Podcasts about james not

It's with his typical insight and simplicity that theologian Warren Wiersbe opens his commentary on James: "Not everybody who grows old, grows up. There's a vast difference between age and maturity. Ideally, the older we are, the more mature we should be; but too often the ideal does not become the real. "The result is problems—problems in personal lives, in homes, and in churches. As a pastor, I see more problems in these areas caused by a maturity than by anything else. If Christians we just grow up, they would become victors instead of victims. "The epistle of James was written to help us understand and attain spiritual maturity: "… That ye may be perfect and entire, wanting nothing" (James 1:4). I like the way J. B. Phillips puts it: '... and you will find you have become men of mature character, men of integrity with no weak spots.'" To help us explore this maturity-encouraging, growth-inspiring, God-inspired writing we welcome Dr. Fred Chay to the podcast. Dr. Chay is the founder of Grace Line Ministry, professor of theology and dean of the doctoral studies program at Grace School of Theology, and managing editor of Grace Theology Press.

James: Hi, audience. This is James Kandasamy. You're listening to Achieve Wealth Podcast through Value at Real Estate Investing. Today, we have an awesome guest. His name is Nikolaï Ray. He's who's the founder and CEO of MREX, which is an acronym for Multifamily Real Estate Exchange; is considered by many of his peers in North America as the leading expert in apartment investing with over $1 billion analysis, underwriting and transactions. He's also a pioneer in mid-cap, multifamily financial engineering, which is, you know, he's regarded as the teacher, advisor and also the keynote speaker. He's also a real estate tech innovator to his current work on the multifamily real estate big data, artificial intelligence and property tokenization using blockchain technology. Hey, Nikolaï, welcome to the show.   Nikolaï: Hi, James. Thanks for having me.   James: Okay, so do you want to mention anything that I missed out about your credibility?   Nikolaï: No, that sounded like a mouthful.   James: It's going to be ready technology-centric discussion today, right?   Nikolaï: Yeah, the full story is that it should probably a lot longer, but I mean, that could be for, that could be for a whole other episode of the origin story of how, how'd you get to, you know, how you get to where we get in life, and professionally and personally, but yeah, that's, that's the gist of it, you know, everything that's underwriting and, you know, acquisitions, dispositions, refinancing, obviously, portfolio management, whether it be the small market, small cap market, you know, between 500 units, all the way up to the mid-market, you know, market cycles, and obviously, have a very strong penchant for data and for technology.   So, so that's, that's pretty much what I've done over the last, I guess, over the last seven or eight years, is focused on, you know, for the most part, I focused mostly on acquisitions. So I was in charge of an investment banking firm, we worked, you know, on both sides of the transaction advisory side of things, for investors and we also work with a lot of ultra high net worth investors, that's kind of where I built my speciality. Eventually, ultra high net worth investors and private equity firms and family offices, you know, by doing all that I kept on, kept on getting annoyed with the fact that the multifamily market is so fragmented, and the data is so packed, I just kept on thinking to myself, you know, this, this market this, which is an important market, I mean, the apartment building investment market is a almost a $10 trillion market worldwide.   It's a, quite, house is a primary need of human beings, which is to have somewhere to live. And yet, you know, we're kind of in the dark ages as multifamily investors, because number one, we don't have access to any centralized marketplace. If you compare us to a stock investor who can go on the NASDAQ and trade every type of tech stock or stock market investing world, the New York Stock Exchange, and we don't have access to any data, the data is very raw, it's very, it's kind of, you know, what I call legacy data, as you look at like Costar and, and all these various data providers who provide this very raw and inert data, without any actual, you know, context around the data, and without any helps with regards to making decisions business intelligence wise, as a multifamily real estate investor. So that's kind of how that's how my career has gone so far. That's why I went from transactions and more towards data technologies because I felt like there was so much work to be done to help investors just you know, be better investors for once.   James: Okay, so let me understand MREX because I think it's important since you have a lot of passion we need right now. Right? So --   Nikolaï: Yeah.   James: Multifamily Real Estate Exchange, if I understand it correctly, so what you're saying is right now, the data is so fragmented, and a lot of times when, you know, people like me underwrite deals, we have to do so much work, I did too. I mean, I really learn to write [inaudible 04:05] for four hours because I did all the property management financial, that there are so much of mistakes in the property management financials, you have to do T-3, T-12, you had to do expense ratio, you have to do market comps, and all that. So what you're saying is, you are going to summarize all that, and make it so easy to look at so that it can be treated as a commodity, commodity, is that right?   Nikolaï: Not necessarily. So, so the idea is taking you as an example or any of your listeners, right now, who are multifamily real estate investors actually acquiring properties, let's say you have the capital ready, or your investors have the capital ready to allocate to an acquisition, you know, just actually finding that first property to buy or the next property to buy is a very time intensive and energy intensive job, right. You have to go on, you have to go on all the different MLS, you have to go on the loop that's of this world, the [inaudible 00:05:00] and the [inaudible :00:05:01] and, you know, just --   James: [inaudible00:05:02]   Nikolaï: Right, and then you have all the brokers, and then you have all the broker websites, then you have all the pocket listings and you have not even really touched the majority of the market, you're actually still missing probably, you know, anywhere between 25% and 50%, of actual transactional inventory, depending which metro area you're in. So it's a lot of work, even just looking at the stuff that's on websites. That's a lot of work because you have to go on between five and fifteen websites, each website has a different user interface, this different user experience, and actually shows different information. On one site, maybe on [inaudible 00:05:42] you might have a cap rate, maybe on the MLS, you won't have cap rate, you'll just have gross revenue.   So then you have to figure out your own cap rate off of that. It's a lot of work, you know, and for me, I just never thought it made sense, to not be able to say, hey, I want to buy a multifamily property, whether it be a five unit, whether it be a 50 unit or 500 units, I want to go on to one marketplace, we're all properties are centralized in a unified, and normalized manner. Because that's the second point of it, is you have to be able to normalize expenses, if you want to start comparing apples with apples, and oranges with oranges. So that's the second phase. So what we're doing with MREX is we're building a unified, standardized marketplace for multifamily investors, where they will be able to see every single property that exists, that is for sale, despite on the way it's being sold or listed or marketed. We're going to be working with brokers obviously, the goal is not to get rid of brokers or anything like that, that's not, that's not what our goal is. Our goal is to help brokers, help investors just make the whole transaction process much quicker and more time efficient. And that way, you know, we're making the market more, you know, just a more efficient market.   James: Okay, okay. Got it. Got it. So you are basically streaming lining the whole selling and buying process, I guess, just to make --?   Nikolaï: Absolutely. Absolutely.   James: Okay, got it.   Nikolaï: And the analysis process as you said too, right, because it's one, it's one thing finding the properties and having them all in one marketplace. Okay, let's say, let's say you have the NASDAQ, let's say I wanted Lesson TechStars rather than multifamily properties. I go the NASDAQ and I can see every single company, I could have access to inventory, now that's the first step. Now the second step is, once you have access to inventory, and the information provided on all that inventory is normalized and standardize, well, I still have to be able to start comparing and start, you know, building my own models to say, well, if I'm a cash flow investor, which stocks are generating the most cash flow relative to the other, to the rest of the inventory. So that's where you know, context and alternative data comes into play with our platform, is that we want to be able to, to offer data and tools to you as a multifamily investor, to help you streamline your underwriting of the inventory that you've seen. So that's really the two things we're focused on at the moment.   James: Okay, got it. Got it. So interesting. So that'll be, that'll make a lot of, I mean, for investors or for buyers, they would be able to see what kind of deals that they want to buy,--   Nikolaï: Right.   James: Not just what they want to get the yield out of --   Nikolaï: Exactly and instead of going on fifteen websites, well, they've only one website, instead of having to, you know, start normalizing expense ratios and sifting through, through T-12 and T-3, and doing all that, it already kind of be all chewed up and kind of built up already. So you can actually focus, focus on analyzing, focus on comparing and establish, okay, I want to buy this property using this strategy. And why would I do that versus the other property that I see over there? That's ultimately what's the most important thing.   James: Okay, okay. So could it then be a good idea to match this with a crowdfunding platform, because during the crowdfunding, they can choose what deal they want, right?   Nikolaï: Right. So crowdfunding is an interesting thing. The problem is crowdfunding, obviously, crowdfunding, crowdfunding has tried to kind of attack two things. Number one is liquidity, right? Because, as a multifamily investor, the more properties that you acquire, you increase your net value, right, you're a richer person. But the problem with that, is that you have to leave equity in every single deal, right. The banks won't finance you 100%. So you always have to leave equity. So as you get richer and richer, value wise, you are actually cash poor, because you're leaving so much equity in each property that you acquire. And there's always a part of the equity that has to stay in those properties. But the problem, the second problem is that as you get, as you become a bigger investor, and you acquire more properties, and you're more well known in the market, well, you get access to better deals, but now you have less access to more money, even though you're richer. That's kind of the liquidity conundrum of multifamily investors. So that's why crowdfunding is interesting, because it gives kind of, you know, after the JOBS Act, it helps multifamily investors, particularly syndicators, to go and raise capital from, you know, from investors either through the regulation CF, you know, and obviously, regulation D506C was quite an upgrade also to be able to start to, to market capital raises. But what we're doing is we're actually building a second platform that is shadowing the Emirates platform. And what that platform will be doing is, we're actually going to create a sort of stock market and take the crowdfunding thing a bit further, because crowdfunding, as I said, tries to attack the liquidity conundrum. But the problem is, is that when you invest in a crowdfunding deal, you as an LP, are stuck in that deal for the lifetime of the deal. So if it's a five, it's a three to five year exit, well, your money stuck in that, so you, you as a passive investor, or as an LP, do not have liquidity. That's, that's one problem. And obviously, crowdfunding also helps with accessibility, right. So obviously, regulation D506C is only for accredited investors, which doesn't really help accessibility that much. Regulation CF has helped that because now then, that kind of lowers the barrier to entry for everyday retail investors who don't have that much money, but it's still a fairly limited regulation. At the moment, I know, they're trying to pass a couple of bills to increase the opportunity for regulation CF investors. So what we're doing is we're building a second platform, that's going to be basically a stock market, in its own sense, where, you know, through a broker-dealer partner that we hope to get. And then also through eventually a, an ATS license with the SEC, we would like to be able to take it a step further, and allow a multifamily investor to pretty much offer his property through one the various regulations on that marketplace. That way people could invest as passive investors, as LPs, either through Reg D, Reg CF, or eventually maybe even Reg A plus, but then they would also be able to acquire or access a secondary trading market so that they're not stuck in an illiquid period of three to five years. They would actually eventually be able to re trade part of their shares or all of their shares, kind of like you would at the stock market.   James: Wow. So it looks like you are trying to really disrupt the industry.   Nikolaï: Yeah, definitely. [inaudible 00:12:36]. You know, multifamily real estate looks like the stock market before the arrival of NASDAQ. Right? It's like before the internet, even though we have internet and multifamily real estate, it's as if people are still trading kind of like stock market investors were trading on floors, you know, with papers and screaming and doing all that stuff. It, you know, it doesn't make sense.   James: Yeah, yeah. It's so private nowadays, right? I mean, everybody has priority, we do not know how, even multi families performing under a different private LLC.   Nikolaï: Exactly.   James: There's a lot of good news out there. But there's also bad news, but nobody talks about it. right. So I think,--   Nikolaï: Oh, right. And the data, the data out there, like look at any of the data from, you know, even from the really big organization like NCREIF so the National Council of Real Estate Investment Trusts, NCREIT sorry. Even their data, when they know these indexes based on multifamily markets is based on a very low volume of the actual number of transactions. So when say a, a company, various data company says, well, the cap rate right now of say Atlanta is 5%, for example, well, that's actually based on a very small portion of overall transactions. So it's hard for us as multifamily investors, to really be sure are about the numbers that we're inputting into our underwriting models, because we're basing it off so little data.   James: Got it. Got it. Yeah, it's, it is just so limited, right? Because everything is done on a private basis on syndication, which is not much of the data being published out there, right. So --   Nikolaï: It's like investing in the stock market, but not knowing how the stocks have performed historically.   James: Yeah. Correct. Correct. So but why do you think this would work? And because if you look at the demographics of the, I mean, because I'm looking at syndication, when we whenever we buy for multifamily.   Nikolaï: Right.   James: But for me, it's just a small part of the whole market.   Nikolaï: Right.   James: Even though we are I mean, maybe my group or my network thinks that that's the whole thing how people buy multifamily. I don't know, that's true, because I network with a lot of different type of people, right. So looking at the classes of investors who are buying multifamily, I think I know for me, my thing is maybe we are one of the, I am one the lowest level part of it, right, because we are buying Class B and C using high net worth individuals and all that, but there are a lot of higher network, higher calibre people who are playing at a different level, which we don't have, which I don't have visibility, maybe you have it right so. So are you trying to look at different classes of investors and cut through all of them? Are you looking at only some classes of people?   Nikolaï: So we're trying to help what we call the small cap to mid middle market investors.   James: Okay.   Nikolaï: So anyone who owns between five units and about, you know, I'd say around 2500 to 5000 units.   James: Okay.   Nikolaï: That's kind of where we stopped, you know, that's where we're focusing on because that, you know, the majority of transactions are actually done by, by small cap to mid-market investors.   James: Okay.   Nikolaï: You know, the multifamily market is historically a mom and pop market. Now, it's, you know, it has transition a bit, investors are getting bigger and bigger. But the reality is the majority of the market is not an institutional market, you know, at the root level, or the private equity firm level or family office level, depending obviously, which metro area you're in, right. New York City is obviously more of an institutional market. Canada, Toronto is a very institutional market, but the majority of cities and metro areas are still, you know, very small cap market. And the problem is that, you know, take you for an example as a syndicator, or even take someone who's not a syndicator, right, because a lot of investors, multifamily aren't syndicators, they just buy their own properties, you know, they end up with maybe, you know, anywhere between 50 and 500 units as time goes by. Now, the problem with with those types of investors and syndicators as yourself is that you do not have access to a team of underwriters, you don't have access to, you know, expensive data that say a real estate investment trust has more than a very big private equity firm has, you don't have access to all those analysts. So, you know, we want to try and make sure that the market stays very level and stays is a level playing field. Because, you know, ultimately, I think the multifamily real estate market is very important for a couple of reasons. Number one, you know, everyone talks about the disparity of wealth, right of the 1%, and how the disparity is getting bigger and bigger. And we could do a whole podcast on that and why it's happened and where it's kind of going. But ultimately, I think, you know, the multifamily market is probably, the market, it's probably the asset class that offers the best returns based on risk, with the best risk-adjusted returns. If you look at Sharpe ratios, and Sortino ratios and all these things. Now, it's also been proven, there's a lot of studies about this, a lot of university studies done on this, that, you know, social mobility comes from education, and access to property, right. The reason why people have been so poor for so long, and like the Brazilian favelas, or the Indian shanty towns, is because people don't have education, and they do not have access to property, they are not able to become landowners, or owners of their own homes, even less become investment property owners, right. So I think multifamily stays as a very important asset class, because, on top of filling a basic need of human beings, that means providing somewhere to live, it also is a very important mover, for the everyday investor, the mom and pop, just the normal person need you to be able to access a very good, very safe, wealth building asset class that does not have the same volatility, or the same pitfalls as say, the stock market and other types of asset classes. So I think it's very important that we provide, you know, tools and data and allow for the smaller investor, the investor that has less than 1000, or even less than 5000 units to be able to continue on performing, continue on from this, this asset class.   James: Got it. Got it. So let's go to a bit more details on some of the big data and artificial intelligence, right.   Nikolaï: Yeah.   James: So yeah, I studied artificial intelligence almost 24 years ago, every now it has become really popular, a lot of startups with artificial intelligence, right.   Nikolaï: Absolutely.   James: So the question is, how do you, I mean, first of all, let's define what, can you define artificial intelligence in your terms in terms of real estate? Because I studied engineering standpoint.   Nikolaï: Yeah, well, I'm not an engineer, by trade, so at least I'll give more of a generalist definition to the people listening which I think is probably gonna be very good. The important thing is to understand, kind of the difference between machine learning and artificial intelligence. So you know, machine learning is more of a, it's a less automated process, right. So a lot of what people are calling artificial intelligence is ultimately just machine learning. And what it is, is that let's say, let's say, you know, I'm a data scientist or an economist, and I build a predictive model using, say, Monte Carlo simulations. Well, I set a, I build a set of hypotheses, I plugged them into my Monte Carlo simulation, and then that runs. Now, with machine learning and artificial intelligence, what becomes very fun as you know, statistics are a funny thing, right? And economic modeling is a very funny thing because even though, you know, people in the economics world swear by predictive analytics, the reality is in data science, it's garbage in garbage out, right. So the outputs always depend on the inputs. So let's say you're doing an underwriting model, and you're looking at an apartment building, and and you say, well if I buy this apartment build in this way, my internal rate of return is going to be 25%. Okay. Now, internal rate of return, net present value is a, is an output or their outputs based ultimately on the strength of those outputs are only as good as the strength of the inputs.   James: Correct.   Nikolaï: And the very important inputs that affect an IRR and NPV, which ultimately led to two of the most important metrics to help you decide whether it's a buy a property or not are rent growth, expense inflation, refinancing interest rate; if your IRR and NPV is based on on refinance, because obviously IRR and NPV has to be based on an exit model. And the exit model can either be a refi or it can be a sale; disposition. And then if it's a disposition, while your IRR and NPV is based, ultimately off the reverse, the reversion cap rates, so the exit cap rate upon sale. Now what everyone's doing right now, in the multifamily market, especially small investors, and mid-market investors is they're just entering these inputs. You know, they're just playing it by ear, and they're not even playing it by ear. They're coming up with these random inputs that are based off absolutely nothing. I just had a huge discussion on LinkedIn about this, with a couple of investors where one guy was saying, well, you know, if I buy it at 5% cap rate, my underwriting model, what I do is, to establish the reversion cap rate. So the cap rate upon eventual sale, let's say five years, is I add 20 basis points to the purchase cap rate per year. So if I bought it at five today at a 5% cap rate, well, then five years from now, I predict that I'll sell it as 6% cap rate, okay. And, you know, people kind of hide behind this type of rule of thumb model, say, well, I'm being conservative, therefore, my underwriting models very good. The reality of it is your underwriting model is bullshit. Okay. It's not worth the the Excel spreadsheet that it's been written upon. The reality is, where are you pulling this, this expansion of 10% or 20%,10 or 20 basis points per year? What are you basing that off? Right? That's what anyone should be asking, What are you basing this off? While being conservative. How do you know you're being conservative?   James: Yeah.   Nikolaï: How do you know you're not being optimistic? Right? You could be being you could actually be very optimistic with that. And conservative might be and then an increase of 0.25 a year, right? The reality of it is that everyone underwriting deals, right now, they're not basing their inputs off any data, right. And they're definitely not basing it off any predictive analytics, because it's one thing to have the data, the historical data. But you know, just because you have historical data doesn't mean necessarily, that's going to repeat itself in the future. That's why we have predictive analytics. So let's say that based on historical data, your 5% acquisition cap rates will actually be a 5.5 in five years. Now, the problem with that is that the future, that history is never guaranteed of the future, right. So that's why you then have to plug in various scenarios where you're considering this. And that's where predictive analytics come very difficult because you're pretty much just kind of taking a shot in the dark and basing things off the past, but you're putting in like a margin of error. With machine learning and artificial intelligence, you're able to make your predictive models better ex post based on ex ante results. So let's say you create a model to predict the future cap rates, well, you want to predict the future cap rate of in five years, it's your goals to sell within five years. Well, if you predict that today, the probability that your five-year cap rate from now is going to be precise, is a lot lower than let's say, in four years, you predict the cap that same cap rate, right, because you'll be closer to your exit. So there'll be less room for margin of error. So what machine learning and artificial intelligence will allow you to do is to consistently kind of reset your model as time advances. So maybe your initial model based upon acquisition was off. But as you advance in time, the artificial intelligence and machine learning continues on training that same model, the same algorithm that you had, and adapts the various inputs and algorithms to make it more and more precise as you get, as you get closer. And on top of that, as you get closer, the range of distribution of property probabilities get smaller. So it's a double effect, your predictive models get even tighter and tighter as time goes by. And that's where [inaudible00:26:03] machine learning and artificial intelligence can really help out. Is that instead of just plugging in these ridiculous exit cap rates, and ridiculous growth rates and ridiculous inflation of expenses, and absolutely ridiculous refinancing interest rates, when we get closer and closer to being able to actually put in inputs that are based on something very, very solid and then, therefore, our underwriting models will become more and more precise. And what we want in underwriting when you're buying a property, whether you're a syndicator, and you're responsible for money of your LPs, or whether it's your own money, the goal of underwriting is not to be conservative. That's not what the goal of underwriting is. And anyone who says that they underwrite, and they're concerned, their underwriting is conservative, what they're really telling you is they don't know how to underwrite, okay.   James: Yeah.   Nikolaï: You don't want to be conservative, you want to be right on the dot, that's what you want to do with underwriting, you want to be as precise as possible because the reason that you buy the property today is you buy it for future cash flows. And cash flows can come in various ways, they come in an annualized cash flow so, so free cash flow, they come in the appreciation of the asset, so the value of that asset gains because of various market dynamics and because of the way you're, you're managing that property. And they also come through the capitalization of your mortgage. So there's a part of your mortgage that you're paying down, which is principal, right. So those are the three cash flows that you can receive. Now, when you're underwriting a deal, and you're looking at how much you should pay for, say, this hundred unit building you're looking at, well, if your inputs are off, you might buy that property. But it's a bad acquisition because you were too optimistic in your inputs. But it also happens that you were too conservative in your books, therefore, you didn't buy the property. Because if you input that at the exit capital, that property is 7%, but, in reality, five years from now, the exit cap rate is five and three quarters, well guess what? You missed one hell of an opportunity.   