quick. And so, we ended up being on the shortlist when they've got a seller that may be willing to transact but doesn't necessarily want to go full bore on market. James: Got it, got it. So let's say today a broker sent you a deal, right? So what would you look for in that deal that may be attractive for you? Ivan: Yeah, so we're looking for newer assets that are late 90s, early two 2000s. We'd like some stability because our fund dictates that the property can pay monthly cash flow to the LPs starting within 30 days of closing. And we liked that cashflow to be current to the preferred return of 7%. So it's got to have cashflow, day one. And then we still want to see some upside from value add, bringing in our management team, like you and I just spoke of, to manage it more efficiently, but also to make some improvements. If it's the mid-90s, it likely can stand some amenity upgrades and some cosmetic upgrades to the units. So we're looking for, for those two pieces.  And then third, we want a market where the rent is still growing, jobs are coming in, it's a good school district, you've got population growth. So those three components. If those add up to a reasonable expectation of 15, 16, 17, 18% IRR on a five to seven-year hold, we'd like it. We underwrite it to attend. So, if we're holding it more than seven years, we want to do two and a half, three and a half X equity multiple net, or we really want to harvest every five years if we can. James: So how do you determine the exit cap rate? I mean, I know you can't really determine the exit cap rate but in the Midwest States, how would you underwrite, what is the market cap rate plus how many...? Ivan: Yeah, I know there's a lot of talk right now about exit caps and what makes sense. We always just provide a cap rate sensitivity analysis. So we show what it looks like if the cap rate goes up every 25 bips, we show what the return looks like. It's our suspicion that cap rates are maybe a little bit lower than they will be over the long run, but not as much as you'd think. The spread right now between the 10 year treasury, which is at 150 today (actually it's a little less than 150 thanks to the coronavirus) and say a cap rate on buying out of five and a half or six, you're talking about 500 basis points spread in some cases.  In 2008 when the economy crashed, the spread between the 10 year and commercial cap rates was 50 75 basis points. So if you think about the spread between what you get for leaving your money in a 10 year bond and what you get for putting your money in multifamily is still very, very fast. So I don't see that spread going up unless interest rates go up a lot and there's a growing consensus that interest rates aren't going up anytime soon, the debt would just get too expensive. There are too much deflation and global slow down in the macro global economy to force rates up. They're actually continuing to have to ease and keep rates down. And so, I am certainly in the school of thought that we are going to look much more like Japan over the next decade. We're not going to have a lot of negative GDP but we're not going to have a lot of positive growth either. So rates will stay fairly low and there will be a demand for risk assets that offer a healthy spread above the 10 year. So that being said, you know, I probably went down a rabbit hole, maybe a little too deep, but with that being said, you know, we're typically looking at 50 basis points on the exit at five years but we don't get too caught up into that. We never show our pie in the sky and projections to our investors. We never show what we think the maximum rent we're going to return is. For example, I just bought a 272 unit deal, a fantastic deal I'm excited about in the submarket called Greenfield, Indiana, it's inside the Indianapolis MSA, third fastest growing County in my state. And I just have been organically raising, for instance, closing $150 a door on renewal and I'm painting and carpeting. James: That's awesome. Ivan: So I'm not really worried about my exit cap on that deal. You know what I mean? The thing is if cap rates, this is the other reason why you and I get 10 year, 12 year agency debt is because if there's this point in time where cap rates spike, I'm not selling, I'm going to hold the property in cashflow. Just think about it, James. If cap rates are going up, it's because of inflation. Interest rates are going up to fight inflation. Agree? James: Yep, absolutely.  Ivan: Well, if inflation goes up, rents are going up too. And the best part about apartments is that we get to reset our rents every month and every year. And so if I don't have to sell at this little point in time and I can raise my rents and wait for things to stabilize and cash flow along the way, I shouldn't be as worried about an exit in a specific year. Where people should be worried about exit cap are these shorter terms bridge loan deals where they're banking on a big rent increase in a refi or a sale two years from now or three years from now. I think that's taking on a measure of risk that would be a little more than I'd be willing to buy it off. We locked in that agency debt early. James: Yeah. Yeah. I've been doing my agency, all my deals has moved to agency, you know, for the past two years I've stopped doing bridge loans just because of the exact reason that you are talking about and yeah, I agree. Bridge loan do have some risks. Some people like it because they think they can flip it but you don't want to flip at the end of the age of the market now [21:51crosstalk]  Ivan: It can also flip the other way on you. James: Yeah, exactly. I mean, bridge loans and turning around huge deep value add needs a lot of skills and you are really banging on the market timing right now. There are a lot of factors to put in. I mean it's like a flipping a house, you're flipping an apartment. So is that how you started from the beginning itself, where you have trained your investors to focus on the cash flow of the deal? And a lot of my investors now, they want like annuity, just give me a cash flow. I don't really look at the pop the bag and it just give me an annuity because you know, six to 8% return cashflow is an awesome return. Right? And it can be much more awesome going down there. Ivan: Yeah. So, how we work with our investors is first, we educate them on how we mitigate the downside. Why we do agency loans, why we lock in for a longer period of time and we plan to hold it. Why we're buying a little bit newer of an asset versus what we were buying in different stages of the market cycle. Then we look at the yields of the property and we look at with them, like you just said, look at this asset. If nothing else works, it's still going to yield seven, eight, 9%. And then we're looking at what's the potential upside down the road, in that order because people do want to see cash flow first and they don't want to lose money. And it's nice to be in a situation where if the stock market is down 30% or if it's 2008 2.0, we might not be selling anytime soon, but we're still going to be cash flowing. Whereas, other parts of their portfolio will be hammered. James: Correct. At that time, that seven to 8% would reap some really, really good return. I mean, you are basically getting it now and you're just maintaining it throughout your market up or down cycle. Ivan: And it's harder but that's why we look for deals that have that seven, eight, 9% cash flow very quickly. And we pay monthly on our distributions is because I like monthly cashflow. I know you do and investors you do. James: Yeah. But is that how when you started like six units, 30 units, 35, is that how you were looking at the apartment? The perception of change. Ivan: No. [24:17inaudible] 2010-2011. When I bought that property, it was bank-owned, REO so that those were heavy value add deals. So early on, I was learning how to reposition a property. Because that was the market cycle that we were in, the stage of the market cycle at that time. And so, I started off buying those, I bought some C properties and Bs and we're looking for more of those heavy value-add deals. And as the market changed, we changed with it. James: Got it. That's very interesting. That's the part that I did. I did a lot of deep value-adds and you know, prove ourselves. I mean, deep value-add takes a lot of skills. I mean, even value-add takes a lot of skills or how fast the turnaround or how we manage a contractor, how you manage your finances, how do you manage your scope of work and the schedule itself. It's very complicated, right? I mean, a lot of people would have done it by skill. A lot of people could have done it just because the market appreciated, not to say because they did the job itself. Ivan: I'm sure you are excited for those deep value-add deals to come back one day down the road. But today a deep value-add deal, we just underwrote one. There was a moderate value-add, maybe $15,000 a door and if everything went according to plan, we would make a 15 IRR. James: Then what's the point of doing deep value-add? Right? Ivan: What's the point? Right. Because I just bought a 1998 vintage deal. It's fully occupied. And I just told you I raised rents organically already and that's going to do a 17. And so, there's so much demand and there are so many buyers trying to crowd in and buy these so-called value-add deals that we've gone to a different strata within our space to find value. And then, when those value-add deals, get back up above a 20 IRR, I'll start taking another look at them. James: Got it. Got it. Got it. So you have changed your strategy just because of the market cycle, and you think that is what the investors want, and you still get, I mean, a lot of investors who had even one, three, 4% return, right? So if you're able to give them like, you know, 15% IRR or 17% IRR, they would be ecstatic. Ivan: Yeah, in my opinion, I've got to be mindful of the market and work within my marketplace. There's opportunities in every stage of the cycle. But you have to go right with the market, not against it. James: Yeah. So how are you competing with big institutional players? Because they look for this 1990s, 2000, and they'd be able to look at the same deals that you are looking at. Right? Ivan: Yeah. It's very hard. It's very hard. I'm very lucky that I started this several years ago. And that I've got a reputation and a track record with the biggest brokers in my region which are all national brokers. And we lose a lot, we lose a lot to big guys. I've just lost a deal yesterday for a deal, I loved it, at 41 million and some out-of-town buyers who've done it for 44 million so they can have it. A lot of times it's off-market. And then some of these submarkets that we're keenly interested in are off the radar of some of the bigger fish from out of town. And that's really how we're finding a lot of value. We know where the emerging markets are, the old Dave Lindahl approach, right? We know how to spot an emerging market and that's a key to getting that value. That's really, in my opinion, one of the only ways that you can get those returns up to where they need to be to continue to please your existing investors and attract new ones. James: So let's go into details on how do you identify emerging market. Can you give like top three things that you look for to identify this as an emerging market? Ivan: You know, there's a lot to it. I'm lucky that I'm in an area that I want to be in, but we're looking at infrastructure improvement is a big one. We're looking at population growth, job announcements. Have the developments. So example in Indianapolis, I know where the growth is going. I know where the good submarkets are that it'll be the big suburbs of tomorrow. Infrastructure is probably one of the biggest ones. For instance, we're buying in a market right now or they're building a brand new federal highway over the Ohio river that is going to bring more jobs and more commerce. Right?That's just a few of the nuggets James: I think the local knowledge and the local connections, right? Just, just the local knowledge itself is just very powerful. Ivan: Yeah. But it's not as hard as people think to find. I mean, if you're looking at the entire map of the United States and you're like, okay, I got to find an emerging market, that's going to be tough. But if you can start to focus in on an area and say, okay, what's like one rung out, where's the growth going? Where are the new big infrastructure projects planned? Where are the good schools out in those areas where people are moving to, where the housing starts, right? Housing brings commercial, commercial brings jobs and jobs bring multifamily. James: Got it. Yeah, it's very interesting to see where is the path of progress and just go and target that where the big fish is not really looking at.  Ivan: And then if you're buying below replacement costs and you're doing it right, you should have a rental range that gives you an economic moat between what a new construction project would have to deliver and would have to charge in rent. So if I'm in an area, like I told you about Greenfield and Indianapolis, I'm in that area and right now my target rental rents are maybe 1150, 1175 target rents after renovation. If I know in that market that somebody wants to come in next door and their rents have to be $1,400- 1,500 a month just to get a shovel in the ground then, I've got a decent defensive asset. So new supply, in many cases for me, isn't as dangerous. It's actually, it can be a good thing. James: Got it. Got it. Yeah, that was my question because in 1990 2000 vintage, sometimes can be competing with a new supplier.  Ivan: Yeah. You really got to make sure your Delta is three, four, five, $600, especially if you're buying A-minus like me. It used to be the difference between A-minus and A-plus was maybe $200 and now in a lot of markets, it's 500, 600, 700, maybe a thousand. And so, if you can figure out where to enter that market and have a large spread between you and new construction, you're much more insulated from A-plus concessions. James: Yeah. Got it. Got it. So apart from getting good loans, because right now, the interest rates are pretty low, apart from the buy itself, you're probably buying at a certain price that you think you can hit the investor target. How do you do value-add? I mean, what do you look for in this 1990s, 2000 vintage that is common. What are the biggest value-adds that you see that is your favorite? Ivan: Oh, that's none of your business. James: Come on, man, reveal the secret. I have to work hard on 1980s, 1970 probably. I want to go to 1990. What are the things, apart from the price, apart from the loan? Ivan: Well, listen, I'll give you a nugget. James: Yeah, you can give a few. Ivan: A lot of operators are spending way too much freaking money on unit improvements. James: Okay. Ivan: Okay. And so because we're vertically integrated because we're property managers and we know everything going on on the front lines, in the trenches, we know where we're going to get an ROI. We know that maybe granite countertops don't get us the ROI but really nice Formica does. We know that a yoga studio...in redoing a 90s fitness center with new equipment and a little yoga studio, it's going to get us a much better ROI than stainless steel appliances, for instance. So it's just knowing your market, it's knowing really the ROI on those improvements and how they impact rent and it's different everywhere you go. It's not like you can just take what I say, go do it anywhere. You have to know in that market what works. James: So is it by doing market surveys where you look for, I mean, in terms of...? Ivan: Well, remember we don't have to survey the market here because we are in the market. We manage the properties. We have leasing agents all over the Midwest that are giving us instant, realtime feedback, right? James: Yeah. Yeah. Ivan: But with that said, we shop our competition. So, because we control our management company and we're part of the apartment association, it's a very tight family in the apartment industry and we really hire from within most of the time because it's such a specialized job. And so, my team can call anybody on any apartment project anywhere in the Midwest and say, hey, it's Cat from Band. Can I shop you today? And they do the same to us and we all trade information on what's working and what's not. And that's really one of the really cool things about property managers, we help each other, right? James: Yeah. Yeah, absolutely. Absolutely. I mean, it is a very small... Ivan: No here is what we do: We shop ourselves, we secret shop ourselves. We're very upfront with our competition. When one leasing agents calling my competitor and saying, Hey, can we trade what's working, what's not? What are you guys renting for? But then we secret shop our own people and they get scored on how they do by outside sales consultants. James: So, you talk about two things. One is the amenity where certain amenities are desirable, where you can raise rents because it's more desirable. The second thing you talk about is the efficiency within the pipeline of property management. Ivan: Listen, nobody uses the gym but it still sells people on renting. James: Yeah, I know. It's crazy, right? I mean, right now I'm being more cautious about what I spend on a gym because I know people may not use it. So I know there's a gym…  Ivan: Yeah but it's the wow factor, James. Oh, you've got a yoga studio. Maybe I'll do yoga now. I've been meaning to do yoga. The year goes by, I never did any yoga but I rented from that guy, James. James: And I see my property managers using the gym, not my residents. That's okay, you need everybody to be healthy.  Ivan:  #culture. James: So let's talk about amenities. How do you decide on which amenities are more attractive? Ivan: It's all a functional market. And, again, it depends on what marketplace that we're talking about. So we're looking,  we will redo pool furniture. Bark park is an easy one to put in if it's not already there, we're typically redoing the gym. A lot of times we're redoing the clubhouse with new paint, new furniture, maybe a couple of computers. Again, things that sometimes we will never use, but just to give that wow factor when they come in to be able to close them on living there. James: So do you increase, like, I mean, you'd be mentioned in the beginning, $100-150 per door just by adding amenities and better management, I guess. Ivan: Yeah. It doesn't always work out that well and usually that 150 is coming from multiple areas. We're raising certain fees so maybe the owner hasn't raised pet fees or water fees since they bought the property. I get bad reviews on my website because we raised water fees to market, you know, but that's just part of it. It'll come from organic rent increases, which is where we're just raising the rent on turn. And then it comes from quick cosmetic improvements to the units, on turn as well. Paint, countertops maybe new cabinet hardware. We rarely ever take out the cabinets. Maybe new switch plates, maybe some new flooring in the kitchen and bath. Very light improvements. James: So among the things that you mentioned just now, what do you think is the most valuable improvements that is the biggest bang for the buck that all your residents love? Ivan: Yes. James: Which one? You've mentioned like five or six, which ones? Ivan: I've given you more nuggets that I should, man. I feel exposed to you. I feel like I got to tell you these things, but no, no. I'm like, keep this to myself. You know, it depends. Sometimes it's organic, right? We bought a couple assets where it was a big company. They own 5,000 units, but they still ran it like a mom and pop and they were like 20 years old and they never raised rents. If people don't move out, they don't renew them and increase them; we do. Another property, it was the amenity package that really started getting more income in other properties. So it's all those things and it's property by property, which one's going to move the needle the most. But typically you need all those components to get into that target rent. That 125, 150, 175, it's going to help you achieve your target returns over the whole period. James: Got it. Got it. So yeah, that's very interesting. So let's go back to whatever you mentioned just now to the demand of the property, which are the residents. Do you think the residents in this 1990s vintage, 2000 year apartment residence is harder than class C, 1960, 1970 residence. How did you manage? Was it more maintenance? Ivan: In some ways, it's less maintenance but in other ways, the tenants can also be the residents. We don't call them tenants anymore, James; the residents. James: Yes, exactly. Ivan: The residents can be more demanding, have higher expectations. See you've got to have the right people there that are used to managing that particular product with the income of the residents that live there. So yeah, some people would misunderstand and thinks that A-plus is easier because everything's new and shiny and oftentimes A-plus is extremely management intensive because of the expectations of the residents. So in some ways easier and in some ways not. James: Yeah, someone told me, a regional manager told me that A or A-plus residents are much harder to manage because they have all this ego that they can pay. They expect a lot of things from the property management company and sometimes their delinquency can be high because they say, I can pay next week, you don't have to really come up... Ivan: We find the collections are usually better. James: Okay. Got it. Got it. So let's go to financing. So on top of agency debt you also do hard debt,  right? And why did you choose some of the deals to be under hard loans? Ivan: It's a great way to take a ton of risk off the table. It's a 35-year amortization and it's full and meaning, you can hold that note for 35 years without having to refinance yourself. So you take a lot of risk off the table. The interest rates are somewhat lower, although Fannie and Freddie have gotten very competitive in the last couple of years. It allows you to get an 85% loan to value on after repair value, so you can finance a lot of improvements as well, which is great in some circumstances. So if you want to hold the deal a while, like 10 years or more, HUD can be a good alternative. It's also very compliance heavy. There are audits, there are physical audits of the property, so you really have to know what you're doing.  We like it just simply for risk management. So we have several assets that are HUD. Big myth is that HUD means it's an income subsidized project and that's actually incorrect. HUD finances A, B, C, D assets. Their mandate is to help provide rental housing so it's available to a lot more people. A lot more assets than people may recognize. It's certainly not for everyone, but in certain circumstances, I think it's advantageous. We locked in our last HUD deal November of 2018, a $34 million deal. Locked in with HUD, our all in note rate is 313. James: And I remember November 2008, the interest for agency debt was pretty high cause I did lock in some deals at that time and I think that was, I think, November, December is when it picked up and it came down again. Ivan: Yeah, it was luck, we were able to catch the bottom of that treasury dip, which helped but it was still lower than the agency. James:  I know HUD like a six months once distribution, where you can take out the money. How do you do distribution to your investors when you have that kind of limitation? Ivan: That's one of the downsides of HUD. You can only distribute every six months. That's why we don't use it very often. It's a different investor profile. Some investors want to be defensive. They want to have their money in something and they want to have leverage but they want to have downside protection. So HUD works really well but it does not provide the same sort of cashflows that agency and Freddie do, which is why we typically use the agencies. For instance, I think I said earlier with our fund, it distributes monthly; I couldn't do that with HUD. James: Got it. Got it. Hey, Ivan, let's go to a personal side of you, right? Why do you do what you do? Ivan: You know, for me, multifamily and growing BAM as a business is a lot of fun. Because the bigger it gets, the more fun I get to have and it's a great business for designing the life I want and designing the business in a way that it's the life I want for myself, my wife, my family. And so I liked the wealth and the freedom with real estate. Yeah, that's the crux of it. James. I've got some big goals and being a good dad and a good husband and a good member of my community and leaving behind the legacy. And for me, owning real estate and owning a business to operate it, is the path. James: Would you do this for another 20 years? Ivan: You know, it's funny, I got to sit down with an older guy on the banking side of our business of multifamily. He took his bank public. I dunno what he's worth, but it's over half a billion dollars. He's probably approaching 70. And he says, Ivan, you don't stop; you just play the game at a higher level. And I can tell you he's having a lot of fun, has a lot of freedom, has a lot of time with the grandkids, travels wherever he wants for as long as he wants, with whomever he wants. So I don't see myself retiring in the traditional way, I want to continue to just play the game at a higher level. James: Yeah, it is so fun to keep on improving things. Ivan: Yeah. And I like to tell young entrepreneurs this and people that are newer to the business, if you're getting bigger and you're not having more fun, you're not doing it right and you need to refocus on your people and your process and so that you can scale it. Because none of us can just keep working harder. It's unsustainable. James: Correct. Yeah. That's one of the challenges that we are having and we are trying to grow and you know, it's becoming harder to find that process and people especially to replace what we do. And we have set an expectation on how things should be done, but not everybody is gonna work like what we do. Ivan: The first coach I hired four years ago, all we focused on was figuring out what my one thing is that if I spend most of my time on that, I will be successful and then finding the right people to do everything else. And then the hardest part is from a guy that started myself and did everything myself, the hardest part but the key is getting out of their way once you hire them. James: That's really hard. And you're right, that is the hardest part. Ivan: I think Tim Sarah(?) said it best. James, he wrote some articles about letting little bad things happen and that's key. Excuse me, I thought I was going to sneeze. Learning to let people make mistakes even when it costs you money and letting them learn and fail forward just like you had to do, it's very freeing. And when you have a management company and you've got fees coming in every month, it becomes a little bit easier to start to let those little bad things happen. Let people fail forward, let them learn and make sure they're not just coming to you for the answers all the time. James: Got it. Got it. Yes. The art of delegation and managing people. So it's just so hard to master, right? Ivan: Well, if you get the right people, there's far less management. You get the right people in the right seats. That's a big part of it. James: Yes. Yes. I agree with you. Let me ask you one more thing. I mean, you started from six units to now, almost 3000 units. So I mean, you have gone through a lot of experiences. Tell me one proud moment that you can never forget that you were really, really proud of yourself. Where you think, Hmm this is something I will never forget in my life, what is that moment in your real estate career? Ivan: Oh, so real estate category? James: Yes. Something related to real estate. Real estate family, I mean, anybody, just a human interaction. What is that one moment where you think that, 'I'm very, very proud that I did this and I can never forget this until the day I die'? Ivan: So it was one of our first bigger deals, it was only 89 units. I think I bought that one after I bought [48:53crosstalk] Yeah, I bought 112. I had already bought 112 units. And so I almost passed on this deal. It was only 89. I'm like, I don't want to do a deal that's only 89 units. And it was in kind of a rough area that we thought was maybe emerging. We kind of looked at each other or like my partner and me, like six months ago, this deal would have been huge for us, why are we turning our nose at this deal? We should do it. And we did the deal, we got it at a good price and people thought we were crazy. And it was a little bit difficult to raise the money. And we bought it from a construction guy that had already done all the heavy lifting on the value. So people thought, right, what's left to do because this guy already improved it physically, but we had the suspicion that we could manage it better. And two years later, we sold it for almost $2 million more than we bought it for, ended up selling it at a two and a half X to our investors in two years, a little over two years. And that was my first like really big home run. And I remember thinking, gosh, we almost didn't even do this deal. James: Yeah. So what did you guys do in that deal to make that much money since it's already done..? Ivan: We got a much better manager in place. We got a really good maintenance guy in there and of course, we asset managed them and we were able to raise rents, we got occupancies up. We reworked the utility bill back to make more revenue there. So the cap rate on that one didn't compress all that much on the sale. It wasn't just like the market went up. We just got in there and turned around the NOI because this guy was really good at making all these physical improvements and he was a terrible manager. And so we got all that straightened out and a couple of years later, had a big win to show for it. James: Awesome. Awesome. Yeah, I remember my third deal was like, everything's done, well, I was trying to find out what's wrong with this deal and it was a smaller deal from what I used to do, trying to really analyze what's wrong. Something is wrong but it ran in and out of contract like five times and the seller was really frustrated, so he wanted someone to close it so that's where I came in at that time. So Ivan, why don't you tell our listeners how to find you, how to get hold of you or your company? Ivan: I'm all over the internet. The easiest way to find me and my team is probably Ivan barratt.com. B A R R A T T If you Google Ivan Barratt, you can find ivanbarratt.com. Barratt Asset Management. Ivan Barratt Education, which is a site I put together for accredited investors, but they all cross-pollinate. So you find one, you'll find them all. I'm all over LinkedIn. Okay. And then if you want to talk, 317 762 2625 James: Is that your cell? Ivan: That is my scheduler to get you on the phone with me.  James: That's going to be, I was surprised. It sounds like a cell phone, but it's not. Awesome, Ivan, thanks for coming over. Hope you enjoyed it. Ivan: I had so much fun, man.   James: I learned so much from you and I'm super happy to know you and thanks for coming in and add value. Ivan: Yeah, I'm sorry to miss you in New Orleans. I can't make it. I'll see you at the next one, dude. I always enjoy our conversations and I gave my banker a ton of crap, thanks to you. I appreciate that. James: Oh yeah, absolutely. I gave you that tip.  Ivan: Oh, yeah. James: All right, so thank you.

James: Hi, audience and listeners, this is James Kandasamy from Achieve Wealth, True Value at Real Estate Investing podcast. Today I have KK Singh, KK Singh is a big figure in our social media circles, especially in the multifamily and multi-families syndication. KK used to be a Microsoft Certified System Engineer. I like to call it MCSE because it's a pretty well known designation for system engineers and the Microsoft world; and KK also owns multiple businesses including gas station convenience stores, a Laundromat, and also he started a real estate with a 40 single family residential in Indiana. And currently he's an investor in almost 3000 units as a LP, and in some of it is a GP across all States in the US. And he also has done agriculture, commercial and residential property in India. And also, business experience, almost 10 to 19 years in the US, and is also looking for expansion opportunity. Hey KK, welcome to the show. KK: Hello. Thank you very much James for having me on your show. James: Sure, absolutely. Absolutely. So, KK let's get started with our show. I mean I got to know you like almost two years now. So you have been doing very well in terms of multifamily investing and especially you started as a passive and now you're going more into the GPU, but I want to go before that. So you are on a later part of your cycle and you did a lot of different businesses, Laundromat and gas station convenience stores. And so I want to go into that business before we go into multifamily. And then after that I want to compare that business to multifamily. And why did you, at this stage of your life, why did you want to do multifamily? Because there's a lot of people who want to really learn these different businesses. Like I always wonder how gas stations work. I always wonder how convenience stores work. How does a Laundromat work? And do they really make more money than what I'm doing right now in multifamily? So you are the best person to really tell us and our audience what are the different aspects of this business. So let's start with, I mean, you own gas station convenience store and Laundromat. So tell us about these three businesses. I mean, how does the business work? How much do people make? Even in that business, what are the values that you always see that it's very awful? KK: Well, I came to United States, as you said, Microsoft Certified System Engineer and I lost my job after 9/11. And it was just about six months before I came. So I had a job for about six months and I lost my job and my friends were in the gas station business in Indianapolis and they offered me a partnership in the business and they asked me to come and join their business. And so I decided, since I had no options, I decided to join their business as a partner. It was a gas station in Indianapolis. So I started managing that, I automated there, put it up because everything they were doing on papers with pen and paper. So I was a computer professional, so I did everything into computers. And soon we lost the lease because the owner did not renew the lease on that property. So I had learned the business because I had it for about a year. So I bought a gas station here in Fort Wayne after about a year and a half since I came to United States.   James: So, before we go to the other business, how does a gas station make money?   KK: Well, the gas station owners make money mostly on the inside sales. They don't make money on the gas. James: Oh, you don't make money on the gas? KK: But you don't make money on the gas. And most of the money is made on the convenience store side. So, first I bought one gas station and soon I had other people join me buying gas stations. Here I was, the first Punjabi to buy a gas station here in Fort Wayne. And soon I brought some of my friends, my relatives to buy gas stations here. So we formed a group and we started buying in bulk. And that way we made more money, we got more rebates; we got more kickbacks since we were buying in bulk. James: So the rebate and discounts that you get that's on the fuel price? KK: No, on the inside sales, mostly on the... James: On the inside sale?    KK: Yeah.   James: So, why does every gas station have different pricing in terms of fuel? KK: Because you have the right to price your own gas, whatever you want to. Some people like to make 5 cents; some people like to make 3 cents. Some people like to lose money on gas. James: So, I mean we are always wondering, I mean I'm sure I thought every gas station owner was trying to make some profit because every gas station has different pricing. So do they try to take it back on making more money by increasing the gas price slightly? I'm sure there's elasticity in terms of customer demand versus the gas price. KK: Well the street price is who rules the gas prices, the street pricing. So some people like to bring the customers in by losing money on the gas.   James: Oh.   KK: Or making less profit on the gas and they want to bring the customers to their lot and then bring them inside to the convenience store where they can make 35% instead of pennies. James: Interesting. I thought there will be some money being made on the gas, but looks like what you're saying is it was so little money, you may not make money or you lose money... KK: I've lost more money because 90% people these days use credit cards. And then on top of that, you end up paying credit card fee as well. James: Oh, so you have to pay, but is the price inside of convenience store slightly higher than what you get from Walmart or Walgreens or CVS? KK: Yes. Yes. That's why they're called convenience stores because they are for convenience. But, yeah. So it's like they have to pay for the convenience. James: Yeah. Which makes sense, I mean, I'm giving you space and the gas for almost all on my costs. Right. And now you come and pay a bit more on the convenience of, probably people don't care because it's convenient for them. That's absolutely right. That makes a lot of sense now because I always wondered this. So, is the gas station business being impacted with some of the electric costs that's being popular nowadays? KK: Well, we never made money on the gas anyways, so I don't think it's going to affect the people still going to buy their food and drinks and chips and candy and the cigarettes. So they do still come. I own an electric car myself but still, I stop at gas stations to...   James: Buy things   KK: Buy coffee, buy candy, and buy something. James: I think the location of it is much more convenient. I think that's how like even Buc-ee's, I'm not sure whether you know Buc-ee's in Texas they're very big. They have a lot of gas stations, like hundred gas stations outside and it's a big convenience store. KK: Yup. Yup. James: Okay. Okay. That makes sense. Yeah. So it's like a big, slightly more expensive because it's very convenient.   KK: Correct.   James: Okay. So what about a Laundromat, how does that work? KK: Well, I had this lot sitting by my gas station for a long time. It was a vacant lot and I thought of buying it and utilizing it and this neighbourhood needed a Laundromat. There was a little lot like a block away from my gas station. There was a Laundromat, which were the old beaten up Laundromat, it had like 20 years old machines. So I thought that I can utilize this property and I did some creativity and bank that lot at a very low price. And I built a Laundromat from ground up with the best machines that they come, bigger machines. So immediately after I opened that Laundromat, the other one closed because it was all, nobody wanted to go there. So, and Laundromat is a good business too because you don't need the employees, so it's unattended. So I have a girl that comes in the evening and cleans up and somebody will go from the gas station and clean up or if there's any problems. So this is kind of a passive income. James: So you still have the Laundromat until now? KK: Yes, I do. And we are building another one. James: Oh, that's awesome. That's awesome. So is this the machine with a speed queen? KK: No, [10:00 unclear] machines. James: [10:02 unclear], okay. Okay. KK: We have bigger machines, like 90 pounders, 60 pounders, 50 pounders. Yeah. James: I mean, the reason I ask about speed queen, because in my properties, I'd probably own a Laundromat as well, but indirectly, right, in all our apartments, I think 90% of our apartments, we own our own machines. So, we like to buy new machines, but this is for residential. So it may not be... KK: [10:28 Inaudible] is good too.   James: Okay. Okay.   KK: But that store is good for Laundromat, commercial and it's very simple to operate, and it's a sturdy machine as well. James: Got it. And have you ever tried to sell these gas stations and the Laundromat? KK: No. James: Okay. So you're keeping it for passive income? KK: I have a system in place and they are an automatic, autopilot, I mean. So, because I have partners in all my gas stations, they run the gas stations and I stay home. James: Okay, good. That's true passive income right. KK: Yeah. James: Now, the reason I asked you whether you sold is because I want to know how this business is being valued. KK: No, I haven't never sold any gas station. I have always bought gas station, and I would still buy a gas station if I get a good deal. James: So if it's passive income, why not you buy nationwide? KK: No, it's not passive income, it's not. It's passive income for me because I have my friends and family as partners who run the businesses for me. It's not passive income and I don't, people call me all the time and ask me if they can buy a gas station and rent it out and make more money than single family or real estate, no, it's not like that. James: So it's not as a, what I'm trying to say I guess is...   KK: It's not at all passive. It's just autopilot for me because I've done this for so many years and I have brought in partners and some of them are even my employees that I have partnered with. James: So they are the one who is active and you are investing money and for you it's passive. So it's not really passive income, but because you are a silent partner, you get passive income, I guess.    KK: Right. Correct.   James: So after that, how did you buy 40 single family residential? KK: Well. the seller was from our community, he met me at the church and he said, I want to sell my property that he had for several years. And I told him that I know somebody in Indianapolis that I can refer to. And he said, no, I want to sell them to you. And I said, no, I have never done this and I'm not going to get into the rental business, toilet and all that kind of stuff. He said, I will give you a good deal and I will teach you for a year how to do it. So that attracted me and I came home and talked to my nephew and at that time I didn't even know about [13:10inaudible] it is. So, I talked to my nephew, we calculated, we didn't get any financials or anything from him and we were comparing, I went online to the city website and check the prices compared to what he was offering us. So I liked the pricing of everything. I said, yes, the very next day I said, yes, we will buy your houses. And we went ahead and bought, we never hired an attorney. We just wrote up purchase agreement on my computer and we bought those 40 single family houses and then he started helping me. But he had done this for about 40 years now. So, but he was all old school, everything was on pen and paper. I didn't like that idea. So I had a lot of other stuff going on. I said, no, I would do it myself. So I bought some books, I went online, did some research and started managing myself and I still manage those 40 single families myself. James: That's a very inspiring story, right? Because where you going from zero to nothing, I mean to learning about how to operate 40 single family residential. So how did you learn to make that business in single family residential from the guy who's selling you, he's old school? So now you are a Microsoft certified system engineer. You are going to think on how to put everything into computer. What was the first website or resource that you used to start managing this 40 single family residential?   KK: Well, first of all, I started researching about the property management software and I did some research on the property management softwares and I found [15:06unclear].com the best software for my purpose. And the pricing was good, the features were good. And I signed up for a demo, I took a demo and liked it and I moved all my properties to [15:21unclear] James: I used [15:23unclear] as well for my single family residential, even though I only own like two right now, but we went through a few iteration of property management software for single family and then settled on [15:33unclear], which is pretty good for the single family and [15:38inaudible] management. KK: Correct. Correct. James: So you are in Indiana? So have you ever thought about looking other places for real estate or you wanted to do that? KK: No, I do my multifamily almost, I have one in Indianapolis and all others are out of Indiana. James: Got it. Got it. KK: So, right now I'm doing the 10th view as a general partner and I did seven deals as a passive investor. So all of them but one is in Indiana and all of them are out of Indiana. James: Okay. So I want to go to that transition where you were doing Laundromat, gas station and 40 single family residential, so, how did you get introduced to multifamily apartments? KK: Well, when I bought these single family houses and I went online to, I started researching on bigger pockets and read some books and I realized that it's not scalable and especially there's no tax advantage. That's why we bought these properties. We thought, oh, we can save money on tax. Because we were paying a lot of tax, we had a lot of cash-flow from the gas stations, so we were paying a lot of tax. But with buying single family, we ended up paying more tax because we made more money. So, I thought, no, we were here to save on taxes, so this is not the way to do it. So I started researching and finally as I learned about the syndication process and cost segregation, how people save money on the tax. So we started and I actually started investing passively and never thought I'm going to be active investor at that time because I had so much going on and I have like 15 companies. So, I thought, okay, I will keep doing it. But I'll keep investing my passively and get K-one losses and wash off other passive incomes. That's was my original plan, but when I started learning about multifamily and I learned that I have so much passion about multi-families, so why not do it actively? James: Yeah, no. So I want to go through the thought process here. So, what year was it that you discovered multifamily? KK: 2015. James: 2015, which is like what? Four years ago. KK: Yeah. Four years ago. James: And you say syndication, right? So even when you introduced to multifamily, did you look at buying a multifamily without syndication? KK: Yes, we did. We did four times. James: So you did buy some multifamily without syndication? KK: No, we didn't buy any. James: Oh you didn’t... KK: Because we were thinking of buying the same way we bought these houses. James: Got it. KK: So we didn't even know how to do underwriting, how to calculate the profit and loss. So we thought, okay, we bought these houses for so much and these are like just two room, one bedroom apartments so this should be half the price of the houses. That's how we started and we offered four alloys. First we started with the 32 unit and we went all the way to 96 units to buy, but every time we were overbid by others and we didn't know that we have to do underwriting and all that stuff that I realized after giving four alloys that we, no, this is not the way to do it. We need to start underwriting and they are not priced as the houses are, they are priced based on the net operating income. Then I started learning all that in 2015, and as I was learning, I was investing passively as well.   James: Got it, got it.   KK: I still kept investing and a couple of my partners started investing along with me too. So, we invested all over the nation in first three years, 15, 16, 17, and in 18 I decided to go at it. James: Why you didn't from single family, you were thinking of buying the large multifamily, which is like 40, 50, no, 90 units, right? Why you didn't look at duplexes, triplexes and fourplexes. KK: Oh, I taught duplex, triplex is the same thing as single family because we had the money, we had the resources, we could get the loan, we had the network, so we thought we can buy 30, 40 units. We never thought of buying smaller properties. James: Okay, so you wanted to go big because you think you can do it. It's just that you didn't have the knowledge on how do people underwrite this commercial properties? KK: And that I learned, that I learned soon after being overburdened, four of those alloy's that we did present. So I decided to learn and then I learned a lot and I attended several boot camps and took some courses, read a lot of books, listened to a lot of podcasts. So actually I had a passion for it. So I was spending like five, six hours a day, maybe even more, maybe eight hours a day. Just learning about multifamily. For six months, I never slept before midnight for six months. James: For six months you didn't sleep before midnight because you were so wowed with this multifamily.   KK: Yes. That's when I was learning about it, listening to podcast, every night I would listen to podcasts, read something about it, so I spent a lot of time learning this process James: And you said multifamily was more interesting compared to buying more gas station, Laundromat and the single family because of the tax advantage. That's what you're saying. So you need something to offset your passive business, I mean, active business income, I guess. KK: Well, I had a lot of passive income as well. Because I was not active in all the gas stations. I was passive in some gas stations and we own real states of several gas stations, and those LLC owned properties. And so our operating companies were paying rent to the real estate company. So that was my passive income as well. James: Oh. That's an interesting strategy there. So why not buy like a strip mall or warehouse or industrial warehouse or South storage? KK: I don't like anything else but multifamily. James: Why? Did you look at that [22:30inaudible]? KK: Yes, I did look at it; it's on my criteria as well. The second think I would ever buy would be storing units or the mobile park, but I would never go to commercial or anything because I know people need at least a roof to live somewhere. James: Okay, got it. So you think there's a definite need for a residential? KK: Yeah, because of the technology, you never know. Did you see the strip malls, commercial buildings closing industries, moving to Mexico, China, India and all those countries? But they can't move apartments to China. James: That's right. That's right. KK: But they have to live here. So, that's the only, I get a lot of other offers, but I am very, very strictly multifamily person. James: Yeah. Yeah. So let me give you some education to the listeners. So, what KK was talking about is the tax advantage that you get in multifamily, especially with something called depreciation, which is a paper loss which offset, which shows your income. Even though you're making cash-flow from a positive cash-flow from your operation in apartments depreciation is going to be more, most of the time it's going to be more than your cash-flow, which means you are, it shows as you're losing money, which means you probably don't pay any tax on your cash-flow; and sometimes net cash flow minus depreciation do come out positive, but the amount will be low because now you have depreciation. And in single family residential houses, you still do have depreciation, but it's divided by 27.5. But in commercial, which is apartment, you've either been doing divide by 27.5, you can still do 27.5 but you can also do something called cost segregation, which means they segregate each part of the building and commercial into five years, seven years, 15 years and 27.5 years? They separate the windows to seven years. I don't know what exactly the schedule is, but example windows took seven years, the driveway took 15 years. Frauding took five years. And what they do is they save all this 15 years for all five years, everything is segregated. And all this depreciation is accelerated in the first five to seven years and 15 years. And even the first five years it's like 30% of total depreciation. So, the number of, the amount of depreciation you get in apartments is like, it can be huge because of this cost segregation. And now with the tax law that we have in 2017 from 2017-2023 you have something called bonus depreciation, which means you are going to take all the 15 years schedule of depreciation, you're going to depreciate it in the first year, which used to be only available for new development. Which makes sense, new developments; everything done you'd appreciate 15 years into it. But now the new tax law have given leverage for the properties that has already been built. But this advantage only available until 2023 and after that it starts reducing to 50% instead of a hundred percent depreciation become 50% and depreciates less, and in other commercial real estate, like strip centre and warehouses and all that, is not depreciated by 27.5, it's depreciated by 39 years. So you can... James: 39 and a half? KK: Come again. James: 39 and a half. KK: 39 and a half. Okay. Thanks for clarifying, I thought it's 39. So 39 and a half, and what happened is you get much lower depreciation, they can do also cost segregation, but you know, you're going to get less number. And it makes perfect sense for farmers because of the Maslow hierarchy of needs as well. Everybody needs a shelter to stay.  And especially because of those appliances they have, the kitchens, the counters, kitchens, fridge, the microwave and the stove, those things get depreciated in the very first five years. And you can get all that in the very first year. James: Yes, yes, correct. Correct. So that's an awesome tax strategy in apartment and that's what we call this multifamily apartment. So let's go ahead. So, you said you started learning how to value the apartment and at 2015 you learned the trick about how to trade. So, why not at that time you go and buy apartments, why did you go passive? KK: Well, at that time I was still managing the Laundromat and one gas station myself. And after about two years in 2017, my son-in-law, my daughter got married in 2015 and her husband came to United States in 2017. I asked him, he was a competitive engineer too, I asked him what he wants to do and he said I want to be in the business. He owned a gas station in Canada as well. So he migrated from Canada. So he started doing what I was doing. So, I was only managing these 40 single family houses and most of my stuff was on autopilot, so I had nothing else to do. I decided to go active. So that's when I started looking to do syndication myself. James: Okay. No, but my question was, like I mean after you learn all the tricks on how to underwrite multifamily, right, why did you still go with a passive investment KK: That's why, because I was busy managing my gas station, single family houses and Laundromat myself.   James: Oh. So, now your son-in-law is taking care of that, now you, okay. Got it. Got it. Got it. Now you have all the time to really be an active sponsor, I guess. KK: Correct. James: So, okay. Okay. How did you make that transition from being a passive to active? Because that's a day and night skills. KK: And you should know that too because you are sitting on this side right hand side and Jeff Green well he was sitting on my left hand side and San Diego mastermind. James: Oh, I must have influenced you. KK: Yeah. Something came, I pulled some of your power and Jeff offered me to be a general partner on his deal. James: That must be my [29:08inaudible] KK: Yeah. So I said, okay, I will be your general partner. I raised money for his deal to close. So that was my first transition and I was so much motivated by meeting all those people that like the mastermind in San Diego last March when I did the deal.   James: Yeah. That's very interesting. Sometimes this mastermind brings, the proximity is power. You have people who are doing it and you know that you can do it if you have the right support. And sometimes, certain words and certain discussions can motivate you to progress. So it's very, very powerful concept of mastermind. Sometimes people thinks that you go from mastermind, you are wasting time. You're talking but there are always influencers, especially in a small setting compared to going into like this large conferences where you go and just network, right. This is not so contagious, but in a small group setting, it can be contagious and that's good, so you are able to, yeah, I know when we were in the mastermind we were talking about, you are passive and I didn't know that was the time that you were transitioning. You decided to transition from GP. KK: That same day I did it and he emailed me all the information and when I was coming from San Diego, I was looking at the costar report, underwriting and everything on the plane from San Diego to Chicago all night. James: I have to give credit to myself too. KK: Yeah. The credit goes to you too. James: That's good. That's good. I hope so. I mean, I'm sure you would have some calling to or for you as well. But I've been, I'm happy to help out as well. So, KK, what was your discovery when you, from a passive investor, I mean, you were of before, let's assume that mastermind was a transition period. At that point before that you were a passive investor, your mindset is completely different. You just want to invest passively. You didn't want to do any active role, maybe its fun, it's interesting, but you just didn't want to do it. But once you step over into the GP side where you partner with another sponsor. So how do you think your mindset has changed from passive to become an active? KK: Well, my mindset changed back in 2017 because I had learned so much. I was thinking, why don't I put all this knowledge to work? Why I am just investing passively. But as I told you that when he took over, so I was completely free. And I stayed home and there was not much, and I have so much of my single family management on autopilot that I spend about nine hours a week. So I had nothing else to do, and I decided to move on to, and I started looking on deals before my mastermind, I did start looking deals and I did some [32:19inaudible] the properties and I did give some alloys as well, and I learned the business practically by doing it. And then it was, I think a miracle happened when you did something at the mastermind that I got a deal. And I also learned that it is teamwork. It's not something that I can do myself. It is teamwork. So I think that was a great opportunity for me when Jeff offered me that deal and they were in, they were very close to the closing. So, I raised the money in about three days and became a member of his asset management team where I learned a lot as well. And after that I did a one deal with Radcliff and Robert in Lexington, Kentucky in May, we closed that in May and now I'm a general partner on a deal with Viking Capital on a 92 unit, a B class asset in Marietta, Georgia, North of Atlanta. James: Got it. So let's assume KK, so now you have moved to become more on the active side, right? Part of the asset management team. So if I split you into two, your best friend is your older, KK Singh as the passive investor and now is the right one. The right side, KK is the active investor, what would you turn to your passive investor, best friend and say what are the advice that you want to give to your KK Singh a passive investor on how to invest smartly as a passive investor? Since now you know both sides. KK: Well, even when I was a passively investing, I was learning continuously because the very first deal I didn't know much about multifamily. So I just invested to see how it works. So I just wrote a check to Ivan Barrett for 50,000 and I invested in his deal in Dayton, Ohio, but after that I realized that I need to learn about the passive as well. And I like reading a lot, listening, and reading and so I started learning how to invest passively and I prepared a list of like 42 questions, which I was asking. And then I started investing with Joe [34:53inaudible] in his deals in Dallas and I didn't want to put all eggs in the same basket. So I tried some other syndicators other markets as well before I finally decided to go active. James: Got it. So, out of that 40 questions that you have in your passive investor checklist, and don't worry, I'm not going to ask you to do all the 40 questions, but is there any like five to 10 questions you think all passive investors should ask before investing in any deals? James: I think the most important thing is in this all the syndication process is the operator. So I always even tell my investors the same thing that I did myself. I always looked at the operator. Who is the operator? Who is their team? Do they have an office? Do they have a complete set up? And then do they have a track record? Have they gone through a full cycle? So I always look at that first, even as a passive investor, even as a general partner, I do the same thing; and the second thing is the market. What market is the property in? So does that property market have a rent growth, continuous rent growth? Does that market have a continuous population growth? Are the companies moving to that area? Is it a bigger like population over 200,000? I don't invest in smaller cities. So those are the second things, and then I move onto the property. Is it really a value added property? Every property sale, value add property, sometimes there's no value at all or there is no rent growth. I have seen like people wrote, right, 300 rent bump. Do you think the previous owner was dumb? So he was $300 below market. It doesn't happen all the time. So I prepared a list of questions. I learned how to do all the comps, sales comps, rent comps, and I do get my investor do the same thing as well. James: Got it. So what you're talking about is operators, the second is the market, third is the deal, which is absolutely the right priority. So let's say for a new passive investor, how do they find about, before we go there, can you define what's an operator is? KK: Well operator is the guy who finds a deal, brings it under contract, signs the loan or brings the team together, or if they already have the team, and then after the closing they operate, they make sure they are performing as for performer, the property management in place is working, doing a good job. And they are giving the reports quarterly or monthly, whatever information to the investors and also paying the investors as promised. James: So how can a passive investor know about the operator? I mean, without asking the operator directly because sometimes it's hard to know. I mean, as I say, a new passive investor comes, sometimes they are very shy to ask a lot of questions because they are worried that they will not get into the deal. But is there any other way that a new passive investor can find out about the operator without asking the operator directly? KK: Well, they shouldn't be shy. I even asked the operator if you die, I go that far, if you die.   James: Absolutely. KK: Yeah. I mean, I don't mind if somebody asks me if you die, where are we going to ask for our [38:57inaudible] or money? I mean, it's obvious if somebody could die in a second. Yeah. So there has to be some things in place that if somebody dies who's going to take care of. So I think that should be and I have uploaded those 42 questions on my Tenex Facebook group several times and Radcliff has those 42 questions on his website. I think passive investors should download there as well. But I can tell you how people find me. They follow me everywhere on social media. They check my profiles and they listen to my podcast and then they approach me, oh we know you for a year or two; I saw your video live or podcast. So they probably know everything before they come and contact me unless they are referred to me by someone who is already in my investor or my friend. So they trust me too. James: Yeah, I mean that's true. I mean once you are... KK: I'm very active on social media so people know what I do. James: Yes, yes, yes. Correct. Correct. Correct. So what about market? Can you tell the audience, especially passive investor, any specific resources they can go and see before investing in the market? I mean, I know you said you do not want smaller cities, you want big cities, but what else they should look for in a market before they even invest even passively? James: Well they should, first of all, we talked about the operator and then the market research is very important. They should look at there are so much free services available, ctdata is one of them. James: ctdata.net? KK: ctdata.com   James: dot com, okay.   KK: Dot com and they can go there at least or just write down population and there will be a population of so and so city. They'll get so much information and there's another world review website that it will automatically pop up under the CTdata and you can go there, research the market, sub-market and even the neighborhood.   James: So have you seen any deals that was presented to you as a, I mean when you are a passive investor, when you presented to you that you think are this guy, he didn't underwrite the deal as conservatively as he is claiming. I mean, everybody claims their underwriting yes. KK: All the time. Right. All the time. James: It's like a value add. Right. All deals are value add. Same thing, all lead sponsors, all our sponsors are saying all their deals are written conservatively, they fill up quickly. KK: Some people are very smart to write their OMs and they'll write it in such a way that a passive investor who's not very literate about the multifamily. And if they don't have time to do their own research, they can fall in that net very easily because they are written so smartly. So they don't understand. And they don't spend much time either. James: Yeah. But how do you, can you give us a few example where you were able to cut some, I would say... KK: The biggest one is the comps. James: It's the comps. Okay. KK: And the second thing is the rent growth. Sometimes they'll write 3% rent growth and they will say, oh, it's very conservatively written. And I have been managing these houses since 2014 I have never seen 3% going up every year. I mean there has to be some year when it's going to be down, it might go up to 3% again, but all five or seven years or 10 years, whatever the whole time is. They don't go up all the time. And another thing is the vacancy. A lot of times they will write the vacancy or we can, we're going to have it 95% occupied, but when you look at the four star report or others resources, the market occupancy is at 90%. So how can you do it 95% if the market is at 90%? So some of those assumptions they make are sometimes very aggressive. James: So you say rent comp, and use also talked about the comps? So you're talking about the rent comp that they are projecting? KK: Rent comps, rent comps, they are projecting this and sometimes I've seen on the OMs, they are not comparing apples to apples. They're comparing one bedroom to three bedrooms and then they'll say, oh, there is a threat, $315 rent bump. You're not comparing apples to apples.   James: Do you think they make a mistake or they just...? KK: They intentionally do it and nobody can challenge that either because they don't, they say nothing there that it is three bedroom compared to one bedroom. So that OM doesn't say that we are comparing one bedroom. It's just going to say that apartment has this rent and this apartment has this rent. And they'll show you that there is a $300 bump which is not true. So far, I never seen a bump more than $150. James: And even 150 is difficult to get, so yeah KK: No more than $150. I have seen up to $150 which is also, as you said, by renovating, adding like $500, $600 to the unit, you might be able to raise the rent by a hundred or $150 maximum. James: Very interesting. So was there any aha moment as a active sponsor, as active person, more on the GP side now that you think like in the past six to eight months that you think, oh, I've learned something new about multifamily. Can you share it with the audience? KK: I always learn every day, every day I get some new experiences. I learned new things from sometimes even from people who know nothing about multifamily, but sometimes they teach you with, and I am very motivational and I'm motivated myself. I try to motivate my members in my Tenex group as well. Like every day you learn, in this business, every day you learn some thing new. James: So, I mean, so you had been pretty successful in investing into multifamily and now you're going more into the GP, so what do you think is the most I would say secret sauce to your success? KK: First of all, and I would also suggest to your audience, which I didn't do, but I didn't have to pay the price, but somebody might end up paying the price. I would say invest in yourself, that means learn the process yourself before you invest in any real estate, it could be single family, multifamily, any kind of real estate, do your homework first and don't be scared to spend some money on yourself, your personal development and learning and boot camps. Those are really helpful and I will, when I started learning at bigger progress, bigger progress always said that you don't have to have a coach, you don't have to attend any boot camps and everything. But when I got out of that mindset, I said, no, I got to go checkout some boot camps. It doesn't matter if I have to spend some money. And I realized that I learned a lot, I got motivated a lot. And also when I was holding myself accountable to do something. So, it's before that it was flow free flow. So, whatever I could do, if I got a deal, I would go ahead and make an appointment. Go look at that deal and end up there. But I think these things help, these Facebook groups, these masterminds, these boot camps, there are all these real estate, multifamily events, all of them help.   James: Got it. So it helps in terms of giving you some guidance to move ahead or give you some motivation or how does, or give you some knowledge? KK: So, as long as you have knowledge, you feel very comfortable doing something. James: Got it. KK: If you get out of your comfort zone and have knowledge and once you have the knowledge, you feel very comfortable doing anything. If you don't have knowledge, you always in fear, you get scared, or what if I do this? What if I can't raise the money? What if I, so there's lot of questions. Once you have the knowledge, you know that you will be able to do this. If you have a good deal, the money will come. And I hear a lot of people saying they're on Facebook as well, that a lot of people say that if you have a deal, money will come. We have a deal, but we can't raise the money. So that means something is wrong with your deal. James: Especially on this market cycle, where there's a lot of capital chasing the small number of deals, the true deals, I mean there are a lot of deals, but most deals are 98% of the deals doesn't really underwrite well as what it used to be. KK: I was looking at underwriting yesterday, this property had since 2015, the occupancy is 60,000 and all of a sudden now it's on sale it's at 90%. I looked at the costar report. I said what? Within the last three months, it went up to from 60% to 90%. James: Hey, hold on, hold on, hold on. KK: Okay. I looked at this deal yesterday and since 2015 I looked at the CoStar report and since 2015 the occupancy was at 60% and then the last four months it went from 60% to 90% because now it's on sale. James: On sale. Yeah, correct. Correct. You have to be very, very careful about these kinds of deals. I mean, unless it's an experienced operator, you are ready to go and turn it around; otherwise it's just going to be difficult to once you take over.   KK: And I think they already offered a little bit more money, but now the broker wants them to raise their price. I said, don't even raise a penny. Whatever you have offered is already on the higher side, but a lot of times they want that kind of money and they can get, because somebody else will pay. And I told this guy that somebody else will pay more, but they're going to be in trouble. James: Correct. Correct. Right. I mean, market is saving a lot of people out there right now. Right. People have all paid in bills and made a lot of mistakes in the underwriting. But market has been saving a lot of them for the past nine years. I mean, a rising tide raises all ships, so it's okay to make mistakes now, but it may not be okay when the market turns. Because now you'll see who is in trouble once the tide comes down. So, you have to be very, very careful right now KK: The market is at such speed now, tending to slow down. So it, people should be very careful and they should do their sensitivity analysis as well. Do the stress testing on their deals to make sure that they will survive if the market sort turns a little bit. James: So KK, can you, is there any proud moment in your life, in your business life that you think you cannot forget? That's going to be that if you really think you know, the next 10 years, one proud moment that you think that you always really proud that you did something. KK: I think I have been always proud of what I did because I do my homework before I do anything. I've spent a lot of time researching when I built a Laundromat. I had spent about a year the same way and I am very proud that I spent that time and I'm making a lot of money on that Laundromat and it's a very successful business. James: So you do, I mean, you're proud that you're doing a lot of research before you entering into a new venture. So... KK: Correct, correct. James: And if you want to let our audience know how to find you KK: Oh, I am very easy to find. They can go to Facebook and I have a Facebook group, Tenex multifamily investment group, and we have a little over 3000 members in about six months. I think we started the group at the same time. James: Yeah. You started late but you are slightly ahead of our group right now. KK: Yeah. And that's where they can find me. They can ask me questions and every Tuesday I have a zoom calls where they can come and join us and learn something, network. And they can ask me questions as well face to face, every Tuesday, nine o'clock Eastern time. And the zoom link is always in the Tenex Facebook group and then they can reach me through our website as well growrichcapital.com, or they can call me on my cell phone, 260-341-1964. James: All right, sounds good. So KK thanks for coming for the show. You add a lot of value. I like to, I mean I think I really found a lot of nuggets because you moved from different, different businesses to multifamily. I think that was very helpful because a lot of listeners could be doing other businesses and always wonder why not that business, why not this business? Right. And then why multifamily? So you, I think you summarize it pretty well and I think you, I think I did get a golden nugget of a few golden nugget when you move from passive to active, right? And how that transition worked out and your thought process when you go to that whole process. So appreciate you coming on board. Thanks for coming and that's it. KK: Thank you very much for having me, James. James: Yeah, most welcome. Thanks KK. KK: Love to be back on your show again, sometimes when I'm a bigger syndicator James: You are already a big syndicated. Thanks KK. KK: Thank you. Thank you.      

James: Okay. So let's get started.  Hey audience, this is James Kandasamy from Achieve Wealth Podcast. Today, we have Tim Bratz from Legacy Wealth Holdings. Tim is a multi-family syndicator/sponsor who owns almost 3200 units almost valued at 250 million dollars in value. Hey Tim, welcome to the show. Tim: James, I appreciate you having me, buddy, thank you.  James: Absolutely. Happy to have you here. I've been trying to get you on the show for some time and we have been playing tag on the appointments. That's good. So, can you tell me which market are you focusing on right now?  Tim: I'm actually in six different markets, six different states. I'm pretty heavy in the Southeast. Majority of my property, about 70% of my properties are in South Carolina and Georgia, but I'm also in Ohio which is where I live. And then I'm also in Texas, Oklahoma and I got a couple of vacation rentals down in Florida as well. James: Okay. Without going too much into detail just quickly, how did you start? And then how did you scale to 3,200 units within how many years?  Tim: Yeah. Well, I mean, I was going through college when the last market cycle was going gangbusters. So 03 to 07, I'm going through college, everybody said if you wanna make money get involved in real estate. I ended up moving out to New York City because my brother was living out there. And I became a commercial real estate agent for businesses. You know, so I broker leases and I brokered a lease that was 400 square feet in Manhattan. It was $10,000 a month and so I was like the wrong side of the coin. I need to be owning real estate not brokering it. So I got into a lot of the residential stuff. I think a lot of investors get into real estate because of the lure of passive income and residual income, but then many of us get stuck doing this transactional stuff of flipping houses and wholesaling. And I went through that same phase, you know, I thought I had to stockpile my own cash. I didn't understand that you could syndicate, that you could raise private money and bring in equity partners and how your sponsors to then cosign on loans. I didn't know that that was possible.  So I went through the whole residential side of things and bought my first apartment building the end of 2012. So just like seven years ago. It was a little eighth unit building and I fixed it all up, put tenants in place and I was like man, I'm making better returns on this than I am flipping houses and it's way less headaches. And so I bought another eight-unit and kind of built up a portfolio about 150 units with some partners.           That partnership ended up going bad a few years later. In 2015, I ended up liquidating everything and then just going back out on my own. And so I started on my own and just kind of partnered up with a couple of people that they just started raising money for different projects and I partnered up with good operators and bring money to those projects and help sponsor those loans or I started buying my own properties here locally in Cleveland. And over the past four years, pretty much in August of 2015, I started buying my own stuff. So it's been right at four years now. I built up a little over 3200 units, 3207 units as of today, about 251 million dollars worth of property value and my model is based on the residential realm, actually. I buy properties and I got to be all in for 65% of the stabilized value because that's what the model was. I never read a book. I never went to a seminar before. I just kind of developed it myself and I started buying properties, apartment buildings, the exact same way.  So I have to be able to buy it, renovate it, be all in for 65% of that stabilized value. And so a lot of the buildings that I buy, you know, I'm into a building that's worth 10 million dollars for about six-six and a half million dollars. So on the 250 million dollars worth of property, I only owe to lenders and my equity investors, it's like right at 150 million dollars. So we have a lot of equity in our properties too.  James: Got it. Got it. So it's very interesting you bring up that 65% because that's the exact number that I had when I was doing my single-family for zero money down. So I counted if I get at 65% ARV, which is after repair value, you should be able to do a second load, which is I call it as a double closing of a loan. I have two loans; one loan is like you do like a short term loan and at 65%, you buy it, you take a rehab loan and then you flip it to the long term loan. Tim: Yes. That's my entire model. So I don't traditionally syndicate, I buy distressed assets. I'm bigger than some of the smaller investors but not quite a hedge fund or a Reit and I'm willing to get my hands dirty, I'm willing to actually do the work. So I take on a little bit more distressed type properties. I only buy in A and B Class areas, but the properties are typically C-Class type properties that need physical improvements, better management. Like really not just value-add but like a total repositioning a lot of times. We're remarketing, rebranding, all that. And so, we come in and we fix it all up and because we force appreciation because we can make it happen and really create the appreciation versus speculating on appreciation and hoping values go up over the next five years, we're able to create a lot of equity in that first 12 months and then we're able to turn around and refinance and cash out our investors.  So instead of selling, I just refinance at like a 70% loan to value that gives me enough money to then, pay off my bridge loan. Or that short-term construction loan is and it helps me pay off my investors and to me, it's more predictable. It's more predictable to know where interest rates and where the economy is going to be 12 months from now or 18 months from now than it is like maybe 5 or 7 years from now. Five or seven years from now, we could have a very different economy, very different political circumstances; could have three different presidents in the next five years, right? So we just don't know.  And for me, I like the predictability of buying at a wholesale price, creating an appreciation and then cashing out my investors. Now it's you know for lack of a better term house money in play, right? So now we can let the property ride and we can hit sit on it. It doesn't matter what happens to the economy for the next 10 years, I have a long-term, long amortization schedule fixed interest rate loan, non-recourse loan in place; where the market can go up it can go down, I still have tenants in place paying the debt service, paying the operating expenses, and putting cash in my pocket and I could ride this thing out because I don't owe any of my investors any more cash.  James: Got it. Got it. So yeah, that's exactly the deep value add, that's how I position it where you buy it at really good value; very, very low level.  You really put all your effort to push up the first appreciation and then you go and refi in 12 to 18 months, I guess right? Tim: And we built some new construction stuff too, down in the Southeast. We built some townhouses. Like we'll do new construction, it'll be like an A or B plus kind of an area but it's not luxury. We do only workforce type housing so we can build townhouses for about $85,000 per unit, 80 to 90,000 per unit and they'll rent for about 1,300 bucks a month for us. And so that allows us to get the values where we need it to then refinance and do the exact same thing just for new construction. So we do a little bit of that and more repositioning of existing assets though. James:  Yeah, very interesting. I really like the model. I was doing it like two-three years ago. I mean, for me, I got worried about the market and I start, not looking for deep value add and also deep value add is harder to find. Even though you find it, what happened the sellers are basically taking the value by pushing up the price on the deep value add and because of that, it's not a deep value add anymore. Tim: Right. I don't pay a seller for the value that I'm going to bring to the property, right? So there are some sellers that you know, they're like, oh, well, this could be worth this much. Yeah, but I have to create that value. You're not creating that value. So we find we're a lot of times direct to seller, off-market type property. You know, we're big enough now, especially in Georgia and South Carolina, we have the broker relationships where we're one of the top five buyers in town and you get those deals before they actually hit the market. But in a lot of other markets, I'm not, you know, the biggest buyer in town so I have to go off-market, direct to seller, kind of stuff. And we get a lot of our properties from Mom and Pops who have owned it for 20 30 years or inherited the property. They just didn't put any more money back into it. You know, the total debt on the property is very low if at all and they just don't want to put any more money into it. They don't want to do the work so we buy it from them. Or I buy a lot from smart entrepreneurs, really sharp people who make a lot of money in their traditional business and they just put their money in real estate and then they didn't have a joint venture partner. They never got educated. They don't know how to manage a management company or interview a management company and they just get abused in the business. So they're like I'm making too much money in my traditional business, this thing is going to sink me. Let me just fire sale this apartment building. So that's where we buy most of our properties from. And then again: we reposition it, we do the stuff that that hedge funds aren't willing to do, and we're qualified enough to take down a 200 unit building that needs a pretty heavy value-add. I do it that way. But like you said though, James, I'm starting to buy a little bit more stabilized assets, more like 85-90 percent occupied of just a little bit of tweaks in the common areas and amenities and then bumping up some rents. We're doing a little bit more of that right now just because of where we are in the market cycle.  James: Yeah, correct. But you gave a lot of details that I want to go a bit more detail into that. So you said you look for deals that are in class A and B, but more distress. And I mean you're basically shrinking your funnel as well because you're going for that... Tim:  Niche gets rich, right? James: Exactly. [11:02crosstalk] Tim: People say hey real estate's mine age. Now real estate's an industry, right? Apartments aren't even initial. You need to figure out what you are really, really good at. And one of the things that I'm really good at is 80 units to 100 units that are distress. It's bigger, it's too distressed for the small guys to get a loan on it because they don't have the background or the resume to go and take down that kind of stuff and the qualifications do that because they haven't done it before. It's a big project, big value add and at the same time, it's too distressed for the hedge funds because they just want to park money and let it sit, let it ride, and let it cash flow from day one. So this is my niche. It's A and B Class areas; good areas, desirable areas, just distressed kind of properties and we're able to get in there and we have all the financing, the relationships are all in place. We could raise the money pretty easily because we can cycle our money every 12 to 18 months. I don't have to wait five years to get my investors their money out; I can cycle at every 12 to 18 months. So as soon as I pay him back guess what they say, let's go do another one. And then they're involved in you know, three deals in five years versus one deal in five years and it makes my life easier because I don't have to go and raise money from new people all the time. James: Got it. Got it. That's a really good model. So that's the investors after you cash out when you pay them back, do they stay in the deal as well? Tim: Yep. So mine's a little bit different than traditional syndication. Usually me and my joint venture boots-on-the-ground partners, we keep 70 to 80% of the equity in the deal and then we pay a pref, a fixed pref to our investors regardless of the properties performance. So even if it's not cash flowing it's predictable because I know that if I'm borrowing 2 million bucks, I'm paying, let's say, 10% pref, I'm going to pay $200,000. That's just a cost of the deal. I got roofs, I got flooring, I got paint, I got cost of capital; it's an extra $200,000.  So I build that into my model and then I can make those payments to them. They feel more confident, more comfortable because now they have a predictable return on their investment. Then I refinance, they get all their money back off the table and then they still maintain 20-30% ownership without any money invested and we're able to do that again and again and again. And so, you know with traditional syndicators if I try raising money from somebody who's used to traditional syndication, they're like, why would I ever do that? Well, you get a predictable return and secondly, you get 30% ownership.  But if all your money is in three different deals, it's actually 90% ownership because 30% 30% 30%. And so overall, they're actually ahead of what they would do in traditional syndication where they might get 70 or 80% of the equity in one deal. So, it actually works out better for the investors, works out better for me but it's a lot of work on my part. We spend a lot of money.  Sometimes we spend a lot of money on advertising in new markets until we have those relationships built up and then, in order to find those off-market direct to seller deals and it's a lot of work. Like my business partner down in Georgia that I own a bunch of property with, he goes and sleeps at the properties for three nights a week. He spends four full days there, sleeps in a B-class apartment, you know, on a blow-up mattress, the guy is worth 25 million bucks. And then his brother who's our other partner is worth another 25 million and they're sleeping at the properties, doing the work, kicking the tables, making sure construction ends up on time, on budget and that's what you need to do man. I see a lot of people who are trying to be this puppet master and they're not willing to actually do the work of taking ownership over this thing. They just want to go and syndicate and then go back off to whatever they're doing. And to me, like there's something to be said about just having old school diligence and work mentality and what you can get done if you're willing to do that kind of stuff. James: Yeah, real estate is very, very powerful; especially commercial real estate where you can force appreciate. And especially if you are going to get the majority of the equity in the deal, why not I sleep, right?  In 12 months, 70 to 80% of this deal is going to be mine. Why not work hard, I'm with you. Tim: It's a season of your life. If you're putting your head down for a year or 18 months, but then you can generate millions of dollars of equity, why not do that? And so yeah, that's kind of the mentality that we take.  James: Correct. Yeah, it's very powerful to create wealth and I think the investors appreciate that as well because now you're able to give them back their money and all that. But your model is assuming that you are able to refi into a long term loan in the 12 to 18 months, right? So what happened if that model breaks? Tim: Yep, absolutely. So that's the inherent risk with our model is what happens if rates change, what happens? If banking tightens up, what does that all look like? So a couple of things. One, I don't think rates are going to change as much in 12 or 18 months as they would maybe in five or seven years. So to me, we underwrite the deal - like right now, I just closed on 500 units. I got 2 buildings, around 250 units each last month and I got a 3.83 and a 3.88 interest rate. Even right now, rates went up back; they're hovering around for four and a quarter right now for stabilized assets. We're underwriting the deals with 4.75 to five percent interest rate on the back end for a stabilized property. So we're taking on some of that, some of that, we're underwriting it for that. We also underwrite our rents very, very conservatively and we're at such a low basis in the property, usually around 60% of what that stabilized value is, we have options. So Fannie and Freddie are tightening up big time right now. That's okay because we're at such a low basis that we can still go over to CMBS - commercial mortgage-backed security - or a life insurance company and even though they offer a lower loan to value, I'm okay with that because I'm at a low enough basis. I can still cash out my investors.  So worst-case scenario, my investors still get their money back and we have a lower LTV loan. So maybe there's not some refi proceeds or anything like that that we can take off the table but at the end of the day, they're going to have more equity, you know, their equities gonna be worth more in the property and the cash flow is going to be more on a recurring basis for that. And the other thing is even when banks stopped lending to people in 2009-2010, guess what? They were still lending to somebody and it was the people with big balance sheets, with stabilized portfolios. And I have a big enough balance sheet and stable enough portfolio. I'll be able to get refinanced regardless of what happens in the next 12 to 18 months so I'm not that concerned about it. And again, because our basis is so low, we have such high cash flow on these properties. I have different options and have a good team of mortgage brokers. Who even if I had a slap another, you know three-year loan on there, even if it was at 6% interest rate or six and a half percent interest rate, I can still cash flow;  it's enough. It covers my operating expenses, it covers my debt service, still puts cash flow in the bank. You know, it's a crappy conversation that I have to have with my equity investors, but they keep on making ten percent on their money so they're happy.           You know, the worst-case scenario is they get their money back in 48 months; then, you know it is what it is. So I've taken a look at all the downside. I've talked to people with billion dollar portfolios and said, hey poke holes in my model. And that's the inherent risk is what if you can't refinance? So that's one of the things. The deals that I just closed last month, they were already in that 85-90 percent occupancy range. Like right at 90-91, I think is what they were. And so we got a Fannie Mae loan actually on it. That's a construction loan that we'll be able to put a supplemental debt on it. So, it's already a long term loan, 30-year amortization, couple years of interest only. And then, whenever we create the appreciation, 12 months 18 months from now, we'll be able to put supplemental debt, which is kind of like a second mortgage almost but through the same lender, so they're cool with it. And so the only real risk I'm taking is the interest rate on that portion of the debt. I owe 17 million dollar mortgage on it right now. And then the other will be about another 7 million dollars. So the only real rate risk is I'll get home at three point eight percent on 17 million dollars, even if the other 7 million goes a 5%, my blended cost of capital still four and a quarter or maybe a little less. So, you know, that's another way that we're reducing that ongoing risk.  James: It's very interesting. Now you're convincing me to do deep value add again. So because it's just so hard to mess up. Tim: I mean, the construction is where it all comes down to. I mean, if you stay on time and on budget, you're in good shape. But if you don't have a good construction partner like you can really get burn bad in the deep value add stuff. So you've got to understand what your team looks like, what your strengths are, what your weaknesses are. And for me, we're okay with it. We're pretty good at it and we have a really good construction team.  My partner in Georgia, man, I put him toe-to-toe against anybody in the country from a construction standpoint. He can build new construction, he can renovate existing units. And because he has the mentality of 'let me go and sleep at the property' three nights a week, away from his family, away from his five kids, you know, he's willing to take that on because it's again a season of his life. Like that's kind of partners that I like to partner up with. James: Yeah. Hustlers, they will go really far in life and that's what we need. It's very interesting. So I mean, is there any deal that you find that you didn't do? That you think you should have done and after you passed on it, you realized, ah, should have done that deal? Is there a deal that you look at...  Tim: That's a good question.  Let me think on this. We try to kill deals. I try to kill every deal that comes across my plate, especially right now. I try to look for every reason to walk away from every deal that comes across my desk. If I cannot kill the deal then I know it's a good deal. And so, you know, as soon as you're like, 'hey, well, I think I can scale back construction and make it work', wrong idea, wrong strategy. Because the last thing you want to scale back is the construction of the value-add process. Because then your rents aren't going to hit where you expect them to hit because you're not able to attract better tenants or higher quality tenants and they don't see the value that you're adding to the property. At the end of the day, like people like, 'oh, I think we can make this one work.' No. The only way you can make it work is if you go back to the seller and negotiate a lower purchase price because that's the only variable in this equation. You know, what rents are going to be is what rents are going to be; what the construction budget is, is what the construction budget is. The only variable here is the purchase price. And you know, you make your money on the buy side. So are there deals that I passed up on that I should have moved on? Maybe but for me, man, I don't have much of a risk tolerance. I only buy stuff that I know that is very predictable to me. That's why I don't play the stock market. I can't control if you know Volkswagen -  I can't control if Elon Musk smokes a joint on public television and the stock drops by 15%; you know, I can't control that. I like being able to control real estate and having very predictable returns for me and my investors. And sometimes it's a gut check, you know. Even if everything looks good on paper, but my gut doesn't feel good about it, I'll say no to a deal. It's just that I've seen enough deals go south. And as quickly as we can build our net worth, being in commercial real estate, one bad deal can take out your legs and wipe you out totally. So I'm just not willing to take on that risk, especially when it takes so much work in order to get to where we are.  James: Yeah. Yeah. I mean I want to touch on your gut check thing because I know numbers don't lie and we are numbers guys and when underwriting, we want to make sure things work on paper and all that. But I've walked out of a deal because everything works very well and the numbers look good, but there is something wrong in that deal that I didn't discover and I've walked out from that kind of deal as well. And that's very important. I mean, real estate is not only science where everybody says a numbers game and people that are good in numbers will do it but there's a lot of odd to it as well where it's just something wrong somewhere and it comes from experience. Tim:  That's the only way you get that, from experience and it's usually personnel kind of things that make me walk from a deal. I'm just not comfortable with that joint venture partner, with that management company or with whatever the seller is saying. You can kind of see through the lines once in a while, whatever that is. Yeah, I mean my model is I'm really good at raising money. I'm really good at sourcing deals. We're pretty good at creating - like we can handle a lot of the back office type stuff.  I'm back in Cleveland, Ohio now, is where I live, we can handle a lot of the management side of things; collecting of rents, work orders, telecommunication; all that kind of stuff, all the administrative side. From here in Cleveland, we just need a local boots-on-the-ground partner and some local property managers, maintenance personnel, and I always have a joint venture partner locally. And so if that joint venture partner isn't strong enough, then usually I'll walk away from the deal. Because man, I think it's important to have somebody with vested interest, with equitable interest in the deal; who's local to the property, who can go put their eyes on it a couple of times a month; to keep everybody honest, to keep the management company honest, to keep the local property manager, maintenance personnel, leasing agents and just come in and kick the tables once a month and just let people know that we're paying attention. Because if you don't pay attention, then they take advantage of you.  James: Yeah, it's hard work. I mean, I know exactly how you feel in terms of how much hustle and how much detail and how much you have to be on top of the property managers because it's not their baby, it's your baby. And there's so much of details that if you don't ask them, they're just going to slack off right?  Tim: Yes.   James: They are paid differently from what we have paid for and we are the owners and it's just completely different ownership level, right? So that's very interesting. Is there any deal that you think after you bought it didn't match from what you thought in the beginning. You thought this is how I'm going to execute it but once you buy, it's like, oh, it's completely different from what I thought and how did you overcome it? Tim: Yeah, I mean every deal is a learning experience and you to get punched in the gut enough times and eventually you learn. Fortunately, you know when I was growing my portfolio, I bought my first building in 2012 and I bought an eight-unit building for $30,000. So I'm in Cleveland, Ohio buying units for $4,000 a unit. I put another, I don't know, 50 grand into it. So I'm all in for $10,000 a unit. And it's hard to lose. And so in 2012 2013 2014 as I'm growing my portfolio, while I'm going through these learning curves, the market is getting better and that was able to absorb a lot of my screw-ups early on. So I still made money on every single deal that I did even though I was learning on a lot of these things. There's only one building, a 44 unit building, that I bought about 2-3 years ago maybe that I've lost money on. It was one of those things, hey, I saw the leases, I saw the rent roll. It was 80% occupied and I bought it from a guy that I know, somebody that I actually know. And so, I bought 44 units and he's like, "Yeah, man, 80% occupancy." "Great, man. I'm going to come in, I'm going to renovate the last whatever 9 units and turn those over. I got a local team." He was out of state.  "So like my team can come in clean it all up clean up the common areas. I think I can make $300,000 on this thing in the next 12 months pretty easily and it'll cash flow a little bit in the meantime." So I buy it and I find out it's only 25% economically occupied. So there are 35 tenants or something in place and only 11 of them are actually paying rent. And so I learned my lesson there, you know. It's not about occupancy, it's about collections.  And this is a buddy of mine. This is somebody I've known for many years and grabbed dinner with him, his wife, my wife and not a lot of times but a few times and close enough where I call him a buddy. And all of a sudden, he sells me a building, tells me it's 80% occupied, doesn't tell me it's only collecting 25%. And all of a sudden, I had to kick out 24 tenants and turn over 24 additional units.  So imagine what that cost does now to the $300,000 I thought I was going to make? And this was one of the only times I brought an investor in and he wanted 50/50 of the deal: "Let me bring the money, you do the deal."  "Okay, cool."  And I'm stroking a check for about 35 40 thousand dollars when it was all said and done. And I could have gone to that investor and said, "Hey, man, I need 20 grand from you. I'm putting up 20 grand of my money. We're selling this thing. It's a pain in the butt. We're gonna lose money on it. But, you know, we gotta get rid of it. And that's part of the deal."  Instead, I stroked the entire check, gave him 100% of his money back and because he didn't make a return, I gave him equity in another deal of mine, without him having to put up any money just to kind of soften that blow. And so I think when you do the right thing by your investors word spreads, you know, he says great things about me, he wants to invest in more deals with me and stuff now. It is, do the right thing knowing that there's always another deal. There's always another opportunity.  That one, we could have held on to the property long-term and let it cash flow. That's a cool thing about buying apartment buildings. You can really screw up and if you had to, you can hold on to it, manage it, let it cash flow for the next 10 years and eventually, you'll actually make money on these things even with that big of a screw-up. But for me and where my long-term vision is and my team and everything else, it was just more of a C-Class type property. It took up too much management and too many headaches. It wasn't big enough. We couldn't really scale it. So we made just a business decision to sell it and to eat that loss. But it's the only building I ever really ever lost money on. Now we've gone through pretty much everything and we've gotten kicked in the crotch enough times where we know what to look for across every building. Like it's very hard to pull the wool over our eyes unless it's like grossly fraudulent on the sellers part.  Another big thing that I didn't know early on that I wish I should have done that's always a consistent issue with every building we've ever bought is like the plumbing and the drain tiles leaving the building. It's always one of those unknowns. So now, we spend three to five thousand dollars to scope every single drain line, in every building that we put under contract to ensure that there's not going to be this massive plumbing bill, unexpected plumbing bill, once we buy the property. So that's one of the things that's been a big deal.           And then just verifying collections. Like those two things from a financial due diligence and a physical due diligence perspective like those two things that we've dialed in now and we always did everything else. We always inspected the rooms in every unit, the electrical panels. One of the other things that I didn't do early on that I do now, we've done for the many years now, is I used to only walk the vacant units and the common areas and the mechanical rooms. And then all of a sudden, you realize that they're not showing you all the vacant units. There are other vacant units that they're telling you that they're occupied, they just didn't want you to see them. And like I bought buildings where tenants were turning on and off their faucet with a wrench because there's no actual faucet. So you don't realize a lot of that stuff early on when you're a dumb kid. But I've been through all man. I've been everything. We walk every single unit on a 500 unit apartment building. We will walk every single unit and we'll put a report together on every single unit. It's a one-page, just kind of condition report. We'll take 30 pictures of every single unit. We put it all into like a Google Drive or Dropbox folder. In that way, we have all the information we could ever need on this property. We're not relying on our memory to look up all that stuff. It's all there. Our contractors can see it during the entire due diligence period, all that stuff. And so I think everything's a learning curve. I think you learn from everything. The thing in this business though is like if you can get past all those learning curves, if you can get past some of those losses and some of those getting punched in the stomach, eventually, you're process is so dialed in.  Like they can't pull the wool over your eyes that you cannot lose on deals. And that's why we walk away from a lot of deals that we do because they're waiting for somebody who's an idiot who doesn't know what they're doing to come in and buy their property and overpay for it or not do the due diligence that they're supposed to be doing and all these other things. But eventually, you know what you're doing enough, where your risk is so minimized because you've done all the due diligence on these things, it's a very predictable business at the end of the day. Like you said, it's all about numbers, right? James: Yeah, I mean, it's crazy nowadays, right? I mean with the market being as hot as it is right now, with so many people looking for deals and so many bidding war. So nowadays, the smarter thing that a lot of brokers and sellers are doing, they say day one hard money. Now, they lock you in. So you go into a bidding war, you pay this huge amount of hard money and sometimes they don't even give you early access., So now you're locked in. You can find a thousand and one things and yet we are locked in. Tim: No, I don't do that stuff. I don't play that game. You don't need to if your off-market direct to seller. If you're going through brokers, they're going to do that to you, you know. And there are some people who have crazy money and they're willing to risk that; I'm not willing to risk any of that stuff. A lot of people, they spend a lot of time on ROI - return on investment. I spend a lot of time on return on ROI - return of investment, you know, and making sure I get all my money back. I never ever want to risk principal.   I mean that deal, that's just too risky of a deal. If they want hard earnest money from day one and I haven't already walked the entire property, I'm not interested in doing it. I think once you get to a point where if you're partnered up with a great sponsor or you are a great sponsor yourself and you have the business acumen that like you have James or that I have like I'm able to posture up with these sellers now and kind of say, "Hey. Yeah, no problem. You can go steal somebody's earnest money. That's okay. You can go ahead and do that. But they're not gonna be able to close on this deal because you're lying about the condition of the property or the financials whatever. Or if you're willing to actually sell it to me, give me my opportunity to do my due diligence and shoot straight with me on everything, I promise you, I'm more capable of closing than any of the other people that you're getting bids from right now or you're getting offers from right now."  And so I've been able to kind of build up my credibility in that way where sellers are willing to take less money and offer me better terms than they would maybe with somebody else because they know that I can close on the property. They don't want to get dragged through the mud.  James: Correct. Yeah, this is very interesting, nowadays, the way the market is being played. They're putting all these handcuffs of hard money, day one. And there's another handcuffed where they said you must do lending with our own in-house lending. So that's another handcuff. There are two or three handcuffs that brokers are putting on sellers. And the third subtle handcuff that they do; nowadays, when they close, they send out an email saying that, oh, this buyer paid day one, you know huge amount of money $500,000. They're telling everybody else. Tim: They're trying to set that expectation.  James: If you want to come and buy deals nowadays, you better be ready. So many handcuffs are being put on buyers. But I think a lot of sellers, you know, if they want to work with a good buyer, people who want to really do business, they don't know want to just make the money on earnest money and waste a lot of time getting people to walk through all their units and getting their stuff all being nervous.  So just find a guy who's willing to do it and who is the true buyer. Who knows what he's doing and can close.  Tim: The good brokers with long-term visions and long-term goals, know how to find quality buyers and that's better than just anybody who raises their hand with earnest money, you know. In every hot market, there are people who are short-sighted, who got into real estate real quick just because they wanted to get rich quick, kind of a thing. And they'd rather just do it that way and then anybody who raises their hand, they're willing to go with and those aren't the brokers you want to work with. You want to work with the people who have been around the block a few times, who understand what a good buyer looks like, can build those ongoing relationships. Because as soon as the market shifts, if things cool off, it's going to clean out all the unqualified buyers and unqualified brokers as well. James: Correct. So, let's go to a bit more personal side of things. So what I like about you is you're very, very positive. So you like to look at life very positively and you know, it's hard to do because sometimes you always have something negative that comes in. So do you want to explain about in this business, yeah, you always want to say something negative that you always want to talk about but how do you maintain that positivity?  Tim: Yeah, I mean, you know, I told you the story when we met up a couple of weeks ago or a month ago. I mean, just less than 90 days ago, I was out golfing and I got rocketed to the face with a golf ball, 100 miles an hour from about 30 yards away. It shattered my upper maxilla bone. It knocked out four of my front teeth and shredded my gums. And my lip opened and I was bleeding like crazy. I look down. I'm like, oh, I feel my teeth dangling from my gums and I look down at the ground and I kind of took a knee to make sure I didn't pass out. I looked down at the grass, I'm like, "Man, this grass is really well-manicured; like beautiful grass here, on this golf course."  And I'm like, How the hell am I able to keep up such a positive attitude in this?" You know, I'm thinking about my thoughts. I'm very reflective in that regard. And I was like, "Well, here's why I can see it positive because I got hit my mouth and not in my eyeball or my temple. I could be blind or dead if this thing was an inch higher than where it was."           