James: Correct.   Nikolaï: And in real estate investing, the most important thing is time value of money, we only have a very limited time during our lifetimes in which we can invest and create wealth. And we only have so many hours during the day. Therefore the cost of opportunity, the time value of money are the things that we should consider the most in our underwrite. And that's really where machine learning and artificial intelligence will help investors become much, much better. Obviously, you also need education, right? You have to understand these, I mean, this is advanced stuff. And I'm trying to kind of explain it in a simple way, where people who don't have master's degrees and PhDs in finance and engineering can understand it. But the reality of the matter is that multifamily investing is very, it's a very complex, it's a very sophisticated asset class, and you need a certain level of education.The problem being right now, despite the very high level of education that some investors have, we just don't have solid, predictive analytics tools and data to be able to make sure that we're actually able to transfer education into decent acquisitions.   James: Yeah. Well, that's very interesting, because exit cap rate is always being misused or mis-conservative right? So --   Nikolaï: Well, even entering cap rates, even acquisition cap rates, I see people saying, well, you know, I'm not gonna buy that property because it's a five cap rate and the markets trading at 5.5. Okay, is that a stabilized property? No, it's a value add property. Well, the cap rate doesn't, the cap rate is meaningless then. A cap rate is a metric of a stabilized asset. If the asset is not stabilized, there is no cap rate, because a cap rate is a perpetual annuity. It's a return metric, based on an unlevel perpetual annuity, which means the same cash flow every year forever.   James: Correct.   Nikolaï: Now, if you want to be able to calculate that your property has to be stabilized. So if you're not buying a property, because it's a five cap rate, and the market sharing at 5.5, but it's a value add deal, well, I'm sorry, I'm sorry to tell you, you should change, you should change fields, you should go play, you should go to Las Vegas and put it on red.   James: Not only that, I mean, not only new investors don't understand the entry cap rate doesn't matter [inaudible 00:30:46] and I don't know, I never see a reason not to do a stabilized deal. Not on commercial, right? So for me, I'm always [inaudible00:30:53] guy, that's why I --   Nikolaï: Well, unless you're a private equity firm or your family office or you're a RET or you're an ultra high net worth individual who now has, you know, net value of anywhere between ten and hundred and fifty million dollars, there's no real reason to do stabilize deals, right. The reason you wanted to stabilize deals is, because you have a very high net worth, or because you're trying to de-risk your portfolio. Right?   James: Correct.   Nikolaï: That's why you would just stabilize deals for small cap or mid cap investor.   James: Yeah, yeah. Most of the time. I mean, commercials always value at play. I mean,   Nikolaï: Of course.   James: I mean, there's a lot of people doing stabilized deal nowadays, just by getting a higher mortgage and getting slightly lower price, play on the mortgage side with the interest to get a cash flow, but --   Nikolaï: And that can work if you're a neurosurgeon, right? If you're a surgeon making a million and a half a year, and you're 35 and you say, well, you know, I want to start buying multifamily property because I like, I like real estate and I like the tangible part of the asset class. But I don't need any money right now, because I'm making a million, I'm making a million and a half a year. I don't need any cash flow. And I'm very long term and I just want to build myself a nice retirement, you know, because you know, that's what I want as objective. Well, then yes, buy stabilize property or be an LP and syndication, or purchase that stock in the [inaudible00:32:23], that's fine. But if your goal is to increase your wealth exponentially, in a short period of time, and what I mean by a short period of time is fifteen to, five to fifteen years. Well, then, yeah, you're gonna have to do some kind of value add, you can't just do financial arbitrage all the time.   James: Yeah. Yeah, there's a lot of deals out there in different asset class, which can give you that cash flow, right. I mean, you can buy a stabilized mobile home park, you know, it'll give you higher cash in cash than any multifamily deals.   Nikolaï: Right.   James: So even self-storage, or even multifamily, which has been stabilized, you get, you'll get good cash flow. But how long will that cash be guaranteed? Because you have a very tight DSER at that point of time. And let's say the market turn, you may not be, your DSER might be compromised right now, because you don't have any buffer. Right?   Nikolaï: Especially if you did not properly manage the terms of your mortgages. Right. So that's very dangerous. Like if you feel that you're, if you feel that the markets going to shift, say interest rate wise, the easiest way to kind of pull yourself out of that situation you just talk about is, you know, just take longer-term mortgages, you know, make sure that the mortgage does not end in five years, make sure it's a 10 year term, or even maybe a 30 year term. Right? That's, that's the easiest way to manage that risk.   James: Yeah, just do a hard loan.   Nikolaï: Right.   James: Which gives you like, 45 years. I mean, there's the other trick that a lot of people play is, you know, showing you need cash in cash based during IO period. And nowadays, people are getting five years, seven years, IO period and sometimes people think, oh, I will not hold, you know, that deal for long term. I mean, you are hoping on not holding, holding, right. But you do not know what's going to be happening to the economy, right?   Nikolaï: It's a dangerous game to play. And I'm not saying don't play it, but make sure you have the, make sure you have the education and the know-how to be able to manage that risk. It's all risk management. Ultimately, that's what it is.   James: Yeah, yeah.   Nikolaï: The problem, the problem is a lot of people are doing this, and they don't know what the hell they're doing.   James: Yeah, I mean, I think so there's so much of capital out there right now, looking for money to be placed in some way.   Nikolaï: Oh definitely.   James: And people don't think that are they going to putting 1% in the CD, I might as well put here and get like six, seven per cent, right? Cash Flow, right? And,--   Nikolaï: And that's, that's the retail market. Like that's, that's small investors like me and you the reality of is the real cap, the real capital flow right now is at the institutional level, there is so much higher level money and smart money searching for returns right now. I mean, we can't even fathom small investors, how much money, I mean, family offices, typically, if you take the family office market, typically always allocated maybe like, I don't know, depending on the family office in the region, but usually anywhere between, you know, maybe eight to twelve per cent of their overall asset allocation, capital allocation to what they call alternative assets, right. And real estate as part of alternative assets. Now, over the last 10, I'd say over the last 10 years, the last decade, family offices have become more and more in tune to the real estate markets. High net worth families also, especially towards like multifamily real estate, and more and more real estate is no longer considered just as, as something under the alternative asset umbrella. But now it's kind of becoming its own umbrella. And what that's doing is that instead of family offices, and we're talking about family offices that have trillions of dollars, right. These are not these are not small things, these are big moving bodies with a lot of capital, we're talking about multi-billions of dollars, not trillions, multi-billion dollar family offices, that are now instead of allocating, you know, 8% to real estate, well, now they're allocating 20% to real estate. So and that's, that's a scale like, there's a lot of them out there. And we haven't even talked about the private equity firms. We haven't even talked about the pension funds, the International pension funds, you know, people talking about globalization and international money, thinking that it's just, you know, rich Russians is going to Sunny Isles, Florida, buy $10 million condominiums. That's not what it is. The global movement of money to American and Canadian Real Estate are things like the Amsterdam teachers pension fund, or government workers pension fund, you know, allocating, allocating, you know, 100 billion dollars to the American real estate market. Now that's, that has a big, that puts a big dent on the supply and demand of real estate. And that's what ultimately drives property value is much more than interest rates. Interest rates only, only influence property values, like people were talking about, especially the last couple of years, all we know, if interest rates go up, cap rates will follow up, they'll go up. That's not true. Capital flow drives cap rates and values and properties and multifamily; interest rates only influence cap rates and values.   James: Very interesting perspective, that's you are right. There's so many, too much money, even out of United States is looking for money to place, right. Like the other dad had a call from the UK. It's a family office who want to invest in the UK and they're looking for like operators like me, and I was asking them, what's the return expectation? They say this 22% IRR credits and I said, well, I [inaudible 00:37:58] you guys, I can get better money in the United States right, so --   Nikolaï: Exactly. And all the, all the money from the quantitative easing the follow the 2008 crash, I mean, all that quantitative easing money, a lot of it still, after even 10 years, has not even found a place for it yet. Right? So there, there's a lot of money chasing deals, there's a lot of money chasing deals.   James: Correct. Correct. Right. That's true. That's true. So coming back to the exit cap rate. So I know that's one of the hardest parameters to measure. Right? So.   Nikolaï: Absolutely.   James: But can you clarify again, how did you, how would you use artificial intelligence to find that a more accurate exit cap rate? You know, T minus five, my T minus 5, five years earlier, before you hit that five years mark of selling, assuming five years of selling.   Nikolaï: So it's the computing power, right. So it's a computer, what we do is, we'll build, so we'll do we'll say, I'm sorry for anyone who hasn't studied, you know, high level university finance, but or statistics, you know, we'll build a, say, a regression model. So we'll look at past data. We'll plug all that in, in order to build a predictive model, a future model being able to come out with future cap rates, and, you know, the more data that we're able to plug into our regression model. So historically, what real estate institutions and economists have use is what they call the linear regression model, use the Monte Carlo simulations. Now, the problem with the linear regression model is that you know, past transactions or data are, are, are also affected a lot by various things like, you know, political environment, and capital markets. And there's a whole bunch of factors. So there's a new model that's being used more and more, especially with a lot of postdoctoral students in statistics, it's called a Quantile regression model. So that's where we're able to create that same kind of, I'm saying this in layman's terms as much as possible, we're able to take past historical data, build that kind of linear model, kind of, like build that line chart for people to understand, and we kind of repeat that line chart in the future. But we're also able to start to weigh that those data points with various things like a new government, with quantitative easing, with the war, with various factors that may be affected that models to make it less linear. And then we're able to start to better predict future stats and future cap rates. So that's the first step of it. The second step is, let's say, right now, we built our Quantile regression model. And now we compute it and what it says to us is well, T minus five cap rates, or five-year cap rate is going to be between, let's say, we have a couple of tracks, it's hard to explain to people who have not done statistics. But we have a couple of tracks. And ultimately, what it says is that the highest probabilities are that cap rate is going to be between 5.75 and 6.10% in five years for that specific market. Now, like I said, as we get closer to the five year period from now, the less the margin of error is, because we're closer and multifamily market moves very slowly. So predicting, the easiest way to understand is predicting 25 years out from now, it's very hard? Your 25 year prediction is going to be way more, there's more room for it to be completely off than your two-year prediction. So we build a model for the five-year prediction, and then starting tomorrow, every day, our artificial intelligence recalculates that model. So as it recalculates, the model gets more and more precise, because let's say we took statistics from today to 20 years ago, let's say we took the cap rate of that market, starting from today, and 20 years back. Well, obviously, the next 20 years are not going to be exactly the last 20 years. But that's ultimately what statistics do, we try and kind of say, well, let's take the last 20 years, there's a margin of error, that's what's going to be the next 20 years.   So what's cool with the artificial intelligence is without actually having to do anything, every day, the artificial intelligence kind of brings the model a day closer and adapts the model with more and more weight on what's going on right now, rather than what happened 20 years ago. And the artificial intelligence is also able to measure what today it predicted for yesterday, versus what actually happened. And what's the spreading difference and what caused that spread? And therefore, once it's able to determine what caused that spread, it'll add that into the equation for the future cap rate model so it becomes much more precise.   James: Yes, but don't try to run it in iteration on a daily or monthly basis to watch the whole investment process. But how do you make it on day zero? Well, today we're buying today how does it iterate then when on a day zero?   Nikolai: Well, what it is I don't understand the question.   James: So my question is, you said the data is being fed into the system to get more accurate exit cap rate. But you're making a decision to buy today? Is the iteration happening from today to all the investment cycle? Or do you do it earlier before you decide to buy a deal?   Nikolai: Okay, I understand what you mean. So like, for determining your actual purchase cap rate,   James: Yes, correct whatever price that I'm going to pay today because that's what I'm getting into the deal. That's the point of me making a decision, whether this is a good deal, and I'm going to be raising money and telling everybody it's a good deal.   Nikolai: The purchase cap rate is a whole other set of statistics and data models. That's more I'd say, determining today's cap rate is much more endeavor of collecting more historical data. Because like I said, let's say JLL Jones Lang LaSalle which is one of the biggest brokerages, they come out with reports and say, Okay, well, the cap rate, let's say in Austin is, 5.2%. Let's say the mean cap rate is 5.2%. Well, that's based on maybe what like 30 or 40%, of actual transactions that happen because they don't have data on like the off-market transactions, or the pocket listings or this and that, right. And on top of that, they haven't normalized the cap rates on whether, let's say, a building traded at a 4.6 cap rate. Well, as we said, if that property wasn't stabilized, well, then that cap rate is off. That's not a good cap rate. So that's a second thing. So for establishing what you should pay to the intrinsic, what's intrinsic value today. that's ultimately what I think the question is, and correct me if I'm wrong, but let's say you're looking at a 100 unit property, what is the actual intrinsic value of that property? What's the real capital I should be buying at? Well, that's a question of having the proper volume of data, Okay, number one. So that's what we're working on right now is making sure we keep on building our database. So instead of our market cap rates being based on the off 30 or 40%, of inventory, or transactions. Well, it'll be based off maybe 60, 70, 75%, therefore, that cap rate becomes more precise. Secondly, we actually look at every transaction and say, qualitatively because that's the first thing is a quantitative aspect, in statistics, we have quantitative, qualitative. So the quality of the data, once we have the quantity, we look at the cap rates and say, okay, that property traded for a 4.2 cap rate. Was that a stabilized property? No, it was not. Once we add the cap x, we have the new revenues. And we adjust the sales price for cap x, but we also adjust NOI. Now we can look at the stabilized cap rate. So that's the qualitative aspects of it. And now we're able to say, here are the market cap rates, here's the low end of cap rates, here's the high end of cap rates, here's the mean, or the media. And here's that range of cap rates. Because cap rates are based on the Capri calculation ultimately, even though people think it's NOI divided by sale price, I'm sure that's not what a cap rate is, that's how you find the cap rate of a soul stabilized property. The actual cap rate calculation or formula is a mathematical equation of R minus G, it's algebra, so are being returned minus g, which is growth. And R is defined as RF plus RP. So the risk-free rate plus the risk premium that you as an investor are looking for or that the market is looking for, a perceived risk premium, obviously. So what we want to do then, that would be like a third step, and we're not at that level right now. But I hope within the next couple of years, we will be, and I'm sure you as an engineer, probably understanding how valuable our ability to do that would become for the market. Is that then you're starting to be able to say, well, right now, that property is being listed at a say, let's say the range for cap rates in Austin is really five to six, obviously, six is going to be in the worst neighborhoods. Five is going to be the best neighborhoods because it's a matter of risk. Well, then you're looking at the property, let's say it's at a 5.7 cap rate. But it's kind of on the limit of a bad neighborhood, good neighborhood. And then you're able to intrinsically say, but the intrinsic cap rate of that property, the real intrinsic value of that cap rate is actually 5.3. Now, if you didn't know that, and you just said, well, the average cap rate is 5.7 well, it's not so much of a deal, I'm not gonna buy that property. But now with this new data, what you're able to see is, wait a minute, it looks more expensive than what it should be but in reality it's not, it's actually cheaper because the real intrinsic value is a 5.3 cap rate. And that would really unlock the potential of what we call value investing, what like a Warren Buffett has built his entire career off of the stock market? Well, he was able to build that value investing exists so much, in the stock market, because of the quantity and the quality of the data. The quantity of data is accessible to everyone, the quality of the data is a bit harder to get the qualitative aspects. That's why Warren Buffett was has been such a great investor, because he invested so heavily into being able to pull out the qualitative aspects of the data, well, now we would be able to do the same thing, you would be able to do the same thing as a multifamily investor. You would have access to the quantity of data needed for you, then to increase your knowledge based on the qualitative aspects of it, and then be able to properly price that acquisition. And then once you're able to do that, well, then you can go say to your investors, look, this is why I'm buying this deal. This is why it's a good deal. And if on top of that, you're able to be more precise with your exit cap rate, and the growth rates of your revenues and expenses and your refinancing rates. Well, you're going to be a much more confident investor.   James: You are making it really what you call a --   Nikolai: It's a more efficient market.   James: It's a more efficient way of actually determining your purchase because you can really just say generally, Austin is what five cap, it's not true, [inaudible00:50:46].   Nikolai: It's kind of scary to say, but we're all kind of invested in multifamily kind of half blindfold. The guys like me and you, and there's a whole bunch of other guys out there really intelligent wrestlers. We're all invested, based on intuition experience, a very strong knowledge base. But we're ultimately kind of invested with one eye closed. Now it's even worse for people who don't have our knowledge base and experience because they're all invested in completely blindfolded.   James: Interesting. So, if you can get that kind of data where you can look at the stock market, and what's the potential, especially if it's in the path of growth. And what's the risk that you're buying? There are some deals, even though you buy it at the lowest cap rate for that market, it could be still the best growth because it could be just like another big explosion, in terms of jobs, is going to be happening in that area just because of the path of growth.   Nikolai: That's so important because if you're a pro forma and you're underwriting you predicted a 2% growth rate in revenue. But in those five years, the analyze growth radio was six. Well, you probably didn't buy that property, when you should have. And the other thing is the same if you predicted a 6% growth rate, and it was two, then you bought that property you shouldn't have, But what most people will say is well, the guy who predicted 6%, he should have put in 2%, like he should have been conservative, but that's not necessarily true. That's a half-truth. That's actually a mistake in logical reasoning because the other guy who says, I'm going to plug in a 2% growth rate because that's what historically happens. What happens if you invest in a market where the growth rate is actually 6%? And that the other intelligent investors knew or predicted that it would be 6%, while they're willing to overpay, according to you for a property, and then you're not buying anything, you're not generating any returns, you're not building your wealth, and you're just kind of sitting on the sidelines there, Bah, humbugging saying, well, the markets paying way too much for the properties and these guys are stupid, stupid money, blah, blah, blah, I'm going to wait for the market to crash and blah, blah, blah, I know guys who've been saying this since 2012. And they have not bought anything since 2012. They haven't generated any returns. All under the pretext of being conservative investors. You know what, they're not conservative investors, you know why because they're not investors. They haven't bought anything, because they take themselves out of the market, and they're sitting on the sidelines, and they're just making up for lack of precision in their underwriting through, this kind of pseudo-conservatism.   James: I think it just depends on the sophistication of the investors. If you look at nowadays, multifamily has become so popular, so many people who did not have the financial education background or the way to analyze a deal. There's a lot of parameters that go into any deals. That's what you mentioned, you mentioned so many parameters, nobody will look at that. Everybody said multifamily is good. I bought it and it went 300%. And they say, Oh, I'm a really good operator. Well, actually, you should have made 500% because the market gave you at least 400%. 100%, you just did 300%, why did you do 300%?   Nikolai: That comes down to what we call the search for alpha. We want to outperform the market. And all these people and there's a whole bunch of them now there's gurus and mentors and coaches, and they're giving all these online classes or seminars or whatnot, or they're boasting about being such great real estate investors. And the reality of it is they don't even know what they did. They're like, well, I generated X percent returns, and I've created X amount of millions of dollars in profit over the last five and 10 years. But that's actually quite average. That's what the market does, as long as you are in the market. Of course, that's what you generated. Now, did you generate more than what the market did? That's the real question. And unfortunately, there are not enough people in the market asking that question. And if you're a passive investor, that's the question you should be asking your syndicator or your GP is not this is what you generated, great. That sounds awesome. You generated 22% IRR annually over the last five years. What did the market generate? The market generated 23.   James: I remember the other day I saw someone, he said, I made 60%. In one year, I bought it in the first year and I sold it in twelve months, I made 60%, I said well, you should have made that 100% because the market went up by that much.   Nikolai: And that's why I'm so bullish on education, and why I think it's so important that multifamily investors get educated and push their knowledge base, because, this is not Nintendo, this is not Xbox, we're not just playing, baseball on our PlayStation three, or Playstation four, this is serious business, and even more, so if you're syndicator. Just in the knowledge base, you know needs to continuously be expanded. And that's why data also needs to be there because knowledge without data is also quite useless.   James: Correct. So coming back to being the alpha in the market. I know you can look at different market appreciation versus how much you are making money. So coming to, let's say, for a decision where you have a deal in your hand, and you're deciding whether you want to sell or you want to refile, or you 10:31 exchange. So can you give us a good methodology to do to make that decision?   Nikolai: To make the decision on whether you beat the market or...   James: Whether you want to sell a deal, or whether you want to refinance, whether you want to hold it for long term or you want to do a 10:31 exchange? How would you approach it?   Nikolai: Well, I'd approach it on a very individual basis. Number one, I think everyone has a very different investor profile. What I mean by investor profile is, what type of returns do you want? And when? What are the strengths and weaknesses that you possess as either an owner-operator or syndicator or whatnot? What access to capital do you have? How patient is that capital? What's the cost of the capital? Now, if it's your own money, obviously, it's probably the most patient money with the cheapest cost of capital. If you're raising money from other people, well, then obviously, there's a less patient aspect to it, and the cost of capital is going to be higher. If you're taking money from bridge loans, well, that's even worse. So if you're taking money from hard money lenders, well, then obviously, your cost of capital is going to be very, very high. So these are all things that you have to consider, you also have to consider where you are in your career with regards to what it is that you want to achieve, either as annual cash flow or just overall that value and what type of risk you're willing to accept.   So ultimately, you have to be able to answer those questions initially, to be able to decide on the strategies. Because ultimately, people in multifamily investing, what they do not understand is the difference between philosophy and strategies. Now, everyone should have their own investment philosophy, based on their investor profile. Now, once you have that philosophy, what you want to do is adapt your strategies according to where you are in the market, and where you are in your career. That's something that is very misunderstood. People say, I'm a buy and hold investor. We hear that a lot in multifamily. So ultimately, what you're saying that you do not have an investment philosophy, that you think you do. You think your philosophy is to buy and hold. But buy and hold is not a philosophy, it's a strategy. So what you're saying is, ultimately, you're investing all the time throughout the whole of your career, using just one strategy. That's very dangerous because let's say the exit point of that strategy eventually, say the day that you do have to sell upon retirement because even though you're buying a whole, you might not be a legacy buy and hold investor. What I mean by that is a legacy buy and hold investor is someone who's just going to pass down the properties to their children, upon death, or upon retirement, whereas most buy and hold investors, what they really need is, I'm going to buy and hold until my retirement, then I'll start selling off. Well, what happens if, during your retirement, you're in a trough of the market cycle. What if you're in that part of the market cycle, or you're at the bottom of it, that's a really bad time to sell? Well, that's the mistake of always investing using only one strategy. So what I would say is that you have to establish your philosophy, understand that your investor profile is going to change over time. And the market cycle moves through phases, there are different phases of the market cycle and your strategies, you have to be able to use different strategies at different phases of the cycle, and at different phases of your career as your profile changes, or adapts or morphs. And that's how you then establish well, with this property, should I buy it and hold it or should I sell it? Or should I just refinance it? What should I do? And I'll give you a very concrete answer. Once I've explained all this.   I have a student here because I do teach real estate investing courses. We actually built a college we call it The College of the Emmerich's. Now you don't have to, it's not college level education. But what we're saying is that from everyday multifamily investors, if you really want to learn college level stuff without having to go to college, well, we have a couple of courses that we teach you very high-level stuff, very concrete work. You still need coaching from coaches and mentors and all that stuff. We actually teach courses. So one of my students in these courses, he's a very successful real estate investor in Montreal, Canada, Montreal is the most important multifamily market in Canada. It's a very strong multifamily market, very competitive. Now he's up to about I guess, 150 units, all on his own, no outside money, no passive money. And he started having trouble refinancing out of his properties because what he was doing, it seems a very big value add investor. So he was using two strategies value added buy and hold. But he was erroneously thinking that value-added and buy and hold was his investment philosophy, which is not, those are two strategies that are part of the philosophy. So he came to me and he said, well, look, banks have now started to tighten their DSCR ratings, and their LTV, therefore, I'm buying a property at a billion dollars, and putting in $300,000 into it. And now the market value of that property is $2 million. But I'm not able to refine it $2 million, because of the banking standards, they're only allowing me to refine out of 1.6. So now, if they're letting you refine out at 1.6, on a 75%, LTV, what they're saying is when you have to leave in 25% of 1.6 plus $400,000, that's a lot of equity, that it is unable to pull out because he was doing too much of a good job at value add. And the capital markets, the banks are not able to follow market value, banks, especially in Canada, are much more conservative than in the US, but even in the US, there is a lot of people buying properties. And they're not able to refine the whole value, because their total loan dollars are blocked by either LTV or DSCR. What I call economic value, the economic value is not as high as market transaction value. Therefore, instead of leaving 25% of equity, you're leaving 25 plus, in this case, $400,000.00. Now that's where I said to him perfect, I looked at his portfolio, I said, well, you have to adapt your strategies, you have to change the strategies, you can no longer at this moment, use the buy and hold strategy, you have to use the fix and flip strategy.   Because you're too good at fixing value add. And you're not able to pull out as much equity as you used to be through refinancing. Therefore, now you have to seriously consider selling that property. Because you can go and get $2 million for other markets right now. So that's an extra $400,000. Because he was able only to refinance 1.6 out of it. So now he's able to get the full market value, pull that cash out, and he has access to a lot of opportunities. He has a really strong bird document work. So his cost of opportunity is very high. If he's leaving all that equity, in these properties that are all stabilized, he's making way more money by doing more value-add stuff. So he made the decision and now he holds zero properties. He sold all of his 140 units because that has allowed him to get more and more cash rich, with less and less money and equity and properties and gain access to more and more opportunities. And ultimately, his annual portfolio, the total return on investment is in the 40 to 70% IRR. Whereas while he was doing buy and hold his overall portfolio was only returned to him maybe 20% if you consider the weighted average return on investment. So that's how I would attack that. I know, that's a very long-winded answer.   James: I think that's the right answer. So I mean, the return on equity, which is date right now, I mean, on this deal. There's so much of dead equity not producing cash. And if your cost of capital, which is also equal to an opportunity outside is much higher, you might as well just cash that out by selling it off.   Nikolai: Because the refinancing is living you to a liquid.   James: Recently, I mean the banks have been more stringent on refine. So the last refine they did ask me to leave 5% my cash basis, which they never did in the past, things have changed. I think that's okay. That's how the banks work now.   Nikolai: It's okay. But the problem is that on a $15 million property, you know, that's two and a half million dollars less cash you have for the next acquisition.   James: Correct. I mean, it depends on what is the cost of capital outside plus how much you can pull out and how much your equity stuck on it. So, coming back to market cycles, because I think this is one thing that I want to ask you because I think you have studied with Dr. Glenn Mueller. So right now, if I look at the latest Q1 forecast for apartments in the hyper supply market. I don't know if that's something that you are aware or not, but...   Nikolai: Nationally?   James: Nationally yes it's not a local, but lots of markets are in it for supply. It's very, very few markets are in the expansion cycle. And even though they are in the expansion cycle, they are at the last stage of the expansion cycle. And all the markets that are on expansion cycle, or the market that recovered late like Las Vegas, Phoenix and a lot of Econo markets. So can you give an overview of what do you think the market is? And what would the strategy be for investors now?   Nikolai: Well, I think number one, I would say that I try not to look at national or macro market cycles. I think that's the first thing to consider. Because multifamily real estate is so hyperlocal. So I look much more at those markets, cycles of hyper supply and expansion and contraction, I look at more of like a metro area. So like you're in Austin, Texas, I look at Austin, I wouldn't really consider the multifamily market at large, because it's kind of like looking at cap rates on an unstabilize property, it's kind of a waste of time. Now, I'd say that I haven't looked at recent data of where all the cycle, where all the markets are, the phases of the cycle. But I mean, I think it is safe to say that, most of the markets right now are in the later phases of the game, or later innings, as Howard Marks likes to say, in the stock market and capital markets. But also, as he says, we don't really know, see the thing with market cycles, and whether it be with Dr. Mueller, whether it be with Karen Trice, out of Australia, and also all the other various professors and researchers of market cycles, is

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This is our final episode looking at some historically significant events in sports! This episode of the mini-series is focused on the the theory that the Summer Olympics effect US Presidential Elections in a non-insignificant way. We are joined by our friends James (@Not_jamesnatoli on Twitter and @rollypollynatoli on Instagram) and Shawn (@NeedNoApplause on Twitter and @thevermanator_ on Instagram) while we talk about this theory and what the effects have been in elections past . Find us on Instagram @wtlgopod Find us on Twitter @WTLGOpod Find us on Youtube at https://cutt.ly/bkz1w0H

This is our third of four episodes looking at some historically significant events in sports! This episode of the mini-series is focused on the Iran Hostage Crisis and SuperBowl XIV. We are joined by our friends James (@Not_jamesnatoli on Twitter and @rollypollynatoli on Instagram) and Shawn (@NeedNoApplause on Twitter and @thevermanator_ on Instagram) while we talk about how sports can provide escapism for those in even the most dire situations. Find us on Instagram @wtlgopod Find us on Twitter @WTLGOpod Find us on Youtube at https://cutt.ly/bkz1w0H

This is our second of four episodes looking at some historically significant events in sports! This episode of the mini-series is focused on the India/Pakistan Cricket Rivalry. We are joined by our friends James (@Not_jamesnatoli on Twitter and @rollypollynatoli on Instagram) and Shawn (@NeedNoApplause on Twitter and @thevermanator_ on Instagram) while we talk about what the rivalry is like and how geopolitical events have shaped the rivalry over the years. Find us on Instagram @wtlgopod Find us on Twitter @WTLGOpod Find us on Youtube at https://cutt.ly/bkz1w0H

Join us for our first of four episodes looking at some historically significant events in sports. This episode of the mini-series is focused on the 1936 Summer Olympics in Germany. We are joined by our friends James (@Not_jamesnatoli on Twitter and @rollypollynatoli on Instagram) and Shawn (@NeedNoApplause on Twitter and @thevermanator_ on Instagram) while we talk about what Hitler hoped to achieve with these Olympics and what the ramifications were for black American athletes. Find us on Instagram @wtlgopod Find us on Twitter @WTLGOpod Find us on Youtube at https://cutt.ly/bkz1w0H

Every day, we spend an average of 20,000 breaths with 11,000 litres of air, primarily made with subconscious effort. If you want better health, changing your breathing technique probably isn’t the first option that comes to mind. We don’t even think about it; we don’t pay attention to how we do it. But it turns out that how you breathe has far-reaching effects on many aspects of human health. Discovering what it means to breathe correctly is crucial for greater wellness. In this episode, author and journalist, James Nestor, joins us in seeking to unlock a person’s full breathing potential. He discusses the myriad of health benefits controlled respiration can provide. You’ll also learn how industrialisation made it harder to breathe correctly and how various exercises can improve your respiration. Listen to this episode to discover simple methods to maximise the benefits of each breath you take.   Get Customised Guidance for Your Genetic Make-Up For our epigenetics health program all about optimising your fitness, lifestyle, nutrition and mind performance to your particular genes, go to  https://www.lisatamati.com/page/epigenetics-and-health-coaching/. You can also join our free live webinar on epigenetics.   Online Coaching for Runners Go to www.runninghotcoaching.com for our online run training coaching.   Consult with Me If you would like to work with me one to one on anything from your mindset, to head injuries, to biohacking your health, to optimal performance or executive coaching, please book a consultation here: https://shop.lisatamati.com/collections/consultations.   Order My Books My latest book Relentless chronicles the inspiring journey about how my mother and I defied the odds after an aneurysm left my mum Isobel with massive brain damage at age 74. The medical professionals told me there was absolutely no hope of any quality of life again, but I used every mindset tool, years of research and incredible tenacity to prove them wrong and bring my mother back to full health within 3 years. Get your copy here: http://relentlessbook.lisatamati.com/ For my other two best-selling books Running Hot and Running to Extremes chronicling my ultrarunning adventures and expeditions all around the world, go to https://shop.lisatamati.com/collections/books.   My Jewellery Collection For my gorgeous and inspiring sports jewellery collection ‘Fierce’, go to https://shop.lisatamati.com/collections/lisa-tamati-bespoke-jewellery-collection.   Here are three reasons why you should listen to the full episode: Discover how carbon dioxide is necessary for getting enough oxygen in your body. Learn how soft foods and bottle feeding during childhood can impact your health as an adult. Understand how oral exercises and breathing practices can significantly improve your wellbeing.   Resources DEEP: Freediving, Renegade Science, and What the Ocean Tells Us About Ourselves by James Nestor Breath: The New Science of a Lost Art by James Nestor Wim Hof Method James Nestor’s website   Episode Highlights [04:03] How James Got into Breathing  James is a journalist who once covered a world freediving championship in Greece. Despite being a swimmer and bodysurfer himself, he was astounded by participants who can dive 300 to 400 feet in a single breath. Upon returning to San Francisco, James decided to write a book about freediving. His research exposed him to the art of breathing and its importance to wellbeing. He learned that improper breathing is damaging to the body. [10:29] The Physiology of Breathing Contrary to widespread knowledge, it’s possible to have too much oxygen and not enough carbon dioxide in the body. However, it is essential to have a balance between these two. Many standard breathing methods deplete carbon dioxide levels, leading to lower oxygen saturation and more unsatisfactory performance. A study found that by holding their breath comfortably for 25 seconds, 85% of the athletes will not have a breathing dysfunction. Instead of compensating, learning proper breathing techniques can increase your bodily tolerance for carbon dioxide. Listen to the full episode to learn more about the process of breathing! [19:57] Basic Breathing Techniques Most people breathe faster than the optimal rate without realising that many of their health problems come from their breathing rate. The point of breathing exercises is to acclimate your body to breathe through the nose without thinking about it. Slower breaths while maintaining the same volume of air can increase efficiency by 35%. Transitioning to slower breathing will temporarily reduce performance, but you will eventually see improvements as your body acclimates. [27:11] Nasal Breathing Listen to the full episode for James’ points on running and breathing! Nasal breathing leads up to 20% more oxygen absorption compared to mouth breathing, all else being equal. Nitric oxide is a potent vasodilator that increases blood circulation. Nasal breathing increases nitric oxide concentrations six times more than mouth breathing. Breathing through the nose is more effective in defending your body against viruses than any other form of breathing. [38:36] Why Aren’t Breathing Interventions More Popular? There’s not a lot of money that can come from breathing interventions. Hence, the development of this alternative practice isn’t promoted widely. That said, James believes that alternative medicine isn’t always the answer. Conventional Western medicine is still crucial for many health interventions. [41:38] How Modern Diets Changed the Way We Breathe In antiquity, people always had perfectly straight teeth and larger mouths. The introduction of industrialised food removed the need for a larger jaw. Evolution drove the shrinking of the human jaw, so more people have crooked teeth or impacted wisdom teeth. Smaller oral cavities also made breathing more difficult, and the incidence of upper airway resistance syndrome rose. [44:24] Childhood Feeding Improper oral posture can root from habitually breathing through the mouth. When we were younger, chewing was essential. The introduction of baby food prevented infants from performing the right chewing exercises. Breastfeeding changes the face structure and promotes more efficient breathing. Children need to eat hard foods to develop a proper jaw and airway. [48:20] Oral Exercises Even adults can see improvements in their breathing efficiency by doing basic oral exercises. After a year of oral exercises, James was able to improve his airway size by around 15% to 20%. Palate expanders are an option for people who need them. However, oropharyngeal exercises and myofunctional therapy are easier and more effective methods for improving your breathing. [54:33] Relaxation through Breathing Slow, focused breathing activates the parasympathetic nervous system, leading to greater relaxation. Doing breathing exercises several times a day will immensely help you cope better with stress. Listen to the full episode to learn more about how slow light breathing diaphragmatically stimulates the parasympathetic nervous system and the vagus nerve. [59:14] Hormetic Stress The quickest way to reduce stress is to breathe. It is all about working your respiratory system and working out your stress. James suggests starting with the foundations of nasal breathing, slow breathing and awareness. Similar to exercising at the gym, breathing exercises promote hormetic stress. At moderate amounts, hormetic stress is beneficial to human health. Listen to the full episode to learn more about the Wim Hof Breathing Method!   7 Powerful Quotes from this Episode ‘By mastering this sort of breathing, we can not only dive deep, but we can heat ourselves up, heal ourselves, and do so many other things’. ‘Scientific papers were published about this 115 years ago, showing very clearly that you need a balance of carbon dioxide and oxygen to operate effectively and efficiently. When we breathe too much, we can offload too much CO2, which actually makes it harder for us to bring oxygen throughout the body’. ‘That slower breath with that pressure allows us to gain 20% more oxygen breathing through our nose than equivalent breaths through our mouth.” ‘I think our bodies are the most powerful pharmacists on the planet and that’s been shown, so why not try to focus on your body and health a little bit’? ‘By having a smaller mouth, you have less room to breathe. And this is one of the main reasons so many of us struggle to breathe’. ‘Start slow, start low. See what your body can naturally do. If after six months, you’re like, ‘I’m still not, this isn’t working’, go see someone and take it from there’.  ‘I talked to dozens and dozens of people who have fundamentally transformed themselves through nothing more than breathing. I want to mention it again. I’m not promising this is going to work for everyone, for everything, but it needs to be considered as a foundation to health’.   About James James Nestor is a journalist and bestselling author. He has contributed to many newspapers and publications such as The New York Times and Scientific American. His first book, DEEP: Freediving, Renegade Science, and What the Ocean Tells Us about Ourselves, took inspiration from his journalistic coverage of a world freediving championship.  James also authored Breath: The New Science of a Lost Art where he combines thousand-year histories with modern research to shed light on proper breathing. His investigations have revolutionised the conventional understanding of breathing and have helped many people live healthier lives. His other projects include speaking engagements for institutions, radio and television shows, and collaborations for scientific research and communication.  Learn more about James Nestor and his work on diving and breathing by visiting his website.   Enjoyed this Podcast? If you did, be sure to subscribe and share it with your friends! Post a review and share it! If you enjoyed tuning in, then leave us a review. You can also share this with your family and friends so they can include more amino acids in protein in their diet. Have any questions? You can contact me through email (support@lisatamati.com) or find me on Facebook, Twitter, Instagram and YouTube. For more episode updates, visit my website. You may also tune in on Apple Podcasts. To pushing the limits, Lisa   Full Transcript Of The Podcast! Welcome to Pushing the Limits, the show that helps you reach your full potential with your host, Lisa Tamati. Brought to you by lisatamati.com. Lisa Tamati: Well, hi, everyone. Welcome back to Pushing the Limits in this new year. I hope you're enjoying yourself. You've had a good break over the holidays, and I have a fantastic guest today. Wow, this guy is insane. So his name is James Nestor, and he is an author, New York Times best selling author, Wall Street Journal best selling author, London Times New York Times bestselling author of a book called Breathe. So it's all about breathing. You might think, how the hell do you write a book on breathing. But I tell you, this is going to be a really exciting interview, and you're going to learn so much that you wish you'd been taught years ago. He's also the author of Deep, another best selling book that he did on freediving. And he's a filmmaker and science writer for many of the science magazines. Now in this book Breathe. He explores the million year long history of how the human species has lost the ability to breathe properly. And why we're suffering from a laundry list of maladies from snoring to sleep apnea to asthma to autoimmune diseases and allergies. And in this, on this journey in this book, which was absolutely fascinating. He travels the world and spends a decade in the attempt to figure out what went wrong and how do—we fix it. And, you know, the links that the sky week two—for his research has just absolutely next level. I really enjoyed doing this interview with James. He's an incredible person. And just so very, very interesting. So I hope you enjoy the show. Before we head over to speak with James in San Francisco, just like to remind you to do a rating and review if you came for the show. This is a labour of love. And it really really helps the show get out there if you can give us a rating and review, either on iTunes or wherever you're listening to this podcast. Or if you can't work it out, just send me an email with it. And we'll gladly receive those as well. And if you want to reach out to me if you've got any ideas for podcasts, or people that you would like to see on here, or if you have a question, health question, if you want help with health journey, health optimisation, epigenetics, run coaching, that's our day job. That's what we do for a living. And that's what we are passionate about. And that's what we love. So if you're having trouble with a tricky health issue, if you wanting high-performance, if you're wanting to do that next ultramarathon or first run your first five-kilometer race, whatever the case may be, please reach out to us, lisa@lisatamati.com. And you can find all our programs also on that website, as well as this podcast and lots of other goodies. So I hope you enjoy this interview with James Nestor. Over to the show now and thanks for listening. Lisa: Well, hi everyone and welcome back to Pushing the Limits. It's fantastic to have you with me and I am jumping out of my skin for excitement today because I have someone that I've been just so looking forward to interviewing. An amazing author, James Nestor, who is going to be sharing his research and his book, which is really a game-changer. Breathe is the name of the book. And James is coming to us all the way from San Francisco today. So welcome to the show, James. Fabulous to have you. James Nestor: Thank you for having me. Lisa: So James, can you just give us a bit of a background into your—who you are in your background? And how the heck did you end up writing a book about breathing? And why do we need to know about it? James: So I'm a journalist, and I write for science magazines and outdoor magazines. I've been doing that for years and years and years. And I think the real jumping off point for me was when I was sent out to go to Greece to write about the world freediving championship. And even though I've spent my life near the ocean, I'm a surfer. I'm a swimmer and body surfer, all that, I had never really spent too much time under the ocean. And I had never seen anyone freedive before because the water is very cloudy here on the West Coast. There's not a lot of places to do this. So I remember going out in this boat, it was the first day of the competition and just watching these people take a single breath and go down 300, 400 feet on a single dive there. And come back four minutes later and—just it was like they we're answering emails just like. Okay, next up, back for lunch. It was what the hell is going on here? I had understood that this was absolutely impossible. And yet here these people vary sizes, various forms - big, tall, large, small, all that - that had mastered this thing. And I got to be friends with a few of them who took me into this other side of freediving outside of the competitive freediving, which I just thought was pretty insane. And they allowed me to understand free diving as this meditation. And of course, breathing is at the core of this meditation. And by mastering the sort of breathing we can not only dive deep, but we can heat ourselves up, heal ourselves and do so many other things. Lisa: Wow, so that was the jumping off point in, for those interested. Yeah, I've taken an interest in freediving too. And my gosh, what they do is pretty next level, insane. I don't think I'm crazy enough to really have a go at it. To be fair, but absolute admiration for what they do and how they do it, in—the everything that they have to overcome. But okay, so if we just jump in now, the into—how does we know? What can we learn from these free divers and other traditional breathing techniques? And why is it important for the everyday person to be understanding how the breath works in the physiology, which we'll get into which I found absolutely mind blowing and thought, why is nobody told me this? And why did—why does, why should someone listening to this actually be interested? James: So the free divers told me that the only way to hold your breath is to master this art of breathing. And it was also something interesting to see all of these different people. And they all had these enormous chest, they had expanded their lung capacity. Some people double the average adult lung capacity by forcing. Well, they were not born this way. So it made me think about how malleable the body is depending on what inputs we give to it. And so I got back to San Francisco, and I wrote another book that featured freedivers. But in the back of my mind, that book was called Deep. And it looks at the human connection from the very surface to the very bottom of the deepest sea, magnetoreception echolocation all that. But as I was researching that book, and writing, I just kept finding more and more information about breathing, about how so many of us in the West, including in the medical world view breathing as just this binary thing. As long as we were breathing, we're healthy, and we're alive. When you're not breathing, that's bad, your dad or you have a serious problem. But that is such the wrong way of looking at this. It's like saying, as long as you are eating, you're getting food, you're getting nutrients. But it's what you eat. That's so important. And it's how you breathe. That's so important. So I was lucky enough to then meet a bunch of leading experts in this field who have been studying this stuff for decades, even publishing in these weird scientific journals. No one's been reading their stuff. I thought, why the hell hasn't anyone told me this? Like, I'm middle aged, I've been mouth breathing, through most of my life. I've been whenever I was working out or surfing, I'm just thinking I'm getting more oxygen in. And this is so damaging to the body, and no one was talking about it.    