And so, man, I don't know if it's the law of attraction. You can call it God, you can call it, you know the universe and call it whatever but I think when you put the positivity out, it comes full circle. It's kind of like you reap what you sow kind of a thing and I sow seeds of positivity. And so, I jump in the golf cart and I get taken back to the clubhouse. You know, who's dining in the clubhouse? There are two dentists and an ER nurse having dinner in the clubhouse. They put me in there. They look at my teeth. They drop what they're doing. They take me to their dental office, 15 minutes down the road. They stitched me all up. They put my teeth back in and I'm able to save my teeth and 90 days later, you couldn't even tell that this whole thing happened. Like I'm still going through some cosmetic stuff, but overall like it was a terrible situation, but I think because I was positive it all just kind of came to fruition.  So, you know, one of the things I've always practiced is not saying I have to do something but saying I get to do something. When I go out to dinner with a bunch of my friends and I pick up the tab, they're like, "Dude, you don't have to do that." " No, I don't have to do it but I get to."  The reason that I do what I do is so that I can help people out and I can pay it forward. "Oh, hey, you don't have to cover that bill. You don't have to do this"  'No, but I get to."           I had to eat soup for about a month afterward, but I'm thinking you know, I'm eating a tomato bisque basil soup. I don't have to eat mud pies like people do on the other side of the earth. I don't have to walk two miles each way to go and get fresh water like people have to do on the other side of the earth and some people on this side of the earth. I get to eat soup, I get to eat something that's a bisque that has basil in it. Like are you kidding me? Like there are people who would kill to be able to eat that kind of stuff. I didn't have 14 teeth knocked out, I only had four teeth knocked out.  I think when you just compare it and you put it in that type of perspective of, man, it could have been way worse, you know, like the situation could have gone - and there are still people even with me with my teeth dangling from my mouth, being in that circumstance, I'm still in a better circumstance than a lot of other people who don't have any food, who don't have any shelter, who don't have any clothes, who don't have any support. They're being trafficked by like human trafficking like all that kind of crazy stuff.  Even when I have to go out and raise - I had to raise 7 million bucks for deals last month, and now I don't have to raise 7 million bucks. I get to raise 7 million bucks; that's a pretty awesome problem to have. And I think just putting it in that perspective of shifting your 'I-have-to' to 'I get to', will really make you more gratuitous or have more gratitude for life. James: Was it because of your parents or do you think because you just had some event in your life that you think now I have to change my time or it's just how you have been? Tim: That's a good question. My mom as always been very positive. My mom as always been, hey, you have something else to compare it to. Compare it to this, compare it to that. And I think that's probably what planted the seed of always looking at it from, "Yeah. You're right. I guess it could be way worse, right?" It could have been totally different circumstance. She always used to say, "Hey, if that's your biggest problem today, you've got a pretty good life, Tim." When I was growing up: "Ma, I don't know what I'm gonna do like my basketball just popped." "If that's your biggest problem today, it's a pretty good problem to have." You know, you're safe. You're secure, you're healthy, you have a family, you've got people who love you, you've got food with food on the table and clothes on your back and a roof over your head. Like all those kinds of things like you put in perspective. There's people dealing with a lot worse things. And yeah, I think my mom kind of rooted that into me maybe early on and it definitely stuck and man, I just show gratitude. Especially once you have kids, you know, and you realize man like all I want is their safety and their security and their healthiness and their happiness and as long as they're happy and I'm happy. That kind of a thing that's really amplified it over the past four years. I have a four-year-old and a two-year-old now. And so just putting things into in the perspective that way has been a big deal.  James: Awesome. Awesome. Is there one proud moment in your life that you think you will be remembering it for your entire life?  Tim: That's a good question, James. You've got some good questions there, buddy. James: I want you to think and answer.  Tim: Yeah, you know, I mean, is there one... James: One proud moment that at the end of your life, you're going to say that I'm really, really proud that I did that and it's going to be you know. Tim: Yeah, I don't know if it's one specific moment, but maybe just like kind of how I live my life. I try to do it on a daily basis and maybe it's not something profound. Maybe it's not something that's like one specific thing that was a catalyst. You know, I'm driving to the office today to come and talk to you and some dude cuts me off. Maybe he's got some priorities or something going on. I don't know what other people are going through, you know and for me to judge or get pissed off because somebody cut me off, why would I do that?   I'll tell you if there's a really proud moment, once my kids grow up to be decent human beings, you know, and making sure that I want to live my life as an example of what an exceptional life can look like. So I want people to be like, hey, if Tim Brax, some kid from a blue-collar family in a blue-collar town, outside of Cleveland, Ohio can build up a big portfolio and still maintain good health and still maintain positivity and still maintain great relationships with his wife and with his children, with his friends and still engage and and maybe not be balanced but have harmony in his life, like if this guy can do it, I know I could do it.  If I can inspire people, whether that be one moment in time by a Facebook post or an event that I host or being on a podcast, if I can inspire people to just be their best which is what I have on my wall here and that's not 'do' that's 'be' you know, that's like consumed that all together. It doesn't have to be the best. It would be your best. There's always gonna be somebody more capable, more resources, more whatever. You know, I don't think it's healthy to compare yourself to other people but to compare yourself to yourself and making sure that you're advancing on a daily, weekly, monthly and annual basis is a big deal. And so, I think I just try to make my kids proud, make my mom proud, make my wife proud, make my friends proud. Inspire other people and I try to do it more in the daily activity versus just do it one time and look at that one moment. I try to give back and try to - like I had suites to the Cavs games when LeBron was here in Cleveland. All right, and so when was that, two years year to go? Two years ago, I think. No, it was last year, I think. And so last year, I had a suite to the Cavs. I got the entire series for the first series. I figured who they're playing, but essentially when you buy a suite, you get it for the entire series, however many games they play at home and they played four games at home. And so, you know the first game I went to, I brought some business partners and was able to pay for the suite that way. And then, the second game I brought some family and the third game, I'm like, hey, I was excited to go but like I'm not as excited as I was maybe the first or second time and I'm like somebody else deserves this more than I do because I've already had this experience right? Like, how can I pay this forward?  And so I posted on social media, "I got a suite to the Cavs game. I have 18 tickets that I can give away, a couple of parking passes. It's stocked with food and drinks and whatever you guys want. Like does anybody know of a family or a few families that I can give these tickets to that maybe wouldn't have this experience on their own but really deserve because of how good of a people that they are?"  And man, like it got so much momentum and got so many shares and then the news picked it up and came and did a story on it. And I had about 5-600 applications that came through for people nominating other people to get tickets to this Cav suite. And so, it was actually really hard to break it down and essentially I found four or five families. I think five families that four tickets a piece that I gave the tickets to. And it was pretty easy to narrow it down to like 25 because I wanted somebody who had maybe faced adversity, overcame the diversity and then found a way to pay it forward; not just overcoming it but actually paying it forward and creating a difference.  So, you know, there was one girl whose sister died of an accidental overdose of drugs and now, this girl who's still alive, her younger sister goes around and speaks at different schools about opioid problems and drug problems and how to overcome that and different resources to plug into for that, you know. And so I'm like, wow, this girl, at the age of 16 years old is making an impact on the world; like she deserves some tickets. There was another gentleman who lost his daughter to a congenital heart defect. She was 3 years old, you know and loses his daughter to this congenital heart defect. And instead of like, I mean, I can only imagine how dark of a place he must have been in and he ends up opening up a nonprofit organization to help families with other kids with congenital heart defects to give them the support and help and the conversations and everything and making a massive impact up here in Cleveland, Ohio. This guy is such a good guy. I give him the tickets and he gives them to one of the people that are in his nonprofit, you know. And it's like, man, these people are just amazing individuals.           And so I found five awesome families like that, that we were able to give the tickets to and like doing stuff like that really makes me feel good. And what's even better is that there were 500 people who I was able to create a catalyst by doing this who now, 500 people are thinking in a positive way about people who make a positive impact on their life. And just that positive ripple effect that's created, I think is really, really powerful and it was really, really cool to see. James: Yeah. When I talk to you, I get very inspired because it's not about the portfolio of real estate or [49:17unintelligible]  rights, it's how you look at life and how you look at things. How you think positive and that's the most important when I look at a person. Tim: Yeah. And you do an awesome job with it, man. I mean, you realize that it's not the portfolio, it's not the money that's noble. It's what you can do with the money that's noble and utilizing it for good. I could afford a really expensive fancy exotic car and I drive a $20,000 Jeep just because I don't really care. I know that there's a bigger impact I can make by being a better steward of my Capital, putting it in more deals or paying it forward in ways like that. So I get more fulfillment from that than from maybe driving something fancy.  James: Yeah, even for me, I can't really imagine driving exotic car because, do I really need it?  Tim: At the end of the day, it'd be cool. I'd rather just go and rent one. I know I'd have buyer's remorse. I just know myself personally and I know that as soon as I bought it I'd be like, I don't really need this. And here's the thing. I like watches. I like clocks. I like taking nice vacations. I like traveling first class. I like that kind of stuff. I like making memories and traveling the world; I love all that. So that's where I get my drive from on making a lot of money. For other people, they like fancy cars, they like fancy houses; that's okay.  I got a good buddy, man, he drives a Rolls-Royce and has multiple hundred-thousand-dollar watches, you know. But I know he doesn't do it for flashed and to impress other people. He does it because when he looks down at his watch and when he gets in his car, he always sits back and he's like, "Man, I had to overcome some adversity, I had to go through some shit in order to get this watch. In order to be able to afford this car. And I've had to grow as an individual, as a person and make an impact on enough other people's lives, positively, that then the universe came back and gave me enough money to be able to afford this car and afford this watch." And so, I think it depends on perspective and that's how you look at it. Like I have nothing against people who have fancy nice things, material type things. Because I know he's one of the most giving people that I've ever met as well and so it's perspective.  James: Yeah, it's perspective. Yeah, awesome, Tim. So why don't you tell our audience how to get hold of you?  Tim: Yeah. I mean, I'm pretty active on social media; you can find me on Facebook Tim Bratz. I run my own Facebook account, you know, it's not somebody else running it. I do some education stuff on how to get involved in apartments and things but hit me up with a message there if you're looking for formal education. I give a lot of away a lot of free content, a lot of free insight and I try to provide a lot of value on social media and stuff so just connect with me on Facebook.  That's gonna be the best way and, yeah, man, James, I appreciate all the value that you give and all the value that you create and all the content that you put out there and, man, you're creating the ripple effect yourself on making a positive impact on people's lives. So appreciate you too, brother. James: Yeah, absolutely. Absolutely. Thanks for coming on the show. It was really a very inspiring show. I'm sure for me and for my listeners and everybody's going to be enjoying it.  Tim: Appreciate it, brother. Thank you so much. James: All right. Bye.

James: Let's get started, 1 2 3. Hi listeners, welcome to Achieve Wealth Podcast. It's a podcast where we focus on how to achieve wealth through value add real estate investing. And today I have John Jacobus from, John, where are you from?  John: I'm from New York.  James: New York. Awesome. Awesome. Why not John, you talk to our listeners about, you know, about yourself and what you've been doing and we are going to be focusing a lot on a mobile home park investment and John is an expert in the operation of mobile home parks. And I thought of bringing him on board and learn that asset class through the level of details where we can learn and figure out, you know, why that would be a really good investment vehicle for everybody. So, John, why don't you go ahead and take a and tell our audience things that I would have missed out. John: Sure. Yeah. Thanks, James for having me on the show, it's really good to be here. As I said, I live in New York City but I invest in the southeast and the southwest. I got started in real estate investing in the early 2000s just doing single-family rentals and fix and flips, down in southern California. I'm originally from the San Francisco Bay area out on the west coast. And there was an equity opportunity down in southern California in the early part of this century. And with my dad, brother and I, we just got started. At the time, I was about 18, so I got started early and that really triggered an interest in investing and building wealth. And from there, just sort of followed my nose. So I got interested in stock market investing and just general assessing quality businesses. And then maybe four years ago, got interested in multifamily investing, being surrounded by skyscrapers and multifamily housing here in Manhattan. I poke my nose into that, got to know people, build the network and started my first multifamily opportunity as a limited partner in a project in Dallas, Texas. And since then, just sort of took incremental steps to become more active and raising capital. As you know, James, it's gotten pretty competitive in the apartment space, especially when you're out of state and don't have the ability to get on planes and meet brokers or property managers for tours. So seeing that it was a sort of impossible for me to compete with locals and the markets that I wanted to invest in, I stumbled across mobile home parks. And the more I learned about it, the more I poked my nose into it, the more I liked it. And I found that I could be competitive despite being located out of town. And for about the past year and a half now, I've been focusing full time on mobile home park investing. Now, I've acquired a portfolio of three parks and I'm looking to continue to scale where we find value. James: Awesome. So yeah, I mean mobile home parks, I mean, I do know some things about mobile home parks, but not to the level of details that you would know. Right. So can you explain to the listeners how does the whole, and at a high level, then we can go into a bit deeper into the details of mobile home parks. Why did you start with mobile home parks? Why not self- storage or office or retail warehouse and all that? John: Yeah, so I'm generally attracted to assets that are under the radar and have a kind of negative stigma with them. So I mentioned I am into investing in businesses on the stock market as well. And I tend to adopt a contrarian mindset where, you know, the more popular or something is in the media or among, you know, the masses, the less interested I become. And so, I think point number one that triggered me to look into mobile home parks was when I would attend these conferences of real estate investors or go to meetups or just hear about mobile home parks in the news, generally, there was no one really focusing on it. So amongst the thousands of people that were at a conference, there was maybe two or three people that were focused on mobile home parks.  And anytime you hear about mobile home parks in the news it seems to be negative. Nobody wants to brag about the fact that they're in the business full time because of the negative public stigma. To me, that's attractive because there are fewer competitors and especially when you dig into the details and see the fundamentals of the business, they're awfully attractive. So I think just generally the unpopular nature of the asset class was something that really appealed to me. And then, you know, the fact that it actually has appealing economics was even more of an attractive factor of the asset class. James: Okay. That's exactly why people can still find really good deals in mobile home parks where there's a lot of stigma tied to it, to mobile home parks and that could be just an opportunity. So I mean, I attended like a two days boot camp, on mobile home parks, like two, three years ago. And I thought it was a really good asset class to enter at the time because as you said, not many people, know mobile home parks, it's not out to the masses. There are not many gurus teaching mobile home park too even though they're teaching, they are not everywhere, right? They're not in the social media guys like what's happening now. And that's a huge stigma on mobile home parks. This is a bit cross kind of thing, right?  I mean that's what even the guy who was teaching that three-day boot camp was telling us, which can be a really good thing, right? I mean, I know the day we want to make sure that we have a good asset class where you know, it's very stable and able to predictably give you good cash and good returns at a high level. So let's talk about how do you make money out of buying a mobile home park? John: Yeah, so a number of ways. We focus on turnaround parks. So one of the areas, well, I said that mobile home park investing is unpopular relative to self- storage or apartments. There is some competition in the market so I still face very healthy competition in some of tier one, tier two markets, where the parks are closer to class B Class So, in an effort to find value, we've found that there's value currently in parks that are rough around the edges. So whether they have high vacancy rates, they have a high percentage of park owned homes, there may be an issue with the infrastructure, whether the sewer or the water. So those things that have a little bit of hair on the deal, those we're finding pretty attractively priced. So currently we focus on those turnarounds and that's where we're able to generate outsize returns, by digging into those problems and fixing them and either elevating the class of the asset or simply filling in vacancies or in some cases, like one of the projects that we have under ownership right now in San Antonio is we're actually expanding the size of the park.  So it's almost like a development deal, where we bought it for 20 units and we have plans to expand it by double. So those types of heavy lifts in terms of either turnaround operationally or expanding the footprint of the park, that's how we're finding ways to make money currently in the mobile home park business. James: Got It. Got It. And correct me if I'm wrong, so the mobile home park is basically you own the park, you don't own the housing units on top of it, right? John: So in an ideal world, and it really, depends on your perspective and what your preferences, but in the traditional way is that you just own the land and not the infrastructure. So you buy the land and you rent out the land to homeowners who pay you for the privilege of placing their home in your park. So in terms of operational cost standpoint, if you pursued that model, your operating costs are pretty low because you really just own the dirt and you're collecting rent for owner residents to use your land. Now, as you look more deals and get involved in the business, there are very few of those types of properties available because over the course of time, where residents come and go, ultimately you're going to find yourself as a park operator with some homes that you end up with, whether they're abandoned or sold to you or just come with the deal.  So there are models in the southeast, in particular where there are parks, where the park owners not only own the land and the infrastructure but also own all of the homes, in which case they're more or less operating an apartment complex just with a different look. There are individual units rather than stacked or adjacent to each other. And for those that can do it and have the model and the pricing is right and their strength in the market, that can be awfully attractive. But I think if you're looking to reduce the amount of time and energy to operate the park when you're a dirt owner, that's the lowest touch, lightest maintenance, I think most appealing and certainly most profitable model from an operating margin perspective. James: Yeah. It's like you have a big parking lot where people come and park their houses on top of it, I guess.   John: That's right. Yeah. Look at it. And it's great because you know, it's very high margin, but also you've got owners that are in your community so there's an alignment of interest. You've got people that have skin in the game because they own the home and they want to take care of the community. So that's a really unique aspect in contrast to apartments where, you know, apartments, you always have renters and just by nature, you know, they're going to treat their place as if they're renting it. And that's very different from the mindset and the behavior of owners who are in your community. It's a stakeholder group shared alignment of interests and it's a mindset shift and something that I really pursue and try to cultivate in our communities. James: Got It. Got It. Yeah. It's a very interesting model. It's a very simple concept. It does serve the affordable housing crisis that we have. Both apartments and mobile home park do serve it, even though it's two different, slightly different tenant base. One is one who wants to be a homeowner, even though it's a cheaper house, right? It's not like normal single-family houses but it's something that gives you a roof on top of your head and people liked that. And they have that community feeling when they are in that park so they are able to take care of it much better than like what you're saying in the apartment. You have leases turnover and you're 50% turnover per year and they leave the place every two years. So you have to go and do a turn around cause a lot more management intensive. How do you add value in mobile home parks? John: Yeah, so a couple of ways. So increasing the rents. So one of the appeals of being in the asset class is it's a very fragmented and somewhat a non-professionally managed business. So in contrast to apartments where you have, I think very high transparency into pricing, because you have things like Yardi Matrix and some of the other platforms, where you can get a very quick insight into what the market rates and comparables are, you don't have that level of transparency into pricing in mobile home parks. So there isn't this invisible hand of pushing up rents with inflation or with market forces because the industry is just sort of 30 to 40 years behind, relative to single-family and multifamily, in terms of just, you know, pricing transparency. So simply coming in and raising the rents to market rates or what should be market, is one way in which you can add value. Another that I described was expanding the footprint of rentable space. So in some cases, like our project in San Antonio, the former owner had given their residents very large lots, so they were almost twice as much as was required or determined as per the setback requirements. And so we found that if we simply move the homes over a bit and decreased the density by half, people would still be given pretty reasonable living space, we would be able to adhere to the setback requirements, and we would effectively double the rentable units within the property. So that's a way in which we're creating significant value by simply taking a look at the zoning requirements and the setbacks and seeing how we can reconfigure the lots well within the land to create new rentable space.  A third is just operating it more professionally. Again, this industry is not one where there's a very sophisticated network of third-party property management. And you know, it's largely mom and pops owner-operators who, you know, at this point in time probably own the property outright. They don't have any data on it and they don't really have a need to maximize or optimize the performance of the property and in which case they let things go. So they may run operating expenses high, where relative to where they should be, they may have their friends working for them doing maintenance and or day to day operations. And as a result, probably pay them at higher than market rates. So coming in and introducing professional practices and professional management, running it as a real business, that's a way to bring down operating costs and increase the NOI. Those are really the main drivers, you know, rent increase, increase the rentable space and push down operating costs, those are the things that we focus on and usually have the greatest impact in terms of value. James: So what about loans? I mean, you said a lot of these are mom and pop and fully, they own the whole thing, right? There is no debt on it. Are you able to get like seller financing deals? John: Yeah, so of the three properties that we own, two of the three are seller financed. So we've got interest-only loans for six years on those two. And it's awfully attractive not to have to go through a bank or an agency to go through the underwriting process. James: So you structure your non-recourse or recourse or how did you do that? John: Yeah, non-recourse loans on both of them. So really great, fairly low down payments. So we have a 75 loan to value on one and 80% loan to value on the other. And we even on the first one, we strung out the timing of the down payment so that we could minimize the use of upfront capital. So, yeah, just increased flexibility, ability to execute with speed and fairly attractive loan terms. Again, another appeal of, of the businesses, you have a lot of flexibility with the lending for some of these smaller to mid-sized parks. James: Yeah. Yeah, that makes it really interesting because recourse versus nonrecourse and loan terms, you know, in this case, you can structure this how you want, right? Because you're talking to mom and pop owner and how big are these parks? John: Yeah, so for us, so we have one in North Carolina, which is 75 spaces. That was the first one that we took down. And that was, we negotiated seller financing for six years at 75% loan to value. And then the second park, we closed the month after. That's in San Antonio, that's 20 spaces and we're currently in the process of expanding that to 49 spaces. So by the end of the summer, that's the one where we're reconfiguring the land and bringing in 29 new homes to expand the footprint of the park. And then the third one is in South Carolina and that's about 45 spaces. So in a 20 to 75 space range, that's where we're finding opportunity value and that's about in the zone where you can negotiate seller financing. You know, it's good and bad, the financing.  One, the pool of capital and the liquidity and access to the debt market is not at the level that multifamily is. So one of the nice things about multifamily is, you know, through Fannie and Freddie and other conduit lenders, you just have masses of capital available to you and it's an industrialized process to go through and get financing for these projects. That type of infrastructure doesn't exist really to the same extent with mobile home parks. So you know, on one end, financing can be really difficult, especially for the smaller parks. But what that affords you is the opportunity to negotiate more flexible and creative deals, through seller financing. Because ultimately, and in many cases, sellers, they don't have a choice. So if they are really interested in selling, buyers can't get financing through traditional sources and so they're sort of left with one choice, which is to carry a note. So, you know, in some cases we celebrate the fact that we can do this stuff, but in other cases we kind of bang our heads against the wall and say, if only we could go to Fannie or Freddie and get this financed, that, you know, very long term, low-cost rates. James: So you are in New York and scattered all over the nation. How are these parks being managed, who's managing them? John: So we have onsite managers for all three of our parks. And for all intents and purposes, they carry out the actions that we dictate. So all of them either live onsite in the park or live very close by and most of the time, we have daily calls with the managers to tell them what to do. Now their level of sophistication and their ability does not rival what you're accustomed to in multifamily because you know, in multifamily you've got a level of professionalism and sophistication that just isn't there yet in the mobile home parks that we deal in. So for us, it's just, we've got boots on the ground. Their jobs are primarily focused on collections. So making sure that people are paying rent on time, posting pay or quit notices or facilitating evictions, coordinating repairs to the extent that we need to bring in someone to fix the plumbing, for example. And then to the extent that we're filling in new units, they're coordinating showings with prospective residents to come and see homes and see if they want to sign a lease. So that's really where their job is focused on. So it's not a full-time gig really for any of them, it's part-time income for them and it's in peaks and valleys. So depending upon the activity, whether that's new rentals that we have, rental units available or repairs that are happening, they may be either really busy or find themselves with not much to do. James: Yeah, I agree. I mean, I see they're not very highly sophisticated people. They are basically, you know, house-owner. So you know, mobile home users, on how people are paying, then we don't expect a lot from them in terms of management. I mean, even in multifamily. Yeah. I mean, we have a lot of professional management, but still, you have to manage them, right? So much moving parts, there's so many expenses, so much of repair and maintenance that need to be taken care of, which doesn't exist in mobile home parks. Because mobile home parks, supposedly, you know, you're just looking at the land and collecting rent. Looking at some common area, usually this kind of thing. So I think it would balance out in terms of, you know, the amount of time that you need to spend, especially for operators. 20:56inaudible] me who's managing our own property management and also people who are not having their own property management, their own active asset managers of apartment, failing to be involved very, very closely. You can't just go to the party. I mean they'll take it to somewhere else. John: Yeah. Right. Yeah. Great. You know, and I think that's an important point that a lot of people miss. You know, going to the boot camp that you mentioned, I also attended, I think one of the things, I think the boot camp, people who leave the boot camp are fairly transparent about what it's like day, day in, day out. But for whatever reason, I talked to a lot of people that are interested in the mobile home park industry and one of the appeals to them is this sense that it's passive. And I would say, you know, it is very hands-on in the projects that we're involved with that we're turning around and trying to increase the value. We are pretty close to being full-time property managers as opposed to seeing the checks, you know, come in and you know, loving the passive income. So that's fine for us. I mean we like getting our hands dirty and taking action and being involved but that's one thing I would caution people about for whatever reason. I think headline news suggests that this is a passive income source and that's absolutely not the case at all when you're dealing with value add, you know, medium size mobile home parks. James: Yeah. I mean if you want really passive and you invest passively or [22:28unintelligible] I don't think there's any business, which is really, really passive in real estate, right? Especially if you're an active operator and you want to make the most money. If you want to be at the top of the food chain, then you have to do work. If you don't do work, you can buy the deal and all that but the thing is you've got no control on the returns that are being made and being generated unless the market is getting up. There a lot of guys out there who are making, who are boasting themselves that they made a lot of money real estate without doing work. But it's actually the market is doing the work for you.  John: Right, exactly. James:  So this is the elephant in the room, right? So how're the returns compared to multifamily class B and C in mobile home parks? Because you have worked a lot on the capital raising side on the multifamily, so you can see a lot of operational stuff on that side compared to mobile home park, you know, how does that compare to..? John: Yeah, so I'd say just general rule of thumb, it all depends, deal specific. I know that there are, you know, opportunities that you come across in apartments, they get into the 20% IRR. But generally speaking, I think hurdle rate for me, for apartment complexes, is about 15% IRR over say a five year holds. Whereas the hurdle rate for me for mobile home parks is about 20% IRR. So I'd say it's a 5% difference in terms of a return premium there that I'm seeing and that I'm using as a guideline for allocating capital in my projects. James: Got It. What about cash flow on a yearly basis? What do you expect between these two asset classes? John: It's about the same. So whereas, you know, you may expect an 8% yield a cash on cash for an apartment complex, larger apartment complex. We're looking at sort of 10 to low teens on cash on cash return. James:  Are you syndicating this deal or you're doing this on your own? John: No. So we use our own capital for all three of our projects and with this fourth in the pipeline. So, I work with other partners. There are about four of us that work together and to date, we've only used our own capital and that's intentional. We think we're still learning. We want to build a track record and we really want to get our arms around these heavy turnarounds so that in the future, we can raise outside capital and go to market with credibility and feel confident taking other people's money to do projects. So yeah, to date, it's just our own capital that we've used. So we're all active partners and no syndication. James: So you could do a Jv type of thing.  John: Exactly.  James:  Okay. So you're saying when you're doing syndicate, you know, I mean, if you do syndication then you have to make sure you allocate some money for your passive investors as well from [25:24inaudible] whatever you guys are putting in I guess. So you're saying cash flow wise is almost similar, is that what I heard? John: So like 3 to 5% premium, cash on cash return. Whereas the IRR was about 5%. That's what we're seeing. We see a significant portion of the overall return allocated towards the equity, the increase in equity because we are doing a turnaround. So you know, the cashflow is nice, but a majority of our returns are coming through the boost because we are fixing problems, elevating the class of the property or expanding it to generate significantly more income. James: Got It. Got It. Got It. I mean audience just want to let you guys know as I wrote my book, you know, as a passive investor, you can choose any asset class, right? It's not only multifamily. I know multifamily is a lot of, what popular names nowadays is more famous than anybody or anything else. I mean, yeah, it is doing very well. There's a black swan effect of people become renters, you know, just demographic shift too. You know, people becoming renters. But there are also other asset classes like mobile home parks, self-storage, office industry. There's a lot of different asset class in that people are doing very well, right? Like, I mean, if you as a passive investor can make a couple of percents more compared to multifamily and you can find a good operator who will give you the returns on the backend you can always definitely do that. The key thing is to diversify your investment from what I see, even though I only do multifamily but I just think that, you know, wearing a bigger hat, my thought process, I think that's the message for passive investors, right? So the question for you is, you're talking about the 5% premium with the IRR and that's where the value adds are being generated, I guess. Right? And how do you plan to exit? I mean, are you going to sell to someone else? Is there like a big reap that is coming in? John: Yeah, so for us, I mean, we like buying and we don't ever want to sell. So I say that in air quotes, you know, we'll own it forever. But for us, the exit is really through a cash-out refinance. For us, we find these smaller to medium size parks where we think that we can elevate the class of the property. So take it just under a million dollars and you know, at a low vacancy and augment it such that it can be financed through, either a conduit loan or a Fannie or Freddie debt. And at that point, we will have created sufficient equity that we can more or less pull out all of our capital that we've put in. And then when we're done, we've got long term, low-cost debt on the property and then we'll just collect the cash and go on and do our next thing.  So that's the vision for all three of these properties is to execute the heavy turn of the value add in the first three to four years and then refi, take out all our capital and then go rinse and repeat and do that elsewhere. Because, I mean there's a very stable asset class. We liked the business. Affordable housing, we think is going to be a thing for the very long term. We like owning productive cash flowing assets and so we don't have any desire to sell now. So someone comes along and gives us an offer we can't refuse, well, we've got to, you know, do the math and see if it makes sense. But we're definitely not looking to go in, execute a turn and then exit to other private equity owners. James: Very interesting. I mean that's what value add keeps you in commercial and that's the real power of commercial real estate. The other day, I was talking to a passive investor. He said, hey, this guy is giving me, you know, 8% cash on cash flow and that's it. Right? What about the back end? He said, oh, I don't care what the backend. I say, well then you can get much higher cash flow on mobile home parks. So if cash flow is the only thing that you're looking at, you know, you shouldn't look at multifamily alone. Or maybe you should look at 'A' type, 'A' class multifamily in a very strong location near to core urban center as what I call a core type of deal, right? You really don't have to do just multifamily, you can do a lot of other asset classes, right?  The power in commercial real estate is actually on the cash flow plus the backend. The equity growth that you generate through value add, right? So that's why I named this podcast as value add real estate investing, because that is the gs of commercial real estate, right. Otherwise, I mean, unless you are rich or unless you are a big family office where you want to preserve your wealth; you're not investing, you're preserving your wealth. You're making slightly more than your inflation. Say inflation is 3%, you're making 8% cash flow. There's nothing on the back end, then you can go and do, you know, that kind of deal. The majority of people, people want the value-add component where it grows on the backend. John: Sure. Yeah. I mean, we'd love to sell to those types of buyers. The ones that are looking at this squeaky clean, I mean, we'll do the work, we'll create the equity and then, you know, for those that just want to collect the rents, we're happy to sell for a premium. James: Yeah, there's a lot of syndicators who buy the type of deal where you just cash flow because they get fees. Right? But for the passive investors and you don't understand, you're just going to get a cash flow, right. And some times people are very intrigued by the cash flow concept. Suddenly they come out from work, you know, working w two for their whole lives. Oh, there's a cash flow coming in monthly, you're going to jump on it, which is okay. It's okay for some people, but there are much better alternatives out there. Where you can grow your wealth as well on top of preserving your cash against the inflation. So that's good. So, how are you finding these deals because you are New York, how do you find it? John: Yeah, so we explore all channels. So we do cold calling, we network with other owner-operators. We had done some fairly extensive direct mailing. We no longer really do that much. We talked to brokers, we go to industry conferences, we look at Facebook, Craigslist, eBay, a variety of other digital platforms. Really, we try to cast as wide a net as possible because again, this industry is really fragmented, not as industrialized as, you know, apartments are. You'd be hard pressed to find significant deal flow on a loop net, for example, for mobile home parks. So we just try to put ourselves in the flow of deals in as many instances as possible. Which means that we look at a lot of deals, we say no to most of them and it's very structured and haphazard. But, I mean, the three deals that we've sourced so far have been through relationships. So whether it's through meetups, we've met people and they needed to refer a deal because they had other priorities that they were going after. So despite, you know, we've done the work and built out databases of owners, throughout the country and, you know, done the cold calling, done the direct mail, despite all that time and energy put into revving up that engine, ultimately today, it's come down to relationships with other people. James: I mean, it is so fragmented, right? It's just so hard to go and get to a broker and buy a right deal. Right. And daily, even in mobile home parks there to work hard for it. But that's okay. I think you're able to find it, which is really awesome. John: Yeah. Yeah. And again, it's good and bad. It's hard work to do it because it's so fragmented. But at the same time, that's one of the reasons why there's value there because you've got really mispriced opportunities because the market isn't as efficient. So I mean, I'll take the hard work any day if it means you can still get good deals. James: Got It. What about the depreciation or tax benefit of mobile home parks? How does that compare to the apartments? John: Yeah, so with those parks where you're owning the land and the infrastructure, so you don't have quite as a large depreciable base as you do in multifamily. One good thing is that you have a condensed depreciation timeline. So while the depreciable base is not as high in terms of absolute dollar value, you can take a decent material dollar value for the depreciable base and depreciate it over sort of a 12 to 17-year timeframe instead of the, I don't remember the exact number.. James:  27.5 John: Yeah, 27 and a half year timeframe. So what you find yourself in a situation is that in the first sort of 10 to 15 years, you have about the same depreciation benefits and taxable losses that you would experience in multifamily. But then after sort of the 10 to 15-year mark, you run out of the depreciation and then, you know, you find yourself in with a larger taxable income. James: Well, I didn't know that that is shorter than multifamily, is it 12 to 17 years? John: Yeah. About that because it's not real property that you're depreciating. These are the utilities, so [35:11crosstalk] and the light posts and the roads and I mean this is equipment, essentially, depreciating. With the schedule, you apply a different shorter schedule depreciation. Then you do the actual structures, James: You're not paying for the whole, I mean, you're paying for the land plus the utility infrastructure. Infrastructure maybe 10% of the overall cost, is that right? John: Roughly. Yeah, it depends. It depends on what your infrastructure looks like. But it's still material; in most cases, it's material amounts that you can depreciate, but it accelerated, right? So now while you may have a lower absolute dollar value of an asset that you can appreciate, you can do it over a much faster time so it's accelerated, which means your yearly depreciation charge is higher and can also be a significant portion. But again, that expires faster than you find in multifamily. James: Yeah. Yeah. But even in multifamily, I don't think anybody owns it for 12, 17 years. I mean, on syndicated deals, I guess. John: Right. James: Interesting. So, okay. So yeah, usually I think in commercial office industrial, is it 39 years? Multifamily residential, it's usually 27.5. And you're saying some of the utilities or infrastructure in the mobile home parks minus the land is 12 to 17 years. Okay. Yeah. Very interesting. So, John: Yeah, so not quite as attractive from a tax basis. Look, after tax returns, I think you still find yourself in a very favorable situation because you know, the overall returns generated by the property are at a premium. And so even if you are paying taxes on that, you're after tax returns still tend to trend above what you would find in other commercial... James:  Are you able to get a negative K1 in the first few years? John: Yeah, yeah, definitely. James: I mean, let's say after value add is done, let's say after value-add is done stabilized, do you still get negative K1? John: I'd say, I mean deals specific, but it would be reasonable to expect that for, you know, the initial years of operation for sure. James: Okay. Okay. Yeah. For our listeners, I mean K1 is the form that everybody gets when you're invested in a deal where it shows what is your paper loss or a paper gain. But usually most of the times, it's the loss. Because your mind is seeing the mortgage or you're minusing the depreciation of the asset and also you're minusing the interest on the loan that you are doing. But in this case, I think, John's case, there is a lot of it is seller finance so that still be interest. Yeah. You still have interests, right? Because for your IOS and all that.  Interesting. So where do you think you want to grow from here in mobile home parks? John: Yeah. So continuing to scale. As I mentioned before, we're probably right on the cusp of taking in outside capital. We'd like to complete the turnaround with the three properties that we have under our ownership now so that we can prove out the concept, you know, go to market credibly with we've executed, have you turn arounds. We did it successfully and just have the inner confidence to be able to go and take outside capital. So look, we're trying to find value and when value presents itself, we'll act. We don't have any stated goals in terms of the number of units that we want to acquire. We do want to get larger. We wanted to do, you know, more complex, more interesting projects. Well, it's hard work, it's also really fun and we find a lot of sizes faction and turning around some pretty beat up and run down communities and augmenting the sense of community, beautifying the neighborhood and again, solving a really meaningful problem, which is the lack of affordable housing. So we get a lot of satisfaction and find fun and interest in solving these problems and continuing to grow the portfolio. James: Yeah. And how frequent do you go and visit these parks? John: So I make trips about quarterly. So I was just in San Antonio in April and was out there for a week and then flew back through the Carolinas to see the other projects. And in South Carolina, North Carolina, I'm going back to the Carolinas in June. So about, you know, every two to three months, I'm a boot on the ground, either looking at deals in the pipeline, checking up on progress on existing turnarounds or, you know, in some cases, we've got to get state licensing in order to do what we want to do in terms of lot infill. So for example, you know, I was in Austin in January to sit for the dealers licensing exam. So in order to execute the law and fill that we want to do in San Antonio, we need to be licensed dealers in order to buy homes directly from the manufacturer. So we were in Austin doing that. The same thing is happening in June. We're getting a dealer's license in North Carolina to be able to execute these large turnarounds. So between checking up on projects, chasing new deals and getting whatever required licensing we need in states, we're on the road a lot and touring around the southwest and the southeast. James: Yeah. Yeah, that's very interesting. How are you getting dealer license to turn it on these properties and how are you finding a lot of fun in doing a lot of value? That's where you make the money. To solve problems that other people don't want to solve.  John: Exactly.  James: Right. So, and what's the point of buying a cash flowing deal?  John: Right, right, exactly. You know, in maybe 30, 40 years from now, great. I'll do those and just collect the rent checks and that'll be fine. But in the meantime, you know, I'm still relatively young, hungry. I want to make an impact. And so that's where value add is really where the opportunity is. James: I don't know, I mean, I think if you didn't want to work hard, I mean, I know if people want to get into real estate, but just so many people either, they don't want to take action or they think the problem is too hard or they just didn't want to put their mind into solving that problem. And that's where the barrier to entry comes in. Not many people want to solve the problem. And people like you who are in New York, you know, is solving the problem like in San Antonio and North Carlina, it's hard work but that's fun. And you make money out of it and it's generational wealth too, right? Because after you refi, you take out your money out, it's your cash flowing for your whole life. So you don't have to answer to anybody since you're not syndicating anyway, so that's awesome. So let's go to a bit more personal side. Why do you do what you do? John: Yeah. So again, I think it's just fun. I'm the kind of person that I don't think I'm ever going to retire and sit on a beach or golf all day. I like to be active and doing things that are interesting. I liked doing challenging things and so, you know, for me, I just get a deep sense of satisfaction in doing hard things and really doing those hard things with teams of people. So I like surrounding myself with partners and binding together as a team to solve challenges that are just intensely satisfying for me. James: Got It. Got It. Is there daily habits that you practice that you think has made you more successful? John: Yeah, so I would say I'm a distance runner. So I'm an athlete, I've been running marathons for what seems like forever. And what that practice is instilled in me is a couple of things that have really translated directly into investment success. One is just the concept of compounding. So logging miles every day, over long periods of time. You know, maybe in a week or a month, I don't notice the progress, but over years of repeated activity and continuing to grind it out despite pain or cold weather or you know, emotional blocks that would, you know, would it difficult for me to want to move forward, I keep powering through it and ultimately it's led to a lot of success in my running endeavors. Implying that same approach of compounding and continuous daily incremental action in the investing space has really helped position me for success in investing there too. James: Got It. Any advice that you want to give to newbies who want to get started in the mobile home park operation or investment in the business? John: Sure. I'd say definitely learn about the nuances of the industry. Take the time to not only attend boot camp or something similar, but talk to other owner-operators about the details of owning and operating parks. You know, it's not enough to just read materials or listening to podcasts, I encourage people to do that, I do it myself, but really get to know owner operators because there are a lot of nuances about running or even finding parks that are glossed over or not adequately covered in podcasts, reading material or boot camps. So I'd say education, definitely take the time. I mean, I took about a year to really get my head around, you know, what is this industry like and what is it going to take to succeed? So education and then just get started. I mean, there's a lot of reasons to say no and to walk away from opportunities. Again, with mobile home parks being kind of 30 to 40 years behind the times relative to multifamily. There's just the nature of the asset classes, there always are going to be problems with these assets because they're not usually professionally managed and they all have some level of hair or warts on them. Don't let that scare you, that should inspire you to learn about which problems are fixable in which are not; where you should run away quickly and where you should dig in. And really find an opportunity to solve problems and create value. So I think those are my two best pieces of advice. Just get educated and then learn to get started and get going. James: Awesome. Hey, John, why don't you tell our audience about yourself and where to get hold of you or if they want to contact you? John: Yeah, so my website has my contact details. So Loan Juniper Capital is the name of my firm. We own and operate mobile home parks in the southeast and southwest. That's loanjunipercapital.com. There you can find my email address, my phone number and I'm on Bigger Pockets as well, I'm all over Facebook as well and the mobile home park forums and multifamily forums in Texas. So I try to be active and get my face out there and I do a fair amount of attending conferences in the southeast and the southwest too. James: Awesome. Thanks for joining us today. I'm very sure that you added so much value. You know, I like to talk about different asset classes such as mobile home parks, other than just multifamily. Because as I said, opportunities everywhere. You have to find the right guys to partner with to know or to learn from. So, absolutely, I had a lot of value. Thanks for coming to the show, John. John: Yeah, thanks for having me, James. This was fun. Appreciate it. James: All right. Okay. Bye. Bye.

James: Hey audience, welcome to Achieve Wealth Podcast. Today, we have Adam Triple A Adams. Adam's one of the Facebook stars, I would say, in the real estate business in the multifamily space because he does a lot of things using social media and I'm proud to have him here. Adam owns, almost sounded at 770 units worth 54 million. And right now, he has been focusing on Oklahoma City to buy their deals and he's the Master Investor of the Year, nominated by Thing Realty. So Adam, do you want to introduce yourself?     Adam: Yeah, hi. Adam Adams, originally from Utah, I live in Denver, the host of the Creative Real Estate Lunch Club, host of the Creative Real Estate Podcast and very focused on syndicating deals. So raising equity and buying larger apartments, we closed on 150 units last week and we just want to keep that momentum going.     James: Hey audience, just a quick note, this is the first time we are streaming live into our Multifamily Investors Group to add value and to allow people to answer questions, real time. I mean, this is almost the ninth recording of the podcast and Adam definitely helped me here today. He helped me to set up this live streaming, which I always want to do from the beginning, but there's a lot of tricks to get it working and I'm so happy to have him help me here. And you can definitely ask questions in the comment box. So go ahead and ask and I'll try to answer as fast as possible, but thanks for joining today. This is the Achieve Wealth Podcast where we focus on value add real estate investing.   So Adam, Why don't you tell what has been your recent focus on the multifamily space?    Adam: Yeah, the main focus is trying to do what we can as a company to add value to other syndicators. So helping other people raise equity, helping other people learn how to do the business. Some of the people watching are personal friends of ours on Facebook right now, Mike Upload, Vincent John, Jesse's on here. Van2 says 'awesome'. It's what we're trying to focus on right now, is just add the most amount of value. See if we can help other people and inspire them to get into multifamily syndication. And we partnered with other people often, we'll help raise equity for deals that you're closing on so that's really what we focus on. 300 of the 700 doors that you mentioned, we personally operate every day and we're always looking for more of those deals, but we've also raised equity for other people's deals.    James: Awesome. Awesome. So, Adam, can you tell us, I mean, value add is important in value adding to other people's lives and just giving out content is very, very important as well. But in your experience, what has been the best business plan that you have seen in terms of value adding to a multifamily deal?    Adam: Okay. So when you're talking about value add to a multifamily deal, you mean the actual property, right? And you don't just mean adding value to other people?     James: No, no. We'll come to that some other time.    Adam: Yeah, we do small things. Like upgrading kitchens, flooring, the bathrooms, painting. So generally what we do for value add is that. We've also implemented what's called RUBS- ratio utility billing system to kind of make it so that the burden of paying for the utilities goes on the tenant instead of us. So we've done a few different things with five syndications that we've closed and it's always different. Just because I say I like RUBS, it doesn't mean you can do that in every single market or in every single neighborhood. Sometimes you can do it on a B class, but not on a C class. So there's not one thing that we do, but we obviously try to raise rents and cut every expense that we can and make the property run more efficiently.     James: Okay. Awesome. I mean, you have been nominated by Thing Reality as the Master Investor of the Year because you add a lot of value, right? But what do you think is the secret sauce to your success in adding value to others?  Adam: Honestly, I would say the one thing that kind of sets me apart or my team apart is that the way that we give is we give fully and willingly. A lot of folks that are doing the business either want to charge for every ounce of advice that they give or they want to not share it with other people because they feel like that's their secret sauce and they're only going to be able to make money if you don't make money. And I think that I've noticed that with some people, they're like, well, I don't want to teach people how to do RUBS because then all of a sudden they're going to make all this money. I want to buy them from them where I can start implementing this. And for us, it's a little bit different. We decide what do people need to know, what are the problems, what have we gone through? Like our own personal issues with running certain properties. And we try our best to just give those pieces of advice and not just part of them, but like in detail.     So when we share things like how we're utilizing Facebook algorithms to get our name out, like we share that. Most people would charge tens of thousands of dollars for that piece of Info on how to do that but we just want other people to grow with us. And I think because of that, people talk about us, they say: you should go to our conferences, you need to go to blue spruce conferences, you need to listen to Adam Adams or whatever because we don't hold back. And that's probably the big thing is as I see most people holding back or only doing it when they're getting charged or giving you some of it and saying, if you want to know the rest, you have to like, come and pay me or you have to do this or you have to do that. But not us, we just give freely.    James: Got It. So yeah, I think it's important to take leadership, right? I mean, not everybody wants to take that leadership. Leadership is really hard and I mean, I commend you for taking leadership and taking like what? Four different conferences in Denver, is that what do you guys do? That's hard. But I think you took the leadership and I commend you for getting that attention and the value that you bring, which is a win-win situation for you, for your investors and for the people who are attending the conference. So coming back to some of the engagement in Facebook, I think you are really good in understanding the algorithm of Facebook, right? So can you give a few tips to our audience and how can they grow their brand? How can they grow their presence on Facebook? And what should they use Facebook for? What should they use LinkedIn for? Because I think you are pretty well-established even on LinkedIn, right? So can you give us some tips on that?    Adam: Yeah, yeah. So to try to give that in a fast--- there's a lot of info there. And the reason I say that is because we have a 13-week raising money course that like teaches you. There are a lot of modules on Facebook and there are modules on LinkedIn and it just goes into tons of detail and I could never give you 13 weeks of info but the way I look at both of them is that this is how people are going to find you. I believe that one of the things that people do for vetting, vetting a new operator to go with or vetting a coach to hire or vetting a private money lender is they check out their references by going on their Facebook and scrolling through and seeing the types of content that they give. People don't do business with businesses anymore. People do business with people that they know, like, and trust.     So we use Facebook and LinkedIn to allow people to know who we are and they are different. And you said you think I'm pretty active on LinkedIn? I'm not that active on LinkedIn. I have a profile because I know I have to have a profile and Chad from our office has optimized the LinkedIn so that it has a whole bunch of keywords so that when people are looking for a syndicator that they find me instead of someone else. I have that and I need that and we use it and we do a private messaging on there and connecting with people. But where I really post the most is on Facebook. And that's one thing that I suggest to a listener is not to worry about having Twitter and LinkedIn and Instagram and all the other things, but to have Facebook and LinkedIn and a focus on one, where you just going to add value every day as much as you can.     And think about it like this, add value to your target audience. Now us, we have conferences, real estate conferences, and so I want to be able to sell more tickets to come to our conferences so I know who my target audiences are. It is somebody who's getting new into syndication so that's who I play to, that's who I help. I give the most amount of value as I can to teach that and I put that all over my Facebook so everybody knows exactly what we're doing. And as far as your listener, they might be only wanting to target accredited investors. So it just depends on who you're targeting. You might find more accredited investors on LinkedIn, but I find more aspiring syndicators on Facebook so that's how it works for me. Does that make sense?    James: Yeah. Yeah, absolutely. Absolutely. So that makes sense. In terms of who do you want to engage in both different platforms, right? So that's good. And also let's go to your favorite topic because you're one of the top 1% in the world in meetups, right? So tell me, I mean, I'm thinking about starting a meetup, but if I start one, what should I do to grow that meet up to the next level?You are the master of meetups.     Adam: I certainly try and as on our raising money course, there's a giant part for just the meetups and I'll give you the most I can in a short amount of time right now. Is number one, people want to be heard. This is big. So you're running a meetup and you're going to fail your people and they're going to stop coming if you don't let them be heard. So how can you let them be heard? This is how. You can allow every single person in the group to be able to share their name and what they're looking for. Why are they here today? Or what is their business? Or how can they help? Or even randomly enough to say, where do you plan to be in five years? And when people get to share, you know, I plan to be in multifamily or I need to close this, or I have a wholesale deal for you, whatever, when they are allowed and able to share that with the group, they feel like they got a ton of value.   And if you can just imagine being at one of these meetings, if you have something to say, and most people are shy, even extroverted people are pretty shy. And so if what you do in your group is make everybody, like if they want to talk to people, they have to literally go and reach out to everybody and say, hi, my name's Adam Adams. I buy apartment buildings with my friends. If you want to be my friend, come and talk to me. If they had to shake everyone's hand to say something like that, then it would be very difficult for them. They would only get a few people in the group. So when you give them a chance to be heard, hey, let's go around and introduce yourself, tell us what you're looking for. And then I get to say the same thing. My quick pitch. I'm Adam Adams. So I buy apartment buildings with my friends. If you want to be friends, come and let me know.     And if I can feel that I shared that with the whole room, I already know that the specific people in the room that resonate with that thing that I said, will come to me. So I get a ton of value by actually being able to do that. And so that's the first thing, let them all be heard. The second thing is I would say...    James: Can I ask a question on the number one?    Adam: Yeah, yeah.     James: So don't you think it's going to take up a lot of time? Let's say you have like 40 people in the first meetup, isn't that going to take a lot more time from the meetup? Because a lot of time, we want to do a lot of networking or presentation so that people learn. I mean some of the introduction itself can take a lot more, right? So how important is that introduction by everybody in every meetup?    Adam: It's extremely important. It takes time, but it doesn't take time from the meetup. It takes time, but it actually adds a lot of value to the meetup. And when you are saying, oh, I want them to be able to network instead, well, this is the best way to let them start networking. Because then somebody's going to say, Hey, I just want to lend passively. I just want to lend my money passively. Someone else is going to say, Hey, I'm an operator, I'm raising equity. Someone else might be saying, I have a wholesale deal available. Somebody else might say, I'm an fix and flipper and I need a wholesale deal. But if you don't let them share that with everybody, then they're going to have a harder time finding that right person. And if it's your group, James that they're just going to have to network just to get that out, there's a high probability, an extremely high probability that the wholesaler might not be able to find the fix and flipper and the syndicator might not be able to find the passive investor and the passive investor might not be able to find the syndicator. So you have to intentionally facilitate it.     And when we think that we're taking time away, then we're already destroying ourselves. It's not taking time away, it's giving a lot of time and value to everybody in there to be able to share that. And they're going to keep coming back and back and back and your group, instead of having 40 next week, it's going to have 45 the week after. But if you start with 40 and you don't let them share that, a lot of them are going to be like, Eh, I didn't really get value out of it so some of them won't come. So now it will be 35 and then it'll be 30 and then 20 and then it will diminish and dwindle. And I see this happen all the time. That's one of the big things that set my meetup apart is that we do a few different things that nobody does, even if they sound counter-intuitive, but because we do them and we do them regularly and religiously and continue to do them, people grow.     So we grew a group, it was a lunch club and I don't know how many people you think would go to a lunch club, but I used to think it'd be like six people, maybe a dozen people. I dreamed I was like, oh, what if I could have 30 people at lunch? That'd be crazy. And all of a sudden, we had it where it was 40 every week, then 60 every week and then we went all the way up to 176 people, weekly on Thursday in the middle of lunch, people drove, came, networked, learned, and then drove home. Spent four hours in the middle of Thursday. I would never could have imagined that we would have had a hundred people a few weeks in a row or 176 people. But we did and that's because we did it differently.     James: Okay, awesome. Continue to your second point.     Adam: The second point was to not sell. And I think it's important to sell. I mean, it's a benefit to your business to sell, but like we're talking about the conferences, which directly correlate with the meetups. I don't have anyone selling at my conferences.   You've been to one of my conferences, right?      James: No. Not yet. I need to make it to Denver.     Adam: Okay. So the conferences are no sales pitch and I needed you to say that you've been there because like most people think that obviously, you're going to have a sales pitch. How are you going to afford to have a conference? So it's just we never sell anything. We don't have a product. We don't have a service. We don't do anything. We don't have any of the speakers that are flying in on their own dime, they're not allowed to share a coaching program. They're not allowed to share a product or a service that they're going to sell. The only people that are allowed to even share that are just the booth sponsors. We have some sponsors that can sell, but the speakers are there just to add value.     And that's the same thing that should happen with your meetup groups. A lot of people, they bring in outside speakers. The REIAs that's how they make money is these outside coaches come and sell and like once you've seen the same selling speaker like two years in a row and you're going to the same REIA and it's that same no investor coming to sell more of their note course, you don't want to go anymore. You've decided, I've already gotten sales pitched by this guy twice, there's no reason to go again. So you actually stay away from it. With mine, every single attendee understands that they're not going to be sold anything and so they attend over and over and over and that's something that we've built in. We just added that or not added that, something that we built in in the beginning. We wanted to make sure that we had that when nobody else did.     Because regardless of what you're doing or what you're not doing, James and Listener, the best way to be different, the best way to get people to come to your events is to do something 100% different. So if everybody else is meeting at dinner, you need to meet at lunch. If everybody else has a free meeting and ours were free but if everyone else is just free, free, free, free, I'm sorry, but you've got to charge 200 or even 2000 a year because now, you can set yourself apart. You can say everyone in this group is more serious than anyone in any other groups because we're paying 2000 to be here instead of all those free groups. So it's not like you down-talk, talk badly about any other group, but you always set yourself apart some way.     Every other group out has a $200 a year or a $20 per day meeting. Well, then you say, hey, we don't need that, we're just going to be free. And you capitalize on the thing that makes you different. You capitalize that you're the only group in the city that doesn't sell, you capitalize that you're the only group that's 100% focused on multifamily or you capitalize that you're the only group that facilitates letting people introduce themselves. All the other places, they're so worried about being rigid and strict and nobody feels like they get heard. And that's why we do it differently.   Whatever you are doing differently and that's the third thing, is just make sure that you find a way to set yourself apart. I don't care if you charge more, charge less, charge nothing, meet at lunch, meet on Saturday, meet on Sunday, just do it differently and that will set you apart. So those are three really good points.     James: Okay, awesome. I think that's a huge value that you're giving out there. So I think apart from that, I mean, I want to go to a more personal level, right? So I mean, why do you do what you do? So I mean, why do you do so much of work and in terms of getting into real estate, multifamily, you know, why do you do what you do?    Adam:  All right, so I buy apartments and syndicate deals because I like passive income and I go the extra step and do something that no one else is doing. Like hosting conferences every year, hosting meetups. Last year we hosted over 200 events. It's insane. I'm hosting a podcast. Why do I do those extra things is because I legitimately want to add value and give back and at the same time, it's just wanting to passionately see other people succeed. I know and understand that I can partner with somebody. If I can teach you how to find a deal, but you don't know how to raise money, all of a sudden, you'll find a deal and I'll raise all the money. We'll manage it, right? If I can teach you how to raise money and I go and find a deal, well you can partner with me and now we can do this together. You get value and I get value.   So to me, why do I go the extra mile and to put out content, put out videos, podcasts? Why did I teach you today James? I hope we don't mind sharing this, but we walked through before this, we walked through a Facebook live, right? And so that benefits me a lot, right? It benefited you and it's going to continue to help you and I love that.     But at the same time, well, I get to be your very first guest that goes Live in your Facebook group, right? So I just believe that in giving first, if you always give first, somehow you'll get it back. You don't have to worry about life if you can just focus on, how can I add value to James today? How can I add value to the listener today on their own meetup groups? And all of a sudden, I helped you with your meetup group or someone else with their meetup group and their meetup become super famous because they just heard this one podcast and learn three random things. And now they call me and say, Adam Adams, I want you to be my first speaker. I want you to be one of my speakers next year at my meetup group, will you accept the invitation? And now I have the opportunity to go and grow my name across the US because a lot of different people heard this podcast guest. So it's just give first and you'll always be able to grow.    James:  Awesome. Awesome. So can you tell me a proud moment in your real estate journey, one moment where you really felt proud that you did something? Can you share it with us?     Adam: Yeah.  I'll give you one that you weren't even expecting. For two years, I grew my business. For two years, I focused on my business so much and one day my son came up to me and unfortunately, I was on Instagram trying to grow my brand. And my son said to me, hey, can you play this game with me? I said, sure, give me one minute. And I thought it would take one minute, but it took like five or 10 minutes. And so he came back up. He goes, Dad, you always do this. You're always on your phone growing your brand. He didn't say that, but he's seven. But he's like, Dad, this is what you always do. You're always working. And I looked at him and then I got a tear in my eye and I was like, holy cow. Then I went to a mastermind group with Rod Cleef. He runs this awesome Mastermind group. So I went there and Jason Peril, he's listening now, he was one of the people at the group and I poured my heart out and I just said, man, I feel like my business is going well. I'll tell you, I just got my feelings hurt and I never knew how like this impacted my kids that I was focusing on working. So James, when you say, what's something that you're proud of It's ever since then, I actually made a conscious change and I found a way to spend a little bit more time with my kiddos. When I'm with them, I'm not on my phone, I'm not on my Instagram. I'm looking at them in the eye. And I try now and it happens most of the time. One of my kids comes up, dad, can you play this game with me? I shut everything else off, I look at them in the eye and said, I'd love to, let's play that game. It sounds so good and then I play it, I put my heart and soul into it, we play for an hour. So if there's anything that I'm proud of is that the business is going fine, it's growing, people know who we are, we're getting deals, we're closing deals, we're raising money. But I finally found a way to start focusing on my kids more and that's really what makes me feel so choked up.    James: Yeah. Yeah. I mean I was in the Mastermind too, so I remembered that time when you went up there and tell that story.    Adam: And I was crying, right?    James: Yeah. You had a teary eye and very vulnerable. It's a moment. I know in social media sometimes it can be addictive and you are trying to respond to one and sometimes your kid needs that one minute and sometimes that one minute becomes five minutes and it's just not good. So that's good. So let's go to newbie questions. What are the top three to five different types of advice that you want to give to newbies who want to get started into this syndication and being operative for multifamily? What do you want to give us an advice?    Adam: All right, I think this is an important question. So I'm really grateful that on your podcast you ask this to guests. So the top three to five things that I would say to a Newbie, and hopefully these are impactful for anyone. So if you're listening and you are new, take super good note of this and pay close attention because I'm trying to give you value from the mistakes that I've made. So here's a couple of things.   Number one, just freaking start. Just start. Everybody has all this fear and it holds them back. So just find a way to get over that. That's number one.   Number two, when partnering, don't let the blind lead the blind. It's insane. So what I'm saying is, you're a Newbie and you think you're going to partner with one or two or three other brand new people, none of you have ever done a deal, but you think that like somehow this is going to work. I'll tell you, it's way too hard still to raise money. It's way too hard to get a broker to take you seriously and give you a deal. It's way too hard to manage a property with no experience. So instead of partnering and letting the blind lead the blind, align yourself with somebody who's already doing the business. Find a way to add value to James. Find a way to add value to Adam Adams. Find a way to add value to somebody and you take on a responsibility of raising equity, managing the property, finding the deal, whatever. Putting in earnest money, putting in passive money, however you want to do it but align with somebody who has a track record. Very, very important.     The next one that I would say is when partnering, it's very critical that you understand that you do not have to get married on the first date. It's critical. What I mean by that is all of a sudden you say this is a good person, I'm a good person, we should just partner. And all of a sudden, you form a team but you've never done business. What I would say instead is to court or date that person for a while. Go on a date with them with the first property, go on a date with them with the second property. And then if you just absolutely just bond so much, then get married. Then say, we've been connecting so well as we've gone. So instead of just doing this, how we've been doing this, how about we decided to form a brand new company and we really make this something special; now you get married. So those would be the three main pieces of advice that I would share with a new listener.    James: Okay. Yeah. If you guys want to start dating some experience sponsor, I mean just be more active in the group. Ask simple questions. I mean, there's so many people in the group. I mean, I'm so proud of the group. We have like 770 people right now and I just look at the stats, almost like 650 people are active in the group, which is really good. And just start asking simple questions and there are so many people help each other, right? So do that and add value to others, whatever you know you want to share and you can actually absorb as well. So you can start from there if you want to start the dating game that Adams has been talking about.   All right, Adam, thanks for joining us today. Do you want to let the listeners know how to get hold of you?    Adam: Sure. For those of the listeners who are active on Facebook right now, if you're not already friends with me, feel free to add me. But I'll tell you one quick thing; I won't accept you unless you write a message. I get so many randoms and I don't know like what country they're in, if they're real, if they're a robot. So just send me a message and an invite and I'll definitely add you if you haven't already. The other place that I would say is if you're just listening on the podcast, just go to realbluespruce.com, real like real estate and then blue spruce, the tree. And that way you can find my bio, you can find my email, you find anything about me there and you can get ahold of me. So realbluespruce.com    James: All right Adam, thanks guys for joining us. This is actually almost the ninth recording of our podcast and we are planning to launch our podcasts by the end of this month, end of April. So hopefully, I'm right now on track to launch it and it's going to be a blast because there's going to be a lot of commercial operators and people are going to be coming and sharing their real style, how do they add value in their properties? And I hope to get good reviews from everybody after we launch and that's it. Thanks, Adam for joining us.    Adam: Thank you. 

In this episode, Jen, Annie and Lauren are joined by James Fell, the author of The Holy Shit Moment, a book that explores epiphanies and how behavior can change overnight. James shares his insights from his own radical behavior change grounded in a lightning bolt moment of permanent change, and talks about the science and stories behind these important moments. Tune in and learn how you can find your own shift, what drives lasting change and how everything can come together in an instant.   What you’ll hear in this episode: What James Fell’s epiphany was and how that changed his life How personal responsibility can be empowering Global versus focal change – what’s the difference Identity shifts and their impacts on relationships The model of personality and how it relates to change Vanity goals: do they work? Are holy S. moments always bad? Gradual vs. Immediate change What supports immediate change? How does gradual change work? Crystallisation of discontent defined The breaking point and change The quest for greatness as an impetus for change Does sucking it up every work? Building habits and enjoyment over time Weighing the pros and cons of action and committing even when it’s unpleasant Acting like a tortoise but thinking like a hare – what does that look like? Post diet rebound, pendulum swings and coming back to centre Resources: Good To Great by Jim Collins The Holy Shit Moment by James Fell Lose It Right by James Fell Learn more about Balance365 Life here Subscribe on Apple Podcasts, Spotify, Google Play, or Android so you never miss a new episode! Visit us on Facebook| Follow us on Instagram| Check us out on Pinterest Join our free Facebook group with over 40k women just like you! Did you enjoy the podcast? Leave us a review on Apple Podcasts or Google Play! It helps us get in front of new listeners so we can keep making great content. Transcript Annie: Today’s long awaited guest has been a longtime friend and supporter to Balance365 and whenever we ask our community which guest we should have on our show his name always comes up. You might know him as the man behind Body for Wife but we can’t get enough of his straight shooter honest approach to behavior change. Joining us today is the one and only James Fell. James is a highly regarded science based motivator for lasting life change. James recently launched his second book and on today’s episode he shares with us how love and a Joan Baez as quote changed his life forever, how getting clearing your values can make change feel easier and why relying on willpower is a bad idea. We had so much fun recording this episode with James and we know you’re going to love it too, enjoy. Jen and Lauren, we have been waiting for a really, really long time for this podcast episode and I know our community members have been too. Are you ready for this Lauren? Lauren: So ready. We had to reschedule. Annie: Jen, are you? Jen: Yes I’m ready. Annie: Sorry, Lauren, what was that?  I’m so excited I just cut you off. Lauren: I was going to say, we had to reschedule so I’ve been waiting for like an extra week. Annie: I know and every time we ask our community insider Facebook group Healthy Habits Happy Moms who we should have on as a guest, notoriously this man’s name keeps coming up. It is James Fell. Welcome to the show, how are you? James; I kind of feel like a rock star right now after that intro. Annie: You kind of are a rock star. James: Yeah, well, tell my kids that one. Jen: We also get a lot of referrals from you so thank you. James: Oh you’re very welcome, you know- Jen: A ton of women that said they found us  through you. James: We have like minded followers I would say. Annie: Yes. We, James and Healthy Habits Happy Mom’s which is what Balance365 was before it became Balance365 go way back so we’ve been pals for a while and Jen and James, you guys met, I think before James and I met, how did you two meet? Jen: In Vancouver. Oh, like, we just met online, small world as we talked about, when you are not shucking B.S. to people and then we met up in Vancouver and we had coffee which was awesome. James: Yeah, that’s right, I was in Vancouver for a conference. So we got to do the, you know, going from being internet friends to real life friends which is always exciting when that happens, so high five! Annie: Yeah and I met James when I went to the fitness summit in Kansas City many years ago, I mean, gosh, that was probably 3 or 4 years ago I suppose but it was, like, one of those whispers in the lobby like, “That’s James Fell.” James: Don’t make it weird, Annie. Annie: That’s what the women were whispering in my ear and I’m like “Oh, OK, OK.” It was fun to have a couple of drinks and since then our relationship with our company and you have fostered and we are excited to bring you on because you have a new book coming out. This is actually your second book, second to Lose It Right, is that correct? James: That’s correct!   Annie: It comes out January 2nd and I told- James: January 22nd. Annie: Oh, sorry, January 22nd and I told you before we started this that we have labeled our podcast as clean, which means it doesn’t have any explicit lyrics and the title of this book is called the Holy S. Moment and that’s what we’re going to call it for this podcast because we know we have people listening with little ears within earshot but you can probably imagine what the title of that book is and I just have to say it’s not actually out in print yet, is it? James: No, no, we’re, so January 22nd, so as of recording right now we’re 6 days away, so it depends on when you publish this. Annie: So by the time it’s released, this episode is released they’ll be able to find it, where can they find it? James: Anywhere, so it’s being published by St Martin’s Press in the United States and Canada and if you have any listeners in the U.K. Harper Collins is the publisher there so this is this is my 1st international released book. My 1st book Lose It Right was just published in Canada. Annie: That’s exciting, do you feel good about it? James: Oh yeah, I’m really stoked. So yeah, they can find it in any bookstore, any platform, there’s an audio recording too so if people don’t hate my voice, I’m the one that did the narration for the audio. Annie: I love it when authors do that. Jen: I do too. You really feel connected to that author. James: Yeah, I love it too because they paid me to do it. Annie: Winning and the cover of the book, unless it’s changed, because you were kind enough to share the digital format with us, the cover has a lightning bolt on it, right? James: Yes, it does. Annie:  And I don’t know if you can see that but I’ve got a big old tattoo on my trap so, you know, I feel like it was clearly, this was a book that was meant to be in my house. James: Annie Brees, me and Harry Potter are all big on lightning. Annie: Except I’ve never seen Harry Potter, I’ve never read Harry Potter- Lauren: What? Annie:  I know nothing about. I know. James: OK, you just lost some fans. Lauren: I’m sorry. I’m not cool. Annie: Okay, I just wanted to get this out too because on page 6 it just says “hi mom” and I was like- Jen: Oh, that is so sweet. Annie: So you definitely earn some bonus points but what I want to talk about is, if you know us, you know that the 3 of us are all about slow and sustainable change but you actually wrote this book because you found yourself as a coach encouraging slow and steady change but that actually hadn’t reflected your experience in how you forever changed your life. Would you mind sharing the story about the moment and the quote that you think shifted for you? James: Yeah, so before I get into that briefly, like, when it comes to say health and fitness, I don’t mean, you know, jump into your first session with Attila the trainer and go hard core and wreck your self on day one. When it comes to the the change of changing one’s body, you still need to be rational and don’t destroy yourself but the change that I’m talking about is the way that you’re motivated, that quite often we talk about motivation as a form of baby steps, being a tortoise not a hare as well, you slowly, step by step drag, yourself over a motivational tipping point developing, you know, habits that become sticky and the reality is that there’s a lot of people that don’t do it that way. They go from 0 to 100 miles an hour in a moment and they stay that way because of some transformative life changing event that just wakes up a part of their brain where they achieve a new purpose in life that endlessly and vigorously drives them forward. So that’s what the book is about is the science of that event and so there’s the, you know, all the scientific aspect but there’s also a lot of anecdotal stories that run the gamut of, you know, relationships and career change and battling addiction but also, yes, there are some weight loss stories in there as well but to my personal, the first big transformative experience for me happened when I was about 22 years old and I was in university and I’d actually gotten a letter that said, this isn’t verbatim but it boils down to “Your grades suck, we’re kicking you out” and I was, you know, I was in debt, you know, the credit card companies were calling. And I wasn’t looking after my health, I was drinking too much and and I was in a state of despair and part of that had to do with my girlfriend was that she was a very driven woman, straight A student, destined for med school and I knew that if I got kicked out of school and I do not say this to ever speak ill of her but I knew if I got kicked out of school that it was going to be the beginning of the end, that, you know, she wasn’t going to stay with a guy that was a drunken dropout who was letting his health go to hell and so I was, I was really kind of freaked out about what am I going to do and so I’m reading the university newspaper and there was this section that’s like there classified ads called 3 lines free and it’s, you know, a mixed bag of things from quotes and witticisms and proclamations of undying love or temporary lust or whatever and there was a quote in there from of all people Joan Baez the folk singer and the quote read “Action is the antidote to despair.” And I read that and it didn’t hit me immediately but it’s the 1st thing was I realize that, you know what, all these problems that I have can be fixed via action. If I get down to get to work I can fix this stuff and that was the first little wake up and then the next part that hit me bigger was the realization that I had been pretty lazy my entire life. I’ve been skating turned on cruise control, not really putting much effort into anything, these problems that I was experiencing were of my own doing. You people know me that I’m not one of those guys that say “Oh, just suck it up” and you know, I realize that there are people that, you know, life is garbage sandwich and it’s not their own doing but my this was my fault. I had dug this hole myself and only I had the ability to dig my way out and and so there was that realization that I’ve been really lazy and I was actually putting effort into being lazy by, you know, the mental gymnastics it took to, you know, shirk my responsibilities each day and that was when my brain woke up in an instant where I said, “If I just put effort in a positive way, if I just got down and started working, I could fix all this” and that’s the way that these life changing epiphanies work is that they are there a big picture concept, they’re fuzzy, they’re not usually very concrete. The concrete action plan comes afterward, after you have the event but the event happened was like, “If I just work I’ll fix everything” and in that moment I experienced what’s known in Psychology of behavior change circles as dramatic relief, where suddenly you see the light at the end of the tunnel, all the problems haven’t gone anywhere, still there but you know you’re going to fix them and you know that the light is there, you can see it and you’re going to race toward it and everything’s going to be OK. And from that moment, in that instant, I was a changed man. Jen: Wow. James: I got 2 master’s degrees. I didn’t flunk out, I went on and got 2 master’s degrees, oh and that woman, the girlfriend, we’ve been together for almost 30 years now and so yeah, I told you she was the one and you know, got in shape, got out of debt all that good stuff, I don’t brag. Annie: I don’t want to spoil, I didn’t want to spoil it for everyone but when I was reading this part about your, like, this moment that you were having reading that quote I was like “Did he do it?” and he did! And that’s, oh my gosh, that’s so sweet. But I love that realization that you said, I was in this position because I had put myself there and while that can maybe feel a little like, “I did this to myself” it can also feel like that “I can get myself out” like the flip side of that coin is, “Yeah, I put myself here but also I can get myself out” and that’s really like encouraging and empowering I think. Jen: I got goosebumps and I don’t know if you can see that on camera but my hair is standing on end. So I see that shift with some of our Balance365 members sometimes and I agree some people get a garbage sandwich but it is so important to reflect on our contribution to where we’re at in life. I believe that wholeheartedly that it is so important to reflect on that. There are obviously things that were out of your control but there are also things that you have done and you know, for this is a very complex topic but especially, you know, just the different members we have in the different lives they come from but I feel like that can be such a light bulb or that lightning bolt they need to go, you know, maybe they can’t change everything about their life but maybe they have more control than they have let themselves believe, leading out to that moment. James:  And the thing is that there’s focal changes and then there’s global changes, what I experienced was largely a global change, that I just decided that it wasn’t that I was going to get in shape or that I was going to stop flunking out of school, I was going to fix everything and so that was a global change. Other people had these focal changes, like the example in chapter one of Chuck Gross, who had started with his weight because he weighed over 400 pounds and that was a life changing epiphany after having struggled and tried and failed to lose weight many times, he had this transformative experience and that he knew it was going to work and the direct quote from Chuck was “I didn’t have to struggle with my motivation. It came built in.” And he lost over 200 pounds and has kept it off for more than a decade but the interesting thing there is that these experiences often have cascading effects where afterwards, he ended up, he went back to school and he was a straight A student, he went through a personality shift where he went from very introverted to, you know, more confident and more extroverted, it was better for his relationship and it just had a lot of other positive impacts throughout his life. Jen: What about, something on the other end of the scale, I was listening to a podcast the other day with a therapist and she was talking about the high failure rate of relationships after somebody has weight loss surgery and they didn’t dig into that but it relates back to what we’re trying but here is because a lot of people, it’s not about the weight loss, it’s about the identity change that they have because of that huge event and I can also see it going the other way, that, I mean, this happens all the time in relationships, I guess, you have people go through identity shifts throughout their life and it can also affect your relationship negatively. And so I can see it also, you know, not that anyone should stop themselves from changing but it’s just to show this is radical, right, it’s radical what happens to people and this cascading effect that you’re talking about, it can affect, we have in Balance365 these women that go on, like, one woman has founded a feminist nonprofit in Vancouver and is building this huge community and she talks about how it was Balance365 that just, it just was that moment, right, everything changed from there and it’s just interesting to see and we’ve had women applying for jobs they didn’t think they were qualified for and we’ve had women leave their husbands, we’ve had, you know, it’s just that radical personal growth shift that just, yeah, cascades everywhere. James:  Well the research you’re talking about with weight loss surgery, of which I am very supportive, I’ve written an article about how I think that if people that think that that is the right decision for them I’m the last person that would ever shame someone for doing so because the research shows that it can be quite effective but I’m not aware of and I’m not denying it, I’m just saying that I can’t speak to that. Jen: Right. James: However, in these instances I didn’t interview anyone for the book that had undergone very bariatric surgery but there were a few people that had experienced significant weight loss and as well as gone through many other changes and the one theme that I noticed is that what we’re talking about is, yes, there’s an identity shift, yes, there’s a value shift, that’s what makes it effortless. There’s the whole, it refers to Roky, social psychologist Milton Roky teaches model of personality which is, like, the whole, you know, ogres are like onions. Well, people are like onions, too. We’ve got our actions and behaviors at the extra layer which is, if you focus just on changing behavior, that’s why you need to be slow and steady because you’re in conflict with those more internal layers of your values and your identity, whereas if you go through an identity shift and a shift in values, the outer layers just sync up effortlessly which is what happened with Chuck Gross. He went through a rapid identity and values shift which just brought his actions and behaviors into line immediately. But so here’s the thing that, yes, this entire book is about a shift in identity and values which sounds scary. So this is anecdotes, not data but the examples in the book, many of these people were in relationships when they went through this dramatic shift, those relationships got better. Jen: In the examples in your book. James: And I can posit a hypothesis as to why that happens, which is that it’s actually and there’s even some philosophy in there and psychology is that this is not a false construct that you’re creating. When you go through something like this, it’s more like the current identity that you’re letting reign is the fake one, that’s the one that is, you feel that you need to survive each day because of societal pressures and pressures of, you know, maybe toxic people in your life or your job or whatever else is going on that this is the thing that, you know, it can be referred to as the despised self that you’re letting rule your life and then all of a sudden, the true self that, this is the person you’ve been yearning to be your entire life, is suddenly let loose. It’s not invented out of thin air, it was there deep down and it was like every little movie that you watched where there was a hero that did something that impressed you or a story that you read that you say “I wish I could be that brave” or all these little things are tiny bits of data that get lodged in your unconscious that that have the ability to coalesce in a profound way in a moment. So when you go through this type of identity change, this is not slow and steady, it’s such a dramatic emotional event that it’s something where it’s unleashed, it’s like, it’s like a volcano where the magma has been bubbling under the surface, building for years and then all of sudden kerblewy, it explodes.   