So this book took me so long, because I couldn't understand why some researchers on one side were saying how you breathe has no effect on your asthma, has no effect on your body, on your brain. And this other side was saying they're 100% wrong. Here's all the data. So it was going through all that and weeding through all that that took me a while. But I think at the end, I finally found the truth behind all of this. Lisa: He certainly did. And the book is such a deep deep dive like you know, and I've been talking to some friends about you know, reading this book and, and everything. How can you have a whole book on breathing? And I'm like, you have no idea. You could probably write 10 books on breathing and it's so powerful. And as an athlete I've, you know, I was just saying to you prior to the recording, I've spent my entire life as an asthmatic since I was two years old. I have a very small lung capacity. I have a low VO2 max, despite that I decided to become an endurance athlete. Go figure that one out, got some mental issues, obviously. But I'd spent my entire athletic career breathing in my mouth in places like Death Valley, in the Sahara, in the Himalayas, and altitude, and you know, freezing cold temperatures. And all of the problems that that brought and so this book has been a life-changing thing for me personally. Unfortunately, I'm no longer a competitive athlete bagger. You know, like I didn't get the memo back then. But now training hundreds of athletes. Wow, I can start to influence them and change them and are already started to adopt some of the information into the programs that we're using. So super powerful information, and in really important. So, okay, now let's go into a little bit—the physiology of breath because we sort of think if I take deep breaths, and breathe often in faster, if I'm running, then I'm going along. I'm getting as much oxygen as my body can get. Why is that completely upside down? James: That is upside down. And it's so counterintuitive. It took me months to get my head around this, even though we've known these scientific papers were published on this 115 years ago, showing very clearly that you need a balance of carbon dioxide and oxygen to operate effectively and efficiently. And when we breathe too much, we can offload too much CO2, which actually makes it harder for us to bring oxygen throughout the body. If you don't believe me right now, you can breathe 20 or 30, heavy breaths. You might feel some tingling in your fingers or some lightness in your head. This is not from an increase of oxygen to these areas, but a decrease of circulation. Lisa: Wow. James: Because you need a balance of CO2, for circulation, for vasodilation. This is—it is integral to providing blood and nutrients to our body. And for some reason, as Westerners we just think more is better, more is always more. That is not the way of the proper way of thinking about this when you talk about breathing, you want to breathe as closely in line with your metabolic needs as possible. Why would you? It's like being in a car. Why would you be revving the motor? Everywhere you're going, I had a stop sign just revving the motor. When you were over breathing. That's exactly what you're doing. You're causing a bunch of wear and tear on your heart on your vascular system. And you're sending stress in those—to your mind. People like you are very strong willed and we'll fight through it right you'll just keep going you're in pain, I don't care. I'm gonna finish this race. I'm gonna make it happen. Compensation is different than health. Oh, and and so this is why so many professional athletes, they'll be really good for a few years. The minute they stopped, diabetes, chronic health problems. Our body.. Lisa: Thyroid, diabetes, metabolic problems. Yeah, like no hell, you've spent your life being a disciplined athlete. I'm struggling with hypothyroid, for example, and high blood sugars. And I'm lean and I'm, you know, it's like what the heck. Like, wow. And I hope through the breathing in some of the other stuff that I'm doing that I can remove some of the damage because you're because it is so counterintuitive. So that carbon dioxide there was a real mind bender for me, because I've always understood carbon dioxide as a negative thing. You know, we want to breathe it out. We want to get it out of the system. That's the end result of you know, what do you call it the electron chain in the ATP production, and we're producing this carbon dioxide, we're gonna give it out. And that's not the case, isn't it? It's a controller of the acidity in the blood is something that we want to train, our chemoreceptors need to be trained in order to be able to tolerate more carbon dioxide. So this just dive into the winds a little bit on the actual physiology that I've just touched on the air so that we can actually get to the bottom of this carbon dioxide, your mind bender, really. James: So when we take breath in, it enters into our lungs and the bronchioles, to these little air sacs, the alveoli, and from there it goes through various layers and enters into red blood cells. The vast majority of oxygen enters into red blood. So there's some free floating but not much. So in those red blood cells or something like 270 million hemoglobin, and so then it enters into this hemoglobin. And it's, you know, it's funny, why would when we're working out, why would we get more oxygen in one area than another? So CO2 is the signaling molecule. So where oxygen is going to detach is an areas where there is CO2, and oxygen isn't going to attach otherwise. So you need this healthy balance of CO2, we have 100 times more CO2 in our bodies than we do oxygen.  Lisa: Wow. James: Okay, so this is this very carefully controlled system that needs to be in balance, and our bodies are so wonderful at keeping us alive. So when we become imbalanced, all these other things happen. If we become too acidic, we'll learn to breathe more, right? We’ll trigger that if we become too alkaline, our kidneys will release bicarbonate. So all of this is incredible and so important. Compensation, different than health. We can compensate for a very long time. Imagine you can live maybe 40 years eating garbage crap food eating Fritos. That doesn't mean you're healthy. No offense to Fritos. Delicious, absolutely delicious. But, you know, it doesn't mean you're healthy. So… Lisa: Yeah. James: ...the reason why you have to understand this balance of CO2 and oxygen is because you can't just understand CO2 as a waste product. It's still considered this a medical school. Yeah, you don't need it. But people who study this know that is—it's absolutely essential to have that balance, you don't want too much. But you don't want too little. You want your body to be able to operate at peak efficiency without having to go through all those compensations, right? To keep you there.   Lisa: Exactly. So when we breathe in, we.. When I say, we don't hold our breath, and I'm holding my breath for a long time, as long as I can. And then that's horrible urgency that comes up and you start to—your diaphragm starts to make that sort of hiccup thing. And this is actually the chemoreceptors in the brain, which is the area that is what I understand, correct me if I'm wrong, that is measuring the CO2 levels more than anything in the blood, not the oxygen levels. And it's so, the CO2 going up, and then the body's going “Oop, time to breathe,” and it makes you do that, you know, hiccup thing in order to make you breathe. And when I'm doing my breathing exercises that I've learned from you, I let that reflex go for a while while I'm training my body and to be able to accept more carbon dioxide. And that will help me be a better athlete with a bit of a EO2 mix hopefully, and make me faster and so on. But it's the CO2, that's actually pushing the oxygen into the cells as well, isn't it? And that was another, a mind bender as well. James: It's an exchange. So you can think about those red blood cells as this cruise ship, right? So and they're full of oxygen. And they cruise to areas where there are other passengers that want to get on this is CO2, and they exchange. The CO2 hops on as oxygen hops off. And this is just how it works. So that need to breathe, you're 100% right. A lot of people think, gonna exhale, hold my breath. “Oh, I don't have enough oxygen, I need to breathe.” No, that is dictated by rising carbon dioxide levels. And so many of us are so sensitised to CO2, that we can't hold our breath more than 10 seconds without going. But they've done a study with athletes. And they found that to very comfortably hold your breath, over 25 seconds, 89% of those athletes will not have any breathing dysfunction. So this is a great practice to do. And this is why this is used in so many different breathing techniques for so long. The ancient Chinese were doing breath holds. Pranayama ancient Hindus were doing breath holds for thousands of years—is to exhale softly. And to hold your breath calmly. You don't want to be struggling and feeling your diaphragm moving. Just calmly, when you feel a little teaspoon of discomfort. You breathe and you calculate how long that is. Don't look at this as a competition. I know that there's a lot of people out here. No, you can compete later. So what you want to do is to get your CO2 tolerance higher, because by having a higher amount of CO2, which is really a normal amount of CO2, your body can operate better. You will have more circulation. Oxygen will detach more easily. And when you're doing endurance sports, this is what you want. You don't want to use energy for things you don't have to use energy for. You want to be burning clean and tight. And that's what this allows you to do. Lisa: This is about efficiency isn't and maybe you're saying that the average person is breathing 12 to 18 times a minute, on average. And ideally, we should be around the five and a half or six times a minute would be ideal. “So breathe light to breathe right” was one of the catchphrases that stuck in my head. And that's my trigger for all over breathing again. And so it's actually slowing down our breathing rate and not increasing the volume so much as diaphragmatic breathing. So using the deep, lower lobes of our lungs to actually get the breath end and doing it a lot slower. And why are we all you know, doing it 12 to 18 times a minute and overbreathing? Which is yeah. It is... James: Sometimes a lot more than that. I mean, I've talked to clinicians who see people breathing 25, 30 times a minute just and they've been doing this for decades, and their bodies are just destroyed. So it's, these things become a habit after a while and our body gets used to that cycle of compensation. And we start acknowledging this is normal. We started thinking having migraines is normal, having cold toes and cold fingers all the time is normal, being exhausted all the time is normal. None of this is normal. And especially if you look at modern populations of what's considered normal now, I mean, what 15% of Americans have diabetes, 25% have sleep apnea, 10% have autoimmune like, what is going on here? And that this is just accepted that, “Oh, just you know, I've my diabetes...” Lisa: Aging. James: ...my drugs. So anyway, I'm getting off track here. You when this becomes a habit, again, compensation different than health. And a wonderful practice to try is to breathe in at a rate of about five to six seconds, and breathe out at around that same rate. I put in the book 5.5 yet, but then people have been writing me, saying, 'I'm a half a second off'. Oh, my God. So now I'm saying anything in that range. And if that's too difficult for you, slow it down, go three seconds in three seconds out. It's perfect. This is not a competition. This is about acclimating your body. So we can't breed this way all the time, that's going to be impossible. But whenever you become aware of your breath, that you're breathing too much, you can bring your breath back by breathing this way and recondition it. And the point of all these exercises is not to think about them. You want to do them often enough, that you're always breathing through your notes that you're always breathing lightly and slowly. And that range of diaphragmatic movement, especially for athletes, I cannot tell you how essential this is, when you're breathing too much. Okay, here's what's happening, you're breathing up into your chest, which is extremely inefficient. There's more blood further down in your lungs, so can participate much more, much better in gas exchange. But you're also doing something else. You're taking air into your mouth, your throat, your bronchi, bronchioles, none of which participate in gas exchange yet do you bring it in? You go? I'm using maybe 50% of that breath. If you slow down with the same volume, six laters a minute, to about six or seven breaths, right? Per minute, your efficiency goes up 35%. 35%. And if you're not gonna make a difference, you're running for five hour days. You're crazy. If you look at Kipchoge, check out how he's breathing, you know, an hour and a half, extremely light. He's completely in control, you can hardly see his chest. And he is in the zone. Sanya Richards-Ross was the top female sprinter in the world for 10 years, check out how she's breathing through the nose in control, destroying everyone else and all of our competitors. So it takes us a while, which is why people don't, you're going to see a decrease in performance when you switch. Okay, guaranteed that it's gonna to go down. If you stick with it, it's gonna go up. I don't want to say that it's true for everyone. But I would say 95% and the breathing experts, the elite trainers I've worked with have told me 100% of the people they've converted, their performance goes up and the recovery is cut by half. Lisa: Wow. And then I mean, who the hell doesn't want that as an athlete, you're fighting for 1%. So when we're talking, no such mess of possible changes that don't rely on your genetics and don't rely on you know, things that you can't control anyway. And like, for me, transitioning has been hard. I'll be honest, because I was completely congested all the time. And that's why I'd heard that nasal breathing because that’s the next thing we'll discuss that nasal breathing was very, very important for a number of reasons. I didn't really understand why. But I was like, well, I can't breathe through my nose is just blocked the whole time. And I don't have a show on hell of doing that. So well. Well, I'll carry on doing my breathing. And then when I learn how to decongest my nose and sometimes it will take me two or three breaths. And the first time the first couple of weeks when I was doing it, my nose was running and I wasn't getting anywhere and I'm like, this is not working. But I pushed through that phase. And now I can run for like a team case at a fairly good pace, completely nasal breathing, if I do the warm up phase properly, if I go out the door and just try and do it straight out, the gate won't work, I need to do the walking, holding my breath, and get that cleared first, and then I can get into my training. And then I can hold it in the first 10 minutes, I'm still finding it a little bit like I want to breathe with my mouth, but that instinct is there. But I'm slowly training myself into that system. And saying, I can actually, you know, I can actually run for a good hour just through my nose without any problems. And I've also not done the high-intensity. So I backed off the super high-intensity, because I know I'm automatically going to open my mouth when it gets to that. So while I'm in this transition phase, I'm not doing anything beyond that sort of aerobic capacity level. And I think I need this just to adapt. So these are huge types of people listening out there, if you are congested, and you think, well, this is all well and good guys, but there's no way in hell that I'm going to be able to breathe through my nose. Think again, there is, it's just a matter of being taught how to do it. And that's a pretty simple couple of exercises that were, you know, that's in the book. It can really, really help us if you persevere through it. And then I expect to see improvements and my VO2 max and all the rest of it. Now, let's talk a little bit about the reason why it has to be nasal breathing. And so it's not just about breathing slowly. We've talked about breathing slowly, we've talked about diaphragmatic breathing. We've talked about CO2 and the role that we don't want our CO2 levels too low in the body. Let's talk now about the whole. Where was I going James? Help me out. I've just hit a.. James: You wanted to talk about breathing, you want to talk about fitness, you want to talk about nasal breathing. Lisa: I hit a moment. So nasal. So we want to understand the physiology of the nose and why the nose is what we want to be breathing with rather than our mouth. James: So I want to mention a few things. A few more things about running. This may seem overkill, but just a couple of points. So what I've heard from various instructors, Patrick McKeown is a world renowned breathing therapist, top got Brian Mackenzie the same thing. Never work out harder than you can breathe correctly. So if you're entering the zone, your mouth is open, slow it down and build your base and work up from there. Sometimes it took Dr John Douillard took him six months to fully acclimate. But once you get there, you are going to find a power in yourself that you did not know existed. And this has been proven time and time again. When Carl Style was working with the Yale running team and the US Olympic running team. He said that these people suffered way more sicknesses, respiratory problems, asthma, COPD than anyone else. And he said, “They push through it because they're competitors. They're gonna push through it.” A complete mess. So there has to be a slight shift and thinking of like, you have to accept your performance is going to go down for a little bit. Right now's a good time to do that. We're still in a pandemic. So you know, once things open up, you'll be kicking everyone's ass. And that's not a bad thing. But just know that this is a wave. This is a process. So the reason why you want to be doing this, we'll get to nasal breathing now is I will bring on my guest. He's been waiting over here patiently. Steve, for the people who aren't watching this, I'm holding up a cross section of a human skull. You can see the nose right here. When you breathe through the nose, you're forcing air through this labyrinth. It's so similar to a seashell. It's called the nasal concha. So seashells have their shells this way to keep invaders out to keep pathogens out. Right? Our noses serve the exact same function. This is our first line of defence. So when we breathe through our nose, we're heating air which is important in cold climates where humidifying it, which is very important in dry climates. We're pressurizing it, we're conditioning it, we're removing particulate which is important, if you live in a city or basically anywhere else now. We're helping to fight more viruses. So there will be a smaller viral load breathing through the nose. And we condition this air so by the time it enters our lungs, it is properly conditioned to be more easily absorbed. When you're breathing through your mouth. You can consider the lungs as an external organ. Yeah, because they're just exposed to everything in your environment. So not only that, not only is this the most effective filter we have is it forces us to breathe more slowly. This is a self-regulating device. Yeah. How long did it take me to take that breath took a while? How long does this take? Yeah, nothing. So that's slower breath with that pressure allows us to gain 20% more oxygen breathing through our nose than equivalent breaths through our mouth. Again, if you think this is gonna make no difference to, you you're absolutely crazy. And this is simple science. You know, this isn't controversial stuff. Lisa: No, this is simple science, but not well, knowing until your book came out and became a worldwide best selling book. Thank goodness because this stuff needs to be out there. And I'm called silly because I'm deep in the waves and in researching all the time. And by hacking and the latest longevity, and the goodness knows what I'm just always into the latest and greatest. And I'm constantly surprised at how you know that some fantastic information never sees the light of day, because of the systems that are in place, or traditions and laws and stuff. And it's like, wow, we have to get this information out there. And this is one of those times when I'm thinking thank goodness, someone has put this into a book that's readable for people to understand the science without having to do such a deep dive themselves. And I think that that's really important. And that nasal, you know, nasal breathing. Also, it does another thing that I found really, really interesting was all about the nitric oxide. Can you explain what nitric oxide is and what it does in the body and why the nose is so important in that regard? James: Nitric oxide is this amazing molecule that our bodies produce that plays a central role in vasodilation. Having more nitric oxide will decrease your chances of having a stroke, will decrease your chances of having a heart attack. It will increase circulation to your brain. I mean, I can go on and on here. It's no coincidence that the drugs Sildenafil also known as viagra, guess what it does, it releases nitric oxide in your body. That's how it cleans. Yeah, we get six times. One study showed that we get six times more nitric oxide breathing through our nose than we do through our mouth. And if we hum we get 15 times more nitric oxide. So this has an incredible effect on the body and especially now there are 11 clinical trials right now where they're giving patients with COVID. Guess what? Nitric oxide. And apparently, according to Nobel Laureate, Louis Ignarro, oh, it's working wonderfully well in these. Studies are going to be out soon. I heard something. My brother in law's an ER doctor, my father in law's a pulmonologist. So we talk all about this stuff. And the vast majority of the people suffering the worst symptoms of COVID are people with chronic inflammation. And as an opposite, very observational study. There are also mouth breathers. Yeah. And this was known 100 years ago, they were saying 75 to 80% of the people with tuberculosis are mouth breathers, chronic mouth breather. So there's been no official study on this just this is just observational stuff. Don't go write me about this, that your nasal breathing got COVID. It can happen. Lisa: Can happen still, we're not saying that.  James: It's to me, but we know that can happen. But we also know something else. That breathing through the nose will help you defend your bodies so much more effectively, against viruses. And this is what Louis Ignarro again, he won a Nobel Prize. So listen to that guy, if you're not gonna listen... Lisa: Yes and I've actually I've heard Dr Ignarro speak a number of times, and I'm hoping I can get him on my podcast to actually just to talk a whole session on nitric oxide and what he discovered, because he he won a prize for discovering this, this gas if you like in the body, because nobody really understood what it was or how it operated. And it is being used for Viagra. And the reason it works for that is that it expands and dilates the blood vessels, but that's what's actually doing it and all parts of our body. And therefore when we're doing this nasal breathing, and we're getting more of that nitric oxide and I mean, a lot of the athletic supplements that you can get now in your corner supplement store are about, you know, drinking beetroot juice or whatever increases your nitric oxide. So this is another way to get at an info for you athletes out there. You want better performance, you know, a lot of my athletes are on beetroot juice and things like that. Just nasal breathing is another way of doing that. You know, so that's a really big piece of the puzzle, I think. James: And those don't work. They certainly work but the key was so much of this just like with a key with oxygen. You don't like, go and get a bunch of oxygen for five minutes, then walk away so I'll fix them. You want to constantly be producing this stuff. So beet juice, you know what we'll work for a short amount of time. But to me, it seems like a much better idea to use something that we're naturally gifted with to use our nose. And to constantly be having a body that can constantly produce a healthy healthy level of nitric oxide. I drink beet juice. I'm a big fan of that, the nitrates and other vegetables can help release more nitric oxide. Great stuff, right? But nasal how often can you be drinking beet juice, you don't want to be drinking that 10 times sugar in it. Lisa: No. There's a lot of sugar in it. James: There’s a lot of sugar in it and you know, occasionally is great, but there's other ways of doing this. And you know, I think our bodies are the most powerful pharmacists on the planet and that's been shown so why not try to focus on your body and health a little bit? Well last thing I want to mention that I just find, is so frustrating here in the US is all this talk of COVID all this talk of you know wear a mask, which I'm a believer in that stay at home. I'm a believer in that. Zero talk about not eating four double cheeseburgers a day.  Lisa: Hey, mean. James: Ola, like getting your health and breathing through your nose. like where's that conversation? Getting vitamin D, getting vitamin C. And so anyway, we've seen what the government's you guys have a much more progressive government, let me tell you, we're so jealous of it. But now we have the whole... Lisa: We’ll be a medical society, though there's nothing. It's not that late. But yeah, and I've had a number of episodes, I've just done a five part series on vitamin C, and intravenous vitamin C, and cancer, and sepsis. And, you know, the whole gamut in the problems there. In this, every single doctor has said to me too, when it comes to COVID, why aren't we building up our immune system so that we don't get people in our ICU on ventilators? You know, so that we don't get to that point, or we have less people and, you know, that just seems like a no brainer to me, but we're still promoting eating crap and drinking crap. And, you know, and not taking into account. It's, yes, I mean, the vaccines and all that, but how about we just take a little bit of self-responsibility we might not have as bad if we do get it. You know, like I've got a mum. I've just written a book called Relentless that my listeners know about and it was about rehabilitating my mum back from an aneurysm four and a half years ago, where she hit massive aneurysm. Hardly any higher function, I was told, like, should never do anything. Again, I spent four and a half years rehabilitating her and she's completely normal. Again, she's driving the car, she's walking, jogging, everything's fine. And this is why I've ended up doing what I do, because I'm very passionate, because none. And I mean, none of this was offered in the standard medical system that we were in. They were great at the surgeries, they were great in the crisis. But when it came to rehabilitation, there was just nothing there, and so I discovered all of these things. And one of the passions I have is just staying one step ahead of here and giving her the next thing now she's 79 years old, I want to keep her healthy. So when COVID threatened us, you know, I've, you know, got over there in the corner, my hyperbaric oxygen chamber, my ozone over the air, and, you know, you name it. I've got it so that if it does come, we prepared as prepared as we can be. And that is a good approach, I think prevention, rather than waiting for the disaster, and then trying to pick up the pieces at the end of the day. You know? James: Yeah, and I just want to be clear, and I know that you're saying the same thing here. There's, doctors in my family that practice Western medicine who've helped people, when I get a car accident, last thing I want is acupuncture. I want to go to the ER and have somebody say, “Sir, I break a bone. I'm not doing pranayama breath work, I'm going to go and get a cast.” But about rehabilitation. This is 100% true, because it costs a lot of money. There's no way a system can support full rehabilitation. And one thing that I've heard from almost every expert in the field, whether it's a professor at a university, or an MD, or a nutritionist, or whatever is they believe, this isn't my view. This is their view. I want to be objective here but they believe that there's a reason people aren't talking about breathing again. It's, there's no money in it. There's a money. Oh, why the US government isn't saying “Don't go to McDonald's today.” That's going to shut the economy down. So the good news about this is people who are interested want to take control of their health. There are now other means of getting information from people who have studied this stuff, people who are into scientific references, who are looking at science in a real objective way. And so I view this thing, hopefully, this is going to be a lesson we can all learn then that we can acknowledge how incredible the human body is, how we become susceptible to illness, and how to better defend ourselves in the future. Lisa: I'm just so on board with all of that. And I think it's our right and this is a problem we do. You know, we love Western medicine, they do some brilliant things. I love naturopathic medicine, I love alternative, complementary, whatever you integrate, or whatever you want to call it.   