That’s why it’s a, it’s a holy s. moment because you have this sudden realisation and because and when we look at our relationships with other people that when you fall in love with someone, you have a tendency to idealize them and you’re falling in love with what you, the vision you have of them as their best self. You see, you know, they’re not always that way but when you see the best in them, you have a tendency to overlook the bad parts the parts that annoy you, hopefully. I know my wife does it with me all the time. Then when that real true best self comes to the surface and is allowed to let reign, it’s, like, yeah, the other member of that relationship is very welcoming of that, so I’m not saying it’s a guarantee, I’m not saying it’s going to work that way every time but it sounds good, they said. Jen:  James, what do you think of this, all of this in terms of dieting. So in our community, really, what we have founded everything on is that dieting does not work and a lot, I mean, it doesn’t work for the majority of people and what happens with women is that dieting becomes a part of our identity over time, so you are or losing weight or maybe you’ll tell me, I’m not using the correct scientific terms for all of this but it may feel like part of our identity. It is so ingrained in us to be basically defining our self-worth based on our ability to lose weight or at least trying to lose weight makes us feel worthy and we get, you know, many pats on the head for it as women when we’re doing that. I would say men probably experience that as well and so feel like when women join Balance365, when we help give them, you know, turn the light on a little bit and they join Balance365 and they realize dieting doesn’t work, and for some of them it happens like in “Zing! This does not work. This I have been doing for 25 years does not work” or sometimes it happens slowly, it’s like, “OK, maybe it doesn’t work” but then they, like, come back, you know, and then maybe they pull back from us a little and go, “Well, I’m just going to try one more diet, just to double check” and then would you say that’s a change in identity happening? James: Absolutely and I think you really nailed it, that a lot of people, so that’s that is, sort of a despised self identity that is being allowed to flourish because their values are the approval of other people or living up to some toxic ideal that you see in an air brushed model on a cover of a magazine and looking at food as something that, you know, what they consume is something that they need to suffer through and this is, the thing about these type of events is the whole goal is to remove suffering, when you focus strictly on behavior change, that’s why the tortoise’s preached over the hare because if you change too much all at once, the amount of suffering you experience is quite high because it’s at odds with the more internal layers. And that’s why they say baby steps is because you’re trying to minimize the discomfort until it gets to the point where you just kind of get used to it and you come to tolerate it and yeah, you know those things can work but we all know that the failure rates are pretty high and what can be a much more positive shift in identity is having self compassion, realizing that you are a fallible human being and that food is something that is supposed to be enjoyable and nourishing and necessary for life and that you can stop caring so much about what other people think and worrying more about the way that you, what you think about yourself. And how you feel about the way you look in the mirror and how you feel physically, like, when you wake up each morning and you know hopefully bounce out of bed and then looking at food as something that nourishes you and because you have compassion for yourself that you want to feed yourself in a healthy and nourishing way and that you want to exercise because it’s good for you and it’s enjoyable and it’s OK to have some vanity goals but if vanity is your overrunning motivator I’ve never seen that work out well. Yeah, you know, for many years I had a shirtless photo of me on my website. And you know, I’m wearing the short sleeved t-shirt- Jen: Snug fit. James: And I think it’s OK to have some of those motivations but you also need to think about the, you know, I’m never going to be as buff as the next guy, I’m never going to be as ripped as the next guy but that’s OK because my wife likes the way I look, I like the way I look and I like running, I like lifting weights, I like riding my bike, I like fueling appropriately, I like the way I feel when I eat mostly healthy food, I like the way I feel when I don’t drink very much, all those types of things, that’s part of my identity, that just being kind of Zen about this whole thing. You know, just do the best you can, enjoy your life, enjoy your food, enjoy your exercise, that’s identity and values right there and that’s a positive one as opposed to all “Oh my God, I’ve got this flab from Christmas” which I totally do and you know, that’s a positive shift that people can make because they hear me talking about it, they hear other people talking about it, they read it and this type of information percolates in your brain and maybe one day it bursts through the surface and you say, “That’s who I am.” Lauren: Can I ask a question before we kind of move on or switch gears? When you were telling your story, I kind of had this realization that I listen to a lot of podcasts and there’s always people, you know, being interviewed and telling their stories and it’s usually someone who has accomplished something or done something and a lot of times you’ll hear them have that Holy S. Moment, you know, whether it’s, you know, they had a big realization or whatever and I am realizing that a lot of times, it’s kind of like they’re, it’s a bad moment, right, like, they’re kind of in a low place when they have that moment, is that and I know you have a lot of examples in the book, is that true for all of them or is there another way you can kind of come to that moment? James: It’s common but it’s not the law so, you know, in my example when I talked about the one when I was flunking out of school, yeah, the whole action is the antidote to despair quote, I was in a state of despair so that’s one of the reasons why it really spoke to me. Despair is not same thing as depression, just so we’re clear. And but and so what happens with a lot of people, one example is called crystallisation of discontent which is a psychological term which refers to discontent is, you know, say there’s one problem that’s bugging you and it’s not that big of a deal by itself you’re like, “Yeah, whatever, I can live with that. Crystallization is when you look at all the other little problems and the whole is greater than the sum of it’s parts where they suddenly crystallize all together and you reach a point where you’re like “OK enough of this, you know, we’ve got to go in a new direction because this is just not working for me anymore.” So that’s an important shift people can make. Then going deeper, we also have the breaking point, which we see quite often with addiction where people are in a horrible state and they realize that they just can’t do it that way anymore and they’ve got to go in a different direction and it is very common for people battling addiction where one day they just “No, this is it, never again” and they’re done and they are done so that’s another way but on the other end of the spectrum, we also have the good to great mentality which is and I’m stealing that from a book of the same name by Jim Collins and and the book is actually about corporate change where corporations want to go from being good at something to being great but it actually, there’s a lot of good stuff in that book that applies to people as well and what it is is someone, you know, life is pretty peachy, things are going along OK, you know, it could be better but then suddenly a quest enters your mind, like, “I gotta do this” where where it’s not like you want to be great for greatness sake, you have discovered something that makes you want to try to create it. And you know, for me people who have that big life changing event often have more later on clarifying epiphanies and for me it was being a writer that I had reached the age of 40 and I had an MBA, I had a successful business career and I didn’t hate my job but I did not love it and I knew that writing was something that I love to do and I realized life was too short to spend the majority of my waking hours doing something that I wasn’t really passionate about and I was going to give it my very best effort in order to make a career out of this and so that was a, life was good and then I became a writer and it became great. Maybe not quite financially great right away. But trust me, you know, I just turned 50 last year and my forties were awesome because I decided to become a writer and my fifties are looking to be even better. Lauren: Right, that’s good to know, you know, you can have these epiphanies without being at like rock bottom. Annie: I would just like to say that James pretty much just described my last year of therapy in like 15 seconds. Because we actually have a section of our program called The Story of You which is where we help members get clear on their values and I think Old Annie, Annie 2 years ago would have just poo-pooed that, like, “Why does this even matter, I just want to lose weight, I just want to build muscle, I just want to, you know, run this or lift this or whatever, like, I want to look a certain way or I want to feel a certain way, why does my values even matter?” and you wrote in a blog post that you encourage people to spend less time worrying about the exertion of will and engaging in continual resistance and suffering and forcing yourself to do what you really would rather not and spend some quality time on examining who you really are deep down and you encourage people to, like, really look at their values, like, what really matters to you and you’ve found in your book evidence that supports that that will help, as you said with that one gentleman that he didn’t have to rely on willpower because this is just what he wanted, like this is was him. This is what he wanted and so we hear it from a lot of women that they feel like they need more willpower and more self control and you’ve dug into self self control, self love and willpower in your book and on your blog post and as you know, the fitness industry loves this like “No excuses, just shut up and do it, grind through it.” So after looking at your work in the book and knowing you and knowing your personal and professional experience, what do you think about that? I mean do you want to expand on that barfy noise? James: There was a lot of research in the book debunking the whole myth of willpower  and seeing it as a limited resource that you can strengthen and you just gotta suck it up, we know it doesn’t work, people have been told to suck it up forever, there’s research showing that the efforts to to strengthen willpower are futile. There’s more research in the book that people who do use what they call grit, that you just tough it out no matter what even though you hate what you’re doing, it’s actually physically damaging, it has negative cardio metabolic effects as well as negative effects on I think the telemores which has to do with your life expectancy and so yeah, it’s and it’s just not fun. Willpower and grit and powering through all imply suffering and I just, we don’t want to suffer, we seek to avoid it. Our entire evolution as a species has been about trying to find ways to make things more comfortable for us so instead a person’s ability to do things, like, I will get up and put on a ridiculous amount of layers of clothes to go out for a 6 mile run in minus 30 and it’s not because, you know, I don’t hate doing it, I actually feel a sense of accomplishment, like, it’s kind of cool for me knowing, “Hey, I’m out doing something that other people think is crazy” and so that’s one of the things that motivates me to do it is that it’s, you know, it’s just I get a bit of a an excitement out of it even though, yes, it’s really cold out there and I’m kind of slow because I’m trudging through snow but it’s just, it’s this neat little sense of accomplishment and also a shower after a run at minus 30 feels really, really good. Jen: And I’m over here like, “No way.'” It brings me zero joy to do something like that. James: So that’s not, I’m not suffering. Jen: Right. James: All that being said and I’m really hoping this book takes off because if it does, not only will I feel validated which I kind of need, then I want to write a sequel about what happens after the holy S. Moment and you know, how do you keep snowballing the success from it and I think that doesn’t rule out discipline, so discipline is different from willpower. Discipline is about things, like, you know, getting, formulating routines that you stick to even though you don’t want to and yes, there are days that I don’t feel like running but you know, I just, you know, I figure I’m still a runner, that’s who I am and I don’t always succeed but there other times when I don’t want to but I’m going to do it anyway and you make yourself do it and then you get out there and yeah, maybe the first kilometer and sorry for the Americans that are listening, the first kilometers kind of drag but then you get into it and after it’s like, “Yeah, I’m really glad I did that” so there’s it’s not like everything is a joyous “Oh yeah, I can’t wait to do this.” But it’s just, it’s because it’s who you are, it’s not that big of a deal. Jen: Annie just talked about this in a workshop last night that we did for our members around exercise, you know, it’s like we do encourage people to find exercise they enjoy or can tolerate and Annie just said “Look, it’s not always going to be super fun, you’re not always going to be like I can’t wait to get to the gym but even if you can tolerate that exercise and afterwards feel accomplished and glad you went” Annie:  Then, yeah, there’s like this like acclimating period for a lot of people that aren’t super jazzed about exercise or movement that it’s like they kind of just have to get over that hump of maybe they’re a little bit sore or they’re getting into a new routine, they’re like, I think of it as like snowplows, you know, like or you’re going through a gravel road, like the first time you go through like fresh gravel it’s like a little bit wonky and then you keep going through and you keep, like, grinding those, like, pathways and-“ James: Grind isn’t a good word to  use, we don’t want to be in a rut. Lauren: No. Annie: But eventually, the pathway is a little bit smoother and you have less resistance but initially, when you’re getting going or maybe you’re trying something new, you’re learning a new skill, it’s not all fun and there’s certainly days where you’re just tired and you just don’t want to do it for whatever reason. James: And sometimes you do and that’s great and other times you don’t, you know, don’t beat yourself up over it because you know, tomorrow’s another day and one of the things that I want to be clear about is that, you know, not throw out the tortoise approach to this because if you think about motivation as, like, a mountain and at the base of the mountain that is 0 motivation to do the thing. And then the peak of the mountain is absolute 100 percent motivation to do everything associated with this goal with inspired vigor. Well, if you’re down at the base of the mountain, you don’t just hang out there and wait for sudden inspiration to arrive and Star Trek transporter your butt all the way up to the top. That can happen, sometimes it does, that’s what happened with Chuck but it doesn’t always work. You increase your odds of success if you start to hike awhile and you do those baby steps, because what it does is that it opens up new experiences to you. It gets you thinking because this is something that happens in the brain and if you are having these new experiences and starting to think about this and examining yourself and how you feel about it and looking at your, this is an emotional experience and that’s what happened for me is I talked about the, you know, the change in school and the change and you know, getting out of debt, all that kind of stuff. I didn’t get in shape right away, that came 2 or 3 years later when I finished my undergraduate degree, stuff was really busy with school and I was really busy with working to pay off my debts and those kind of things and I didn’t do anything about my body because I felt like I didn’t have time and then as soon as I finished my degree I looked in the mirror and said “Wow, I got kind of heavy. Maybe I should do some about that.” That became my next mission, I’d learned how to work hard but it doesn’t mean that I liked it. I started going to the gym and I did not like it one bit and it was after about 2 months that I was, you know, just forcing myself to go because I knew that this was something that I had to do and I was powering through on that grit and that willpower and I came close to quitting so many times and I felt like I was losing no weight whatsoever and then, so I was doing that that slow hike up the mountain of motivation and then one day I’m walking out of the gym after a couple months and the person at the front desk said “Did you have a good workout?” and I stopped and I thought about that for a moment and I said to myself, “Well, it didn’t totally suck” and I thought “It used to totally suck” and hopefully we can say suck on your podcast. Jen: Yes. Annie: Yes. James: OK, so it went from totally sucking to not totally sucking and I thought, well, if I could evolve from it toward it not sucking then one day I could learn to love it and in that moment, I wouldn’t say that I transformed into loving it but I did make a life altering decision that said “OK. One day I can learn how to love that” so therefore, I’m going to keep doing it until I die and that was 25 years ago still going so, go me! Jen: There are a lot of aspects that suck about running a business, it’s coming together but ultimately when you’re, you know, values, you know wake up in the morning and being safe, having financial autonomy is so so important to me, I will, we will show up and we will do those sucky things because ultimately our value of having financial autonomy overrides the pain of doing those sucky things. James: Yeah and it’s, you know, the alternative is is worse, right. Jen: Right, is way worse, yes. Annie: I think that that’s an important point that I hope our listeners grab, especially, you know, I’m talking about exercise because I’m a trainer but so often people think that they love something so then they’ll do it and that’s how you do more things, right, you have to love it first but like you just described, you can actually do something, get a little bit better at it and that cultivates a sense of love or enjoyment, so you can, in essence, learn to love something, like, you learn to love exercise and I think that that’s what so many women who don’t naturally love exercise like I do, I get it Jen and Lauren have expressed that they don’t share their passion for exercise like I do all the time. But that that doesn’t mean that they’re just out of luck. James: And for the analogy that I would use to describe it is that when you take this approach hiking up that mountain and then waiting for sudden inspiration to move you much further up the mountain, you know, dramatically increase your motivation all of a sudden, I refer to it as acting like a tortoise but thinking like a hare and so people need to be receptive to the possibility of this sudden gaining motivation and if they’re more receptive to it, if they’re more mindful of it happening, it dramatically increases the likelihood of it taking place. Annie: I like that, that’s really good. Jen: One of our members, her husband’s in the Army and she had this really good saying on one of our podcasts around motivation and behavior change and self-awareness, I guess, sometimes you need to know when to advance and when you just need to hold the line and I feel like that was a real, like, that’s kind of the hare and the tortoise thing, right, like you just, sometimes you have an opportunity in your life to advance and you need to take it. Motivation isn’t bad, it’s just knowing, yeah. James: Something interesting happened with me, so I was talking about how new experiences and an openness to new ideas that wake up a part of your brain that wouldn’t have happened if you hadn’t gone out and tried that thing, that’s what absolutely happened to me with running. So when I decided to take up running, so I’d lost a fair bit of weight with weight lifting and dietary changes and then I decided, well, I want to lose more and this was before Facebook, so I actually knew that that running was good for weight loss, that it could work because I hadn’t bought into all the fit pros saying “No, cardio makes you fat.” So I decided that for me that running would be a good choice and that it would also be not just good for weight loss but just good for my health, it’s good for organ health and all that kind of stuff and so I decided to start doing it and I was terrible at it and it was painful but I just started it, really short distances and gradually built myself up and I was just thinking about the outcome, like, this is good for losing weight, this is good for my health, that’s why I’m doing it and something completely unexpected happened was that that being a writer and being a person that likes to create stories and tell himself stories is that became the most creative part of my day was when I go for a run my best ideas come to me, either when I’m running or going for a bike ride and I just love the free association that I get to do. I’m away from technology, you know, I don’t have my phone with me or anything like that and it gives me that time alone in my head that, you know, that I just didn’t realize how much I craved that. And it makes such a big difference to me that that was really what I fell in love with, that if I hadn’t actually tried running I never would have known that that was the thing that I needed. Annie: Yeah, that’s really pretty, that’s a beautiful story. Lauren: That’s really pretty. Jen: James, can I get your take on another behavior we see quite often? James; Sure. Jen: So what happens very often in our community when women have the epiphany that diets don’t work and they’ve been living for years and years under a very restrictive way of living, they have their pendulum swing out the other way so many of our members talk about, after they join Balance365 they overeat, go swing into this period of eating all the things that they have denied themselves for so many years and that usually comes with weight gain and a lot of them say it became a necessary part of the process for them in order to have their pendulum swing back to center and be able to be more objective and balanced in their approach. What is your, do you think it’s necessary and or do you, is there any science or anything that you know of to explain that or what’s your take on it? James: So, I mean, I, the first caveat is that I’m not actually a psychologist. Jen: Right. James: I interviewed a whole bunch of psychologists for the book and we didn’t specifically get into that type of stuff. I would say that if you are hearing a lot of people saying that that was necessary for them and that it worked, then it sounds like there’s got to be something to it. For me, like I always would like to say err on the side of caution a little bit but you’ve got to do what you gotta do. Jen: Right. James: If you have been punishing yourself this much for so long and you reach this breaking point and you just got to go in another direction where you’re like “OK, I’m sorry but this is, I just need a break” and that what happens then, then that makes sense to me but at the same time, you need to keep something in the back your mind that says “This is temporary, that this is a reset” because you don’t want to go off the rails, right? You don’t you don’t want to never stop because and it’s not about shaming people for their body weight but just being concerned for their health and you being concerned about your own health and how you’re feeling and that as long as you realize that this is a temporary reset and that it’s part of finding a mentally and physically healthier way to move forward it sounds OK to me but- Jen: Right. James:  Just realize, OK, how far does that pendulum need to swing the other way before it comes back and don’t go beyond what’s necessary? So just little bit of caution. Jen: We have to have these come to Jesus talks with our members often on how far that pendulum has swung out and how far, how long they’re willing to stay there because in the end, a lot of women feel they came from a space where they were controlled by the diet industry saying- James: Oh yeah. Jen: Right, but then they’re screaming out into this other space where I’m like “But you’re still not really free, like you’re still not making free will choices if you can’t get your pendulum to come back to center.” James:  Exactly- Jen: You’re just in a rebound state. James:  You let the food hedonism rule instead. Jen: Right. James: You go from restriction ruling the life on one hand to highly palatable food ruling it on the other hand. Jen: Right. James: So you’re still, like you said, you nailed it, you’re still not really free, so be careful how far you let it swing- Jen: Right. James:  Consider it a bit of a mental reset that it’s almost like a statement that you’re making- Jen: Exactly. James: A rejection of this toxic diet mentality where OK, and then you make your point, “Forget you diets.” And then you come back to what you really feel is going to be both physically and psychologically nourishing for you. Jen:  Right, exactly. Annie: James, I know you have to get going because you have more interviews, you are just an in demand man. The first time we tried to schedule this episode you were just coming off of another interview and it was right before another one and everyone wants to talk to you, so I’m so thankful that you gave us some of your time. I know our community is just going to really enjoy this episode and I bet they cannot wait to get their hands on your new book which comes out the 22nd of January, so by time this should be available. James: Yes, indeed. Annie: And where, I know they already know where to find you but if they’re new to you, where are you hanging out online, where is the best way to connect to you? James: So if they want to find a book probably easiest place is well, they can either walk into a bookstore or go to bodyforwife.com and there’s a book tab that has links to every possible platform they can want. I think I mentioned that I did the narration for it so they can also get the audio if they want to do it that way. We have a lot of fun on my Facebook page, really good crowd there. Jen: Oh yes. James: It’s, I think we’re over two thirds women on the page and they’re very accepting, very feminist environment, sometimes some very foolish men show up and get their butts handed to them righteously and that’s an awesome thing to witness. Annie: You’ve had some threads that are like “Get your popcorn ready” sort of thing. Jen: You know, I don’t even say a word, I just read through them and I’m like, “Whoah!” James: Yeah, well and the thing is that people like the smack down because it serves as a lesson to other people and I learn things by, because there are so many really intelligent women on that page that, you know, people say “Oh, you know, you really get this whole kind of feminism thing” and it was like “Well, it’s only because I’ve been reading comments on my Facebook page from awesome women who know this stuff really well” and so yeah, that’s Facebook.com/bodyforwife, Twitter, Twitter sucks. I’m on Twitter let’s stick- Jen: What about Instagram? James: I’m not on Instagram, I don’t take good selfies. So Twitter is Twitter.com/bodyforwife as well. Annie: Awesome, well James, thank you so much, I cannot appreciate you enough, I’m really excited for everyone to check out this book and we’ll hope to have you back soon, OK? James: I’d love to and in closing, the one thing I will say to everyone that’s listening, that when it comes to these types of life changing epiphanies, the most important thing is to understand these things happen all the time and it is really important to believe that it’s something that can happen for you because that’s what opens yourself up to actually experiencing it. Annie: Awesome, thank you so much. James: Thank you. Annie: We’ll talk to you later. James: Bye. Lauren: Bye. Annie: Bye.     The post 51: James Fell: Epiphanies and Life Change appeared first on Balance365.

In this episode of the Houston Home Talk, Mike Wall of Love Ohio Living and James talk about the detailed roadmap for changing business over to EXP, consistency, and branding.Quotes : " If we do get somebody to say yes, then we got a shot at a six-figure income."" You'll get what you want if you can help other people get what they want. "Mentions:Website: http://loveohioliving.comShownotes: 1:04: Response from other people to the interviews2:07 Mike started real state business04:45 Mike talking about consistency08:45 - Mike talks about branding 19:24 - Team Structure 20: 48 - Mike's favorite books and podcasts.Full Transcript:[00:03] INTRO: Welcome to Houston home talk featuring all things real estate in the Houston area. We'll interview real estate professionals, local business owners, and special guests from right here in the Houston community. This is where you get the inside scoop about what's new in real estate, new community openings and business openings and much more. The Houston Home Talk Show starts right now.[00:32] JAMES: All right guys welcome. What's up? This is James J. Welcome to Houston Home Talk. I am excited today to have my man Mike Wall from Dayton, Ohio. What's up Mike? How are you today?[00:43] MIKE: Yes sir. Baby, I'm so happy to be here, man. I'm so happy to help. We'll be able to drop some value on your audience today, brother.[00:50] JAMES: Yeah. Listen, I have been watching you now for several months as you have been doing a lot of interviews with a lot of the new people that have been moving over to EXP Realty. I want to say thank you because a lot of the content that you've been providing, I know I've used, I forwarded it to people and I know that the value that you're providing is helpful to a lot of people. You and I met in New Orleans last month. I've been watching you for several months. As soon as we met, there was several people that came up to you and said, hey, thanks Mike. I know you're reaching people. [01:21] MIKE: Yeah.[01:22] JAMES: You're helping people because a lot of people can't do what you're doing in the way that you do it so thank you for that. I wanted to ask you so I want to just start, so you've been doing a lot of these interviews, a lot of Facebook Live interviews. I want to get people introduced you. I want to ask you real quick, what's been the response from other people to the interviews that you've been doing with the new people that have joining EXP?[01:42] MIKE: Yeah. No, it's a great question man. It's really been overwhelming more than I even thought and really the whole reason if I back up and just telling you the reason why I started doing the podcast… [01:52] JAMES: Right.[01:53] MIKE:…is because I knew that we were building something special. I also knew that changes is big. Change is big for everybody involved and especially the for those people who are team leaders in running a business. I wanted to give those people a platform to be able to share their unique story with the world and in hopes that somebody out there might identify with them and be able to make an intelligent decision about where their business went and then also providing a detailed roadmap for change if they decided to move their business over to EXP. Then also kind of lastly is just to provide insight on people curious about learning more about EXP.[02:34] JAMES: Right? Yeah. Let's get to know a little bit about you because I know you have been in the business. You've been licensed for about 16 years or so. You started full time…was it 2014 when you were officially started full time? [02:45] MIKE: I did it. I got a unique story. I've had my license since 2002. I actually got into the business just as a buyer specialist for one of the top agents here in our marketplace. A guy named Phil Herman who worked for Remax is a big deal man. The guy was selling like 300 properties back like when nobody knew about teams. When I got into the business I just thought, man, I don't want to try to learn all this on my own. What I'll do is I'll take a little bit less of a commission split to go under somebody who actually has all the knowledge for what I want to do, right? I worked with Phil 2002 to 2009 and we all know what happened in 2008-2009. The market just completely crashed.I actually got out of real estate. I kept my license but I went to work back in corporate America and I did that for five years. I was working for a company that was based out of Blue Ash, which is a suburb of Cincinnati and I was selling copiers, man. It is a grind doing that. I did that for five years. I knew I wouldn't do that long term and I knew I would get into real estate. [03:43] JAMES: Right. [03:44] MIKE: In 2013 in about October, I started calling the expires in 2013. In 2014 May I had 44 listings and I went to my wife and I said, honey, it's costing me more to be at my corporate job than it is to be here in real estate. She said, you know what? She said, do your thing man. That first year went out and sold 57 houses. Second year in the business, sold 104 houses, third year sold 187 houses and then fourth year I sold 309 houses. I just haven't looked back, man. There's so much obviously that goes in between there because now you know, I'm operating as a team. I've got some great team members. I got a great business partner now. We've opened up a whole world with investing and so forth.[04:30] JAMES: Now let me touch on this because it seems pretty simple. One of the things that I love about you is the consistency. I know you've been doing a lot of live coaching calls. Obviously you've been doing this for several years, calling the expires. [04:41] MIKE: Yup.[04:43] JAMES: One of the things that I tell a lot of new agents is what you think, because everybody just assumes everybody's calling the expires. I've heard you mentioned this in the video, a lot of people will stop calling after the fourth time or even a third time in a lot of cases. Obviously you were consistent. What made you focus on the expires? Because as a new agent, that's one of the things that I always tell people to do. Focus on expires. You can get that information and just keep consistent, stay consistent with it. What made you start? What was the thing that kind of got you to focus on the expires when you first started?[05:17] MIKE: Yeah. No man. That's a legitimate question because if you think about it, I mean everybody's good at something, right? Everybody can always make up the excuse that I'm not good at something and typically it's because they either don't have the experience or they're just not willing to try. For me, when I moved here, I went to high school and was raised mostly in to Dallas, Fort Worth area. I moved to Ohio and went to college at Ohio State. Go Bucks. I met my wife there and my wife was from this small town, which is a Northern Cincinnati, Southern Dayton suburb called Springboro. I didn't have a personal network. I didn't have a lot of people that I could tap into. I just thought, well, what is the next best thing? I knew I could grind it out on the phones because I had done in B to B sales selling copiers, right?[06:03] JAMES: Right. [06:05] MIKE: There's no science behind it, man. I just did it. You talked about consistency and that's, that's really what it was. It's just doing it. It's repetitions in the gym, right? It's like every day you show up. You put in your reps. You work hard, and then the magic starts to happen, man.[06:20] JAMES: Right. Yeah. That consistency thing is very difficult, especially for us because there's no one to tell us to do anything.[06:27] MIKE: Right.[06:29] JAMES: Everyone wants to get in the business, but then lacking the discipline to do what you did for three years and still continue to do to this day with the Expires. It's something tells you is you have a schedule and you got to work. It's hard to do. It is hard because stuff comes up. It's hard to stay consistent. If you really want to make it and you're a prime example, everybody that's calling these Expires, they're not doing it consistently. They just don't. I know it. In Houston, it's the same thing. We've got 30,000 agents here. We've got a lot of expires but of that 30,000 there's only a handful of people that are actually consistent with it. As a matter of fact you knew that and you stuck with it and clearly it works.[07:09] MIKE: I want your audience to understand something too James is that the great thing about calling the Expires is not everyone's is going to say yes, right? We are fortunate enough to work in an industry where the margins, if you do get a yes, are very large, and I always tell my team this, right? We live in a market in southwest Ohio here where the average price point is not really high, right? Our team average sale price is $178,000. Our market. Average sale price is $130,000 but you can still make a six figure income here if you just get one yes, every week because our agents average commission check is 25.50 and if you take 25.50 and divide that out over 50 weeks, you've got a nice income, right?[07:48] JAMES: Absolutely, yeah.[07:50] MIKE: Really we just focus…we have our team focus on that one yes per week, right? We understand when we pick up the phone that the odds are against us, right? We understand that most people are not going to answer the phone and if they answer, most people are not going to set an appointment. We understand also that if we do get somebody to answer it, if we do get somebody to say yes, then we got a shot at a six figure income.[08:10] JAMES: Absolutely. Yeah, and you know there's a couple of books I've got but the go for no is one. Darren Hardy, I love Darren Hardy. December is going to be here tomorrow and I bring this up because his book talks about the format. There's this habit, habit, habit, habit and what he used to do when he was in real estate back in the day, he would just look for no's. The more no's you get, you're just closer to that yes. At some point somebody is going to say yes and I'm a huge Darren…the compound effect. That's what that's saying in the book, compound effect. I love that book. Usually we'll bring it up every single year around this time of year and I go through it and I'll operates during the year because it's a great book about the discipline of habits. In this business. it is key to everything is self-discipline to be able to, to continue to do that. Props to you on that. Now I wanted to ask you, so I heard in the interview that you had mentioned that you had back when you started full time back '04, 2014-2015. I guess a couple of years into it. You switch from the wall group over to love Ohio living, LOL team.[09:05] MIKE: I did. I did.[09:07] JAMES: Explain why did you did that? I think I know the answer. I wanted my audience to understand why did you do that? Why did you think that was important to get your name off the brand and brand it to level high live in which you did.[09:18] MIKE: Yeah. No, that's a great question. There's arguments for both sides.For me personally, I thought it was more sustainable to build a business that didn't have my name on it. I didn't think people would sustainably work to build my business. I thought that together, if we formed something that we could all believe in and all row the same direction, that didn't have my name on it. In another words, it's like a football team, right? If you think of the Dallas cowboys, right? Who did beat the Saints last night which…[09:50] JAMES: Yes, they did. Yeah.[09:51] MIKE: if you think of the Dallas Cowboys, they're not called the Jerry Jones, right? They're called the Dallas Cowboys. Jerry Jones owns the cowboys, but everybody has their respective position for the Dallas cowboys. When they come together, they make a team, right? I wanted to do is I wanted to take the level how living team and I wanted to galvanize everybody around that.What that stood for was elite level agents being able to plug their businesses in to our tool systems and resources to go out and sell as many houses as they want. Not, they plugged into Mike Wall and just took every, all my leftovers, right? Because there is a team model that works that way and I just don't believe it's sustainable. The statistics show, I mean, the shelf life on those type of a team, the shelf life of the agent is much lower, right? Because what happens is they come in, in most cases and they build them up and then those agents, they want to go do the same thing whereas now we have an agent on our team. It's like Natalie Rose, right? Is an agent on our team? It's Natalie Rose with the level higher living team at a power broker by EXP Realty, right? Her name goes on the sign. We just have our LOL logo. Frankly, it's not that I would ever sell my business, but if you think of it like this, James who's going to buy Mike Wall real estate without Mike Wall.[11:09] JAMES: Yeah. [11:10] MIKE: You know what I mean? [11:11] JAMES: Now you're, you're right on. That's a key when we talk about marketing branding because I f struggled with that as well earlier and having my name. I agree with you completely. I think the buy in from your team is much more when you have LOL Level Higher Living. I love that you did that. That's a key. That's a nugget for people to really look at that because like you say there's arguments both ways. I'm actually on board with you as far as the branding and not having your name attached to it for the long term, long term that's a great idea. Good information there. Let me ask you, so from all the interviews that you've been doing with a lot of the EXP Agents that have been mourning, it's been absolutely crazy the growth that we've had. You joined back, was it February of this year is when you guys moved over? [11:55] MIKE: Yes sir, it'd be a year. [11:58] JAMES: Montel Williams, you moved over. What's been the best or the most surprising thing, specifically from the people that you have interviewed? Because I don't know if you've got to off the top of your head how many people you've interviewed since you started the show.[12:10] MIKE: Probably around 20, 25 at this point.[12:13] JAMES: Okay. Okay. What's been maybe one of the biggest surprises or maybe common similarities? Because everybody's story's a little different. I probably have watched virtually every video interview that you've done. Everybody's story just a little bit different. What have you found that maybe something that's maybe been similar from a lot of the people that you've spoken to? [12:30] MIKE: Yeah. I have them. Something instantly pops to mind and because it really not only has it surprised me that this is what I've learned from them. It is something that we never expected when we came over. I'm learning now when I talked to people in those interviews is that it's the same thing for them, right? What I'm learning is that the community. It's the community that we've created. It's the people that now we're able to tap into, right? Because like Jay Kinder and Mike Reese, the NEA group, right? They used to run this mastermind that was like a $25,000 buy in, right? Now they're doing that mastermind for free. [13:09] JAMES: Yeah. [13:10] MIKE: Right? We're talking about Kinder was the number one, number two guy for COA banker in the world at one time, right? He's one of the smartest guys in real estate. When you're able to plug in to those guys like I could shoot him a text right now and get a response from him, right? The same thing with Kyle Whistle, the same thing with Dan Beer. I mean we're talking about some of the biggest real estate teams and smartest real estate minds in the business.For me that was the biggest surprise man, is the fact that now we've created this fantastic community of learning and sharing and just growth and excitement, man. That's an easy answer for me. [13:50] JAMES: Yeah, you and I, we've got a lot of similar circles as far as NEA. I've been with NEA probably since 2011. Actually, back then it was just Kinder-Reese. I've been following Jay for years. He's one of the nicest guys you'll ever meet. Yes, I also coached with them him well. You're right. When now you've gotten to exponential growth summit back in the day. [14:06] MIKE: I never did go to that believe it or not. Yeah, I never went.[14:12] JAMES: Okay.[14:13] MIKE: I coached with NEA. I didn't exponential growth. [14:17] JAMES: Right. The funny thing now is that with EXP, with all these big name ages moving over, and you're right, the community and the collaboration. I know we keep using these words over. It's true. When you're in it and you and I were here where we both are at EXPN. We've been able to see it. The fact that you're right that I could call Jay right now. I've paid thousands and thousands of dollars to Jay to coach me. Now that same information, I could still get it and get access to him with literally just picking up the phone right now. That's been one of the biggest, pleasant things that I've seen as well. For a lot of people that are not, or maybe looking at the opportunity right now other than the collaboration, what else is maybe been one of the things that's been a plus for you? [15:03] MIKE: What I want to add to that real quick is that I don't want people to take that for granted because a lot of people I think represent EXP the wrong way. You're trying to get people, you're calling people that you don't know and you're trying to get them to move for revenue share or stock. That's not enough to get people to move. It's like you need to figure out what if we understand at the end of the day, right? That map is more valuable than the treasure. Then you understand that that knowledge that you can get through collaboration, that's where the treasure is, right?That's the map to the treasure. To be able to collaborate with those guys in a mastermind group. These guys are doing stuff at a level that we just haven't thought of or haven't gotten to in our businesses yet. For that person out there who's doing $10 million or $20 million a year that wants to get to 20 million or 40 million or a 100 million, right. The difference between them, where they're at right now and where they want to be is that roadmap, right? When you join EXP, you're able to tap into that right away, right, through the collaboration and relationships that you'll build here. I wanted to make sure that your audience was crystal clear on that because although revenue share is fantastic and the opportunity to be an owner through stock is fantastic. It's not the only reason you should join EXP, right?[16:28] JAMES: Yeah. No question about it. Yeah. I think the excitement around it is just because it hasn't been done this way before. [16:33] MIKE: Yeah. [16:37] JAMES: You start looking at the opportunity down the road. I could not agree with you more, Mike. That component of EXP has gotten a lot of publicity. I think as far as representing EXP, a lot of people would probably get a little turned off because everybody's talking about the revenue shift. You are right. That's not really for me the number one reason. It is the fact that you get to collaborate. You and I would not be talking right now. We aren't talking right now if it wasn’t for EXP. I wouldn't be able to call collar or anybody for that matter. It's genuine. When we went to the EXP con last month it's genuine. People are just really willing to help you with whatever because it does benefit us all when we all succeed. Where it used to be you have freinemies and you interviewed with Tammy yesterday?[17:25] MIKE: Tammy was day before. You're talking about Mary Simons Malone. I love them so much. Yes, she was frienemies with Kyle Whistle, right? They worked at competing brokerages in San Diego. She talked about that too with the collaboration now with Dan and Kyle who were formerly her biggest competition, right?[17:44] JAMES: Yeah, Yeah. Huge, huge, huge, huge. That's awesome. Couple more questions for you Mike, before I let you get on out of here. Again, you said the response from people because I saw people coming up to you and we're at the EXP last month which is pretty cool. As we were in the middle of talking,[17:59] MIKE: Let me one more thing James before because I know you asked me and I'll try not to be too long winded here. I want to make sure that people understand the value of what the model at EXP has to offer no matter where you're at in your business because you asked also what was another thing that I had learned or what was another reason that we moved and what we learned through our move, and I'm hearing back from obviously a lot of these team leaders in our interviews is the fact that I had a decision to make personally when I moved. We were opening up our own market center. We had approval through KWRI. We were opening. In fact, that market center has now opened without me. Right? [18:34] JAMES: Okay. [18:35] MIKE: Some other person or group came in and took my place. I was supposed to be an owner at that market center and EXP was put into my lap, right? We had a decision to make right away and that decision was, do I move forward with my plans with Keller Williams to open this market center, right? Or do I move my team to EXP? I'll tell you what it came down to. It came down to what was better for my team, right? Ultimately the reason why EXP want one out is because the move to Keller Williams would have been a lateral move. Actually it would have been a worst move for them because the CAP was going up at the new office. It would have only been a win for me, right? I could have been an owner at that office and that would have been great, right? Our Ego loves that, right? I'm an owner. Ultimately if I knew I wanted it to be successful through my team. That's what I want and ultimately to be able to provide them the best platform for success, right? I knew that I had to make the decision to move to EXP because now I can offer them things that I never could before. That is through revenue share and that is through who stocks, right? Now, they can become owners. They have a vested interest after three years. They have two exceptional wealth building tools that they never had access to before.[19:46] JAMES: Absolutely, yeah. That same message as I go around talking with agents in my market, same message. My team is definitely not structured because your team structure right now is, consists of what? How is your team set up right now?[19:57] MIKE: We serve two markets. We serve Dayton-Ohio market and also the Cincinnati-Ohio market. [20:02] JAMES: Okay. [20:03] MIKE: We have 25 agents. We also have a listing manager and a contract manager and then an office manager as well. [20:10] JAMES: Right. [20:11] MIKE: I have Director of operations/ co-owner and a guy named Jump Welski.[20:16] JAMES: Yeah. You've got a pretty big a machine going up there and a lot of people being affected by your decision, all tweets and make that move over to the EXP, which is not something to be taken lightly by any means. I've spoken to a lot of other agents. I don't know. I've watched a lot of your interviews with people. It's a tough decision because it's not just you that you're affecting here. It's a ton of people that are affected by your decision, good or bad one way or the other. I don't think there's really any downside to EXP. I'm going to be a little biased, but the other revenue models or other revenue streams that we have available is great. The fact that we can collaborate with people all over the country at this point and soon it'd be international, 2019-2020 which is a pretty exciting where the company's. I compare what we're doing now with EXP and how Glenn has set this up and the fact that you are not going to have a conversation. You and I could talk to each day. Three quick questions I want to ask you. First question is what are you reading right now? I know you're always seeking knowledge. I know. Are you reading anything right now that…[21:20] MIKE: Let me make it up for you man. I'll tell you right now. I usually have a couple of different books going on. I do love to read and I do love to listen to podcasts. I'm listening to… this is not a business book but its called sleep smart. I don't do fitness coaching, but I have a fitness coach too. He sends me books. I'm also listening to the Perfect Day Formula and that's by Craig Valentine. I'm listening to it another book called The Swerve. That's a good book. It's funny man, because if you do a lot of reading or if you listen to podcasts, you always get ideas about books from other people, right? It seems like one book leads to another write. One book mentions another and then you pop that in audible and you read that. I think one really good nugget and you and your audience should write this down if you haven't heard it already is listen to that recent, the most recent Maxout podcast with Ed Mylett, where he talks to you. UOP baseball team. That is so good, man. It is so powerful. I've shared that with my entire team. I listened to it probably every other morning because it just so resonates with me, especially as you transitioned into 2019. If you need something to get you up and light a fire under your butt and it is great, great material, man. [22:26] JAMES: Yeah, I have my last. He's awesome. He is awesome. That's the beauty of a podcast is or an audio book for that matter just to be able to listen to it at any point of your day, at any time. It really doesn't matter where you're at nowadays. You can just pop that in and listen to us. I have not heard that one. I will make sure that I listened to it. I'm actually post the links so people can get just click where and go right into it. [22:46] MIKE: Awesome. [22:47] JAMES: I'm an avid, avid reader as well. There's always something that I pick up. The knowledge that it's that compound effect. One compounds on top of you, the next thing. Another last, last two questions here. What's your favorite quote? Favorite quote.[23:02] MIKE: Man, that's a good one. I think it's probably changed throughout time. I think my favorite quote is probably really cliché at this point, but it just so resonates with me is the old Zig Ziglar quote is that "you'll get what you want. If you can help enough other people get what they want." That has not always been true for me. I've grown in my business, I've learned that my success will ultimately be a product of the success that I help others have.[23:28] JAMES: Yeah, no, that's awesome. Zig Ziglar Fan, goodness gracious as well. I one that was one of my favorite of course. The other one is then you're going to be a meaningful specific or a wandering generality. It's huge and especially for realtors because most realtors are not meaningful specifics.[23:45] MIKE: Right. Right. We know that.[23:46] JAMES: Great, great quote there. The last thing I want to ask you, so what's something that you want to do in 2019 that you've never done before? Whether it be business related obviously EXP is an explosion in growth mode right now. What's something that maybe you've got want to do a 2019 that you've never done before?[24:04] MIKE: That question comes at a really opportune time for me because we're actually in the middle of opening up our own mortgage company, the P and L model. I'm actually really excited to play around with that a little bit. I think there's a huge opportunity, not only to add more money to the bottom line but to also provide a level of service that most of the real estate agents can't provide because this is going to be set ups just so especially at first just so this person is servicing our team.[24:29] JAMES: That's great. I've had a sin as a, as a loan officer. There's no better mortgage advisor like yourself because you are on that side and you speak to what your clients are really wanting and really be able to direct if it's going to be your mortgage company or whoever you're working or partnering with on the mortgage side to really provide a really, really good value for people because I know you've experienced it. I've experienced it with a mortgage companies that it amazes me that some of these mortgage companies exist or lenders should I say. I've had people just completely disappear during the process. This is amazing to me. It's amazing. That's a great opportunity and I think with your background there's no way that you would not be successful with that or anything else that you do. [25:19] MIKE: Thank you sir.[25:20] JAMES: That'd be great. Again, I am a huge fan. I admire everything you've been doing. You're one of those people when you meet him, you just like of like literally I met you. We shook hands on. My God, I just liked this guy. [25:29] MIKE: Likewise my man, likewise.[25:34] JAMES: I've got to get up to and actually one more thing we got to talk about real quick, the most important thing will Ohio State be in the playoffs or not.[25:42] MIKE: Man, at this point, does it even matter? It's whoever's going to play Bama and lose, right?[25:45] JAMES: Right. Right. That’s true. [25:50] MIKE: I love my Buck guys I'm also a realist man. [25:52] JAMES: Yeah, absolutely. Yeah, it's got to be quiet if you you say well. Anyway, when I appreciate your time, Mike. Thank you so much man. Thank you. Thank you. Keep doing what you're doing. I will continue to promote you as much as I can. If there's anything I can help you with, let me know and appreciate your time, man. You have a great one and we'll catch up. [26:07] MIKE: Likewise and if anybody's interested in that free coaching that you mentioned they could go to liverealestatecoaching.com and sign up there. I'd be happy to take on anybody for 30 to 40 minutes and just really dive deep into any area of your business you're looking to improve. [26:24] JAMES: I will post the link on the podcast. Actually let me put it on here so people can get that link and access what you're offering there. Yeah, can't go wrong. Free strategy call with Mike, reach out to them. He's an awesome agent, great example a lot of consistency and professionalism. I really appreciate what you do on Mike, We'll catch up soon brother. You take care.[26:43] MIKE: All right man. Thanks so much, James. I appreciate it. [26:46] JAMES: Okay. All right, bye-bye.[26:47] MIKE: Good luck.If you like this episode of the Houston Home Talk podcast, please don't forget to like, share, and comment! We appreciate your support and feedback! See acast.com/privacy for privacy and opt-out information.

In this episode of the Houston Home Talk, Cindy West from NRL Mortgage and James talks about the process of getting a mortgage loan, interest rates, NRL Mortgage loan programs you can apply to and other things such as Cindy’s career trajectory and how her knowledge in forensic accounting helped her in her role as a mortgage loan officer. QUOTES“You have to make sure that the house is not listed for sale, because that’s a red flag in mortgage, before you cash out.”“The buying power of people changes significantly as those rates go up.”MENTIONSContact Cindy:Phone: 832-370-7373Website: https://cindywest.nrlmortgage.com/SHOW NOTES[0:02:10.9] How Cindy got into mortgage lending[0:03:32.4] How forensic accounting works[0:08:02.3] NRL Mortgage loan programs[0:14:25.1] James and Cindy talk about interest rates[0:21:04.4] The difference between pre-approval and pre-qualification[0:32:24.5] Get in touch with Cindy!Full Transcript: [00:03] INTRO: Welcome to Houston home tall, featuring all things real estate in the Houston area. We'll interview real estate professionals, local business owners, and special guests from right here in the Houston community. This is where you get the inside scoop about what's new in real estate, new community openings and business openings, and much more. The Houston home talk show starts right now.[00:33] JAMES: All right, welcome guys. This is James with Houston home talk and I am joined today by my good friend, Cindy West in our El mortgage. Um, how are you doing this morning, Cindy?[00:45] CINDY: Hey James. I'm great.[00:48] JAMES: Awesome. I'm doing great. It's a little chilly for us here in Houston at a blistering 70 degrees. Now, just joking. People in the Midwest laugh at us when it gets too 40s. [01:00] CINDY: Yeah. Yeah. [01:02] JAMES: It is cold for us but I am glad to have you on. It has been an interesting ride as far as interest rates and a lot of things going on specifically this year. You have been in the business for a few years now. You've done really well and I appreciate all your insight. Just to kind of set the table for everybody, so sending and I have known each other for about three years. We've been working together. You came to visit me when I worked for a home builder and you were one of very few, really probably the only one person that really would come visit me because everybody else was scared to come see me working for a home builder because they just assumed that they could get no business from a home builders onsite salesperson which was not the case. [01:52] CINDY: No. [01:52] JAMES: I'm glad that you've been very tenacious and the way you work and I admire your work of it. I see you on Saturdays, Sundays. I see everywhere. You have gotten a lot of knowledge and your work ethic is been very, very admirable. What I want you to do is just kind of introduced yourself. You've got a very interesting background. Introduce yourself to the audience and tell us a little bit about your background and how you got into the mortgage.[02:22] CINDY: Okay. Sure. Yeah. I've been in the business three years ago and I'm like, my background started with auditing and taxes. I did that for several years and then I relocated to Los Angeles and I became a forensic accountants, which is very interesting. [02:39] JAMES: Okay. [02:42] CINDY: Pretty much what I would do is I worked with people getting in divorce, determining child support, alimony, division of assets and valuing businesses. Pretty much I would find the money and determine what the individual's cash flow was for child support and alimony. Then after that, and I relocated here with my family. [03:04] JAMES: Okay. [03:05] CINDY: That's where I met Chad Freeman and he is a manager for Nations Reliable Lending. Tell me about the job. My personality and my background was the perfect fit and my daughter is going into school so I thought, it's a great time to get back into the workforce full time. I took the test and passed it and then I'm on my way ever since.[03:32] JAMES: The forensic, you got to give me a…tell us back a little bit more. The last time I hear forensic, I usually think, CSI and one of these criminal shows when I hear forensics. Break that down a little bit more as far as what you did with that that as forensic accounting?[03:55] CINDY: Yeah, so pretty much, I mean it has to do with documentation. [03:57] JAMES: Okay. [03:58] CINDY: Thing at paperwork, a little bit differently and people represent themselves based on the tax return. I only make $25,000 a year when you're living in a half million dollar house and you drive a Mercedes and I could see all the charges on your credit card for limousines and things of that nature. I would pretty much hunt down the money. [04:21] JAMES: Got it. [04:21] CINDY: Figure out what the true cash flow is because people have businesses, they write off all their personal expenses, cellphones, cable bill, I'm 100 percent of their auto. All those things are not true. Business expenses, personnel. They drained the company, and they want the write offs. They pay as much taxes. From a divorced stamp, that's now your cash flow. We add back all this personal offenses as perquisite come up with somebody's true cash flow. Then that's how we figured out how child support and alimony.[05:00] JAMES: Okay. I see. Then the connection with that and the connection to the mortgage side of the business because a lot of what you were doing and that career really translates into you being a mortgage lender because a lot of the details that come along with, especially, specifically you brought up self-employed because those are the biggest challenges when it comes to the mortgage. [05:24] CINDY: Yes. Yeah. [05:26] JAMES: How does that background, how did that help you on the mortgage side because like I said, I know you've only been three years but you've been…you've been very, very successful and the time that had been a mortgage lender. How has that helped you in being successful in what you're doing now?[05:42] CINDY: Definitely the tax knowledge and the attention to detail and I'm looking at paperwork a little bit differently. Very detail oriented, which in mortgage you have be, when you looked at the paperwork upfront for a year under contract and kind of figure everything out ahead of time instead of having issues under contract that who I wish I would've seen this or looked at it closer than. Definitely the tax return and the tax knowledge has helped me with understanding the actual tax return for the self-employed borrowers. [06:18] JAMES: Right. [06:18] CINDY: You can have a schedule C which is on your 1040 where you can have 1065, which is a partnership returns, that's corporations or your 11 languages are C corps. Understanding how somebody gets paid out of each one of those is quite really friendly. You can get paid out of distribution. You can get paid through salaries and wages or dividends depending on what X return you're filing. That's definitely given me an edge on a fast track and dealing with more sophisticated buyers would complex tax returns. The attention to detail, I'm looking at paperwork and just knowing. I've seen all these documents who I've been working with them for years. It's definitely helped.[07:08] JAMES: No. That definitely explains a lot because I've had a brief stint as a mortgage lender as well, so I understand the level of these. I don’t think a lot of people understand it and unless you've done it. There was no way. As a realtor, most realtors, all we care about is the loan approved. [07:29] CINDY: Right. [07:30] JAMES: Always funded. Those are the words that kind of care is, are we funded. Okay. When you're behind the scenes, the level of detail. There're so many moving parts. There's so many moving parts. I appreciate you guys more because I've had a boost said joining and kind of understand now that there's so much that goes on behind the scenes. Someone like yourself with that background and being very detailed. It's so important. It really is. Now, I know you guys have a program because one of the things that I work a lot with, I work a lot with home buyers will still be sellers who have a home to sell before they purchased their next home.I do a lot of new construction and so typically, we have a contingency to where the only way they can purchase the new house is if they sell the current house and multiple cases. I know you guys have a product that's kind of design and you don't have to go into a whole lot of detail, but I know that's something that I wanted you to share a little bit about because I think it's important for people to know that, that you guys have that product. I've dealt with a lot of lenders. I don't know anyone that has a program like this. I might be wrong. I know anybody that has that program. Tell us a little bit about that. A little bit about that program.[08:53] CINDY: It's a fantastic program because people that are looking to buy and I say new construction, it doesn't have to be new construction. It can be anything, but who this product would best serve. Somebody that finds a house that they fall in love with. That they really want. It could be through a builder. They might find a lot, the perfect lot and I called a stack or on a green belt with backyard. Let's say water way or anything specific that they might lose if we wait to sell their house. [09:32] JAMES: Right. [09:32] CINDY: That's the emotional side of this product is somebody that's motivated to move forward, doesn't want to wait. I think this product also is more beneficial to people in the higher price points a significant equity. Pretty much in order for this product work, you have to have at least 30 percent equity, the partying residence, and you need 20 percent down payment to move forward on the purchase.Now, you can obtain gift funds for the 20 percent. However, you do have to have at least 5 percent of your own friends. That would mean 25 percent now. You can get the Gift Front Lens of 20. You bring 5 percent. The 30 percent equity, if you have your house paid off or have significant equity, meaning like 30 percent or more and you don't have the cash in bank, you can do a cash out refi, pull out 20 percent as long as you leave 30 percent equity in the parting residence. You can pull out money to use that on the down payment for the purchase side, [10:43] JAMES: Got it. [10:45] CINDY: Yeah, you have to make sure the house is not listed for sale because that's a red flag and mortgage, so before you get a cash out. It's a purchase just like any other purchase, but we are eliminating that just from the ratio. You actually will have two mortgage payments until the house is sold. The only stipulation is that their house has to be listed for sale prior to the purchase of the new residents. That's it. [11:10] JAMES: Okay. [11:11] CINDY: That's something where if you're building builder relationships, that's a good thing to have because the builder that's going to identify that and it's going to call you, you're marketing this product and lease the house for sale. That's the key is you're, as a realtor, you're getting the leasing and hopefully, the buy side as well, because you're going to get a walk in client that falls in love, has a house to sell and that builders not going to wait, want to wait three to six months for the house to sell or probably does not want the contingency offer because if it's in a higher price point, we might take a little bit longer. Or if it's a flooded house that you have for sale, who knows how long going to take it so. It's a great product that allows people to move forward without waiting for the house to sell and then they don't lose equity. They don't have to half the price. They just have to afford the two payments[12:07] JAMES: Right. There're a lot of people that are in that position to be able to do it especially like you said, in a higher price point. This helps them not lose out because I've seen it on several occasions where they probably could qualify for both financially, but this product, like I said, this product wasn't around. I knew I have no knowledge of that product a few years ago. It's a great option for people that are…that are looking to buy another hall or build either one. I'll make sure I post your information because there're people out there that want to reach out to you and get a little bit. I know there's probably a little bit more detail, which you probably just speak with somebody in person. Speaks somebody over the phone to get a little bit more detail about their situation and how the product help, but I know it's a great product and it can help a lot of people.[13:05] CINDY: Yeah. Builders love it. I'm not competing with Mortgage Company. They're in house lender to add on to their business, to help it grow. I'm not looking to compete with them. I usually can't let their incentives. [13:17] JAMES: Right, yeah. [13:18] CINDY: This can eliminate the contingency offer and it's very attractive to builders and playing lots of calls and emails from builders I've ever even met before clients. Again, it's a great…it's a great marketing tool to get connected, to build a relationship and help builder build business and great for realtors to use that as well.[13:45] JAMES: I know a lot of builders are work with a ton of them in a new construction kind of what I specialize in more than anything. Having worked for a few builders myself personally. I will make sure they all know about this. Like I said, anybody is working for builders that might be watching this. I'll make sure they get you a contact because the onsite…where the onsite, salespeople or about getting…they don’t get paid to do loans. They get paid to close homes. [14:14] CINDY: That's right. [14:14] JAMES: Having you as a resource and in those situations is a great, great thing to have a speaker. I'm speaking from experience. I know one of the big things and challenges that I've seen so far this year are the interest rate. Rates have slowly just crept up and I back in January and February, I was telling people that rates are going to increase and unfortunately they have. Now we're now almost to the end of the year and so one, I guess, what are we looking now. FHA, I know everything obviously based on credit scores, but what kind of averages are we saying on FHA, conventional, and then what are we looking at? Maybe first part of 2019 that you kind of thing, well what may happen, which rates come from that first quarter?[15:09] CINDY: Well, definitely rates have slowly increased. They're in the fines, so again, to then plan your LTB FICA score, debt information, that I've seen. ORS, donate them five again. Sometimes they come with the discount, to the rate of that. Rates are still great. There's still near historic. Still a great time to buy. Do not wait to buy a house. The rates are going to go down. Of course I don't have a crystal ball. That's my said, good judgment indicates that I think are going to probably stay or climb a little bit. The interest rates a tight to this, excuse me, the 10 year treasury. [15:53] JAMES: Right? [15:53] CINDY: Usually when the Fed announces the direction of interest rates, they going to use some hikes, the market has a tendency to accelerate that. If they're going to say an increase in December, market goes higher before that. It's stable. It's still…they're still near historic low and they're in the five and would not wait 1 percent increase in the interest rate. Will make it 13 percent increase in your payment. [16:22] JAMES: Absolutely. [16:23] CINDY: A thousand dollar monthly payment. Your payment will go off to a 103 or extra $130 a month. That's pretty significant. People always talk about the score and want to increase it. I tell them, I said, you time you increase your score, you're going to be offset by the higher rate.[16:43] JAMES: Right. [16:44] CINDY: It's a lot. [16:46] JAMES: Yeah. That could take somebody from qualifying to not qualify. The bump in the rate and for people and for some people that might be borderline or maybe close anyway and you wait. You're not really winning and a lot of cases. You're not winning by waiting a. I try to encourage people, if you find…if you find a home that you're interested in now, don't wait because literally, half of point or all the point can make a significant difference. It can't really be the difference when you qualified or not in some cases. [17:19] CINDY: Yeah. Yeah. Or you have to drop the purchase price or have to come up with no money down to offset that. For every $10,000 you put down in a house, your monthly payment will change by $20,000. [17:32] JAMES: Right. [17:32] CINDY: $20,000 will only make $100 a month difference in your payment. That's not a lot of movement with significant $20,000 down payment. You're better off to do it now because rates in the fives are fantastic. I know people go back to the past and threes and fours and the confused I've seen. Ladies and gentlemen, that was history. You make three for a lifetime. [18:06] JAMES: Yeah, that's just… that's with sales. [18:04] CINDY: Gosh, yes. [18:04] JAMES: You've set the sale that made you want it. [18:08] CINDY: Right. [18:08] JAMES: It's funny when people started talking about the rates now, how they're going up and I tell people, before the crash, it just rates are in the 60s. [18:18] CINDY: Yes. [18:19] JAMES: My parents, when they bought their houses, they were in double digit. It's just perspective but if you didn't own a home before '07, '08 and maybe you just, you started looking into it after 2008. Basically the last 10 years, it won't be spoiled. [18:39] CINDY: Yes, absolutely. It means accidentally. [18:43] JAMES: It wasn't on purpose. They were spoiling. There's either the Katas or they're hard. [18:47] CINDY: I know, right?[18:48] JAMES: They were doing it to encourage people to go by because everything had kind of tanked. '08, '09 that's why those race was so insanely low, it was encouraged people to go out and own. Obviously, as the economy starts to get better, it's just a matter of time before those rates start creeping back up and that's where we are right now. [19:09] CINDY: Yes. Yeah. [19:12] JAMES: I laugh when people started talking about, oh my goodness, my rate's 4.8 and it's like…[19:19] CINDY: I know. [19:20] JAMES: Five [19:21] CINDY: Right. [19:22] JAMES: Rates are still very, very low. Yeah. Historically speaking, if your history is only six years ago. [19:31] CINDY: I know, right. Yeah. [19:34] JAMES: It’s a difficult… [19:34] CINDY: First house too that we bought was back in 2006 and it was 6 percent. I remember high fiving in the kitchen and using hands like, everybody was paying 10 and 11 percent, and I get 6 percent. That was a great rate. Six percent so great rate. [19:54] JAMES: Yeah, wise. [19:54] CINDY: It is good. [19:56] JAMES: Yeah. Absolutely was, yeah. I find it funny when people started talking about it, but we can't control it. Home ownership is still a better way to go. [20:09] CINDY: Yes. [20:10] JAMES: Paying a 5 percent interest or half or whatever it is and whatever it ends up being in 2019. It's still a better option than renting and in most cases. We'll continue to encourage people to go on. The sooner the better because rates, from what I see, and you can speak on that. For what I see, it seems like it's going to…the experts are saying that 2019, of course again, there's no crystal ball. Yeah, we're going to maybe be in that consistently in the 5 percent range. Who knows for, but that's what I see and that's what I've read. [20:51] CINDY: Yeah. Definitely would agree with that. Yeah.[20:53] JAMES: Yeah. The buying power for people, it changes significantly as those raised a lot. Yeah. If you guys are looking at a owning a home call, call Cindy. [21:04] CINDY: Yes. [21:04] JAMES: One more thing that I want to ask you. I want you to distinguish between pre-approval versus pre-qualification because I get this question a lot. I know what the difference is. [21:16] CINDY: Right. [21:16] JAMES: They are a big difference. I want you to speak on that a little bit so people really understand the difference and when, as a realtor, if you're making an offer on one of my listing with the prequalification letter, I'm not feeling that comfortable about it quite honestly. [21:32] CINDY: Yeah. [21:33] JAMES: Yeah, speak on that a little bit and tell the people the differences are. [21:39] CINDY: Sure. Okay. Definitely pre-qualification and pre-approval. The underwriter, there's a couple differences. The underwriter does the pre-approval, so that's when it actually goes into underwriting. [21:53] JAMES: Yeah. [21:53] CINDY: There're levels of prequalification letters that have stronger credibility than others. That's pretty much the documentation. [22:05] JAMES: Yes. [22:05] CINDY: When that consumer fills out a credit application and we call them. We go over the 10 on 3 with them. We pull their [inaudible] with score, input their liabilities and the application, make sure their debt to income ratio is right and sure. The LTV is right. Run interest rate pricing and make sure we get automated underwriting system approval, which is the automated scientific version of what an underwriter does. When we get an approved eligible, that triggers us to give a prequalification letter. [22:41] JAMES: Right. [22:42] CINDY: On that letter thought, if we want to take it to, I always say, I want to upgrades your prequalification letter, just to upgrade its which means I'm going to now look at your source document. [22:53] JAMES: Right. [22:54] CINDY: Source documents are your tax returns to your tax returns, early day pay stubs. That's the critical part because we really want to look at the tax returns to see what are you writing off. If you're a W2 employee, to write off, [inaudible] 106 expenses, with your salary reimbursed expenses. Because if so, we may and I say may, have to charge that as debt because those are business expenses that you're claiming. There are different programs where you may be able to skirt around that like a W2 only program if you don't own any real estate, you might be able to eliminate that. The point is, is that we need to look at the documentation that will uncover potential issues and can give us a better direction of which way we want to take the financing. [23:50] JAMES: Right. [23:50] CINDY: Yeah, it's pretty much, it’s a prequalification letter. It's just reviewing the documentation or not. That, if you're realtor, that's one of the things that you should look at is the documentation. [24:04] JAMES: Yes. Yeah. Because I mean, the prequalification, and yeah, you spoke on. That you can go online and fill out some information and get a prequalification spit out. [24:13] CINDY: Yes. [24:13] JAMES: With no verification of anything, which is why I love the fact that you take it a step further. For all of us that are involved in the transaction. From realtor to lender, we wanted to be strong. Nobody wants to waste time going through contracts and inspections and everything kind of like that. [24:37] CINDY: No. You can raise so much money. Like you wait to you inspection fee, your option fee. [24:42] JAMES: For sure. [24:42] CINDY: Even lose your earnest money, appraisal. You talk in $3,000. [24:47] JAMES: Yeah. [24:48] CINDY: I always…the realtors that I work with, I always train them, teach their clients in the beginning because you're the front contact. Let's see, pair them with need and it's very easy to your tax returns to your W2's, a 30 day pay stubs, two month bank statements, and even the bank statements are pretty significant. Even ID, I mean we've uncovered…we don't look at the beginning and then things happen that's expired and they don't have time to go get it renewed or there's always something. Really, I always tell borrower. I said, it is a lot of extra work. There is no benefit to them, the consumer if they don't provide that upfront. [25:29] JAMES: Yup. [25:32] CINDY: Good realtors prepare their clients for that right in the beginning. When I come in and talk to them, they've already heard it from you, another hearing it a second time. Again I pushed for that. I can't make them do anything. I tell them what's that risk? If they don’t get those documents and they usually, I've never had a problem with anybody complying with that. [25:59] JAMES: Right. Yeah. I think you said it. Yeah, setting that expectation from my end before they ever really talked in and most of the time, not all the time, but most of the time, it's going to start with the agent. That is so important to set that expectation. [26:12] CINDY: Yeah. You're really the point of contact. This is your lead. [26:17] JAMES: Right. [26:17] CINDY: The relationship in some way. Either from a referral or somebody that's coming to you to buy a home and I'm just the support behind the scenes. You lay the groundwork. You're going to have more credibility because you know what you're doing because this isn't your first rodeo. Then when I get them, they've already heard it before. It's really the call about preparing them and making it easier for them.[26:43] JAMES: Absolutely. [26:43] CINDY: The financing process can be, we asked for lots of documents throughout the process from start to finish and consumers will always say, is this all you need? I tell them, I'm like, well this is all I need today. [26:57] JAMES: Right. That's right.[26:58] CINDY: I'm going to back up really people behind me that are going to look at your file in a completely different way than I do. The underwriter is going to ask for conditions that need to be cleared. The processor's going to ask for documentation, my production partner, and then we might ask you for the same document again because you might not be exactly what we need. We can ask for documents up until a week or less than a week before closing. You can prepare your borrowers for that and if that doesn't happen, then it's even better.[27:33] JAMES: Yeah, supplies. [27:35] CINDY: Yeah. [27:35] JAMES: Absolutely, yeah. Now I try and said that explanations for all my clients, so yeah. It could go up to the day or the week before. [27:46] CINDY: Yeah. [27:47] JAMES: Just prepare for it. If it happens, then you know. You knew it was a possibility and I think that just makes people feel so much better because…and it's not a difficult thing just to let people know. This is not. There's a lot. It's not a straight. It might go like this. [28:06] CINDY: Yeah. [28:07] JAMES: With the close. It's not just a straight…a straight. There're a lot of things that happened. A lot of adjustments that get made, kind of like flying a plane. We never really feel it for the most part, but there're a million adjustments that these pilots are making over in a plane. Out of my analogy when it comes to a mortgage loan, because it's the same thing. It starts off one way and eventually you'll get to your destination which is closing. It's not always just a smooth process and a pupil, so frustrated with it. [28:39] CINDY: When I'm there along the way, every step of the way, I tell my followers, you can follow me after 5:00 and you can call me on the weekends. There's going to a lot of stuff that it's going to be thrown at you and especially that first time home buyers, I'm here to help you to translate what somebody else is asking. I might not be specifically asking you, but somebody else has requested that non-certain. That's part of my job. There is service court, which is mortgage lenders like myself, local small lenders. That one of the benefits is the service and being available and for the realtor as well to call and know that every time they call me, I answered the phone and I can get my voicemail. You're going to get me. [29:30] JAMES: Yes. [29:30] CINDY: You can ask the questions and I'm going to give you a straight up answer or I'm going to find out the answer if I don't know. Figure it out because you're left on a, on a ship that with the captain.[29:44] JAMES: I had that happen. I know there're a lot of realtors, its happened. Lender just do this but I know I'm working with you for the past three years. You are truly aware. You do answer the phone. Whether it's good or not, you're not the lender who just takes off and which is amazing that it happens, but it does.[30:06] CINDY: Bringing bad news to people is not easy. There's nobody on the planet would like to do that. Especially, the largest purchase of your life and that would not be a good thing and I try to stay clear of that, meaning I don't have bad situations at my peak that I qualify either solid and if they're not which means there are some weaknesses in their credit profile, which there could be that prepare them for that. I can say, this is what we're…this is the plan, and I give them the option. Your ratios are super high. You've got these collections that could be an issue. Here's what you risk. Your option money, your inspection fee, your appraisal fee. I will tell them that its a weaker profile and let them make a decision if I want to move forward or not. It also tell my realtor that too, so that they can be prepared if I have to make that call and say we, there was a hurdle that we just couldn't overcome. Blindsided like, well, why didn't you tell me this? Because yeah, I haven't run into that yet, but I will and I would. That's how I would approach that there wasn’t a paper lending. [31:29] JAMES: Yeah. There's a lot of stuff that happens that we just, again we don’t have control over what this, what the transaction is. So many people involved with so many things that happened. It's just the nature of what we signed up for this. [31:46] CINDY: That's right. [31:46] JAMES: We have this business but we love what we do. We all do because it's…it can be a crazy, crazy business. It really can. You are really good at what you do. I will excel the builder, all my builder partners that I know of. They are looking for a dependable vender. You are definitely a… [32:11] CINDY: Thank you. [32:13] JAMES: I'm speaking from personal experience, so not mean I've worked with you and I've seen what you do. How can people get a hold of you? Website, phone number? What's the best way? I'm going to post your information as throughout but…[32:30] CINDY: Okay. [32:30] JAMES: Go ahead and give…what's the website and in your phone number where to reached for you. [32:34] CINDY: My phone number is the best way. [32:36] JAMES: Okay. [32:37] CINDY: 832-370-7373, that's the best way. [32:42] JAMES: Okay. [32:43] CINDY: Yeah. [32:44] JAMES: Got it. [32:45] CINDY: My phone and now we will…you can go from there. Apply online. I get a direct portal website for online applications. [32:53] JAMES: Right. [32:54] CINDY: Get notification when it started. Application started and I get a notification when it's completed through email. What I usually do is I call the borrower right away. Introduce myself. Go over the 103 with. [33:08] JAMES: Okay. [33:08] CINDY: My link to apply online is cindywest.nrlmortgage.com.[33:17] JAMES: Okay, say that on more time. Cindy West just one word.[33:18] CINDY: Cindy West one word dot NRL mortgage.com. [33:24] JAMES: Got It. Okay, I'll make sure I'll post that on so people can have that and say if there's…if someone just got some questions about that, that special program that you guys have because there's probably a lot more detail that you can speak with and that…or just any loan. You have it take conventional or Cindy does it all. [33:41] CINDY: That's right. Okay. [33:42] JAMES: She could help you guys and she will get you to the finish line. I promise you. She's really good at it and I appreciate your time Cindy. [33:52] CINDY: Thanks James. [33:53] JAMES: We will do this again. [33:55] CINDY: Yes. [33:55] JAMES: Now we're about to head and get into the holiday season here the next week or so. We'll make sure we do this again. We can sit here and talk for hours about this. There's so much talk about. [34:09] CINDY: There is. [34:10] JAMES: We'll do this again. I appreciate your time. [34:13] CINDY: Okay, thanks. [34:14] JAMES: We will do this again. Thank you so much Cindy. [34:17] CINDY: Okay James. [34:17] JAMES: You take care.[34:18] CINDY: Thank you. [34:19] JAMES: All right. [34:19] CINDY: All right. Bye. [34:20] JAMES: Bye-bye. If you like this episode of the Houston Home Talk podcast, please don't forget to like, share, and comment! We appreciate your support and feedback! See acast.com/privacy for privacy and opt-out information.