We've all got deficits, and we've all got blind spots, and every single piece of this. And it's about bringing the whole lot together, and not letting money rule the world. I think is, if we can ever get to that point, that would be fantastic because it is at the moment. And there's a lot of things that are being hindered, like things, simple things like breath work, like stress reduction, like intravenous vitamin C's, like things that don't, nobody can make money at, or hyperbaric oxygen is not going to make millions for anybody. So it's not getting out there, that information is not getting out there. And it needs to be out there. We got I reckon we could talk for days, the job's because we were obviously on the same track. But I wanted to touch on a couple of areas. One was the whole skeletal muscle record of our ancestors and our facial, you know, our whole facial development and why that's part of the problem and the food problem, the mushy food that we eat today. And then remind me to talk briefly about the immune system and all this inveigled the vagus nerve and stuff. So let's start with though, with the skeletal record, and the difference between our ancestors and how we are today. James: So early on in my research, I started hearing these stories about how humans used to have perfectly straight teeth and I don't know if you're like me. I had extractions, braces, headgear, you name it, every single person I knew had the same thing. It was never if it was just went this is what how it was done. At wisdom teeth removed. If you think about how weird that is, you're like, why are we removing teeth? From our mouths? Why are teeth so crooked? Where if you look at any other animal in the wild, they all have perfectly straight teeth. And what I learned was that all of our ancestors, before industrialisation, before farming, any hunter-gatherer all had perfectly straight teeth. So I went to a museum and looked at hundreds of skulls, and they all stared back at me, these perfectly straight teeth. Completely freaked me out. They had these very broad jaws, wide nasal apertures forward, growing powerful faces. So if you have a face that grows this way, and you have a mouth that's wide enough for your teeth, you have a wider airway. Having a smaller mouth, you have less room to breathe. And this is one of the main reasons so many of us struggle to breathe, we have upper airway resistance syndrome, sleep apnea, snoring, and so many other respiratory issues is because there's less room in there. And what happened is this came on, in a blink of an eye with industrialised food in a single generation. People went from having perfectly straight teeth, wider nasal apertures, to having crooked teeth and smaller mouths and a different facial profile. And this has been documented time and time again. Yet I had learned in school, which for me, it was zillion years ago that this was evolution-meant progress we're getting we're always getting younger, you're getting taller, we're getting better, look around the day and ask yourself if that's true, it's complete garbage. And then I went back and looked at the real definition of what evolution means. All it means is change and you can change for the better, or for the worse. And humans, as far as our breathing concern is concerned, are changing very much for the worse. Lisa: Wow. And so we're, I mean, I'm saying I grew up have had so many extractions and teeth completely crooked and a tiny little mouth and all of those sort of problems that you're describing. So what was it that their ancestors did differently? So it was just the food being not we not chewing as much was that basically? Yes, like that's that was a real chain game changer for us when the industrialisation happened and we got mushy food. James: There were many inputs, chewing is the main one. So when you live in an extremely polluted environment, sometimes your nose can get plugged, right? You start breathing through your mouth, that can create respiratory problems, but if you breathe through your mouth long enough, your face grows that way actually changes the skeletal picture of your face. So that's another input improper oral posture is what that is called, but it's for when you're younger chewing is so essential and it starts with breastfeeding. There were no Gerbers food. I don't know if you have that out there, but there were no, like, soft foods. Just a few 100 years ago. So if you think about it, so now we're eating the soft processed foods right out of the gates. We're going, we're being fed on a bottle, soft processes. All of our mouths are too small and too crooked. So this chewing stress starts at birth. They've done various studies looking at kids who were bottle fed versus those who are breastfed. When you're breastfed, your face pulls out your mouth, gets wider because it takes a lot of stress to do. Two hours a day, like every day, every two hours, you're doing it. And literally, and I've talked to parents who had twins, I just talked to a lady yesterday who bottle fed one did love not want to be breast fed breast fed the other. They look totally different. One has crooked teeth, one has autoimmune problems. One has swollen tonsils, the other doesn’t. So that is anecdotal. But there's been studies in the 1930s they did tons of studies into this. So I'm a dude, I'm not going to sit here and tell everyone they breastfed people for that is not my point yet. But some people just can't. But I think it's important to acknowledge that the physics of how this works. And after that, if you have bottle fed a kid that's fine. But they need to start eating hard foods baby led weaning, this is what needs to happen to develop that proper jaw to develop that proper airway. And even if you don't do that, if you then go to soft foods, and your kid is two to three years old, and it's snoring or sleep apnea, which is so common now it's so tragic, because that leads to neurological disorders, ADHD, again. This isn't crazy New Agey. This was at Stanford, there's 50 years of research on this from the top institution here. So there are direct links between those things, but luckily we have technologies now that can help restore to the mouth to the way it was supposed to have been before industrialisation. They actually widened the mouth of these small little kids, and open their airways, and it drastically improves their health. Lisa: Today so it's palatal expanders that you you tried out and actually isn't even as an adult was you developed I remember it was at eight coins worth of new bone in your in your face and in a year or something crazy so we can still so if you've missed about if you've not received your kids or your you didn't get that yourself or whatever, it's not all over there is things that you can start doing even starting just to chew now like that to eat some carrots and whatever you know, whatever hard foods you can find to actually use those that powerful joy in order to make it stronger. It's just like every other muscle in the body isn't it? And when we're mouth breathing to our remember you saying or the muscles here get lax and flattered and just like any other muscle that we're not training, if we're if we're going to mouth open all night and we're you know, then we're causing those muscles to be lax and over time that that leads into sleep apnea and things as well can do. So yeah, so this is something that we can practically get a hold on now even if it's a bit late for you and I think. James: Yeah, I talked to my mum I was bottle fed after like six months my mum was like six months is a long time when I was growing up bottle fed soft foods industrialized crap my off intel I was you know 25 and it discovered these things called vegetables. But you know, so so this isn't pointing the finger at anyone we were sold this story by our governments that said you shouldn't eat mostly refined grains, eat your Cheerios, eat your bread, or crema wheat eat your oatmeal like that this is eat your sugar, that's good. Eat your chocolate milk, you know, so we have knowledge now we know the folly of our ways. But the one thing that was inspiring to me this is easier to do, when you've got a developing kid quickly growing it, you can set the foundation and their face will grow around like their faces grow different. It's just, it's beautiful to see how the body forms to its inputs. So I, you know, youth was several decades ago for me, for far too long. I was a child of the 70s and 80s. Right? Yeah, we thought I thought once you're in middle age, you're completely screwed. What can you do, but that is just a convenient excuse for people to say, “Oh, it's genetics. Oh, I inherited this.”  Like genes turn on but they can also be turned off and so I wanted to see what how I could improve my airway health in a year and so I took a CAT scan, and I did proper oral posture, you're 100% right when, when you're just eating soft, mushy food in your mouth is open. All of those tissues can grow really flabby just like anywhere else on your body. But if you exercise them if you exercise the jaw, the strongest muscle in the body, you know, for its size, the tongue, extremely powerful muscle, you exercise these things, they get tone like anything else. And this can help open your airways. So this is just an anecdote, this was my experience, it'll probably be different for other people. But I did a number of these things. And a year later to the week, I took another CAT scan, and the results were analysed by the Mayo Clinic, which is one of the top hospitals here. And they found that I increased my airway size about 15 to 20%. In some areas, and I can't tell you just as a personal story, it has absolutely transformed my life because I can breathe so much more easily through my nose. At night. I am silent. I didn't snore before but I was knowing that my wife would always tell me, totally silent now. And of course I am because I have a larger airway, things are more toned air can enter more easily. Lisa: Is it easy to find palace expanders are these like any a couple of dentists in the world doing this sort of stuff? James: Not everyone needs palatal expansion. I've gotten so many hundreds of emails of people, you know how we are, it's like, what's the latest thing, oh, there's a new pill, there's a new device. Oh, I get it, that's gonna solve all my problems. So they can really help people who need it just like surgical interventions. For people who have severe problems in their nose are a huge help. They're transformative. What I found is a lot of people don't need that. And what I firmly believe is start slow, start low, see what your body can naturally do. If after six months, you're like, ‘I'm still not this isn't working,’ go see someone you know, and take it from there. But palatal expansion absolutely works for people who really need it, but you would be amazed by just doing something called oral-pharyngeal exercises. There was a study out in chest, which is one of the top medical journals, you know, they found this significantly cut down on snoring, not lightly, significantly. And all it is, is exercising the tongue, roof of the mouth, proper oral posture, just working out this area. Toning it, of course, that's gonna help you if this is flabby and hasn't been to.. Lisa: The gym for your mouth. James: That's what it is. And I view that world, there's a whole separate school called myofunctional therapy that is helping people do this, which is so beneficial. They focus mostly on kids, but they also work with adults. And this is what they do. They are the instructors, the gym instructors, for your mouth and for your airwaves. And I strongly recommend people looking that up, there's a bunch of instructionals for free on YouTube, you can go that route as well. Lisa: Oh, brilliant, we'll link to some of those on your website. And, you know, I get people those resources. It's just, it's just amazing and fascinating stuff. And who would have thought this conversation would go so deep and wide, I wanted to just finish up then with talking about the immune system and stress reduction and vagus nerves and all of us area too, because, you know, me included in this and most people are dealing with, you know, massive levels of stress, and breathing can I've, since I've read your book, and I was really, you know, quite aware of how to bring my stress levels down and movements and the importance of you know, yoga and all those sorts of things. I've had that piece of the puzzle sort of dialed in, if you like, but the breathing exercises and actually calming the nervous system down within minutes. Now I can fall asleep in seconds. And you know, what seconds is a bit exaggerated but minutes, and I can I can take myself from being in this emotionally, my god and i tend to be like that because I'm like, you know, busy, busy, busy. And then go, “Hey, I'm spinning out of control. I've lost control of my breath. And I hear myself and I pick myself up on it now.”  And I go and do two minutes of breathing exercises. That's you know if that's all I can afford to do, and I can switch into parasympathetic now, that's been gold. Can you just explain why the heck does doing this slow light breathing diaphragmatically stimulate the parasympathetic nervous system and the vagus nerve from what's actually going on there? James: Sure. So what people can do now is take a hand and you can place it on your heart. And you can breathe into rate of about three seconds and try to breathe out to about six to eight seconds, just whatever's comfortable. Now, breathe in again. 123 and exhale. And as you're exhaling out very softly, you're going to feel your heart rate, get lower and lower. And lower. So when you are exhaling, you're stimulating that parasympathetic side of your nervous system, our breath can actually hack our nervous system function. And by exhaling more, and taking these long and fluid breaths, you can trigger all of those wonderful things that happen when you're parasympathetic. You reduce inflammation very quickly. You send signals to your brain to calm down. You actually change how your brain is operating the connectivity before the between the prefrontal cortex and the emotional centers of the brain changes when you slow your breathing.  So throughout the day, if you want to remain balanced, you take those soft and easy light, low breaths, to account of whatever's comfortable, three, four, even up to six, and six out. But if at some times you feel “My stress levels are starting to increase. I'm feeling my mind slip. I'm making rash decisions.” Start extending the exhale. An exercise I like to do is inhale to about four, exhale to six, you don't have to do it that long. Inhale, two, three, exhale to five, whatever's comfortable, as long as that exhale is longer, you're gonna feel your body slowing down. And if you don't believe me, all you need to do is get your heart rate variability, monitor your pulse oximeter and take a look at what happens after 30 seconds of slow, focused breathing. And you will see this transformation occur in your body, if that can happen in a couple minutes, what's going to happen to you after a couple of hours of taking control of your breathing, or a couple of days, or a couple of months.  I'll tell you what's going to happen. I talked to dozens and dozens of people who have fundamentally transformed themselves through nothing more than breathing. I want to mention again, I'm not promising this is going to work for everyone for everything. But it needs to be considered as a foundation to health. Lisa: And you need to stick at it for a little bit. And you know, I do my HIV monitoring every morning before I get out of bed and do my breath holding exercises and look at my boat score from Patrick McKeown. And you know, all that sort of stuff. Before I even put my feet on the floor, and I yeah, I can control my heart rate to a degree just through my birth weight. So I know this works. And I know that when I do a longer exhale from that, and compared to the inhale, immediately, I just feel a bit more calmer, and a bit more in control. And it's reminding myself and this is the trick because we, when we're in the middle of work, and we've got meetings and phones are going and emails are coming at us, and it's like the “Lions are chasing me.” And it's been trying to remember to breathe in. Bring yourself down and calm yourself down. And just take that couple of minutes many times a day, you know, depending on how stressful Your life is. And in doing that on a regular basis, over time will have massive implications. Because we're talking here, your digestion. You digest food better if you're in a parasympathetic state versus a sympathetic, your immune system. Again, coming back to COVID in that conversation, you're going to be improved, you know, your hormone balance. Yeah, just to fix everything, the way your, the brain waves, all of these things are going to be affected by your stress levels. And what is th

John: Hi, this is Doctor John Dacey with my weekly podcast, New Solutions to the Anxiety Epidemic. Today, I have a friend of mine, James, who’s going to be talking to us about his own situation and his own familiarity with anxiety. James, how are you? James: I’m doing alright, how are you? John: Good, thank you. I wonder if you could tell us a little something about yourself before we get started. James: Well, I am currently a junior in high school. I’m 17. John: How are you finding taking courses online? James: Online? It’s presented its own set of challenges. I wouldn’t say it’s better or worse than regular school but, I think there’s less work but it’s a different kind of material. It feels a little bit less meaningful. John: Yeah, I can understand that. People say that there’s such a thing as Zoom exhaustion. After you’ve spent a certain amount of time on Zoom that it’s much more tiring than sitting there and talking to somebody. James: Yeah, I don’t do too many Zoom calls because of the way the school has set it up for us but I get that. John: Today, what I would like to do is go over 7 of the 8 types of anxiety that there are and have you tell me, do you think that you have a condition in that area, the anxiety syndrome, and we’ll talk a little bit about if you’ve discovered anything that’s helped with you. Is that ok? James: Sounds good. John: I’m going to skip the first one which is called simple phobias because everybody has them, agoraphobia, afraid of falling from heights, things like that. We’ll start with probably the most common one which is social anxiety. Social anxiety is things like fear of speaking in public, feeling of not wanting to go to parties, that sort of thing. Do you think you’re bothered by any of that? James: Not generally. Sometimes I’ll have a little bit in large groups but generally speaking, that’s not something that I tend to experience. John: I remember some years ago watching you sing by yourself in front of probably 300 people in the audience and you seemed to be very calm about the whole thing and very confident. Is that typically the case? James: Yeah that tends to be the case. John: And you’ve been in some theater things where if you were going to have social anxiety, that’s where you’d have it. James: Yeah, I’ve been doing theater from a very young age so it’s something that I’ve got pretty used to. John: That’s great. Separation anxiety usually bothers younger people but sometimes older people. Separation anxiety is when you feel like if you’re not around a person who is very powerful, that knows how to take care of you, that you’re in trouble. Did you have any trouble starting school, for example leaving your mother? James: No, I don’t think I did. John: I don’t think you did either. The next one is called generalized anxiety. Just a general nervous feeling at least half of the time. James: Yeah, that’s the one that I definitely have. John: That usually comes about from a bunch of experiences that didn’t go so well for you, or  that you feel like they didn’t go so well for you, and you become sort of nervous, on the lookout and what we call “hypervigilant.” Do you know what I mean when I say hypervigilant? James: Yeah, exactly. John: What about that does that seem like something that you’ve been dealing with? James: Yeah I think it’s something that I definitely have. It’s something I was diagnosed with and it’s something I’m on medication for. John: Oh ok. When you talk to your therapist who’s the one who did the diagnosis I suppose, what suggestions do they make about why you have this? Do you have any guess as to why you’re generally anxious? James: There’s a history of anxiety in my family. John: So, you think it might be genetic? James: I think genetics certainly has a large role in it. John: We say that everything is biopsychosocial in my field so the biological part would be genetics. Can you think of anything that psychologically might have oriented you toward that? From your experiences, for example. James: Yeah, I think some of it’s genetic and some of it’s from my experiences. Some of it from when I was younger, but it’s a combination of things that have added up to this. John: What is your position in the family? James: I’m the youngest. John: Do you think that might have anything to do with it? James: Being the youngest? I think there’s a certain level of insecurity about being young and having to prove yourself so I’m sure that played a role. John: Yeah, that’s absolutely true. Your siblings are pretty smart if I remember. They are smart people. James: They are. They’re quite intelligent. John: But as I think you know, I think you’re very smart and I’m inviting you to be in a group of mine called “Spirituality and Science.” It’s almost all adults, older adults for that matter but you’re probably the youngest person in the group but you seem to do very well supporting yourself. James: Well thank you. John: Do you feel nervous when you’re in that group? James: No, it’s a very relaxed environment. John. Oh, that’s great. Now that’s the first four and they tend to be less serious so let’s look at the next ones. Agoraphobia is fear of being away from home because of lack of control. Are you bothered by that at all? Do you feel nervous when you’re about to go on a trip or something like that? James: No. John: Ok so being out of the house or being away from the home is not a problem. James: No. John: The next one is called panic attacks. Those are feelings of fearfulness that seem to come from nowhere. They don’t seem to be related to anything. All of a sudden you start to feel really nervous. How about that one? James: Yeah that’s one that I experience. John: I’m going to guess that you probably think that’s genetic also. James: I don’t know if it’s genetic. It’s not something that I experienced when I was younger. It really didn’t come up until fairly recently, actually. John: How recently, James? James: About a year or two ago is when it first started and then it’s ramped up in the past year or so. John: When you say started, what was the first one like? James: The first one I think was actually in my chemistry class and it was just like I was doing my work. The whole room was silent and I was just doing my work and then all of a sudden, something changed and I’m not 100% sure what it was but something shifted and it was like I couldn’t breathe, my chest was compressing, shaking. It was a terrifying experience. John: That’s exactly how everybody describes it. We can be very sure you had a panic attack because that’s exactly what it sounds like. And it seems to come out of nowhere am I right? James: Yeah. John: Has anybody ever told you that it seems to be, but it actually isn’t? When I talked to my clients about panic attacks, I make an analogy to a bunch of cowboys out with a heard of cattle and if the heard of cattle starts to get nervous and one or two of them start to stand up, the cowboys have to start whistling and singing to calm them back down. Because if they all get up and going, then the next thing you know, you got a stampede on your hands and there’s nothing you can do except follow along. That’s sort of an analogy to what a panic attack is described as. I’ve had a couple myself, only about two, and it’s the weirdest thing, it seems to come out of nowhere but it really doesn’t. And what we tell people is, “you’ve got to try and be aware of your subconscious.” And that’s a really hard thing to do especially when the subconscious is saying, “something scary is about to happen” because you try to deny it. Nobody wants to be scared out of their minds. It’s a very unpleasant feeling and that’s what a panic attack is like. Instead of saying, “I think I’m beginning to feel the beginnings of a panic attack” you try and avoid it and it makes it worse. Does that sound right? James: Yeah. John: have you had any success with stopping them? James: Yeah I think I have. John: As I might say, “cutting them off at the pass.” Do you know what I mean? James: Yeah. It’s something that’s really hard to do. John: It is really hard to do. The biggest thing that’s hard about it is that you don’t want to be thinking about this. Am I right? James: Exactly. It’s something that I’ve had a lot of, so I’ve had to get pretty good at preventing them, cutting them off before they get to that point and recovering after them which is also something that’s I’ve struggled with because they’re pretty debilitating. They’re hard to come back from. John: One of the things that I’ve heard is that they’re especially hard for males because males are supposed to be strong and not give in to something like this. Am I right? James: Yeah, I think there’s some pressure. John: When you’re having a panic attack, do you tell all your friends around you that you’re having one? James: Generally, no. John: Do you feel a little bit ashamed of it? James: Yeah, I mean, it’s not something that I want to be experiencing. John: Yeah of course not. Of course, you don’t. And of course, with the stereotype that we have that men are so brave and tough, it’s not the image that we want to give to ourselves. “I can’t talk to you right now because I’m having a panic attack.” But, you know, that’s how it is. Okay, there’s only two more. OCD, which is obsessive-compulsive disorder. James: I think I have a little bit of that. John: What’s your evidence? James: I find myself having to do things a certain number of times. It’s pretty manageable and it’s not super severe, but there are certain things where like, I have to flip a coin in my hand a certain number of times or whatever so it’s even on both sides. John: James, my understanding of OCD, or obsessive-compulsive disorder, is that it is not necessarily coming from a learned experience but from another part of your brain called the amygdala and that’s it’s definitely genetic. Do you have anybody else in your family, you don’t have to say who, but do you have anybody else in your family that has trouble with this? James: Yeah, definitely. John: Would that be your father or your mother? James: I believe it’s my mother’s side. John: And anybody else in your family? James: Yeah, some siblings. John: Ok, well dealing with that is a tough one and what you have to do is basically reprogram your amygdala, is what we say about it and it means when you got to go back in the house or you got to do somethings repeatedly because they make you feel safe, you know that old phrase, “don’t step on a crack, you’ll break your mother’s back,” do you remember that? James: Yeah John: That sort of OCD-ish because it means that if you don’t step on a crack, then your mother’s back won’t be broken. But if you do step on a crack, your mother’s back will probably not be broken. It just makes you feel a little bit better that you can do something about which you almost really have no control. Am I right? James: Right. John: Okay, James, one more. Post-traumatic stress disorder. You’re pretty young for this. It’s usually soldiers and people who have been in battle or firemen who have seen burnt up bodies. Do you think you have anything in PTSD? James: I don’t think so. John: Well, James, I appreciate very much you talking to me about this. You’re very brave and I think also one of the things it does is it shows other males that it’s OK to talk about some of this stuff and in fact, it’s really necessary to talk about it, even if you don’t feel like it. Would you agree with that? James: Yeah, 100%. John: Okay, James. Thanks a million for participating today, I appreciate it.

In this episode, Seamus and Lucas and joined by their friends Kevin and James (Not the actor) as they discuss old memories, Star Wars, Scoob!, and they all just have a good time with possibly the best audio yet not including when they were in person.

James: Hey, audience and listeners, this is James Kandasamy from Achieve Wealth Through Value-add Real Estate Investing. Today, I've Cody Payne and Michael Tran from Colliers International out of Dallas market. Hey guys, why don't you say hi to our audience and why don't you introduce what you guys do? Michael: Oh, Hey everybody. Michael here. You know, we focus mainly on multitenant, mid-rise office buildings or industrial buildings or industrial parks. Anything between three to 25 mil is our typical range that we work on. Cody: And I'm Cody Payne and I work with Michael and that pretty much sums it up pretty well. We sell investment office and industrial buildings in Dallas Fort Worth. James: Got it, got it. So you guys are brokers, right? Do you own any of these as well? Cody: Yeah, actually we do, we actually just did a syndication not long ago where we pulled together a few investors and bought a portfolio of five office buildings down the mid-cities. And we've even done some development also. James: Got it. So office and industrial; nobody has talked about this asset class in the show. So I want to go really deep into how people make money out of this asset class because I'm a multifamily guy. I'm so used to multifamily and a lot of people knows multifamily very well. It's like seems to be like the only asset class out there. Right? But I'm sure there's a lot of people out there who's killing it in industrial and office. Right? So, I want to go deep into, you know, how an active investor would look at these two asset classes and you guys absolutely will be you know, giving a lot of value in this discussion. So let's start with industrial. Can we define what is an industrial asset class and how does it look like when I drive by, how can I say this is industrial and is there any different types of industrial that I need to be aware of when I drive by and when I'm going to look at something? Cody: Yeah, absolutely. So industrial is going to be, you know, your big box, tall, concrete warehouses that you'll see as you're driving along the freeway or in some other parts. These things can range anywhere from tenants utilizing just a couple thousand square feet up to a large shipping receiving warehouse that you'll see, that can be half a million-million square feet. A lot of things that I think a lot of people are familiar with is, seeing those tall, 24 36 foot tall concrete structures where a lot of 18 wheelers are backed up to that are loading, unloading, cross-docking and things of that nature. That's what your typical image of a warehouse industrial is. And a lot of people look for that and that's one of the key asset classes that a lot of investors are looking for right now. James: Well, so you said a lot of investors, I mean, it's a very relative term, right? And I'm not sure you guys know how much people invest in multifamily. So is that same equal in people investing in industrial and office or is it like coming from your knowledge in a multifamily is like crazily too many people and industrial is like a niche [03:26unclear] ? Cody: So the office and industrial it is a little more niche. I wouldn't say there's as many buyers for it as there is for multifamily. I mean, you, obviously there's a lot more multi-families than there are mid-rise office buildings, especially out here in Dallas, Fort Worth and even in Texas as a whole. But it's very niche specific. And so, that's why a lot of times you'll see a multifamily guy refer out if someone's looking at buying an office building or even vice versa. Because we won't sell a multifamily complex just because we're not as aware of it but the buyer pool is still very good. We get a lot of multifamily people, especially over the past three, four or five years, that have really started to hone in on the office industrial market as compared to my 10 years prior to that. James: Got it. Got it. Yeah. Even in my book, I mentioned that, you know, all these asset classes, they are somebody who's really good at these asset classes. And a lot of passive investors just look to, you know, seek to this kind of operators who are really good at industrial office or multifamily. There are people who specialize in this and they're really, really good at it so they have to seek for that operators. So that's good to know. It's very niche market. So, coming back to industrial, how do I identify a sub-market...how do I find an industrial, which is a really good, in terms of location, how do I say if I look at this building, I can say that this building is in a really good industrial location. How do I say that? What are the factors I need to look at? Michael: You know, one of the main ones nowadays is access. A lot of the logistics chains, they kind of make sure they can get the 18 wheelers in there, parked. That's why a lot of the users that are looking out that way, they're always making sure that they're centralized too. So like, let's say the great Southwest district here just South of DFW Airport; that's one of the biggest industrial hubs over here, you can get to almost any part of the metroplex within 20 to 30 minutes max. And then you'll have Alliance, which is in North Fortworth. I think that's a sleeper town that a lot of people overlook here but they're just building more and more bigger boxes up there. And it's due to 35 West Highway that goes all the way down to Austin, even down where you guys are at. So that's become another major hub press as well. And FedEx, Amazon they're all up that way. And you've got little pockets up in Plano as well which is probably about 30 minutes from the airport and they've got some major like Toyota is looking to move up that way. And they've got everybody else just following them over here. James: So do you look at, like for example, in multifamily, we look at household demographic, we look at median household income and income growth, job growth and all that. But it looks like industrial is different, I guess. Like you have to look at how convenient it is for the 18 wheelers to meet and compare and also seems to be some kind of adjacency with the certain key distributors like Amazon or Toyota. So is that key factors, I presume? Cody: Yeah, absolutely. And actually, we've got a map behind us.  James: So those who are on YouTube, you can definitely see the map. Cody: Yeah. James: To really, you know, talk numbers in terms of what? Cody: Just as the Dallas Fortworth airport right here. And this is the great South West district that Michael was talking about. This is where you'll have a lot of warehousing and a lot of it up North as well. Amazon's got a large center as well. So you've kind of have the same thing, which is growing a lot out here where Hillwood has their Alliance airport. And then the same thing back over here where Dallas load field is, there's a lot of warehouses over there and there's a lot off limits. So you know, a lot of these guys where we see a lot of tenant velocity and things of that nature are going to be closest to the airports because that [07:49unclear]  Fortworth because here and going to Fortworth and go to Dallas and go South and go North and they can receive from one of the largest airports in the world right here. James: Got it. So it's basically access to the airport and access to the highway and how can we get to go to other big cities, I guess, right? Fortworth, Austin. Cody: And they don't necessarily need highway visibility cause that's your most expensive parcel of land, but they need good access to it. And so having that nearby that airport, they've got access to I-20, I-30, 183, 360, and so that's a really good hub. And that's why that district is such a large district and continues to expand. James: Is there like a park, like an industrial park where the city or the government is allocated or is it like, is there random everywhere? Cody: They're more spread out. James: So there is no like tax incentive offered by any government or any cities, I guess. Cody: Well, yeah, certain cities will offer certain tax incentives. I know Dallas offers quite a few in certain areas and even if you start getting into like the opportunities zone areas and things of that nature. James: Got it. Got it. Got it. So, you talk in terms of industrial, in terms of square footage, right? That's what you said, or square footage and access, access is also an amenity. But I presume, what is the average price per square feet in terms of industrial buildings? Michael: So that is a very good question cause those can actually range anywhere between 50 a foot all the way up to, you know, building new. It also depends on the age of the building, ceiling height, [09:39unclear] in the building. So there's a lot of factors in industrial that you have to account for. How many docks as well. Dock high, grade level doors or are you familiar with any of these terms? James: No, no. This is all completely new. But it's important. I want you guys to share that level of detail because I want people to really learn how do you, cause I'm going to go to their underwriting later on. So that's going to features of the industrial, is that like a class A, class B, class C industrial buildings? Cody: Absolutely. Go over some of the rates that you see on some... James: Yeah. What are the class As? Cody: Are you asking for rental rates? James:  Rental rates and also buildings, right. I presume that's all correlated? Michael: Yeah. So rental rates, you'll see anything, depending, like I said, very niche-specific stuff. So like you'll see anything from $4 a foot all the way up to 10 and sometimes even higher and triple net or some of the newer industrial products coming out. And then you have if it's, you know, if it's in the less desirable area, they'll Teeter with the four to seven modified gross or industrial gross as you'll hear. And those usually have some expenses in there that are charged back to the tenant. As for space, if the space is less desirable, you're going to see more of that industrial gross number anywhere between, you know, five to seven. Newer stuff, like I said, $10, sometimes triple net, just depending on area and access. Cody: And a lot of times is that building size gets larger, that rental rate, well a lot of times go down. James: Okay. Okay. So before we probably go further, can you define triple-net because a lot of people in the residential stage, they are not used to this triple net. Can you define triple net, what does it mean? Michael: Yeah. So if you can ever in residential, try to charge them triple net. But when I was saying it's a triple net, basically it's taxes, insurance, and common area maintenance is charged back to your [11:46unclear]  Sometimes you can get an absolute triple-net deal and that's where the tenant also care of the roof and structure. It's not as common in industrial unless it's a single-tenant deal, but most of the time you're going to see this regular triple nets. James: Okay. Right. Interesting. Because we don't have that in multifamily. That'd be awesome. So triple net also means that if the property taxes go up, the landlord doesn't get any impact. We still get the rents that we supposed to get, I guess. Michael: That's correct. And sometimes, you know, your tenant, if they're a little more savvy they'll have like a protection on no higher increase in five to 10% on their common area maintenance or taxes. So let's say like your lawn guy wants to charge you way more, that'll force you to just find a new one at a more reasonable price. James: Got it. Got it. Got it. So what is the landlord responsible for then? Michael: Roof and parking lot. Structuring the building if it's triple net. Yeah. James: So does the landlord still get the tax benefits of owning the real estate? I'm presume so, right? Because you own the building, you own the roof and you own the real estate, I guess, right? Cody: Yes. So, well it depends on the tax benefits that they're getting, but if it's, you know, ownership of the real estate tax benefits, yes. Now if it's business-related or some of that nature, that's for them, obviously. James: Correct. Correct, correct. And I think the depreciation schedule for industrial and an office, I just want to cover that, is 39 and a half. Is that right if I'm not mistaken. Cody: I believe you're correct. James:  I think in residential it's 27.5 and all of the asset classes like 39 or 39.5, I can't remember. But that's a good distinction within triple net and the normal deals that we buy in multifamily. So, coming back to my question, I know we talked about different rental rates, but are there any classes that you guys have categorized in terms of industrial buildings? So it's just based on how old they are and there's no real definition... Cody: Yeah. So they do have classes, you've got B, you've got C, you've got A class and a lot of times that is determined by age and location and building quality and things of that nature. James: Okay. Okay. Got it. Got it, got it. But definitely have to be in some way accessible near to their distribution part I would say, or distribution hub. I guess Cody: That's when a lot of them like it, they are very keen on location. But like I said, I didn't have to have highway frontage. In that access is very key. James: Okay. What about the, who buys the industrial? I want to interview a buyer of industrial parks and industrial buildings and I can never find, but you guys know all these guys, but who buys...what are the typical buyer characteristics or where does it come from? What does he look for? What is his appetite in terms of investment whenever they buy these industrial buildings? Cody: Absolutely. So there's a lot of buyers for industrial and they increase every day. And you know, even for the small Bay warehouses, you know, we have so many of those people that keep pouring into the marketplace and not just Texas, but in the US as a whole. But yeah, I mean industrial probably gets some of the most cross product or cross asset buyers that we've got. You know, people from self-storage buy these, people retail, past experience, they buy these. We even have apartment owners and operators buy these. But you know, there's a lot of REITs and institutions and things of that nature that are big in it. But no, a lot of, I would say the past 10 industrial buildings that we sold, probably I think, I want to say seven of those were an out of state owners. James: Got it. Are they from coastal city? Like New York and California? Are they local? Cody: Yeah. Canada, Florida, Chicago, absolutely. James: And do you see that this one guy buying across the nation or it's still very localized? Cody: No, a lot of these people will buy across the nation, but this is a market that a lot of these people will look into.  James: Texas, they like a lot of Texas? Cody:  Oh absolutely. Yeah. And like Michael was saying, you know, because of the Dallas Fortworth economy and things of that nature, it gets a lot of eyes. James: Got it. Very interesting. So, let's go back to underwriting and industrial building. So I presume that's a rental of the building where the tenants...is it like usually one tenant or is it like multiple tenants or how does that or is it all the 17-wheelers parking need to pay rent?  Cody: Yeah, it can be one tenant. We just sold a very large complex off of 360 and about 80 tenants in it. So, it can be very, very intense with a lot of tenants. And I think the group that bought that had a lot of multifamily experience as well. James: So 80 tenants in one building. I mean, do they have like counters in it or do they have docks? Cody: Yeah, so it was a bunch of buildings in a business park and so it was about 22 of them. And so it was just park. James: So it's like an industrial park where everybody had buildings and they ran the... Cody: Yeah, they had their own suites and things of that nature. James: Okay. So if it's triple net then probably there's nothing to do with expense ratio for a landlord. Right, because you get [17:30 crosstalk] Cody: One of those, I believe, were on gross leases still, but with industrial, a lot of people that aren't on triple net are going that way. James: Okay. Explain what's the difference between gross lease and triple net? Cody: So a gross lease, you'll find a lot more in office, in general office. You will absolutely find it in an industrial and gross lease is going to be where the landlord's taking on commonary maintenance, landscaping, repairs and maintenance, you know, HVAC, things of that nature. And so it's more management intensive. Your expenses on the landlord are going to be higher and that's a gross lease. But then you start getting into other types of leases. You know, you've got full service, you got gross, you've got modified gross and you get into like net, double net, triple net. James: Oh, okay. And what about full service? As you mentioned, because I've seen Cody: So full service, you're really only going to see that in office. And what I mean by that is landlord pays everything. They pay the utilities, they pay the janitorial, they pay the common area maintenance, they pay taxes, insurance, they cover everything. A tenant goes in as you know, a price per square foot and that's all they pay. James: Got it. Got it. Very interesting. So let's go to office. I mean in general, people are worried about office. Because you know, people say the trend is working from home. So is that still true?  Cody: Not here. James: Not probably in Dallas, I guess. Cody: No. I think office is actually trending a lot more towards coworking and things of that nature. And that's a model that has just expanded and blown up like crazy, especially out here in Dallas, Fortworth. James: So what is a typical investor who's looking to buy office space, office buildings? Where do they come from, what do they look for in an office? What kind of hold time do they have usually? Michael: Yeah. So their hold time can range anywhere between five and seven years. But you know, we just did a major value-add project in Plano where Toyota's headquarters is. State Farm had moved out and it was probably 20% occupied. That buyer actually, you know, did a bridge loan and he's going to go ahead and get that filled up very quickly, just cause the area's occupancy is not any lower than 80, 85%. But where these buyers come from, same thing as the industrial guys, cause a lot of industrial buyers also look at office and office guys look at industrial as well. But like I was telling you the other day on the phone, we've noticed a huge influx of multifamily buyers moving into office just because the returns are a little higher. And so, we had like that last guy, California we've got one in Chicago looking at one of our deals right now. We've got a couple of local groups out here that know these office buildings really well too and they know the trends of the area and how the occupancy is. So one specifically we're working on right near White Rock Lake in Dallas. That one's at 92, 93%, and that one's always been full ever since anybody can remember. So that's where these buyers come from. Any other questions? James: Yeah. How do you decide this office space is in a good location? Other than knowing, I know Plano is hard and I know free score is hard, but how, what are the parameters you look for in terms of like like you know, jobs growth in that particular submarket? Michael:  So, yeah, so you look for competition within the area for that office building, comparables in that market to the building because if you know the market really well and you know every building, you'll see that some gives you like a better bang for your buck. You know, some will have a lot of amenities that they're starting to offer. [21:48unclear]  groups are starting to do incubator spaces where they have a smaller coworking model and then their tenants will grow into spaces that are available in their building that they have rooms. And so they'll convert, you know, a small executive office and they can charge anywhere, you know, 35 to $45 per square foot just for a room. And as that tenant grows, they can grow within the building. But if you want to look at like specific markets like Las Colinas Irving area, are you familiar with that area? James: Yeah. Michael: Yeah. So you know that area has a lot of office and that's one thing you need to make sure of when you're looking at a deal. How many other class B or class A properties can your tenants look at before they commit to a space? But if you're looking over in Dallas, like where White Rock is, our building is the only building for the next two or three miles before you hit a highway, either going towards 75 or going North towards 635. And so that's why this building has been able to capture a lot of the people who don't want to drive all the way to 75 and fight that traffic every day or drive North on  635 and fight with that traffic as well. James: So you probably look at a cost, what the VPD, vehicle per day drive on that nearby highway, I guess. And I think you probably...I mean, as you mentioned, you look at other office supply in that area and I'm presuming you look at vacancy rate as well, on nearby office. And what tool do you use? Is it CoStar that you guys is primary for this industrial and office? Cody: Yeah. So there's a lot of tools you can use CoStar and Craxi and things of that nature. There's a lot of, you know, real capital analytics as well. They track a lot of good stuff. What I would also say on the office side is it's probably one of the product types. It's a little closer to multifamily as far as kind of a how to make them successful and things of that nature. Because, you know, when people go look at a multifamily complex, they usually have a couple options. And so a lot of times what they'll look at is amenities, access, recent renovations, things of that nature. What can they do for me on a new move in? And so office is very much a model that is driven just like multifamily. And so, keeping up with the times, making sure the renovations are good, making sure the building offers things like the deli or wifi and stuff of that nature or coworking style environment. Those things all help office buildings succeed. James: Got it. And what about this vacancy rate? Cause sometimes they're not...I mean multi-families and people that need a place to leave and vacancies are pretty low I guess comparatively to office, I mean different tenant profile. Right. So what is the average vacancy rate? I mean, how do I know like this area, this is the vacancy rate because somebody can be like six months, one year or somebody can be a few months, right? Depends on the area, I guess. How do you determine what is the vacancy rate for office and what are the lease terms in office? Cody: Absolutely. So the vacancy rate is going to be area driven. And so, you'll have certain areas like downtown Fortworth, which will have a certain vacancy rate and then that is going to be very much different than Las Colinas, downtown Dallas, Plano Allen, McKinney, Frisco. We pulled something earlier today working on a few things out in the Allen and McKinney area up there by Frisco and you know, they're class B office spaces around 5% on the vacancy side, which is very good for office, especially with more and more supply continuing to come up out there. In Los Colinas, it's gonna move a little bit more. And so, in my career, I've seen Los Colinas go down to almost 30%, and come up to somewhere around 10. But there's a lot of supply out there and there's always things shifting. Fortworth, I believe their occupancy is higher than what's being shown, but that's because XTO owned a bunch of the office product out there at one time and they recently sold a lot of that off. So some of that's being converted to hotels and things of that nature. But what you want to look at when you're buying an office building is yes, the area of vacancy, the area rental rates, but also the velocity of tenants, how many tenants are moving in that area. And then you also want to look at what are the size of tenants, the square footage sizes that we have and what is really the area tenant size. And so, some people will buy a building and they'll have 10,000, 15,000 square foot units, when the area is really commanding three to 5,000 square foot tenants. And so they'll see a lot longer on market time. And so what they need to do is chop those spaces down. James: And do people who buy, you know, I just want to add industrial. So industrial office, are they people who syndicate deals, like what a lot of multifamily people do? Or is it REITs or is it some institutional or some rich guy from the coastal areas? Cody: It can be a rich guy like yourself or it could [27:23crosstalk] James: I'm in Austin, Texas.  