Welcome to the very first episode of the Houston Home Talk podcast! For our first episode, we have Willie Adolph from The Adolph Group, a company dedicated to educating others about their credit, and he’s going to talk about how we can manage our credit scores to how credit can affect the overall quality of your life.Want to learn more? Give this episode a listen! QUOTES“A lot of people feel that cash is king but credit can actually take you further.”“Credit is like reputation; It doesn’t matter all the good that you’ve done, but that one thing that you did wrong, people will spread that so fast.”“If you work with the system, the system will work for you”“When somebody takes a look at your report (credit score) it’s basically a reflection of what you’ve done, it’s not a reflection of who you are but it’s a reflection of what you’ve done”MENTIONSWillie Adolph (FB)The Adolph GroupContact Willie!Website: www.myfes.net/wadolphPhone: 281 451 7087SHOW NOTES[0:01:34.1] How to use leverage with credit[0:05:15.4] Credit Inquiries[0:06:16.7] Soft Pull VS Hard Pull[0:07:15.9] Case Study: Credit Karma[0:10:14.8] How co-signing can affect you[0:11:06.5] Credit restoration[0:14:03.5] Building/Maintaining your credit score[0:16:19.0] Which credit affect your score the most[0:18:25.7] How your credit is calculated[0:18:53.4] Models for credit scoring[0:20:40.0] What The Adolph Group does[0:22:47.4] How your credit will affect your overall quality of life[0:26:08.1] The advantages and disadvantages of having/not having a specialist assist you[0:32:49.0] A program that can help you have a better credit score[0:36:39.0] Contact Willie!Full Transcript: [00:03] Intro: Welcome Houston home talk, featuring all things real estate in the Houston area. We'll interview real estate professionals, local business owners, and special guests from right here in the Houston community. This is where you get the inside scoop about what's new in real estate, new community openings and business openings and much more. The Houston home talk show starts right now. [00:34] James: Yeah. You go ahead and introduce yourself, introduce your company and what we'll start there.[00:40] Willie: Okay. My name is Willie Adolph. I'm with MBS. I have a team called Adolf group. Basically what we do, we're here to help others educate them with about their credit. A lot of people feel that cash is king, but credit actually can take your whole lot farther because you can…you can use leverage with credit. A lot of people have a miss conception about credit. Everybody saying seven years in the final law. That's a myth. [01:08] James: Yeah, talk a little bit and more about that. Because I've heard that for years, seven years, seven years, seven years and a lot of people, it'll keep them from buying a house because they just, without contacting a professional like yourself to really know that hey, there's ways and that's seven year thing is a myth. Yeah, talk a little bit more about how that really works and how people can understand that meant, because I've heard it for year or two.[01:37] Willie: Right? Before I got into this, other place like, because I've been doing introducing credit since 2003. I've been messing around with the credit stuff for a long time because I started with the mortgage side. [01:49] James: Okay. [01:49] Willie: When I started with the mortgages, I had to kind of understand credit to help the clients that I had and then as I continue my career, I started learning more inter credit. When I dove deep into just learning about credit, it was around 2006, 2007 when that crash was coming. [02:09] James: Right. [02:10] Willie: Once they crash, it gave me more insight because it affected my family personally with. [02:16] James: Absolutely. [02:16] Willie: With the repossessions, foreclosures, things like that that was on my credit. Seven years, a lot of people say, well, with these seven years, they follow us off. Basically it's obsolete. You have a statute of limitation that it's on. [02:33] James: Right. [02:35] Willie: The problem is with a lot of people think that, so it's just like, I'm going to tell a company, 'Hey, I'm reporting this person later.' [02:44] James: Right. [02:45] Willie: I'm reporting it to the credit bureau. The person that the credit gear is not going to sit there and say it's seven years. 'Hey, guess what? We need to go ahead and take that off.' Technically, it has to be requested off because it can stay on your credit report for our life. It just doesn't fall off. It's just like home purchasing when they have the PMI is supposed to fall off, you get 20%. [03:10] James: You read my mind. Because that's where I was going. That's exactly what I was going to say. Go ahead. I'll let you continue.[03:16] Willie: Yeah. Technically, the mortgages company going try to ride and as long as they can but it wants you to realize, hey, I got 100% equity in my home. You have to contact the mortgage company, they request it off. [03:31] James: Absolutely. [03:30] Willie: There're a lot of things and with credit, a lot of people here, it's a law that was passed that anything negative on your credit report, you're allowed to…you'd be allowed to investigate. [03:44] James: Right. Right. [03:45] Willie: When a lot of people fail to understand that we're credit repair, it's not saying it's not your debt, but what it is saying that what's on there has to be accurate. It has to be verifiable and it can't be too old. Out of those three things, if it's one of those three, it has to be deleted. A lot of people don't know that if they're off by $100, $5, it has to be deleted because it's called inaccurate information.Even for like repossessions, a lot of people fall on hard times. With the repossession, you could have put a lot of money down and the car may still have a little value. Let's say for instance you owe $5,000 and they take the car back or you give it back. Voluntary repossession is still repossession. Majority of the time, if they repossessed the car, what they're going to try to do to it, if it's still in good condition, they're going to try to sell it. When you turned it in, it was $5,000 but what if they sold it for 40,000, will you own the 5,000? No.[04:50] James: No, definitely. [04:51] Willie: Now you only owe 1,000. They're supposed to contact you and let you know that hey, your car was sold and you're supposed to…there is the difference of what it is. It's the bill of sale. A lot of people don't understand the leverage that that credit has. Nowadays, rental history, before they pull your background, they looking at your credit.[05:13] James: Yeah. It's crazy. Because I mean, honestly, you can speak on this because it affects almost everything right now. I am a huge fan of the Dave Ramsey. [05:24] Willie: Yes. [05:25] James: I do. I like Dave Ramsey. As far as I haven't any credit, I mean honestly it affects job situations. It's his job. The employers check credit now. I'm not digging that all of them but I know I will check credit. Insurance, I mean it's virtually everything but its close. It's real close. Yeah, you can go ahead and you can kind of expand on that a little bit more. It's basically affect there. [05:51] Willie: Credit has so much to do with your down payment. Credit has so much to do with your interest rate and all you have some insurance company they say well it doesn't matter what your credit ain't doing what they call a soft core. [06:02] James: Right. [06:03] Willie: When they do a soft pull, they're looking at your credit history and basically your credit history is like your car telling you what you've been doing within the past few years of your financial life.[06:16] James: Yeah. Explain a sophomore versus a heart and so people understand the difference. Because I mean know the…yeah, people may not understand the difference between them, so again, explain that a little bit about the sophomore versus a parting firing.[06:27] Willie: Okay. Well that sounds cool is when a company, say for instance, sometimes like a light company. They can do, it's like a snapshot of your credit. [06:39] James: Right. [06:40] Willie: What they do is they look at it and they kind of judge and see if you have anything that's basically, do you owe them? Yeah. When you do a hardcore, they're contacting the bureaus…[06:54] James: Right? [06:54] Willie: They're getting all the information from all three bureaus or depending on if you're pulling a car, they only pulled from certain bureaus. When you're doing a home, they pulled it from all three bureaus. That's what you consider a harp pool and harp pools does affect your credit.[07:11] James: Yes. Then that's another differentiating factor too because a lot of people think, and I definitely want you to talk about this. There're so many resources out there for people to go get their credit. Get their…[07:21] Willie: Right. [07:23] James: What I get a lot is, people will tell me, they'll call me and want to, you know, they want to, are they looking, they're buying the house and they'll say, 'Hey, we're now pulled by credit, three weeks ago, three months ago. I have an 80.' I'm like, okay, well listen, and you guys…yeah, I want you to talk about this because the difference between like Credit Karma or all these other resources that people have versus them getting a mortgage. I know a mortgage, when you get any mortgage credit qualified a mortgage, it's the most thorough reports you're going to get even more so than a car already anything in my opinion. Yeah. Talk a little bit about that like the hard, like kind of the differences there.[08:07] Willie: What we've noticed over the past years, Credit Karma, they give you more of a snapshot of what your credit. [08:17] James: Right? [08:16] Willie: They give you free credit analysis. [08:21] James: Yes. [08:21] Willie: What I've seen in the past is that the numbers are off because they don't actually pull directly from the credit bureaus updated file. Perfect example, I have a client right now that she called me and she was like, 'Hey, I just need to get my scores up to a 680. I just checked on Credit Karma. I'm at a 622.' We was like, okay. Let's do it. We're glad to go through the process of eliminating this and that and see what we can do. When we actually, I said, well matter of fact, go talk to my friend that works at the mortgage company. Let's see where we stand so we can actually do a real hard pool and come to find out she was at may have fives.[09:13] James: Yeah. I've seen about that. [09:16] Willie: That's a big difference. If you're at a 622, and you're now at the mid of 5, that's like 60 some points and one point can actually kill any kind of deal and depending on what company you're going through. When you go with Credit Karma, it gives you a snapshot. They can't, they offer a lot of stuff to you to try to be more aware of your credit. To be accurate about your credit, you have to be more mindful of what's going on when you coast time for somebody. If they mess up, it falls on YouTube. A lot of people think that, well that's not mine. No. It is. It's, I'm sorry to say and you can't just call them and say, look, take my name off. No, because you're the reason why they got it.[10:04] James: Right, right. Yes. This means is that you too, I'm like you're supposed to have. I go sign and you might as well be the top signer because it really doesn't matter to get one of the names. It counts the same. [10:20] Willie: Yes. [10:20] James: That co-signer to get, I mean I've seen people get just completely get there, kind of ruined by it. My co-signer for somebody. [10:28] Willie: Right. [10:29] James: People not to, uh, whenever, you know, whenever looking to own a home because yeah, especially when…yeah, I see that all the time too, if somebody's is full stop and maybe that one debt is really keeping there for what. They got to go look at maybe trying to refine and other way, it's really [inaudible] [00:10:48] and so we finance it. There's no other way, like you said, kangaroo take, you know, take my name off of it. Yeah. That's definitely, I see that all the time. I'm like when I talked to people about credit, I don't like to use credit rest of that. For some credit repair has a negative connotation. I don't know why but for real estate, the bottom line is we need to, we need to move from here to here. [11:18] Willie: Right. [11:20] James: I call it. For you guys, I know there's not a one size fits all because everybody's situation is different. If you're working with somebody, do you guys give them a, I guess is it just based on situation to say base on what I see here, I think let's say two months, three months or how do you guys break that down when people come to you for to look at that. [11:43] Willie: Technically what it is everybody, like you said, it's a case by case scenario. [11:48] James: Right? Yeah. [11:49] Willie: Nobody can guarantee you anything. Basically everything is computer generated and it, but it's calculated as well. We're looking at the credit, the good thing about what we have to offer to the clients is that we have a similar what if scenario. What happens is, what a what if scenario? What if I pay this down, this down, this down, or pay this off, this off this off. It gives you a calculation. If you do this, you have an opportunity to get this score from where you're at now. Now is it 100% on point? No. [12:25] James: Right. [12:25] Willie: It gives you a snapshot of, hey, if you do this, you would be in that ballpark figure. It's just, it's hard for me to eyeball it and say, but what I do know if you're late, you hurt yourself.A lot of people also don't know. So let's say for instance, March has 31 days in that, right? You have a payment due on the 1st of March. Some people say, 'Oh man, I made the payment on the 15. I'm late.' Okay, you're late with the company, but you're not late with the credit. [13:02] James: Right, right. [13:02] Willie: Because you have to be a certain amount of days, which is 30. Now, some people will say, okay, well I'm going to make my payment at the end of March, which is the 31st. Guess what? You are late now. Even though you paid in March. [13:17] James: Right. [13:17] Willie: Because that is a perceptive, well I still pay on March. Yeah, but you paid on the 31st, that's past 30 days. You have to realize 30 days is 30 days. We have 28 days. You really technically anything after the 2nd of March, now you're late unless you get that leap year. There're a whole lot of things, a whole lot of variables that a lot of people don't think. They look at, well, I paid in March, it's March. No, it's the days. Then you also have to look at your calculations. You have to realize, you have to probably even call your company and ask when do they report to the credit bureaus? [13:57] James: Right. [13:57] Willie: Because your credit cards are not all reporting at the same time. Now the way to build your credit is to keep your maximum balance up on the 30%. You can charge you whatever, but you have to realize once you charge over 30% regardless if you're making that payment on time, you're going to get hit because you're overextending yourself. You're spending your…what they say you're living on other people's money and and you get deemed for that at the beginning.[14:31] James: Yeah. No. Yeah, and I use it. That's the rule I give everybody. I always say 30% I'm not real sure where the game for a while, so probably sometime long, long ago somebody mentioned that to me. I was going to ask you about that because that's what I, that's kind of the advice I'd give people when they're looking at because that's probably, yeah, I want you to talk about like the way that these girls put on a mortgage credit card versus maybe not necessarily specific percentages, but I'd rather different weight for different things. I stop my loans and mortgages so forth.[15:07] Willie: Your biggest weight is your payments. That's 30% of how everything is graded on your credit. A lot of people look at it the wrong way for the simple fact is that they feel that, okay, if I make my payments on time, my scores are going to boost up tremendously. [15:30] James: Right? [15:30] Willie: What they fail to understand, yeah, your scores are going to go up as long as you keep that balance low. [15:37] James: Right. [15:37: Willie: They're going to go up. The problem is, I look at it like it's almost like somebody's reputation and you look at it like this, it doesn't matter all the good that you've done that one thing, that one thing that you did wrong, people will sprint that so fast and your credit is the same way. You make that one late payment. Guess what? Your scores can drop anywhere from 20 to 70 points off of one late payment.[16:10] James: That doesn't matter whether it's a credit card, a car, honestly, I know a mortgage payment, you probably take the biggest skin if you're, if you have ever had like a late or…[16:21] Willie: Mortgage? Yeah, mortgage and cars take the biggest hit, but also the credit cards take a big hit is what the mortgage take I think the biggest hit for the simple fact, if you try to purchase another home…[16:38] James: Right. [16:38] Willie: The first thing they, the mortgage, another mortgage company is looking at is your mortgage history. Rental history, whatever history is where you live and what they look at is that, I have a, I have a client right now is that we're disputing their late pay. [16:54] James: Right. [16:54] Willie: You can actually get that negative off of there because at the same time they have to verify how were you late the days and the thing is, is that it's going through the credit bureaus that fight these for you. A lot of people think that you go straight to the creditor, sometimes you can work a deal out with them, but a lot of times you're going to lose that battle because they're in it for the money. You're not in it for the people there any for that bottom line.[17:23] James: No, that makes sense, man. When people are looking at getting a mortgage, it's, there's a lot of stuff that people do and what they don’t know, for me, I found that it's usually when they're looking at buying a house is when a lot of stuff comes up. That they just didn't work for. [17:41] Willie: Right. [17:43] James: If you're buying a car, you're trying to get a credit card. It never really comes. There's a lot of you can get away with just buying a car. The car that you go recently is a, what it can. It's just different but while you get it, while you back in the mortgage for example is just I felt like all of the stuff you didn’t know about your credit pass also come up. Never faills. [18:04] Willie: Exactly. [18:13] James: When it felt back and I'm getting more of it, so. [18:08] Willie: Yeah, I forgot about that. [18:10] James: I have this all the time. Yeah, all the time. All right, well…[18:14] Willie: Well James, they give you…they give you a little better percentage. You got the way that your credit is calculated, 35% of your payment history, 30% of your year amount use 15% of the length of your credit, 10% is your new credit and 10% is the type of credit that is used. Yeah. Basically all of that is calculated into what your scores are as of today, every vendor is supposed to pull from the credit bureaus. All of them don't.[18:52] James: Yeah. It's frustrating too because all the bureaus, and we could speak on this a little bit too, because you got Equifax, Transunion, and Experian. [19:02] Willie: Experian. [19:03] James: They don't all necessarily treat everything It's frustrating for me because they all do stuff different that's through scores. Yeah, maybe you talked a little bit about why that is. I don't know if you'd have to know what the why is or why they do that. I don't know if it's…cause you're getting a mortgage. Of course they look at all three scores and then they take the middle. [19:27] Willie: Right. [19:28] James: That's the fair way to do it because they all have different models.[19:33] Willie: Correct. The way that the model work, I didn't mean to cut you off. The calculations are the same. [19:40] James: Right. [19:41] Willie: It's the reporting. Everybody doesn't report to the bureaus they're saying.[19:46] James: Okay.[19:49] Willie: I may report to Transunion but not report to Equifax.[19:51] James: I made the report there also.[19:53] Wilile: No, see a lot of people think that the government, that the, the bureaus are governmental rule. They're not. That's a myth. They're not governed by the government. This is an independent source. They're making billions of dollars. They're not governed…they're not regulated by the government. It's crazy that they have…those three numbers have so much power over what you can do with your life, what you could do with purchasing and things like that. And a lot of people just really don't understand the power of credit. When you work with me are, our company. We not just only give you the opportunity to restore your credit, we educate you on your credit. You get your own private portal to where you have a snapshot of what's going on with your credit at all times.You can wake up at two o'clock in the morning and say, Hey, what's going on? We have what they call a progress report but a lot of people…we live in a microwave society. What I mean by that, we put in the microwave. We hit the popcorn button and guess what happens. It's done. We don't…we're not old school where you have to warm up the oil, put the popcorn in, shake it around and take its time. We want everything. I paid this and this should go to…no it takes time. Negative stuff does spread faster than pot the thing.[21:31] James: I'm glad you said that cause I'd rather browse…to say, it's funny because when you screw up trying to fix it now. If the creditor makes the mistake though, it's like pulling teeth trying to get them to fix it. Now visually to stay on it, you'll get it fixed. A lot of people just don't have the patience to deal with it. That's where you can come in and help people that are in that situation. Yeah, when you screw up it's like Bam, they hit you a hard real quick but trying to fix a mistake from a quick, it's just the opposite. It's not a microwave fix when it comes to them screwing up but when you do it is the microwave[22:12] Willie: It's like bam. We got you. We got you. A lot of people…[22:17] James: You have some people like it is what it is. These are the rules. This is the sandbox we're in. It's their rules. If you want to play in their sandbox, this is what you got to do. That's not cool. If you just don't…If you want to try and go through life without credit at all? I guess you can. That's what Dave Ramsey advocates. It makes it challenging in a lot of situations when you're trying to, look I'd say even just from applying for job or getting…[22:48] Willie: Like a mortgage Insurer…[22:50] James: Brad was insured for that matter. Literally everything gets checked. Even if it's a cell phone, it's still having an effect because they can say no.[22:58] Willie: Even for cell phones. Okay. So here's another thing. When you look at credit, okay, you have to have credit to get into this apartment, to get into this house, whatever which ones. Guess what? You have to have lights. What do they do? They pull credit. Not saying they're going to deny you buy you may have to pay a deposit. [23:21] James: Exactly, yeah.[23:23] Willie: You may have to…when you do your gas, when you do cable, internet, anything that you do nowadays, they pull credit. I've always thought different. It's like, okay, well if I got bad credit, why are you making my payments so harder. If I'm struggling now with these payments, how are you going to give me a higher? It's one of them lessons you have learn. If you want good things, you have to treat things good.With us, we involve our clients with every step of the way. We make sure that they are involved in it. A lot of people say, well, why didn't you do that? Well, if you put skin into the game, you're going to be more involved with it. You're going to make sure that I'm not messing it up? I'm not going to let nobody mess it up and things like that. We're here to educate. It's not we're going to fix it. No, we're going to educate you during the whole process. It's not fixing anything. It's restoring it and making sure. Can you do this yourself? You can. You definitely can. That just like when you go to court, you don't have to have a lawyer. You can represent yourself. There's so many ins and outs that you may not know. [24:37] James: That’s right.[24:36] Willie: I always say, can you change your own oil? Sure you can. Do you really want to go through that hassle? If you want it…[24:45] James: thank them for us. I'm a realtor. Yeah, you could sell your home on your own.[24:49] Willie: Right.[24:50] James: A lot of times they're the same thing. There's so much stuff that goes into it that you may not know when it comes to contracts and stuff that comes along with title. Maybe you roll on the dice. eah, could you do it? Yeah, you could. Why not pay an extra for having the expert that knows exactly what they're doing. They're going to save you a whole lot of time and in the case of real estate, most of the time having in Asia people will actually get more money when they…versus them selling. I don't know. A lot of people would think it's flipped. There might be a case by case situation where that's not true. For the most part I say to them to get an expert.Yeah, you can figure out anything you want. Just go to YouTube. everything is YouTube. People got a lot of stuff going on. The credit thing for me, I'm like, man, you need, I can get an expert because it is. It's not something like you say, it's not a microwave. You know what you're doing. Yes, people could figure it out. Consistency and staying on top of these boroughs before you see change. Most people in my experience, they don't have the -- they don't have the patience to do that and so you guys are what you do for people. It's great.[26:04] Willie: I appreciate that. For what you guys do, a lot of people say, well all you're doing is opening the house and showing the house. It's a lot more. It's a whole lot more behind that. You guys have to take on the liability of making sure that perfect example, if a house is flooded and somebody comes in there and paint the house and cover everything up it's your fiduciary to make sure that that client is taken care of, that they're not stepping into a mold trap or stepping into things that's going to hurt them later down the line. You guys do a great job of helping out the clients as well. It's a hand in hand thing that what we do. A lot of people said we don't work fast enough.here's the thing.Here's the thing. It's not that we don't work fast enough. You just destroyed your credit faster than we can repair it. Paying your bills, taking care of it, being responsible. Don't get me wrong. Life happens. Things happen in life. There's uncontrollable things that I've been there. I've had repossessions. I've had foreclosures. At the same time with credit restoration, there had been mistakes reported incorrectly that was able to be deleted and removed off of my credit report. That's our thing is that we are here to help. Are we going to sit here and say it's going to be fixed right away? No, we can't promise that that first round that we do is going to be taken care of. I'm never going to tell…I set expectations. You're going to take three months. You're going to see some improvement. [27:47] James: Right.[27:48] Willie: Six months is when you're going to see great improvement. At the same time, your improvement and my improvement is totally different. You have people out there that says, in 30 days your score's going to go up. Guess what? They're not lying if and go, if you had a 500 and you go to 501.[28:07] James: Yup. Exactly, that’s right. It went up.[28:11] Willie: It went up.[28:10] James: It's funny. I just referred to the day. It's a guarantee we're going to get you to, I think it was like 720 and I'm just laughing like how are you making this guarantee because everybody, there was no one person and I don't do credit restoration. I've been around a lot of it to know everybody. There is no one situation that repeats itself exactly the same way. I'd probably be doing this. There's probably nobody that's like, exactly the same.[28:40] Willie: No. You might have some similarities. When people say, we can raise your scores guaranteed. The problem with that is I'm going to tell you my guarantee is satisfaction guarantee. If you work the system, the system will work for you. I'm not going to guarantee because he was another thing that I've run across my years. Even easing at that as of last month, I still run through this thing. People say, it doesn't work. You know why it doesn't work? Because you don't allow it to work. What I mean by that, if we do remove some negativity your scores will go up a little bit. Perfect example, I have client. We removed six items. Scores went up 52 points, great job. They missed paying a bill and then scores dropped 65 points. Then they're down what? so that’s 13 what? 13 points under from where we started.They got…they was like, hey, you said my scores will go…it did go up. When you didn't make this payment. You got to stay with it. You understand? No, I don't understand. You know that this is this. This is that. I do understand times do come where we have to pick and choose or what, what's going to happen. Here's another thing. A lot of people don't know that if you have a collection…I will use a cable company and they're coming after their debt. Of course, they sold it to a collection company and now they're trying to fight. You can't have two people coming after the same day. [30:24] James: Right. Right.[30:25] Willie: that's against the law. Some people don't know that. We have to remove that. We also clean up your history of where you live of addresses because sometimes there's a typo O because you may have 6502 but then on your credit report it says 6520. A bank is going to say why is this like that?This is where we can remove things like that. Phone numbers, employment history, misspell of your name, nicknames. A lot of times that we do come across, like for instance, my dad is a senior. I'm a junior so when you say Willy Adolf, they can have all my dad's information on there. It may not be good that I need that because it's not accurate information and vice versa. They might have been some bills that I didn't take care of and my dad be like son, you need to get this taken care of. We are very diligent on making sure that when somebody looks at your report, it's a really a reflection of, of what you've done. It's not a reflection of who you are. It's a reflection of what you've done.We try to make sure that when creditors and vendors look at your credit report, we try to make sure that it is clean as it possible. We want to make sure that all the I's are dotted and the T's are crossed. Do we get everything off? No. Why? Because some stuff is reported correctly, is reported accurately, and it's still within that timeframe of statute of limitation where it has to be on there. We're not here to say we can get everything off because nobody can just get everything off. You got to be careful of who you let put stuff on your credit because it's technically illegal to do that. It's credit fraud. There are things that you can add to it. We have what we say credit rent. Basically what credit rent is, this is good for people who have lack of trade lines.They need some more to help boost their scores. How many times had you pulled somebody or seen somebody's credit and their rental history is on there? You don't see that? Guess what? Miss that payment and it'd be on there. We offer programs that's legal that you can actually go back two years and put that positive trade line on there and that helps with their spores. That helps with their rental history. We also offer secure credit cards because here's the funny thing, you go to a bank and tell them I want a secure credit card. That means I want to give you my money to open up a line of credit. Guess what's the first thing they do? Pull your credit. [33:17] James: Yeah. I'm giving you my money [33:22] Willie: Guess what happens? I don't like what your credit look like. You're denied. You're denying me for me to give you my money to put on this card to spin and yes they will. We offer services to that. Now, the thing is, is that now once you put your money on there, how are you going to treat that car? This is what the credit bureaus now look at. Even though it's your money and you give your credit card, $300 that doesn't mean you have $300 of spent. That means you're showing the three bureaus, hey, let me show you what, how I can manage this money because after x amount of time, you can graduate and then it goes to unsecure and then that means now you're trusted with somebody else's money. [34:05] James: It's almost like having a debit card, but you get to use it to build up your score. Actually, obviously a debit transaction report. Essentially it's a debit card that gets reported to the credit bureaus in essence is what it is.It's important for a lot of people, especially people that don't have any credit or just people that may have just had some stuff come up in the past where it's just, you know, they had a bad situation. That's kind of like I said, like everybody's problem at this at some point. I've dealt with it before. Yeah, that's secure credit card. I did not know that. That's actually a nugget because I didn't know that you could get denied for secure credit card. I didn't even know that. [34:46] Willie: Yes, I ran across that many and many a times and it still baffles me that how can you get denied. There's several banks out there, I'm not mentioning them, but there are several banks out there that will deny. You just got to make sure. Another thing that we offer with our service is on top of the education, on top of showing you how you can do debt, get to your…clear your debt, how you can pay your debt, how you can pay your house off, or how you could pay your car loan or how can pay your credit card off.We have so many tools. We have credit protection. We offer life lock part of our program. Because every two seconds somebody that identity is getting stolen. Somebody's identity just got stolen. Now you're getting alerts of what's going on. We offer credit monitoring. All of this is part of it. We say for instance, now we're going into the tough times up. We have stuff that we can prove that is inaccurate or unverifiable but the creditor is being real stubborn about it. Part of the service is we have created attorneys on staff to help fight that. Another thing, you get those phone calls on your job at home, our credited attorneys take care of that as well to stop the harassing calls for the simple fact is that we get that taken care of for you because you're not allowed to be harassed.[36:15] James: Right. That's awesome man. Lots to go man. Listen, tell people first of all, how did you get to get in touch with you guys? Would it be website, social media, whatever it is. Let people know how they can reach out to you guys, their knee if they've just got questions about anything. We just talked about anything else often they want to maybe address to you personally? How to get a hold you.[36:38] Willie: To get a hold of me, you can always call me or text me at (281) 451-7087, If you want to go to my website and just check out everything that we offer and what we have, you can go to www.myfes.net//wadolph. That’s W-A-D-O-L-P-H. On their it has so many opportunities[37:09] James: I'll add that on here so people can easily just click there and access it. Let me ask you one last question. You're based in Houston. It doesn't really matter where people are, right?[37:16] Willie: No, I'm, I'm actually bonded under the company. I'm bonded and licensed in all 50 states. [37:22] James: Awesome. That’s great to know. [37:26] Willie: Everybody can call me. Call for Will because you know, if you have, will you have a way. I am Will,[37:33] James: I appreciate your time. Listen, we will do this again because this is one of those things that you can't just touch. This is something I would see it for what I do and I know your wife she's a realtor as well. All of us. This is something we will definitely, I will have you on again and we'll talk some more about this but I appreciate your time man[37:52] Willie: I appreciate you, and think about this for all the realtors out there. If this is something that you're interested in, how can you learn about it? Reach out to me because you can do the same thing. You can help your pipeline out, help grow, add value to your service anywhere instead of sending it somewhere off to someone, you can give them the same information. Just reach me. (281) 451-7087.[38:25] James: Sounds good man. I will get that out. Like I said, I'll post that website as. well. Again, I appreciate your time and, yeah, you guys you got to have questions. Give Willy a call or reach out to him on his website and we will have you on again brother, I appreciate your time.[38:40] Willie: Hey, I appreciate you having me on. I really appreciate it. Thank you very much.[38:42] James: All right Willy. All right, man. You take care. Have a good evening. [38:46] Willie: All right. You too. Thanks.If you like this episode of the Houston Home Talk podcast, please don't forget to like, share, and comment! We appreciate your support and feedback! See acast.com/privacy for privacy and opt-out information.

Beverly Langston from Bath Fitter joins us this week on the podcast, and we’re going to be talking about bathroom remodeling and renovations, and what sets them apart from the competition.Bath Fitter is an international company know for their state-of-the-art product line that includes acrylic bathtubs and shower liners, free standing bathtub and shower bases, acrylic seamless walls, domed ceilings, tub and shower doors, accessories and wainscoting.Know more about their services and products here! QUOTES“We are very versed in safety because bathrooms are very dangerous places no matter who you are. They’re slippery. So we have lots of different options for safety like grab bars, different types of grab bars, and we really work with our customers to make sure they’re getting everything they need so that everything is safe and secure, and usable and accessible for them.”MENTIONSBath FitterContact Beverly at:Office: 713-691-4110 orMobile: 281-636-3560Email: blangston@bathfitter.comSHOW NOTES[0:01:22.2] Bath Fitter: Who they are and what they do[0:04:11.2] Issues usually encountered when remodeling the bathroom[0:05:29.2] Converting the tub into a standing shower[0:06:56.0] Renovating and remodeling for investment properties[0:09:02.1] The origins of Bath Fitters, showrooms in Houston[0:10:54.1] ADA Compliance[0:12:06.7] Create your own custom bathroom on their site![0:13:17.6] Contact Beverly, Bath Fitter office hours[0:14:39.6] What happens during the consultation phaseFull Transcript:[00:03] INTRO: Welcome to Houston Home Talk featuring all things real estate in the Houston area. We'll interview real estate professionals, local business owners, and special guests from right here in the Houston community. This is where you get the inside scoop about what's new in real estate, new community openings and business openings and much more the Houston home talk show starts right now.[00:33] JAMES: All right. Welcome guys. Welcome to Houston Home Talk. My name is James and I am excited today I am joined by Beverly Langston from bath fitter and Beverly and I met just actually just not even a week ago at the sip and stroll and Katie and it was great getting a chance to meet you. How are you doing about really?[00:55] BEVERLY: I'm great. How are you?[00:57] JAMES: I'm doing great. Great. I wanted to have you on. SO as soon as I saw you in the booth, I wanted to have you guys come on and talk about what you do because I am a…in addition to roadster. I'm an investor as well and I think what you guys do can help anybody, but I was very intrigued by it and wanted to have you on. Thank you for coming on the show.[01:21] BEVERLY: Thanks for having. We're excited.[01:22] JAMES: Yeah, it's pretty cool. Why don't you tell, tell us a little bit about what it is that you guys do, how you got into it, a little bit more about bath fitter and I think it's pretty interesting what you guys do. I really do. Why don't we just start there and you introduce yourself to the audience.[01:40] BEVERLY: Sure. I'm Beverly Langston. I'm the event manager for Bath Fitter here in Houston. We are actually an international company. We're in Canada and the United States all over North America or United States. Our corporate office is right outside of Nashville, Tennessee. I've been here for about a year. I do mostly events and marketing and it's just a really amazing company, quite a unique product. It was started and the mid-80s about my [inaudible], four to be exact by three brothers, the Cotton Brothers. It started because one of them had had a baby and his wife said, I don't want to bath my baby in disgusting bathtub. He trying to figure out an economical way to repair the bathtub and make it look better and for it to be cleaner so that his wife would be happy because happy wife, happy life, right?[02:32] JAMES: Absolutely, yeah.[02:33] BEVERLY: They developed this system. The product is made out of acrylic which is really great for bathrooms because the bathrooms firmly are made…you have lots of tile, lots of grout, those kinds of things and they're porous which means they absorb the water. That's why you get all that mold and mildew in your bathroom which nobody likes and you can never ever get rid of. The acrylic is not porous. It will not ever mold and mildew ever.[03:01] JAMES: Okay. [03:02] BEVERLY: Very, very easy to keep clean. There's no scrubbing involved. Basically it's a spray cleaner if you have hard water, you either squeegee it or wipe it off with a cloth and that's it. That’s it. It's super easy to maintain as well which is a wonderful thing. Bath Fitters philosophy is we want everybody to walk into the bathroom and smile and be happy. We want to give you joy. We should all love our homes and our spaces so much and unfortunately the bathroom isn't one of those places where a lot of people are like, I just really hate it because of things like mold or mildew or maybe things are not updated so that's where the product, you know, it's great. It's a great solution for construction too because what we're most known for is our tub over tub system, which is where we can create a brand new bathtub that goes directly right over your existing bathtub. There's no like tear outs which is wonderful. Even if we do take out a product, it's still also a one day install. It's a very short timeframe.[04:06] JAMES: If you guys are going over the top of existing are there situations where maybe you're not able to just go over top or fruit for most bathrooms, I guess you guys have the ability to be able to really literally just go over top of everything that exiting. Is there any situation where maybe… [04:27] BEVERLY: There are. Sometimes there are plumbing issues that we might we have to people get. Most of the times we cannot go over fiberglass tub because the structure of them is weaker.[04:36] JAMES: Okay.[04:37] JAMES: We still have solutions for that. We can actually just remove those tubs that don't work and put in a brand new bathtub. Still with the product, still the great acrylic. Another thing that we do, we do showers as well the same way. We have a wall system that will go right over your tile. One of the greatest things about our wall system and we're the only company that does it, is it's seamless. There's in the corners is to bang on the material. There's no caulking or grout. It's not going to mold or mildew,[05:11] JAMES: That’s awesome. [05:13] JAMES: That’s is awesome. Literally there is no seam. I'm assuming then the corner is it rounded or --[05:16] BEVERLY: It depends on the material. We actually bend onsite. People always say to me, well, you're not going to get it through my door. Yeah, we will. You'd be surprised. You think you have a small doorway. We will get through it. The other thing that we do that's really, really popular now for a plethora of reasons is we take the tub out and turn it into a standing shower using the same footprint as that tub. You've got a long shower. I think a lot of people are in a point where they're not really taking baths like they used to like it's a waste of space. A lot of people also want to change it because of mobility issues, getting up and over the top. If you're older and if your short, it's very difficult so removing the tub and not having that 18 inches to get up and over is very, very popular. [06:07] JAMES: It's funny that you bring that up because a lot of people, when I sell homes or when I'm listing homes as a realtor, a lot of people for some odd reason they still ask for Tub. Most people don't use it.[06:20] BEVERLY: Yeah, yeah.[06:21] JAMES: Is baffling to me. It really is. I have a home in San Antonio where we actually built it with no tub. For some reason when we tried to sell it, like that came up at certain points, but I think now and that was I was eight, nine years ago. Now I think a lot has changed because of, like you said, the mobility for a lot of people as we start to mature, I'll use that word. Yeah, the tub. I have a tub. I never use it even now. My kids use it. That's awesome that you guys do that.Now do you guys have more like you, I guess your typical client. I don't know if you really have a typical client. I'm assuming you guys have people that are just looking to renovate, remodel, maybe investors. Maybe I could see that part of your product being awesome for a lot of people that may do an investment property where they don't have to come in and rip out. You guys don't have to come rip everything out. You could go over the exist and that's a big time saver because I've done some remodels and it can be expensive if I'm having to rip everything out[07:30] BEVERLY: Exactly, especially if you have an investment property where you have a tenants that leaving and you need to make a repair. It's pretty quick repair. The tub actually whether the shower whatever you're using has to get manufactured because it's all custom done so it's manufactured for you. Once the install happens it's a one day and the great thing is that with construction where there's a lot of dust and debris and dirt and it's sort of a messy process. We're not like that at all. The bathroom probably will be cleaner than when they walked into it. You've got a fresh, clean bathroom ready to show to your next tenant, which is wonderful. For residential, the product has a lifetime guarantee on it. For a rental facilities that's considered commercial. It doesn't have that lifetime guarantee, but I will tell you it really will last a very long time especially because in tenant situations people don't clean them as if was their property. That’s okay because the product is so sturdy and hold up so well to that. That is okay. I've talked with people that have had a rental property and the tub and the wall has been in there 30 years. Other than having to replace the caulk every few years it's been fine. [08:39] JAMES: Got it.[08:40] BEVERLY: We also do a lot of properties like hotels and apartment complexes, dormitories, lots of dormitories because kids.[08:50] JAMES: Okay. That’s makes a lot of sense.[08:51] BEVERLY: Yeah. Yeah, college students destroy things. They get in product for this. [80:59] JAMES: Absolutely. [09:00] BEVERLY: Yeah.[09:01] JAMES: Now you guys have locations. You said it started andI did not realize that you guys have been around for that long. You said the eighties. Where did this, I guess where the company originate and then where are you guys located in the Houston area? Because we're in the Houston Area. Where are you guys located? Where did things originate.[09:20] BEVERLY: It originated in Canada. That’s where the Cotton Brothers are from. Got some branches out in Canada, some stuff mostly with people who are buying in the franchises. There are some franchises store out there, but mostly they're all corporately owned stores. It is a US based company now though because our headquarters are in Springfield, Tennessee, which is right in [00:09:43] in Nashville.[09:43] JAMES: Okay. Yeah. Got it.[09:44] BEVERLY: It's manufactured here in the U.S. We manufacturer on acrylic. Everybody that works on it or all Bath Fitter employees. We never have third party. From the person that answers your phone call to the person who installs it. We are all Bath Fitter employees. We're behind our company. For Houston we are actually in the Garden Oaks District of the Heights, right off of Shepherd and Crosstimbers. We have a show room. We are welcome for people to come in and see the showroom and you have to that. If they're interested we'll send a consultant out to you and they have a mobile showroom they can bring you. If you are around and you wanted to come say hi, we love it. We love having people in here. We can give some more information here and let you see all the different models. We have garden tubs in our shower. We have the standard tub type of the tub. We have tub to shower. We also can change your shower into a bathtub, both ways. Really. Anything you want to do with your tub or shower, we can handle[10:52] JAMES: Got it. You guys can…not only just replace what is existing. You can actually do the remodeling more or less instead of ripping the tub complete out and just make it into a full shower?[11:05] BEVERLY: Yeah. We can. Yeah. Yeah. There's different color [inaudible], wall options as far style and things that people like. We even do showers for those who are wheelchair bound, who need an ADA shower.[11:20] JAMES: Yeah. I was just about to ask you about that because that's a big thing. I was about to ask you about ADA, being ADA compliant because I get a lot of clients that are looking for that so that is something that you guys have the ability to do as well.[11:32] BEVERLY: You can [inaudible] too as far the type of thresholds that we have with them or seat option. We are very, very verse also in the safety because bathrooms are very dangerous places no matter who you are. They're slippery. We have lots of different options for safety, like grab bars, different types of grab bars and we really work with our customers to make sure that they're getting everything they need so that everything is safe and secure and usable and accessible for them.[11:59] JAMES: That is awesome. In Houston that is the only location that you guys physically have here in the Houston. Go ahead…how can people look if they want to look on the website. What is the website? Go ahead and I'll post the website as well for people to be able to go and look and see what you guys have to offer. what is the website?[12:18] BEVERLY: Sure. The website is www.bathfitter.com.[12:22] JAMES: Okay.[12:23] BEVERLY: The website has got a great tool as well. You can watch some videos on how the process works. It also got a build your bathroom tool that you can imagine what you like, would it look like?[12:36] JAMES: that's awesome. That is awesome. Is it almost like a preview of what your bathroom would look like if you chose this or this --[12:47] BEVERLY: It's a virtual room to build your bathroom. [12:50] JAMES: Right[12:51] BEVERLY: On the computer so it's not going to look like it does in reality. It will show you how things will fit in certain ways. A lot of times when our design consultants go out, they use that tool as well on there. They always bring an iPad with them so that people can see and imagine it because sometimes when you actually see it put together, you're like I really don't like that soap dish. I want to be bigger. You could play around with it and see what you like.[13:18] JAMES: Got It. Got it. That is awesome. If anybody wants to reach out to you to have either email, phone number and I'll post that as well so people can reach out to you. I've got a lot of people that I work with but a lot of investors and a lot of clients that are looking for remodeling. I think you guys are very cost effective way of doing it which is really, really was intrigued when I saw what you guys did. Do you have like either a direct phone number for yourself or a… [13:44] BEVERLY: Sure. My office number is 713-691-4110. I also have a company cell phone and you can call me anytime on that which is 281-636-3560 You could e-mail me at blangstonatbathfitter.com. You're welcome to come by the store which is 356 Garden Oaks Boulevard.[14:08] JAMES: Awesome. What are your hours? What are your hours, Monday to Friday. Saturday. Tell us so we'll know what that is as well.[14:14] BEVERLY: We are Monday through Thursday. There's somebody here at 7:00 p.m. On Fridays we're open until 4:00 and on Saturdays there's somebody here from 10:00 to 2:00. Like I said we can bring everything to you. Our sales staff is great. Our consultants are great. If you can't make it in during those hours, we can come to you and we do have evening and Saturday hours or you book appointment for our consultants to come out.[14:39] JAMES: Awesome. Awesome. On the consultant, when they come out, I know you said everything was custom made so they look at the customer. Once they it out like is there…I'm assuming it's probably obviously case by case as far as how long it takes, Do you have… [14:59] BEVERLY: The process is really for us to give anybody a pricing we have … just like any home construction we've got to come out and take a look at what's going on in a bathroom.[15:05] JAMES: Sure. Sure.[15:08] BEVERLY: They'll come out. The first thing they generally do if they go into your bathroom and take out a lot of measurements because those measurements are what gets sent in when you decide to purchase. [15:18] JAMES: Right.[15:20] BEVERLY: They'll sit down with you and go over all options and all the colors and if there's any underlying problems with the bathtub or the bathroom, what those solutions would be. We do have a master plumber on staff. If there's some drainage problem or a leak somewhere, we can definitely get that fixed because we don't want to put a band aide on a problem. We want to make sure everything fits perfectly. The design consultants are really amazing people. We do understand sometimes we need to leave you with the estimate and let you think about it and they're not ever going to pressure anybody. When you decide that you want to purchase it, all of that goes to our plant in Tennessee. The product actually gets manufactured to fit your specifications. For instance, if Joseph Smith ordered a tub, it will have Joe Smith's name on it throughout the entire process up until it's actually put into their bathroom because that is Joe Smith's bathtub.[16:17] JAMES: Yeah. Awesome. Once you get it back, the actual installation, once it's put together, the actual installation process is about basically a day.[16:26] BEVERLY: It's one day, one day, unless we come across some problem. There are issues just like any construction. Sometimes you up a wall or whatever. For instance, we did a tub to shower renovation, we pulled that tub out and there was a tree root growing up underneath it[16:43] JAMES: Yeah.[16:44] BEVERLY: Our sales guy really tried to take care of that or installer trying to take care of it himself, but then he was worried he was going to damage the foundation. We stopped what we were doing. We made sure to have a professional…we met with the homeowner. They had somebody come out to fix that issue. We came back and finished it. The goal was one day but occasionally things happen.[17:08] JAMES: Yeah, it's amazing what happens behind walls. The reality is nobody really knows until there's a problem[17:18] BEVERLY: Yeah, unfortunately my guy – there's the times where I thought they're not going to finish it today and they always be like I was with a woman, very sweet lady. She'd had a knee and a hip replacement maybe six weeks out of surgery and decided she didn't want the bathtub. She wanted to shower and we took the tub out and there was this huge amount of concrete coming up from the foundation. We had to go run a Jack Hammer and it's still not done in one day. All done in one day.[17:44] JAMES: Yeah. It's amazing what happens. Unfortunately when these houses are being constructed whether it's new construction or 10 years or 15 or 20 years. The stuff that happens, it's amazing. I've seen a lot. I've been working for a few builders that I've worked for in the past and seen what happens as homes are being constructed. Yeah, it's amazing what can happen. So that's …[18:08] BEVERLY: Yeah. There had a been a ton of these structural support for the original tub that was there which was not the best option. That’s what happened. Our installers worked very hard to try to get everything done within that one day timeframe. I have done actual construction of a bathroom prior to me working here and not without a bathroom for a couple of weeks. That's not fun. We don't our customers to experience that.[18:34] JAMES: Yeah. No, I've, I've had to do the same thing. Yeah, it is a big hassle. Yeah. We like our bathrooms. We like our bathrooms and when were disrupted from being able to use one is it is definitely it disrupts my whole household. That's awesome that you guys…[18:52]BEVERLY: That’s what the construction does disrupt because there's so much dust and debris everywhere. Yeah.[18:57] JAMES: Awesome. Alright, I will post your website. Give me the website one more time Beverly.[19:03] BEVERLY: www.bathfitter.com.[19:06] JAMES: Okay. I will post that and then I'll also put your contact information. You guys share, reach out to Beverly. The service is, it's amazing. As soon as I saw it, I wanted to have you come on and talk about this because I think it's a really, really great way for people to save if they're looking to remodel or if someone's got an investment property. I think is a great alternative to ripping something completely out and investors like to save money. Actually we all like to save money. It's not even just for that matter who it is and I just think what you guys offer is a great alternative.[19:42] BEVERLY: It's great way to do it. Not have to redo it again in a few years. In the long run really cost effective.[19:51] JAMES: Yes, very, very important. I will post all that contact information there Beverly. Thank you so much. I appreciate you. It was a pleasure meeting you guys. [Inaudible] has been barely a week. That's how I'm sure what you guys l with you guys. We had a long conversation the other day. Thank you for coming on and you guys reach out. If you have questions, reach out to Beverly, www.bathfitter. That's FITTER dot com, correct?[20:19] BEVERLY: Correct.[20:20] JAMES: Got it. All right guys. Thank you. Thank you Beverly. I appreciate your time.[20:25] BEVERLY: Thank you[20:26] JAMES: All right. Take care.[20:27] BEVERLY: Take care. All right, bye-bye.If you like this episode of the Houston Home Talk podcast, please don't forget to like, share, and comment! We appreciate your support and feedback! See acast.com/privacy for privacy and opt-out information.