Cody: It varies. When you start dealing under $5 million, a lot of that's going to be private. James: But is it a lot of syndication happening? Cody: Oh yeah. James: Oh really? Okay. So, syndication is not a multifamily game only is also in the office and industrial. Okay. That's really good to know because I didn't know that. Michael: Yeah. And to go back on your question, you're asking about these terms. So you want to make sure that, area driven but you also want to make sure that your TIs are not going to eat you alive. James: Yeah. So TI is tenant improvements; just for our audience, for them to know. Michael: Yes. So and you'll see a lot of these guys in office that are moving. Sometimes they really want like a gold plated wall finish out and you just can't do that for them. You need to make sure you get that lease term where it can get your TIs not in the red for the first year. I even try to keep that around like $10 or so per square foot. But you'll see those terms go just depending on what they need done to the space, how many offices they need built out. You'll see that range anywhere between three years, five years, seven or 10, sometimes 15. That's really big one that's usually the range you'll see on a lease term. James: Got it. So I think it's all up to negotiation and how much the landlord is going to pay and how strong is the lease terms and all that. How do you qualify your tenants? I mean, let's say I'm a buyer, I'm buying an office space with 10 different tenants in it, how do I say this is a class A tenant, this is a class B tenant and this is a class C tenant. And how do I say that? Michael: So when we underwrite a lot of these deals, we're looking at the tenants, how long they've been there. We can also reach out to the seller or ourselves if we know the tenant what their credit rating is. And you can give a write upon them. Like we were selling a three tenant deal out in Las Colinas and some of the tenants themselves put in their own money. They put in 500,000 in improvements to the space work for them. So that was one of the things that we made sure that we had in our OM when we were underwriting that deal and how much time they had left. Cause when you're looking at these, you're like, Oh man, this guy, he's only got a year or two left. But you know, a year or two ago they put $500,000 into this space. So sometimes it was a really big key factors, explaining these commitment levels of the tenant. James: So you said credit rating. Is there data that you pull out from them or you just look at history and how they [30:18unclear] Michael: Yeah, all those things combined. James: But is that something that way you can pull from the credit rating of the tenants? Is that a system or you just have to look [30:30unclear] Michael:  Yeah, not always, but you know, when you're working a lease deal when I used to lease back from the day, we would get tenant financials from them, sometimes, yeah. James: So based on their financials and what's their commitment to the space that's where you establish their credit rating, I guess? Michael: Yes. And comfort level and then like, Oh, okay. I feel like their financials are good enough for me to say. James: So it's very subjective then because I mean, somebody who want to sell the deal, he may say to all my tenants are A-plus credit rating, I guess. So, I'm just trying to quantify that a bit more, but I think it looks like there's no real... Cody: Sometimes you would have like an A-plus credit rating or something of that nature is when you've got like a DaVita or something of that nature in the building or a FedEx or something like that. But a lot of times, office buildings will have, you know, a little bit more generic companies, local regional firms. And so that's why Michael said if they're going to spend a lot of money on the finish out, they'll say, Hey, we'd like to see your business financials just so we can make sure that the money we're spending that you look like someone's going to be in business for the term. And you know, they're pretty much used to that. James: Got it. Got it. So let's say a building is being sold right now and some of the residents have like one or two years left in their lease. If they get to know that somebody's going to buy this building, will they start negotiating with the new buyer or the new buyer have an option to know whether they're going to be renewing? How does that work? Cause you know, that basically increases your risk. Michael: Yeah. So typically they do not know until you're pretty far along in the process. So they'll usually get attendant estoppel, which will signal to them that, Hey the building may change hands to a new owner. But although they're getting that, it's mainly just a lease verification to make sure also their security deposit is transferred over as well. And you know, you don't want to alert the tenants, but you also want to make sure that when you're working on these, they're paying what they're saying on the OM and it's matching what it has on the estoppel as well. James: Got it. Got it, got it. Well, Michael and Cody, thanks for coming. I mean, can you tell our audience and listeners how to get hold of you? You guys are doing really big deals in the DFW area. I'm not sure, are you guys covering any of the areas other than DFW? Cody: I'd say 95% of the business that we've got is in DFW now. We will branch out and sell a couple of things here and there. We're actually about to bring out a 20 story office tower out in Corpus Christi. That's a relationship that we have. James: Let me know if some of the towers in Austin is coming for Salem. Probably I can even buy one. Cody: Absolutely. James: I just heard there are 37 new towers coming in Austin. Cody: Well, there's a lot of people that are looking out there, I can tell you that. James: Yeah. So why not you guys tell our audience how to get hold of you guys. Cody: I'll do it. So yeah, Cody Payne, Michael Tran. Our number is (817) 840-0055, we're with Colliers International, we're office and industrial specialists and we've got some really good self-storage and retail guys here as well. James: Good, good. Guys, look for a specialist because all this asset class, there's a lot of nuances to it as so much of details. Not everybody can do this. And you know, these guys are some of the best in the industry. Thanks for coming on Cody: See you.

Sam and Callum are back! Almost a month of crack to catch up on! A general election announced, multiple bastards, Labour's mint policy announcements, a moth! 00:13 The crack is back! 02:34 GEt in 09:50 The Cowardly Nigel 19:13 Labour: exceedingly good policies 31:00 James Not-so-Cleverly and fake news 35:03 JRM's common sense approach to escaping a fire 39:25 A simple choice 53:49 Elementary, Tom Watson 01:01:33 Is it a bee?! Or a moth?! Kill it! Producer: Alan Watkinson Editor: John Dalziel

James: Hi, audience. This is James Kandasamy. You're listening to Achieve Wealth Podcast through Value at Real Estate Investing. Today, we have an awesome guest. His name is Nikolaï Ray. He's who's the founder and CEO of MREX, which is an acronym for Multifamily Real Estate Exchange; is considered by many of his peers in North America as the leading expert in apartment investing with over $1 billion analysis, underwriting and transactions. He's also a pioneer in mid-cap, multifamily financial engineering, which is, you know, he's regarded as the teacher, advisor and also the keynote speaker. He's also a real estate tech innovator to his current work on the multifamily real estate big data, artificial intelligence and property tokenization using blockchain technology. Hey, Nikolaï, welcome to the show.   Nikolaï: Hi, James. Thanks for having me.   James: Okay, so do you want to mention anything that I missed out about your credibility?   Nikolaï: No, that sounded like a mouthful.   James: It's going to be ready technology-centric discussion today, right?   Nikolaï: Yeah, the full story is that it should probably a lot longer, but I mean, that could be for, that could be for a whole other episode of the origin story of how, how'd you get to, you know, how you get to where we get in life, and professionally and personally, but yeah, that's, that's the gist of it, you know, everything that's underwriting and, you know, acquisitions, dispositions, refinancing, obviously, portfolio management, whether it be the small market, small cap market, you know, between 500 units, all the way up to the mid-market, you know, market cycles, and obviously, have a very strong penchant for data and for technology.   So, so that's, that's pretty much what I've done over the last, I guess, over the last seven or eight years, is focused on, you know, for the most part, I focused mostly on acquisitions. So I was in charge of an investment banking firm, we worked, you know, on both sides of the transaction advisory side of things, for investors and we also work with a lot of ultra high net worth investors, that's kind of where I built my speciality. Eventually, ultra high net worth investors and private equity firms and family offices, you know, by doing all that I kept on, kept on getting annoyed with the fact that the multifamily market is so fragmented, and the data is so packed, I just kept on thinking to myself, you know, this, this market this, which is an important market, I mean, the apartment building investment market is a almost a $10 trillion market worldwide.   It's a, quite, house is a primary need of human beings, which is to have somewhere to live. And yet, you know, we're kind of in the dark ages as multifamily investors, because number one, we don't have access to any centralized marketplace. If you compare us to a stock investor who can go on the NASDAQ and trade every type of tech stock or stock market investing world, the New York Stock Exchange, and we don't have access to any data, the data is very raw, it's very, it's kind of, you know, what I call legacy data, as you look at like Costar and, and all these various data providers who provide this very raw and inert data, without any actual, you know, context around the data, and without any helps with regards to making decisions business intelligence wise, as a multifamily real estate investor. So that's kind of how that's how my career has gone so far. That's why I went from transactions and more towards data technologies because I felt like there was so much work to be done to help investors just you know, be better investors for once.   James: Okay, so let me understand MREX because I think it's important since you have a lot of passion we need right now. Right? So --   Nikolaï: Yeah.   James: Multifamily Real Estate Exchange, if I understand it correctly, so what you're saying is right now, the data is so fragmented, and a lot of times when, you know, people like me underwrite deals, we have to do so much work, I did too. I mean, I really learn to write [inaudible 04:05] for four hours because I did all the property management financial, that there are so much of mistakes in the property management financials, you have to do T-3, T-12, you had to do expense ratio, you have to do market comps, and all that. So what you're saying is, you are going to summarize all that, and make it so easy to look at so that it can be treated as a commodity, commodity, is that right?   Nikolaï: Not necessarily. So, so the idea is taking you as an example or any of your listeners, right now, who are multifamily real estate investors actually acquiring properties, let's say you have the capital ready, or your investors have the capital ready to allocate to an acquisition, you know, just actually finding that first property to buy or the next property to buy is a very time intensive and energy intensive job, right. You have to go on, you have to go on all the different MLS, you have to go on the loop that's of this world, the [inaudible 00:05:00] and the [inaudible :00:05:01] and, you know, just --   James: [inaudible00:05:02]   Nikolaï: Right, and then you have all the brokers, and then you have all the broker websites, then you have all the pocket listings and you have not even really touched the majority of the market, you're actually still missing probably, you know, anywhere between 25% and 50%, of actual transactional inventory, depending which metro area you're in. So it's a lot of work, even just looking at the stuff that's on websites. That's a lot of work because you have to go on between five and fifteen websites, each website has a different user interface, this different user experience, and actually shows different information. On one site, maybe on [inaudible 00:05:42] you might have a cap rate, maybe on the MLS, you won't have cap rate, you'll just have gross revenue.   So then you have to figure out your own cap rate off of that. It's a lot of work, you know, and for me, I just never thought it made sense, to not be able to say, hey, I want to buy a multifamily property, whether it be a five unit, whether it be a 50 unit or 500 units, I want to go on to one marketplace, we're all properties are centralized in a unified, and normalized manner. Because that's the second point of it, is you have to be able to normalize expenses, if you want to start comparing apples with apples, and oranges with oranges. So that's the second phase. So what we're doing with MREX is we're building a unified, standardized marketplace for multifamily investors, where they will be able to see every single property that exists, that is for sale, despite on the way it's being sold or listed or marketed. We're going to be working with brokers obviously, the goal is not to get rid of brokers or anything like that, that's not, that's not what our goal is. Our goal is to help brokers, help investors just make the whole transaction process much quicker and more time efficient. And that way, you know, we're making the market more, you know, just a more efficient market.   James: Okay, okay. Got it. Got it. So you are basically streaming lining the whole selling and buying process, I guess, just to make --?   Nikolaï: Absolutely. Absolutely.   James: Okay, got it.   Nikolaï: And the analysis process as you said too, right, because it's one, it's one thing finding the properties and having them all in one marketplace. Okay, let's say, let's say you have the NASDAQ, let's say I wanted Lesson TechStars rather than multifamily properties. I go the NASDAQ and I can see every single company, I could have access to inventory, now that's the first step. Now the second step is, once you have access to inventory, and the information provided on all that inventory is normalized and standardize, well, I still have to be able to start comparing and start, you know, building my own models to say, well, if I'm a cash flow investor, which stocks are generating the most cash flow relative to the other, to the rest of the inventory. So that's where you know, context and alternative data comes into play with our platform, is that we want to be able to, to offer data and tools to you as a multifamily investor, to help you streamline your underwriting of the inventory that you've seen. So that's really the two things we're focused on at the moment.   James: Okay, got it. Got it. So interesting. So that'll be, that'll make a lot of, I mean, for investors or for buyers, they would be able to see what kind of deals that they want to buy,--   Nikolaï: Right.   James: Not just what they want to get the yield out of --   Nikolaï: Exactly and instead of going on fifteen websites, well, they've only one website, instead of having to, you know, start normalizing expense ratios and sifting through, through T-12 and T-3, and doing all that, it already kind of be all chewed up and kind of built up already. So you can actually focus, focus on analyzing, focus on comparing and establish, okay, I want to buy this property using this strategy. And why would I do that versus the other property that I see over there? That's ultimately what's the most important thing.   James: Okay, okay. So could it then be a good idea to match this with a crowdfunding platform, because during the crowdfunding, they can choose what deal they want, right?   Nikolaï: Right. So crowdfunding is an interesting thing. The problem is crowdfunding, obviously, crowdfunding, crowdfunding has tried to kind of attack two things. Number one is liquidity, right? Because, as a multifamily investor, the more properties that you acquire, you increase your net value, right, you're a richer person. But the problem with that, is that you have to leave equity in every single deal, right. The banks won't finance you 100%. So you always have to leave equity. So as you get richer and richer, value wise, you are actually cash poor, because you're leaving so much equity in each property that you acquire. And there's always a part of the equity that has to stay in those properties. But the problem, the second problem is that as you get, as you become a bigger investor, and you acquire more properties, and you're more well known in the market, well, you get access to better deals, but now you have less access to more money, even though you're richer. That's kind of the liquidity conundrum of multifamily investors. So that's why crowdfunding is interesting, because it gives kind of, you know, after the JOBS Act, it helps multifamily investors, particularly syndicators, to go and raise capital from, you know, from investors either through the regulation CF, you know, and obviously, regulation D506C was quite an upgrade also to be able to start to, to market capital raises. But what we're doing is we're actually building a second platform that is shadowing the Emirates platform. And what that platform will be doing is, we're actually going to create a sort of stock market and take the crowdfunding thing a bit further, because crowdfunding, as I said, tries to attack the liquidity conundrum. But the problem is, is that when you invest in a crowdfunding deal, you as an LP, are stuck in that deal for the lifetime of the deal. So if it's a five, it's a three to five year exit, well, your money stuck in that, so you, you as a passive investor, or as an LP, do not have liquidity. That's, that's one problem. And obviously, crowdfunding also helps with accessibility, right. So obviously, regulation D506C is only for accredited investors, which doesn't really help accessibility that much. Regulation CF has helped that because now then, that kind of lowers the barrier to entry for everyday retail investors who don't have that much money, but it's still a fairly limited regulation. At the moment, I know, they're trying to pass a couple of bills to increase the opportunity for regulation CF investors. So what we're doing is we're building a second platform, that's going to be basically a stock market, in its own sense, where, you know, through a broker-dealer partner that we hope to get. And then also through eventually a, an ATS license with the SEC, we would like to be able to take it a step further, and allow a multifamily investor to pretty much offer his property through one the various regulations on that marketplace. That way people could invest as passive investors, as LPs, either through Reg D, Reg CF, or eventually maybe even Reg A plus, but then they would also be able to acquire or access a secondary trading market so that they're not stuck in an illiquid period of three to five years. They would actually eventually be able to re trade part of their shares or all of their shares, kind of like you would at the stock market.   James: Wow. So it looks like you are trying to really disrupt the industry.   Nikolaï: Yeah, definitely. [inaudible 00:12:36]. You know, multifamily real estate looks like the stock market before the arrival of NASDAQ. Right? It's like before the internet, even though we have internet and multifamily real estate, it's as if people are still trading kind of like stock market investors were trading on floors, you know, with papers and screaming and doing all that stuff. It, you know, it doesn't make sense.   James: Yeah, yeah. It's so private nowadays, right? I mean, everybody has priority, we do not know how, even multi families performing under a different private LLC.   Nikolaï: Exactly.   James: There's a lot of good news out there. But there's also bad news, but nobody talks about it. right. So I think,--   Nikolaï: Oh, right. And the data, the data out there, like look at any of the data from, you know, even from the really big organization like NCREIF so the National Council of Real Estate Investment Trusts, NCREIT sorry. Even their data, when they know these indexes based on multifamily markets is based on a very low volume of the actual number of transactions. So when say a, a company, various data company says, well, the cap rate right now of say Atlanta is 5%, for example, well, that's actually based on a very small portion of overall transactions. So it's hard for us as multifamily investors, to really be sure are about the numbers that we're inputting into our underwriting models, because we're basing it off so little data.   James: Got it. Got it. Yeah, it's, it is just so limited, right? Because everything is done on a private basis on syndication, which is not much of the data being published out there, right. So --   Nikolaï: It's like investing in the stock market, but not knowing how the stocks have performed historically.   James: Yeah. Correct. Correct. So but why do you think this would work? And because if you look at the demographics of the, I mean, because I'm looking at syndication, when we whenever we buy for multifamily.   Nikolaï: Right.   James: But for me, it's just a small part of the whole market.   Nikolaï: Right.   James: Even though we are I mean, maybe my group or my network thinks that that's the whole thing how people buy multifamily. I don't know, that's true, because I network with a lot of different type of people, right. So looking at the classes of investors who are buying multifamily, I think I know for me, my thing is maybe we are one of the, I am one the lowest level part of it, right, because we are buying Class B and C using high net worth individuals and all that, but there are a lot of higher network, higher calibre people who are playing at a different level, which we don't have, which I don't have visibility, maybe you have it right so. So are you trying to look at different classes of investors and cut through all of them? Are you looking at only some classes of people?   Nikolaï: So we're trying to help what we call the small cap to mid middle market investors.   James: Okay.   Nikolaï: So anyone who owns between five units and about, you know, I'd say around 2500 to 5000 units.   James: Okay.   Nikolaï: That's kind of where we stopped, you know, that's where we're focusing on because that, you know, the majority of transactions are actually done by, by small cap to mid-market investors.   James: Okay.   Nikolaï: You know, the multifamily market is historically a mom and pop market. Now, it's, you know, it has transition a bit, investors are getting bigger and bigger. But the reality is the majority of the market is not an institutional market, you know, at the root level, or the private equity firm level or family office level, depending obviously, which metro area you're in, right. New York City is obviously more of an institutional market. Canada, Toronto is a very institutional market, but the majority of cities and metro areas are still, you know, very small cap market. And the problem is that, you know, take you for an example as a syndicator, or even take someone who's not a syndicator, right, because a lot of investors, multifamily aren't syndicators, they just buy their own properties, you know, they end up with maybe, you know, anywhere between 50 and 500 units as time goes by. Now, the problem with with those types of investors and syndicators as yourself is that you do not have access to a team of underwriters, you don't have access to, you know, expensive data that say a real estate investment trust has more than a very big private equity firm has, you don't have access to all those analysts. So, you know, we want to try and make sure that the market stays very level and stays is a level playing field. Because, you know, ultimately, I think the multifamily real estate market is very important for a couple of reasons. Number one, you know, everyone talks about the disparity of wealth, right of the 1%, and how the disparity is getting bigger and bigger. And we could do a whole podcast on that and why it's happened and where it's kind of going. But ultimately, I think, you know, the multifamily market is probably, the market, it's probably the asset class that offers the best returns based on risk, with the best risk-adjusted returns. If you look at Sharpe ratios, and Sortino ratios and all these things. Now, it's also been proven, there's a lot of studies about this, a lot of university studies done on this, that, you know, social mobility comes from education, and access to property, right. The reason why people have been so poor for so long, and like the Brazilian favelas, or the Indian shanty towns, is because people don't have education, and they do not have access to property, they are not able to become landowners, or owners of their own homes, even less become investment property owners, right. So I think multifamily stays as a very important asset class, because, on top of filling a basic need of human beings, that means providing somewhere to live, it also is a very important mover, for the everyday investor, the mom and pop, just the normal person need you to be able to access a very good, very safe, wealth building asset class that does not have the same volatility, or the same pitfalls as say, the stock market and other types of asset classes. So I think it's very important that we provide, you know, tools and data and allow for the smaller investor, the investor that has less than 1000, or even less than 5000 units to be able to continue on performing, continue on from this, this asset class.   