Michael: Hello everybody. This is Michael Gross of OptionSellers.com here with head trader James Cordier. We’re here with your March OptionSellers.com video podcast. James, as we head in to March here, what’s on everyone’s mind is the obviously the big development we had here in February. Big stock sell-off, it’s on everyone’s mind right now… stock investors are busy brushing themselves off, wondering what’s next. Over here in commodities, we didn’t really see a lot of movement in the markets themselves, but we had some developments in the option and option volatility. Why don’t we start off this month by maybe just talking a little bit about what happened in stocks themselves. James: Michael, it’s interesting, a couple of years ago we had BREXIT. We had Switzerland leaving the European Union, we also had the election outcome a year and a half ago. All these events didn’t really change fundamentals on a long-term basis, but what they did do is they injected a lot of volatility. The 3,000 point drop in the Dow Jones here just a couple weeks ago did exactly that. It turns out that there’s something called the volatility index in stocks. There was an instrument that was built for people to go short or long on it. It seems as though everyone was way short volatility. In the stock market, that got unwound, it developed a 3,000 point drop in the Dow Jones, and now we’ve got to the stock market recouping quite well. It’s probably going to continue to rally everything as far as we can tell. The U.S. economy looks good, the global economy looks good, stock profits look excellent right now. Volatility spiked in a dramatic way. For ourselves selling options on commodities, we saw volatility index spike as well. Precious metals, energies, and some of the foods did have a spike. In many cases, a lot of the positions we had did increase in value during this large increase in volatility. It’s not always fun when this happens, but it is absolutely a key ingredient in option selling. It allows us to sell options, as you know, 40-50% out-of-the-money. Without that creation that happens every 6-12 months in the volatility index in commodities and in stocks, we wouldn’t be able to do what we do. It’s a key ingredient and it did happen this past month. We’re very excited about the opportunities that it has now in selling options. Michael: It was kind of ironic, James, because you and I were watching this unfold, we were watching the stock market take a nose-dive, and we’re watching our commodities boards and basically nothing is going on. We have gold and silver prices staying silver, the grains and foods were business as usual, crude took a little bit of a sell-off, tied into stocks, but that was really the only one. Over in natural we had to sell off, but that was really already under way. It didn’t have much to do with stocks. Yet, you saw option volatility spill over from that stocks and it increased the value of those options temporarily, but now you’re seeing that come off a little bit. Is that right? James: It is. The volatility index in the stock market is practically to the same level as it was prior to the 3,000 point sell-off. In commodities, it has now come back about 75% of the level that it was at. The fundamentals never really changed at all, especially in commodities, and I think it sets up a great landscape for doing what we do. We’ll find out relatively soon. Michael: You know, a lot of people, they want to get diversified from stocks. That’s one reason why they’re interested in selling commodities options in the first place. You know, it was interesting… on CNBC they had an article about on the biggest day down in the Dow it was down, what…1,075 points or something like that? They ran an article that there was only 7 stocks higher that day and 2 of them were cereal and tobacco. It was Kellogg and one of the tobacco companies- I forget which one. CNBC’s analysis of that was, “well, even when stocks are down, people will still eat and they’ll still smoke”. That’s a point we make constantly is that no matter what’s going on, people still need to eat, they still need to drink coffee, and they still need to put gas in their tanks. James: The breakaway from the correlation from the stock market was very evident on that day. Gasoline and crude oil and soybeans and coffee… business as usual. That’s why a lot of our clients like being diversified away from the stock market. On that occasion, we did see the volatility index increase options on commodities, as well, and that’s just a key ingredient for us doing the business that we do. They did increase while we were in them. We just see, going forward, just a great opportunity to use that additional premium to position clients. Michael: So, we got a little bit of a surge in volatility, that pushed premiums up, and now that’s coming off. The premium is coming back down a little bit, but now we’ll have that historical volatility in the market. One thing you and I have talked about is now that opens up opportunities for us to do some strategies that maybe we weren’t able to do before. James: Right. In 2017, we saw volatility come down steadily the entire year, which really produced a great return for a lot of option sellers last year. Chapter 10 in the Third Edition of our book, we talk extensively about credit spreads. We haven’t had the opportunity to do that the last year or two because volatility has been low. The influx of volatility that happened over the last 30 days now allows us to do this. It is probably the most safe, sound option strategy there is. With the additional premium now, we’re looking forward to positioning in that fashion the next 6 months or so. Michael: Okay. One observation we were making as well is when volatility is up in options, obviously that’s when we want to sell them, but when the volatility is higher there can actually be less risk in selling the options because you’ve already had that surge in volatility. So, often times the path of least resistance is to come back off that volatility after you sold them. James: We saw that the months after the BREXIT, we saw that months after the Trump win during the election of 2016, and, boy, we did quite well right after that period. We expect that to happen again this year. We’ll see if that’s how it plays out. Michael: All right. As we head into March, we’re going to show you a couple ways maybe you can do just that. We’re going to move on to our feature markets segment and we will cover that in just a couple minutes. Thank you. Michael: All right. So, we’re back with our markets segment this month. The first market we’re going to talk about this month is the natural gas market, a market that’s near and dear to our hearts. Natural gas, if you’re unfamiliar with commodities, it’s a great market for selling options. There’s a ton of liquidity there and also you can sell options very far out-of-the-money, so it’s one of the core markets you want to focus on if you’re building an option selling portfolio. One of the first fundamentals that we look at when we look at markets like natural gas is going to be the seasonal tendency. As we know, seasonal tendency charts are not guaranteed by any means, but they do give you an average of what prices have tended to do in past years at different times of year. What we find is there are underlying fundamentals that tend to drive these every year. We’re going to take a look at the ones in natural gas right now. James, do you want to talk about that and why we see this type of movement in gas prices often in the past? James: It’s interesting, Michael. Often, suppliers want to bulk up for seasonal demand in winter, and everyone is basically building supplies going into December, January, and February. If the winter, especially in the Northeast, falls just a little bit shy of expectations or it’s 5 degrees cooler or warmer than normal, the supply actually is more than ample and prices usually start coming down in January and February as we see that we’re going to have enough natural gas and we’re not going to be running out. Again, here in the United States, we’ve had an extremely mild winter. Philadelphia, New York, and Boston, it has been some 10-15 degrees warmer this year than normal, and prices have come down just like seasonally they do. Supplies of natural gas this year are surprisingly low. Right now, we are approximately 23% below the supply of last year. We’re 19% below the 5-year average. That is because we’ve been exporting natural gas, something brand new to the exporting ability right now here in the United States. It’s setting up really nicely for the seasonal rally that we’re expecting. Natural gas right now is near it’s 12-month low here as we end February, often where it is this time of the year. Seasonally, what then happens is suppliers start building supplies then for summer cooling needs, which is like May, June, and July, and that often will give us a price spike starting in March and April. Michael: So, what you’re saying is this is really a factor of distributors accumulating that inventory, driving demand at that wholesale level, which is really what’s pulling prices higher… at least it has in the past. James: Exactly right. If we get through the winter, and it looks like we are again this year, prices usually come down because we are more than well supplied this time of the year. What wholesalers do for summer demand for cooling needs, especially in the Northeast, is they start building supplies and that demand boosts the prices starting in March, April, and May, and it’s setting up quite well to do that again this year. Michael: You know, it’s interesting, James, we talked about stock prices coming down earlier and a lot of people noticed a correlation and said, “oh, natural gas prices came down with stock.” That price really had nothing to do with that move in stocks. Natural gas prices were already coming down as a result of just normal seasonal tendencies. Wouldn’t you agree with that? James: Right. The natural gas market is so liquid. It takes no cues from any other market. The price of Apple stock has absolutely nothing to do with the supply of natural gas, the demand, or the price. It was in a downtrend here in the last few weeks just as the seasonal entails, and it was again this year. Natural gas definitely uncorrelated from the stock market and this year proved it as well. Michael: Let’s take a look at some of the fundamentals of where we find ourselves right now at the end of February, as far as supply goes. First of all, we’re going to take a look at the current chart, which looks a lot like that seasonal one. It looks like we may be at a low right now, technically looks like we’re a little bit set up for a rally here. Is that what you would expect it to look like this time of year? James: Michael, we could almost overlay the seasonal that we were just looking at and it lines up extremely well with this year’s pattern. The market is oversold right now, as the stochastic on the bottom of the chart describes. We really like the idea of the fundamentals being slightly bullish right now. We have nearly 20% below the 5-year average on supplies here in the United States. We’re going to be exporting more natural gas this year than ever before. As we get into the spring and summer cooling season, we do expect a nice bump up in natural gas prices, setting up, what we think, is a very good put sale for new option traders. Michael: Okay, good. That supply situation James was referring to, this shows the last 4 years. You’ll notice this line here is indicating this year where supply levels are. We are, as James mentioned, about 19% below the 5-year average as far as supplies go. So, this is where we are now. It sets up a fairly bullish fundamental supply picture, as you mentioned, James. There’s another side to that equation and that’s also the demand side. Why don’t you talk a little bit about that? James: The country is trying to get away from coal - electric power plants. We’re switching off into more cleaner utilization. Natural gas is going to be a big winner with that. Starting this year, having more so in the coming 3 or 4 years, but we are looking at record demand here in the United States for natural gas, combined with the fact that we are some 20% under the 5 year average on supplies sets up a nice bullish situation here for the next 3-6 months. Michael: I noticed, too, when we were looking at this bump for projected record demand in 2018, that came evenly from both residential and industrial demand sides… possibly speaking to a stronger economy, tax cuts, what have you, that are maybe at least partially driving that in addition to what you mentioned with coal fired plants switching over to electricity. James: Right. Definitely a push for greener production of energy here in the United States, and I think this chart shows it really well. Michael: Let’s take a look at a trading strategy here for those of you that are watching this. You put together a strategy here for, and obviously we’re doing a number of different things in our portfolios, but for the person watching at home that maybe wants to try it out or at least just see how it works… this is the strategy you suggested. James: We like the idea of selling September natural gas puts at approximately the $2.25 level. You can see where we’re trading right now. Often, with a seasonal rally that may or may not take place, we think it will this year, I think it’s set up quite well, natural gas is probably going to head up towards $3… maybe $3.10 or $3.20 this summer. We’re going to be some 30-40% above this strike price. We should have very fast decay in selling the $2.25 put. The market should stay a long ways away from it. The whole idea about trading seasonalities or trading fundamentals using short options is look at the variance you have in the market. This is a very large window for the market to stay above. If we have strong fundamentals and if we have a strong seasonality, can natural gas fall below $2.25? Of course it can; however, we really like the odds of this position going forward over the next several months. Fundamentally, natural gas should not fall below this level. Seasonally, natural gas shouldn’t fall below this level and we have record demand this year. It’s definitely a trade that we like going forward. I think it’s a great investment. Michael: So, what you’re saying for those viewing this at home, yes everything looks bullish here. That doesn’t mean it still can’t come down in the meantime to here, here, or here. That’s why you sell the option in the first place. You’re not trying to pick the bottom, you’re just saying it’s not coming here. So, we can go down here and it doesn’t matter what it does, even if we’re a little early or late on the trade, you still win at the end of the day if it stays above that strike. James: All investors know that timing the market is practically impossible. Trying to pick these small swings in the market are very difficult. All we’re simply doing is saying the market’s not going to fall below this level. As long as natural gas stays here, here, or higher, these natural gas puts expire worthless. Of course, as a seller, we get to keep the premium. Michael: Very good. Let’s go ahead and move into our next market, which will be the cotton market. Michael: Okay, we’re back with our second market this month, which is going to be the cotton market. Before we talk about cotton, there’s something I wanted to point out form our last segment in natural gas and the cotton market. These strikes we’re talking about right now have been made available by that last burst of volatility we got from the stock market. These strikes we are looking at probably weren’t available a couple weeks ago. When we’re looking at them now they are. So, this is kind of the fruits that option sellers can benefit from, from these little inputs of volatility into the market. So, let’s talk about cotton. It’s our next market for this month. The first thing we’re going to look at is the seasonal tendency for cotton. Obviously, we tend to see a rally up through the springtime months and then we see a sharp drop off. James, do you want to explain that or why that has tended to happen historically? James: Michael, this chart you can almost mirror over the grains of the United States. Basically, corn, soybeans, and wheat often planted in the spring and then harvested in summer and fall, and as the angst of the weather problems subside, so does the price. Cotton is planted in the south and, of course, it’s planted early in the year. So, as we’re planting in February, March, and April, there’s possible excitement about not exactly perfect weather. Users want to get insurance and they want to purchase cotton prior to planting season. As we reach April and May, we have a very good idea about how much cotton we’re going to be producing that year. End users get to stay off as far as needing to get a lot of cotton around them. So normally, once the commercial buying stops, the market usually starts coming down in May, June, and July. Interestingly, this formation so far has mirrored almost perfectly with what’s going on so far in 2018. We have a really nice setup looking just like this with a decent rally that started about 3 months ago. It’s starting to look like this already. Michael: Similar to that natural gas trade where you have the seasonal pattern tending to line up very closely with what we’re seeing in the actual price chart this year. Let’s take a look at where our fundamentals are this year as we look at the cotton market. The big story, ending stocks, stock/usage ratio… looks like they’re pretty healthy levels this year, James. James: They are. Cotton supplies in the United States are going to probably be exceeding the 10-year level that we had. In other words, we have cotton stocks that are going to be highest since 2007. Supplies look more than plentiful. We’ve planted just a great deal of cottonseeds so far this year in the south, and we’re probably going to have a bumper crop, the weather looks ideal, and planting went extremely well. With supplies in the United States at a 10-year high, the chance for a large rally going into harvest seems quite low. We really like the idea of selling calls. Michael: Yeah, that stocks/usage ratio at 30%... if you’re unfamiliar with the importance of these 2 figures, ending socks and stocks/usage ratio in agricultural commodities, we do have a piece on that on our website. It’s a tutorial. It’s at www.OptionSellers.com/agriculture. There’s just a brief video but it shows you the importance of these 2 figures. They’re the core measurements of supply and demand. They’re both baked into these things. With the highest in 10 years and, James, you alluded to it, next year, if they harvest all the acres they’re planning on putting in the ground this year, we could see these numbers even climb more. Outlook for cotton is somewhat bearish fundamentally, lining up well with that seasonal. Let’s go to the strategy we’re talking about this month. You’re recommending a call selling strategy. Do you want to talk a little bit about that? James: We are. We have cotton trading in the middle 70’s right now as planning season starts wrapping up. We’re probably looking at price pressure in the 3rd and 4th quarter. We really like the idea of selling cotton as high as the $0.90 level. The fact that we’re going to have practically a record supply and a record production this year at a time when supplies are nearing a 10-year high, the chance for approximately 20-25% rally going into harvest seems quite small. Cotton can fall, it can stay the same, it can actually rally quite a bit between now and harvest season. It has certainly a long way to go before we get to our strike price. This option at the $0.90 call strike price is trading around $700-$800. We think that is a very low hanging fruit for later this year and we think that we’ll probably be covering that position around $100 well before option expiration. The decay on that option looks terrific and the odds of cotton reaching that level is quite miniscule. Michael: Excellent. Part of the benefit if you’re using seasonals when you’re deciding which option to sell, these 2 things are almost perfectly matched because seasonals are not a perfect recipe. For right now, the seasonal tendency for cotton, it may not start declining until March or April, if it does at all. Even if you’re here and even if it does rally a little bit more and you’re not right at the beginning, that’s okay because, as James is saying, your strike is way up there at the $0.90 level and you’ve got plenty of wiggle room here to be wrong for a while, so to speak. James: That’s exactly right. That’s why we sell options on commodities and we don’t try and predict the small moves, just based on fundamentals, levels that the market cannot reach and will likely not reach. We’re not correct all the time. Every once in a while, the market might move in that direction, but selling options that far out-of-the-money using the fundamentals is a very good long-term strategy. Michael: If you’d like to read more about our research pieces on these 2 markets, of course they’ll be available on the blog. You’ll also want to make sure you get this month’s Option Seller Newsletter. That should be out at the end of this week, which would be March 2nd. The newsletter will go in the mail and that’s when the e-copy will go out. We will be featuring the natural gas market and trade strategies there. The cotton market will be on the blog, so if you want to read more about those be sure to get them. Let’s go ahead and move into our Q and A section and we’ll answer some questions for our viewers. Michael: We’re back with our Q and A session for this month. Our first question comes from Rob Reirick of Ithaca, New York. Rob asks, “ Dear James, you refer often to credit spreads in your book; however, I rarely hear you mention them in your market segments. Do you still recommend option credit spreads and, if so, why not features on them?” James: That’s a very good question. The layout and the description of our trading philosophy in our book is very detailed. When we’re giving examples for option sales in crude oil or cotton or anything else, we’re basically just laying out primary examples of where we think the market probably won’t reach. We often don’t talk about a more elaborate trade, which is a credit spread. We feel that credit spreads are probably the most opportune way to take advantage of high premiums and, at the same time, have a very conservative position where it locks in certain types of risk as involved with not just being a naked put or a naked call. We are looking at the next 5-10 years of utilizing credit spreads. We don’t talk about them a lot. They are something we’re going to be utilizing a lot in the future. Basically, when we’re talking about examples for option selling, we’re basically talking about straight fundamentals and levels that the market won’t reach. We are absolutely huge proponents of credit spreads and for our clients we will be doing those often now and in the future. Michael: This isn’t the only letter we got on this, James. Because you may want to read more about credit spreads and see examples, maybe we will start incorporating some of those into some of our examples in the future and showing you, the viewer or the reader, how to actually do it. James: As our viewership gets more further along with understanding option selling, I think that’d be a very good idea to elaborate a little more on the actual positioning that we do at home for our clients. Michael: Let’s get to our next question here. This is from Kevin Woo over Cupertino, California. Kevin asks, “Dear James, with the outlook for inflation growing, do you see a favorable outlook for commodities ahead?” James: Good question. As a basket of commodities for 2018 and 2019, we do see it in uptrend in primary prices. Basically, picking out a particular one that might outpace the other ones, I think that’s difficult to do. We’re looking presently at some of the best demand for raw commodities that we’ve seen for probably the last 10 years… from China, from Europe, from the United States. Of course, there’s some infrastructure spending ideas that are coming down the pike here in the United States. We do see commodity prices probably increasing this year anywhere from 5-15%. That might be led by precious metals, that might be led by energies, but, as a whole basket, we do like commodities going forward in the next 12-24 months. Of course, as option sellers, it doesn’t really matter if the market has inflationary factors that do increase commodity prices; however, if we do see that developing and we do see that on the horizon, we simply change our slant to a slightly more bullish factor as opposed to selling calls that are going to be out-of-the-money that are probably not going to be reached. We might utilize more 60% of our option selling as a bullish structure. In other words, selling puts under what we think might be a slightly higher commodities market in 2018 and 2019. I think that’s a great question and we are somewhat favorable on commodities. As a general theme, we do see the market going slightly higher this year and next year. Michael: That’s a great point you made there as well, James. I’m glad you addressed this, because this is a question we get often… “What do you think commodities will do? Is it a good time to be investing in commodities?” The point you made is as option sellers it doesn’t really matter if it’s a bullish or bearish year for commodities. We’ve had some of our best years in bear markets. James: Absolutely. Michael: It kind of goes back to one of those points we’re always making about diversifying your assets. If you have some of your assets in equities, real estate, or what have you, most people invest by buying assets hoping for appreciation. It goes back to that importance of diversification, not only of asset class into that commodity asset class, but also diversification of strategy, where as in what you described, you can benefit even if prices are moving lower, so you have a strategy equipped even in a bear market and you can potentially benefit from that. The importance of diversification is strategy. James: As option writers, you can be diversified to where part of your portfolio is looking for a slight uptick in prices while other markets that, whether you’re in stocks or commodities, and then other commodities might have bearish fundamentals and you might take a slightly bearish stance to those 2 or 3 markets. The idea of being diversified and having a portfolio that doesn’t necessarily need the stock market to rally, the commodities market doesn’t have to rally, this really gives a lot of versatility for a client or ourselves to diversify a client and have them be profitable, whether the stock market or commodities market goes up, down, or sideways. Often the market does go sideways. Right now, we have a very strong stock market, but over the last 10 years it normally doesn’t do that. In commodities, we normally have 1 or 2 really banner years out of 10 but, for the most part, commodity prices realize fair value, and selling puts and calls far above those markets can be very fruitful as we found out. Michael: Of course, if you want to learn more about the entire option selling strategy, you’ll want to read our book The Complete Guide to Option Selling. It’s now in its Third Edition through McGraw Hill. If you want to get a copy at a discount, or you get it at Amazon or in bookstores, you can buy it through our website… that’s www.OptionSellers.com/book. Thanks for watching our Q and A session, and we’ll now wrap up our podcast for the month. Michael: We hope you’ve enjoyed this month’s OptionSellers.com Podcast. James, we have in March, coming up, possibly our first interest rate hike. Do you have any comments on that or things investors might want to watch out for in the upcoming month? James: I think the realization of interest rates going up is going to really hit home. In March, we’re going to have the first rise of interest rates in 2018. There’s a lot of debate whether it’s 3 rate hikes or 4 rate hikes. It’s not going to matter that much. The dollar should be on more firm footing after the 1st hike, and then we’ll see where it goes from there. Higher interest rates are in the future and, we think, the U.S. economy and economies around the world are probably very well ready for that to actually take place. We think that’s going to create more opportunities in some of the strategies that we’re implementing. We’ll see. Michael: For those of you that are considering managed option selling accounts with OptionSellers.com, you probably saw the announcements over the month that as of May 1st, we will be raising account minimums to $500,000 for new accounts only. So, if you currently have an account under that level it’s quite all right. You’ll be grandfathered in, but as of May 1st, all new accounts will have to have $500,000 as the minimum. We are almost fully booked through April, so if you want to grab one of those last consultations through April to try and get in ahead of that minimum change, you can call Rosemary at the office. The number is 800-346-1949. If you are calling from overseas it’s 813-472-5760. Of course, you can always send an e-mail as well to office@optionsellers.com. If you’re watching our podcast today and you like what you read, be sure to subscribe to our YouTube channel. You can also get us on iTunes and, of course, you can subscribe to our mailing list on our website at www.OptionSellers.com. If you request any of our free materials there you’ll automatically get on our list and we’ll send you a notification any time we have new videos or podcasts. Thank you for joining us this month. James, thank you for your analysis on the markets this month. James: Likewise, Michael. Always happy to. Michael: … and we will talk to all of you in a month. Thank you.

Our third and final episode of maritime tales. Among some lighthearted shorts, we meet a sailor's wife, and then witness the birth of the ship that's we've heard so much about. Music: Creepy — Bensound.com.     James: Here are some Totally Made Up Tales, brought to you by the magic of the internet. Alternating: Jump over small hoops. It's better than going through them. Sweeten your deal with honey. It will help you get sales. Mixing your metaphors will lead you to water. Walk a long way. You'll clear your mind and stretch your legs. James: And now: The Sailor's Wife. Alternating: Heather was the wife of a sailor who spent many months away at sea at a time. She survived on hope and her only consolation was her child, Phillip. He was the apple of her eye. Three years old and running around like a maniac. Just the spit of his father. One day, Heather and Phillip were playing in the sand when Phillip saw a ship entering the harbour. "That is my Daddy's ship," he cried. "No," said Heather. "Your daddy is away for another six months." "No," said Phillip. "That is my Daddy's ship," and he stamped his foot petulantly. Heather caught him up in an embrace. "We'll go and look at it." They walked to the harbour wall, Phillip squirming in anticipation. "There he is!", he said, pointing to a man walking away from the ship. "No," said Heather. "That man is too tall." "There!" said Phillip, pointing at a different man. "No," said Heather. "That man is too short." "There!", said Phillip, pointing at a third man. "Well," said Heather, "it is very similar to Roger. I wonder what he's doing back so soon." They walked quickly to where the man was standing. "Are you my husband?", asked Heather. "Are you my Daddy?", asked Phillip. "Are you my family?", asked the man, and they embraced. "Why are you back so soon?" asked Heather. "That is a long story," said Roger, "and one day, I will tell it to you." "We met a disaster just as we were passing the Rock of Gibraltar. The Captain saw three figures floating above the deck and one pointed at him and let a fearsome cry. The second pointed at him and spoke words of dread. The third pointed at him and spoke nothing. The Captain locked himself in his cabin and refused to come out, insisting that we return home at once. The First Mate brought us around and navigated us safely home. I do not know when we shall sail again, but this is a terrible portent." Heather held his hand and hoped that he would never go away again. Phillip also held his father's hand. The End. Alternating: Attention to detail is a devil's errand, so allow yourself to be sloppy. Muster Mister Custer, pester Lester. Faster, Pastor Caster! and foster Coster Gloucester. "Splice the main brace," said Jeffrey, and proceeded to get drunk. James: And now: The Ship Awakes. Andrew: Bang, bang, bang, bang, bang went the hammers against the wood and the sound reverberated around the mighty shed of the shipyard. James: They were putting the finishing touches on the latest ship to roll through the George & Brothers Shipyards, at Chatham. Andrew: She was a truly beautiful vessel, destined for the merchant marine. Large, imposing, grandiose, sleek, missing only the final pieces of decking and the mast to be fixed and raised. James: Spencer, the ship's architect was watching from one side, from the office, as the men swarmed over her. Andrew: He turned, from watching the finishing touches being made, to the ship that he had been imagining for so long. Rolled up the plans on his desk, locked the office door, and headed off to meet the ship's new owner. James: Over a pint in the Rope and Anchor, they toasted the successful completion of the ship's hull, and looked forward to her launch next week, to join the merchant fleet owned by this particular businessman. Andrew: The end of the day came, the foreman blew his whistle, the workmen downed their tools and set out for their homes, and the shipyard shed was locked securely for the night. James: There she rested, silent and waiting. Andrew: The silence of the ship building shed at night had the special quality that only comes to spaces that so often ring with noise. It had a textured feeling to it, as if you could reach out and touch it. James: A shaft of moonlight through the windows of the shed, illuminated the brass name plate on the ship's stern. "Sea Sprite." Andrew: If anyone had been in the shed, they might have had the eerie feeling that someone behind them was watching, and have turned and found nothing but the ship bearing down on them, as its soul slowly started to awaken. James: What do ships dream about before they first touch the ocean? What can a boat imagine before it feels the kiss of a wave? What could go through the mind of Sea Sprite, before she had ever even tasted the open air? Andrew: That same observer, who we earlier imagined, might feel, not just a watchful, but was it a malevolent presence? No. Not quite malevolent, but somehow not of this world. James: All ships have personalities, and those personalities are shaped and changed by their captain and their crew, but at birth, they are invested by only two things. The men who built her and the wood she is constructed from.   Andrew: Once upon a time, in a far off land, where a warm rain falls for much of the day, for much of the year, and many exotic animals make their homes, and the forest is alive with the squawks of birds, and the ribbitting of frogs, and the hissing of snakes and other wildlife… there stood a tree. A mighty hardwood tree, towering over all the others. James: It had been there so long, that it had seen not only generations of creatures and birds come and go, but it had also seen the gradual rise of the forest around it, and indeed, deep within its rings, it still bore the memories of the open plain. Andrew: Ah, the time of the open plain. The tree was one of the few remaining witnesses of the period in history, when humans has first descended from the trees, walked on the grounds, and formed their earliest tribes. James: In its branches and whorls, in its trunk and its bark, were encoded the history of not only the human race, but so many other species that it had seen rise and sometimes fall before it. Andrew: Owing to its long life, the tree possessed a deep wisdom that few others were able to obtain, through years of reflection and adversity. Many human shamans and magic men and women had come to worship at the tree, and to draw strength from its wisdom and from its magical power. James: For generations, the savviest traders would come and eat under the tree, hoping that its wisdom would somehow filter into them, and help them be better in the world. Andrew: Now the tree stood tall and proud. Its history rooted deeply inside it. And it knew that a change was about to come. James: The animals and birds were gradually being driven out of the forest, and indeed the forest itself, was being felled one tree at a time. Andrew: And then, the fateful day dawned when the foresters came for the mystical tree itself, and began to hack their little axes into its bark, and slowly cut out an enormous wedge from its base, until it fell — bringing down with it many smaller trees, and other parts of the canopy, so that it too could, in its turn, be packed up, chopped down into planks, shipped off, and sold to European merchants. James: In the shed of the shipyard, Sea Sprite lay waiting, and dreamed of revenge. I'm James, and I'm here with Andrew. These stories were recorded without advanced planning, and then lightly edited for the discerning listener. Join us next time for more Totally Made Up Tales.   Andrew: Muster Mister Coster. Pester Lester, test… James: No, I think when we pester Lester, you need to move on to something else, don't you? Andrew: Oh, okay. James: Well, I don't think there's a third one with pester Lester. Andrew: Oh, I don't know why in my head, it was gonna go pester Lester, test a sister. But, that was maybe a bit… James: Yeah, that wasn't gonna happen. I would not have guessed that. Andrew: But, okay. So, pester Lester. I'll just keep "test a sister" for myself. James: Okay.

Our fourth episode of Totally Made Up Tales, with more tales of wonder and mystery. Spread the word! Tell a friend!   Music: Creepy – Bensound.com.   Andrew: Here are some totally made up tales. Brought to you by the magic of the internet.   James: One   Andrew: Day   James: Elise   Andrew: Held   James: Her   Andrew: Boyfriend   James: Tightly   Andrew: And   James: Whispered   Andrew: That   James: She   Andrew: Was   James: Pregnant.   Andrew: He   James: Was   Andrew: Surprised   James: But   Andrew: Delighted.   James: Together   Andrew: They   James: Planned   Andrew: For   James: A   Andrew: Home   James: That   Andrew: Would   James: Welcome   Andrew: A   James: New   Andrew: Life.   James: Painting   Andrew: The   James: Nursery   Andrew: In   James: Bright   Andrew: Green   James: With   Andrew: Some   James: Dinosaurs   Andrew: On   James: The   Andrew: Walls.   James: Building   Andrew: A   James: Crib   Andrew: Out   James: Of   Andrew: Ikea   James: And   Andrew: Reading   James: To   Andrew: Each   James: Other   Andrew: The   James: Day   Andrew: Of   James: Delivery   Andrew: Arrived   James: And   Andrew: They   James: Took   Andrew: Elise   James: To   Andrew: The   James: Hospital,   Andrew: Where   James: She   Andrew: Gave   James: Birth   Andrew: To   James: A   Andrew: Healthy   James: Baby   Andrew: Dinosaur   James: The   Andrew: End.   James: This is the story of the Gamekeeper's Family.   Once upon a time, not so very long ago, there lived a couple in a wood.   Andrew: The husband was a gamekeeper at the local estate.   James: His wife was a housekeeper for the same.   Andrew: They had lived in their little cottage very happily for the last fifteen years.   James: But ... they longed for a child.   Andrew: They had tried many things, been to doctors, healers and priests but without success.   James: They had traveled the world looking for witches that might be able to cure their barrenness, but all in vain.   Andrew: After many years of searching and hoping, they had resigned themselves to their situation and were content to mind the children of their neighbours and fellow workers.   James: But one day, as the gamekeeper walked home through the forest paths, he came across a basket.   Andrew: Attached to the basket was a note, read, “please take care of me” and inside wrapped up in blankets there was a tiny baby.   James: He rushed home to his wife to show her what he had found.   Andrew: They spent a long time discussing whether or not it would be right for them to keep this child. Who had left it there and why?   James: Eventually, they chose to consult the local vicar who assured them that with all of their experience helping to look after their neighbours' children and given that almost everyone else in the village already had children of their own, the right thing would be for them to keep it and raise it as their own.   Andrew: This they did, with great success and a fine healthy young man was the product of their labours.   James: They had named him Benjamin, after the wife's father and as Benjamin grew in stature, he also grew in the love given to him, not only by them but by others in the village. For everyone enjoyed his outgoing and pleasant company.   Andrew: As the years passed the time came for him to take over his father's job as gamekeeper on the estate and this he did.   James: He had spent his childhood growing up amongst the forest and knew how to look for the different types of woodland animal and also how to protect them. How best to defend them from poachers and so forth. And so, continuing the charm of his childhood as he started his job, he proved to be more than adept as a gamekeeper and was rapidly promoted until he became head gamekeeper.   Andrew: After many years, his parents passed away in a peaceful old age and he moved back to the cottage where he had grown up.   James: By this time, he was himself, married, although as with his parents, he and his wife Amelia, had not been able to have a child.   Andrew: One day, while out walking in the estate, completing his rounds and jobs, Benjamin too came across a basket with a note attached.   James: The note, as the note on his own basket, said “please take care of me” and inside was a tiny child that he took home to Amelia and which as with his parents before him, they decided it was right to adopt.   Andrew: Now, the listener will not know that Benjamin's parents had not chosen to share with him the story of how they had found him in a cradle in the woods. And so, it did not occur to him that there was anything unusual about this coincidence.   James: As Benjamin and Amelia's daughter, Susanna, grew, she also, much like Benjamin was much loved around the village and when it came time for her to start working, she took over Amelia's job as housekeeper, as Amelia had taken over the job of Benjamin's mother before her.   Andrew: And so it was that this story played out from generation to generation. Susanna had a son named Robert. Robert had a daughter named Barbara. Barbara had a son named Tom.   James: And always, down through the generations, the same jobs were passed from father to daughter, from daughter to son, across the generations, gamekeeper and housekeeper both.   Andrew: But why? Why was it that these popular, lovable, outgoing people were never able to have children of their own? And where was it that the mysterious foundlings were coming from?   James: For that, dear listener, we must go back to the first gamekeeper and housekeeper, Benjamin's parents, and see their story from another angle.   Andrew: Once upon a time there was a magical forest where there dwelled many sprites and pixies.   James: Chief among them was a fairy who had lived for many hundreds of years, spending her time looking after the non-magical creatures of the kingdom.   Andrew: Now, many fairies have an ambiguous and complicated relationship with human beings, seeing them somewhat like a tree sees a fungus growing on its bark.   James: At times, the fairy would help humans through stumbling difficulties in their lives, but at other times she would punish them for what she saw as a transgression against the magical forest.   Andrew: She was, to our eyes, capricious in her whims. Sometimes kind, sometimes cruel.   James: One day, the gamekeeper, while walking home through the forest spied a rogue pheasant which had somehow escaped from, as he thought, the forest that he managed.   Andrew: What appeared to be a pheasant to his eyes, was in fact the fairy, wandering through her domain.   James: He carefully set a trap and as she did not consider him a threat, she walked right into it and was quickly bound and trussed with him carrying her home towards the pot.   Andrew: He was not by nature a sentimental person, having spent his life working with the wild animals of the forest. But, there was something about the way this bird fixed him with a seemingly knowing stare as he set it down on the kitchen table that made him think twice about instantly wringing its neck.   James: In the moment that he hesitated, the fairy, as fairies sometimes do, cast a spell, not only for her to be released and free but also so that he would forget having ever encountered her. And, as fairies are also sometimes wont to do, she cursed him at that moment, annoyed and upset that she had ignominiously been bound and walked over the forest. She cursed him that he should never have a child to love him.   Andrew: Sometime later, the fairy observed his wife walking through the forest and weeping and lamenting her lack of children.   James: Unaware that this woman was in any way related to the gamekeeper she had previously cursed, she cast a beneficial spell over the housekeeper that she would have a child that she so clearly desired.   Andrew: The child of course, was easy to provide for fairy folk often have children which they need to be raised in the human world.   James: And no one ever questioned from Benjamin through Susanna, through Robert, through Barbara, through Tom, why, when their feet touched the ground in the forest, flowers grew in their footsteps.   Andrew: And from generation to generation, they continued to live, in the small charming cottage in the middle of the wonderful magical wood.   James: Sally   Andrew: Held   James: Her   Andrew: Handbag   James: Defensively   Andrew: When   James: The   Andrew: Mugger   James: Threatened   Andrew: Her   James: With   Andrew: A   James: Knife.   Andrew: She   James: Balanced   Andrew: On   James: The   Andrew: Balls   James: Of   Andrew: Her   James: Feet   Andrew: And   James: Lashed   Andrew: Out   James: With   Andrew: Her   James: Handbag   Andrew: Knocking   James: Him   Andrew: Over   James: And   Andrew: Giving   James: Her   Andrew: The   James: Chance   Andrew: To   James: Escape.   Andrew: She   James: Reported   Andrew: The   James: Incident   Andrew: To   James: The   Andrew: Police   James: Who   Andrew: Promptly   James: Ignored   Andrew: Her   James: And   Andrew: Carried   James: On   Andrew: Filling   James: In   Andrew: Paperwork.   James: The   Andrew: End.   James: Our next story is Jeremy's Place.   One   Andrew: Day   James: Jeremy   Andrew: Was   James: Walking   Andrew: Along   James: The   Andrew: High   James: Street   Andrew: When   James: He   Andrew: Noticed   James: That   Andrew: The   James: Shops   Andrew: Were   James: All   Andrew: Closed.   James: In   Andrew: Normal   James: Times   Andrew: They   James: Would   Andrew: Be   James: Open   Andrew: On   James: Fridays   Andrew: But   James: Today   Andrew: They   James: Were   Andrew: Not   James: “Hmmm?”   Andrew: He   James: Thought   Andrew: “Is   James: There   Andrew: A   James: Special   Andrew: Occasion?   James: Perhaps   Andrew: It's   James: Remembrance   Andrew: Day?   James: But   Andrew: That   James: Is   Andrew: Always   James: On   Andrew: A   James: Sunday.”   Andrew: So   James: He   Andrew: Knocked   James: On   Andrew: The   James: Door   Andrew: Of   James: The   Andrew: Post   James: Office   Andrew: And   James: Waited   Andrew: For   James: Someone   Andrew: To   James: Open   Andrew: It.   James: Waited   Andrew: And   James: Waited   Andrew: Then   James: Waited   Andrew: Some   James: More.   Andrew: He   James: Gave   Andrew: The   James: Putative   Andrew: Post-mistress   James: Half   Andrew: An   James: Hour   Andrew: And   James: She   Andrew: Didn't   James: Appear.   Andrew: So   James: He   Andrew: Pushed   James: And   Andrew: The   James: Door   Andrew: Opened.   James: “Funny,”   Andrew: He   James: Thought   Andrew: And   James: Stepped   Andrew: Inside.   James: Inside   Andrew: There   James: Was   Andrew: No   James: Light.   Andrew: In   James: The   Andrew: Space   James: Reserved   Andrew: For   James: Packages,   Andrew: There   James: Was   Andrew: A   James: Small   Andrew: Dog.   James: “Strange,”   Andrew: He   James: Thought,   Andrew: And   James: Approached.   Andrew: The   James: Dog   Andrew: Looked   James: At   Andrew: Him   James: And   Andrew: Opened   James: His   Andrew: Mouth.   James: “Why   Andrew: Are   James: You   Andrew: Here?”   James: Asked   Andrew: The   James: Dog   Andrew: “I   James: Want   Andrew: To   James: Know   Andrew: What's   James: Going   Andrew: On?”   James: Said   Andrew: Jeremy.   James: “This   Andrew: Is   James: Not   Andrew: A   James: Place   Andrew: For   James: You.”   Andrew: Said   James: The   Andrew: Dog   James: “Where   Andrew: Am   James: I?”   Andrew: “You   James: Are   Andrew: In   James: The   Andrew: Seventh   James: Kingdom.”   Andrew: Jeremy   James: Backed   Andrew: Away   James: From   Andrew: The   James: Dog   Andrew: And   James: Fled.   Andrew: Once   James: Outside   Andrew: He   James: Started   Andrew: To   James: Calm   Andrew: Down   James: Again.   Andrew: He   James: Convinced   Andrew: Himself   James: That   Andrew: Nothing   James: Strange   Andrew: Had   James: Happened   Andrew: To   James: Him   Andrew: And   James: Proceeded   Andrew: To   James: Walk   Andrew: Down   James: The   Andrew: High   James: Street   Andrew: And   James: Knocked   Andrew: On   James: The   Andrew: Door   James: Of   Andrew: The   James: Butchers.   Andrew: Again   James: There   Andrew: Was   James: No   Andrew: Reply   James: So   Andrew: He   James: Pushed   Andrew: The   James: Door   Andrew: Open   James: And   Andrew: Stepped   James: Inside.   Andrew: Within,   James: There   Andrew: Was   James: No   Andrew: Light.   James: In   Andrew: The   James: Area   Andrew: Where   James: Meat   Andrew: Would   James: Be   Andrew: Chilled   James: There   Andrew: Was   James: Another   Andrew: Dog.   James: “What   Andrew: Are   James: You   Andrew: Doing   James: Here?”   Andrew: Said   James: The   Andrew: Dog.   James: “I'm   Andrew: Just…”   James: “No!”   Andrew: Said   James: The   Andrew: Dog.   James: “This   Andrew: Is   James: Not   Andrew: A   James: Place   Andrew: For   James: You!”   Andrew: Jeremy   James: Looked   Andrew: Confused.   James: “Where   Andrew: Am   James: I?”   Andrew: “Go!   James: This   Andrew: Is   James: The   Andrew: Kingdom.   James: You   Andrew: Must   James: Leave.”   Andrew: Jeremy   James: Backed   Andrew: Away   James: From   Andrew: The   James: Dog   Andrew: Into   James: The   Andrew: Doorway,   James: And   Andrew: Stepped   James: Back   Andrew: Onto   James: The   Andrew: High   James: Street.   Andrew: Now   James: He   Andrew: Was   James: Having   Andrew: Second   James: Thoughts   Andrew: About   James: The   Andrew: Shopping   James: Trip   Andrew: That   James: He   Andrew: Had   James: Planned   Andrew: And   James: Walked   Andrew: Back   James: Towards   Andrew: Home.   James: Passing   Andrew: The   James: Police   Andrew: Station,   James: He   Andrew: Went   James: To   Andrew: The   James: Door   Andrew: And   James: Knocked.   Andrew: The   James: Door   Andrew: Was   James: Not   Andrew: Locked,   James: And   Andrew: So   James: He   Andrew: Went   James: Inside.   Andrew: Within,   James: There   Andrew: Was   James: No   Andrew: Light.   James: In   Andrew: The   James: Cells   Andrew: Where   James: Prisoners   Andrew: Usually   James: Resided,   Andrew: There   James: Was   Andrew: A   James: Third   Andrew: Dog.   James: “Seriously!”   Andrew: Said   James: The   Andrew: Dog.   James: “What   Andrew: Are   James: You   Andrew: Doing   James: Here?”   Andrew: Jeremy   James: Panicked   Andrew: And   James: Ran   Andrew: At   James: The   Andrew: Dog.   James: “Give   Andrew: Me   James: Back   Andrew: My   James: Place!”   Andrew: He   James: Exclaimed.   Andrew: The   James: Dog   Andrew: Jumped   James: Sideways   Andrew: And   James: Avoided   Andrew: Jeremy's   James: Grasping,   Andrew: And   James: Replied,   Andrew: “This   James: Is   Andrew: Your   James: Place   Andrew: Here.”   James: Slamming   Andrew: The   James: Cell   Andrew: Door   James: Shut,   Andrew: Jeremy   James: Collapsed   Andrew: Into   James: The   Andrew: Corner   James: And   Andrew: Slept.   James: The   Andrew: Next   James: Day   Andrew: He   James: Awoke   Andrew: In   James: The   Andrew: Cell   James: To   Andrew: Discover   James: Three   Andrew: Policemen   James: Looking   Andrew: At   James: Him   Andrew: In   James: Confusion.   Andrew: “What's   James: All   Andrew: This   James: Then?”   Andrew: They   James: Said   Andrew: In   James: Unison.   Andrew: Jeremy   James: Stumbled   Andrew: Out   James: Into   Andrew: The   James: Open   Andrew: Air   James: And   Andrew: Saw   James: That   Andrew: Things   James: Were   Andrew: Back   James: To   Andrew: Normal.   James: The   Andrew: Post   James: Office   Andrew: Was   James: Open,   Andrew: The   James: Butchers   Andrew: Had   James: Customers,   Andrew: The   James: High   Andrew: Street   James: Was   Andrew: Bustling.   James: “What   Andrew: Happened   James: Yesterday?”   Andrew: He   James: Thought   Andrew: As   James: He   Andrew: Opened   James: His   Andrew: Front   James: Door.   Andrew: “I   James: Swore   Andrew: I…”   James: And   Andrew: In   James: Front   Andrew: Of   James: Him   Andrew: Were   James: Three   Andrew: Dogs.   James: The   Andrew: End.       James: Peter   Andrew: Liked   James: Jam   Andrew: And   James: Toast.   Andrew: He   James: Regularly   Andrew: Ate   James: Ten   Andrew: Slices   James: Of   Andrew: Them   James: For   Andrew: Breakfast.   James: His   Andrew: Constitution   James: Was   Andrew: As   James: Solid   Andrew: As   James: A   Andrew: House.   James: One   Andrew: Day   James: He   Andrew: Ran   James: Out   Andrew: Of   James: Jam   Andrew: And   James: Had   Andrew: To   James: Use   Andrew: Marmite   James: Instead.   Andrew: This   James: Gummed   Andrew: His   James: Works   Andrew: Up   James: And   Andrew: He   James: Slowly   Andrew: Died.   James: The   Andrew: End.   I've been Andrew, and I'm here with James. These stories were recorded without advanced planning and then lightly edited for the discerning listener. Join us next time for more totally made-up tales ...    

What are the Oscar season's early players? Why is Phoenix now our favorite move of the year? Who the heck are Mike and James? All that and more on this episode of Talking During the Movie.