James: Got it. Got it. So let's go to a bit more details on some of the big data and artificial intelligence, right.   Nikolaï: Yeah.   James: So yeah, I studied artificial intelligence almost 24 years ago, every now it has become really popular, a lot of startups with artificial intelligence, right.   Nikolaï: Absolutely.   James: So the question is, how do you, I mean, first of all, let's define what, can you define artificial intelligence in your terms in terms of real estate? Because I studied engineering standpoint.   Nikolaï: Yeah, well, I'm not an engineer, by trade, so at least I'll give more of a generalist definition to the people listening which I think is probably gonna be very good. The important thing is to understand, kind of the difference between machine learning and artificial intelligence. So you know, machine learning is more of a, it's a less automated process, right. So a lot of what people are calling artificial intelligence is ultimately just machine learning. And what it is, is that let's say, let's say, you know, I'm a data scientist or an economist, and I build a predictive model using, say, Monte Carlo simulations. Well, I set a, I build a set of hypotheses, I plugged them into my Monte Carlo simulation, and then that runs. Now, with machine learning and artificial intelligence, what becomes very fun as you know, statistics are a funny thing, right? And economic modeling is a very funny thing because even though, you know, people in the economics world swear by predictive analytics, the reality is in data science, it's garbage in garbage out, right. So the outputs always depend on the inputs. So let's say you're doing an underwriting model, and you're looking at an apartment building, and and you say, well if I buy this apartment build in this way, my internal rate of return is going to be 25%. Okay. Now, internal rate of return, net present value is a, is an output or their outputs based ultimately on the strength of those outputs are only as good as the strength of the inputs.   James: Correct.   Nikolaï: And the very important inputs that affect an IRR and NPV, which ultimately led to two of the most important metrics to help you decide whether it's a buy a property or not are rent growth, expense inflation, refinancing interest rate; if your IRR and NPV is based on on refinance, because obviously IRR and NPV has to be based on an exit model. And the exit model can either be a refi or it can be a sale; disposition. And then if it's a disposition, while your IRR and NPV is based, ultimately off the reverse, the reversion cap rates, so the exit cap rate upon sale. Now what everyone's doing right now, in the multifamily market, especially small investors, and mid-market investors is they're just entering these inputs. You know, they're just playing it by ear, and they're not even playing it by ear. They're coming up with these random inputs that are based off absolutely nothing. I just had a huge discussion on LinkedIn about this, with a couple of investors where one guy was saying, well, you know, if I buy it at 5% cap rate, my underwriting model, what I do is, to establish the reversion cap rate. So the cap rate upon eventual sale, let's say five years, is I add 20 basis points to the purchase cap rate per year. So if I bought it at five today at a 5% cap rate, well, then five years from now, I predict that I'll sell it as 6% cap rate, okay. And, you know, people kind of hide behind this type of rule of thumb model, say, well, I'm being conservative, therefore, my underwriting models very good. The reality of it is your underwriting model is bullshit. Okay. It's not worth the the Excel spreadsheet that it's been written upon. The reality is, where are you pulling this, this expansion of 10% or 20%,10 or 20 basis points per year? What are you basing that off? Right? That's what anyone should be asking, What are you basing this off? While being conservative. How do you know you're being conservative?   James: Yeah.   Nikolaï: How do you know you're not being optimistic? Right? You could be being you could actually be very optimistic with that. And conservative might be and then an increase of 0.25 a year, right? The reality of it is that everyone underwriting deals, right now, they're not basing their inputs off any data, right. And they're definitely not basing it off any predictive analytics, because it's one thing to have the data, the historical data. But you know, just because you have historical data doesn't mean necessarily, that's going to repeat itself in the future. That's why we have predictive analytics. So let's say that based on historical data, your 5% acquisition cap rates will actually be a 5.5 in five years. Now, the problem with that is that the future, that history is never guaranteed of the future, right. So that's why you then have to plug in various scenarios where you're considering this. And that's where predictive analytics come very difficult because you're pretty much just kind of taking a shot in the dark and basing things off the past, but you're putting in like a margin of error. With machine learning and artificial intelligence, you're able to make your predictive models better ex post based on ex ante results. So let's say you create a model to predict the future cap rates, well, you want to predict the future cap rate of in five years, it's your goals to sell within five years. Well, if you predict that today, the probability that your five-year cap rate from now is going to be precise, is a lot lower than let's say, in four years, you predict the cap that same cap rate, right, because you'll be closer to your exit. So there'll be less room for margin of error. So what machine learning and artificial intelligence will allow you to do is to consistently kind of reset your model as time advances. So maybe your initial model based upon acquisition was off. But as you advance in time, the artificial intelligence and machine learning continues on training that same model, the same algorithm that you had, and adapts the various inputs and algorithms to make it more and more precise as you get, as you get closer. And on top of that, as you get closer, the range of distribution of property probabilities get smaller. So it's a double effect, your predictive models get even tighter and tighter as time goes by. And that's where [inaudible00:26:03] machine learning and artificial intelligence can really help out. Is that instead of just plugging in these ridiculous exit cap rates, and ridiculous growth rates and ridiculous inflation of expenses, and absolutely ridiculous refinancing interest rates, when we get closer and closer to being able to actually put in inputs that are based on something very, very solid and then, therefore, our underwriting models will become more and more precise. And what we want in underwriting when you're buying a property, whether you're a syndicator, and you're responsible for money of your LPs, or whether it's your own money, the goal of underwriting is not to be conservative. That's not what the goal of underwriting is. And anyone who says that they underwrite, and they're concerned, their underwriting is conservative, what they're really telling you is they don't know how to underwrite, okay.   James: Yeah.   Nikolaï: You don't want to be conservative, you want to be right on the dot, that's what you want to do with underwriting, you want to be as precise as possible because the reason that you buy the property today is you buy it for future cash flows. And cash flows can come in various ways, they come in an annualized cash flow so, so free cash flow, they come in the appreciation of the asset, so the value of that asset gains because of various market dynamics and because of the way you're, you're managing that property. And they also come through the capitalization of your mortgage. So there's a part of your mortgage that you're paying down, which is principal, right. So those are the three cash flows that you can receive. Now, when you're underwriting a deal, and you're looking at how much you should pay for, say, this hundred unit building you're looking at, well, if your inputs are off, you might buy that property. But it's a bad acquisition because you were too optimistic in your inputs. But it also happens that you were too conservative in your books, therefore, you didn't buy the property. Because if you input that at the exit capital, that property is 7%, but, in reality, five years from now, the exit cap rate is five and three quarters, well guess what? You missed one hell of an opportunity.   James: Correct.   Nikolaï: And in real estate investing, the most important thing is time value of money, we only have a very limited time during our lifetimes in which we can invest and create wealth. And we only have so many hours during the day. Therefore the cost of opportunity, the time value of money are the things that we should consider the most in our underwrite. And that's really where machine learning and artificial intelligence will help investors become much, much better. Obviously, you also need education, right? You have to understand these, I mean, this is advanced stuff. And I'm trying to kind of explain it in a simple way, where people who don't have master's degrees and PhDs in finance and engineering can understand it. But the reality of the matter is that multifamily investing is very, it's a very complex, it's a very sophisticated asset class, and you need a certain level of education.The problem being right now, despite the very high level of education that some investors have, we just don't have solid, predictive analytics tools and data to be able to make sure that we're actually able to transfer education into decent acquisitions.   James: Yeah. Well, that's very interesting, because exit cap rate is always being misused or mis-conservative right? So --   Nikolaï: Well, even entering cap rates, even acquisition cap rates, I see people saying, well, you know, I'm not gonna buy that property because it's a five cap rate and the markets trading at 5.5. Okay, is that a stabilized property? No, it's a value add property. Well, the cap rate doesn't, the cap rate is meaningless then. A cap rate is a metric of a stabilized asset. If the asset is not stabilized, there is no cap rate, because a cap rate is a perpetual annuity. It's a return metric, based on an unlevel perpetual annuity, which means the same cash flow every year forever.   James: Correct.   Nikolaï: Now, if you want to be able to calculate that your property has to be stabilized. So if you're not buying a property, because it's a five cap rate, and the market sharing at 5.5, but it's a value add deal, well, I'm sorry, I'm sorry to tell you, you should change, you should change fields, you should go play, you should go to Las Vegas and put it on red.   James: Not only that, I mean, not only new investors don't understand the entry cap rate doesn't matter [inaudible 00:30:46] and I don't know, I never see a reason not to do a stabilized deal. Not on commercial, right? So for me, I'm always [inaudible00:30:53] guy, that's why I --   Nikolaï: Well, unless you're a private equity firm or your family office or you're a RET or you're an ultra high net worth individual who now has, you know, net value of anywhere between ten and hundred and fifty million dollars, there's no real reason to do stabilize deals, right. The reason you wanted to stabilize deals is, because you have a very high net worth, or because you're trying to de-risk your portfolio. Right?   James: Correct.   Nikolaï: That's why you would just stabilize deals for small cap or mid cap investor.   James: Yeah, yeah. Most of the time. I mean, commercials always value at play. I mean,   Nikolaï: Of course.   James: I mean, there's a lot of people doing stabilized deal nowadays, just by getting a higher mortgage and getting slightly lower price, play on the mortgage side with the interest to get a cash flow, but --   Nikolaï: And that can work if you're a neurosurgeon, right? If you're a surgeon making a million and a half a year, and you're 35 and you say, well, you know, I want to start buying multifamily property because I like, I like real estate and I like the tangible part of the asset class. But I don't need any money right now, because I'm making a million, I'm making a million and a half a year. I don't need any cash flow. And I'm very long term and I just want to build myself a nice retirement, you know, because you know, that's what I want as objective. Well, then yes, buy stabilize property or be an LP and syndication, or purchase that stock in the [inaudible00:32:23], that's fine. But if your goal is to increase your wealth exponentially, in a short period of time, and what I mean by a short period of time is fifteen to, five to fifteen years. Well, then, yeah, you're gonna have to do some kind of value add, you can't just do financial arbitrage all the time.   James: Yeah. Yeah, there's a lot of deals out there in different asset class, which can give you that cash flow, right. I mean, you can buy a stabilized mobile home park, you know, it'll give you higher cash in cash than any multifamily deals.   Nikolaï: Right.   James: So even self-storage, or even multifamily, which has been stabilized, you get, you'll get good cash flow. But how long will that cash be guaranteed? Because you have a very tight DSER at that point of time. And let's say the market turn, you may not be, your DSER might be compromised right now, because you don't have any buffer. Right?   Nikolaï: Especially if you did not properly manage the terms of your mortgages. Right. So that's very dangerous. Like if you feel that you're, if you feel that the markets going to shift, say interest rate wise, the easiest way to kind of pull yourself out of that situation you just talk about is, you know, just take longer-term mortgages, you know, make sure that the mortgage does not end in five years, make sure it's a 10 year term, or even maybe a 30 year term. Right? That's, that's the easiest way to manage that risk.   James: Yeah, just do a hard loan.   Nikolaï: Right.   James: Which gives you like, 45 years. I mean, there's the other trick that a lot of people play is, you know, showing you need cash in cash based during IO period. And nowadays, people are getting five years, seven years, IO period and sometimes people think, oh, I will not hold, you know, that deal for long term. I mean, you are hoping on not holding, holding, right. But you do not know what's going to be happening to the economy, right?   Nikolaï: It's a dangerous game to play. And I'm not saying don't play it, but make sure you have the, make sure you have the education and the know-how to be able to manage that risk. It's all risk management. Ultimately, that's what it is.   James: Yeah, yeah.   Nikolaï: The problem, the problem is a lot of people are doing this, and they don't know what the hell they're doing.   James: Yeah, I mean, I think so there's so much of capital out there right now, looking for money to be placed in some way.   Nikolaï: Oh definitely.   James: And people don't think that are they going to putting 1% in the CD, I might as well put here and get like six, seven per cent, right? Cash Flow, right? And,--   Nikolaï: And that's, that's the retail market. Like that's, that's small investors like me and you the reality of is the real cap, the real capital flow right now is at the institutional level, there is so much higher level money and smart money searching for returns right now. I mean, we can't even fathom small investors, how much money, I mean, family offices, typically, if you take the family office market, typically always allocated maybe like, I don't know, depending on the family office in the region, but usually anywhere between, you know, maybe eight to twelve per cent of their overall asset allocation, capital allocation to what they call alternative assets, right. And real estate as part of alternative assets. Now, over the last 10, I'd say over the last 10 years, the last decade, family offices have become more and more in tune to the real estate markets. High net worth families also, especially towards like multifamily real estate, and more and more real estate is no longer considered just as, as something under the alternative asset umbrella. But now it's kind of becoming its own umbrella. And what that's doing is that instead of family offices, and we're talking about family offices that have trillions of dollars, right. These are not these are not small things, these are big moving bodies with a lot of capital, we're talking about multi-billions of dollars, not trillions, multi-billion dollar family offices, that are now instead of allocating, you know, 8% to real estate, well, now they're allocating 20% to real estate. So and that's, that's a scale like, there's a lot of them out there. And we haven't even talked about the private equity firms. We haven't even talked about the pension funds, the International pension funds, you know, people talking about globalization and international money, thinking that it's just, you know, rich Russians is going to Sunny Isles, Florida, buy $10 million condominiums. That's not what it is. The global movement of money to American and Canadian Real Estate are things like the Amsterdam teachers pension fund, or government workers pension fund, you know, allocating, allocating, you know, 100 billion dollars to the American real estate market. Now that's, that has a big, that puts a big dent on the supply and demand of real estate. And that's what ultimately drives property value is much more than interest rates. Interest rates only, only influence property values, like people were talking about, especially the last couple of years, all we know, if interest rates go up, cap rates will follow up, they'll go up. That's not true. Capital flow drives cap rates and values and properties and multifamily; interest rates only influence cap rates and values.   James: Very interesting perspective, that's you are right. There's so many, too much money, even out of United States is looking for money to place, right. Like the other dad had a call from the UK. It's a family office who want to invest in the UK and they're looking for like operators like me, and I was asking them, what's the return expectation? They say this 22% IRR credits and I said, well, I [inaudible 00:37:58] you guys, I can get better money in the United States right, so --   Nikolaï: Exactly. And all the, all the money from the quantitative easing the follow the 2008 crash, I mean, all that quantitative easing money, a lot of it still, after even 10 years, has not even found a place for it yet. Right? So there, there's a lot of money chasing deals, there's a lot of money chasing deals.   James: Correct. Correct. Right. That's true. That's true. So coming back to the exit cap rate. So I know that's one of the hardest parameters to measure. Right? So.   Nikolaï: Absolutely.   James: But can you clarify again, how did you, how would you use artificial intelligence to find that a more accurate exit cap rate? You know, T minus five, my T minus 5, five years earlier, before you hit that five years mark of selling, assuming five years of selling.   Nikolaï: So it's the computing power, right. So it's a computer, what we do is, we'll build, so we'll do we'll say, I'm sorry for anyone who hasn't studied, you know, high level university finance, but or statistics, you know, we'll build a, say, a regression model. So we'll look at past data. We'll plug all that in, in order to build a predictive model, a future model being able to come out with future cap rates, and, you know, the more data that we're able to plug into our regression model. So historically, what real estate institutions and economists have use is what they call the linear regression model, use the Monte Carlo simulations. Now, the problem with the linear regression model is that you know, past transactions or data are, are, are also affected a lot by various things like, you know, political environment, and capital markets. And there's a whole bunch of factors. So there's a new model that's being used more and more, especially with a lot of postdoctoral students in statistics, it's called a Quantile regression model. So that's where we're able to create that same kind of, I'm saying this in layman's terms as much as possible, we're able to take past historical data, build that kind of linear model, kind of, like build that line chart for people to understand, and we kind of repeat that line chart in the future. But we're also able to start to weigh that those data points with various things like a new government, with quantitative easing, with the war, with various factors that may be affected that models to make it less linear. And then we're able to start to better predict future stats and future cap rates. So that's the first step of it. The second step is, let's say, right now, we built our Quantile regression model. And now we compute it and what it says to us is well, T minus five cap rates, or five-year cap rate is going to be between, let's say, we have a couple of tracks, it's hard to explain to people who have not done statistics. But we have a couple of tracks. And ultimately, what it says is that the highest probabilities are that cap rate is going to be between 5.75 and 6.10% in five years for that specific market. Now, like I said, as we get closer to the five year period from now, the less the margin of error is, because we're closer and multifamily market moves very slowly. So predicting, the easiest way to understand is predicting 25 years out from now, it's very hard? Your 25 year prediction is going to be way more, there's more room for it to be completely off than your two-year prediction. So we build a model for the five-year prediction, and then starting tomorrow, every day, our artificial intelligence recalculates that model. So as it recalculates, the model gets more and more precise, because let's say we took statistics from today to 20 years ago, let's say we took the cap rate of that market, starting from today, and 20 years back. Well, obviously, the next 20 years are not going to be exactly the last 20 years. But that's ultimately what statistics do, we try and kind of say, well, let's take the last 20 years, there's a margin of error, that's what's going to be the next 20 years.   So what's cool with the artificial intelligence is without actually having to do anything, every day, the artificial intelligence kind of brings the model a day closer and adapts the model with more and more weight on what's going on right now, rather than what happened 20 years ago. And the artificial intelligence is also able to measure what today it predicted for yesterday, versus what actually happened. And what's the spreading difference and what caused that spread? And therefore, once it's able to determine what caused that spread, it'll add that into the equation for the future cap rate model so it becomes much more precise.   James: Yes, but don't try to run it in iteration on a daily or monthly basis to watch the whole investment process. But how do you make it on day zero? Well, today we're buying today how does it iterate then when on a day zero?   Nikolai: Well, what it is I don't understand the question.   James: So my question is, you said the data is being fed into the system to get more accurate exit cap rate. But you're making a decision to buy today? Is the iteration happening from today to all the investment cycle? Or do you do it earlier before you decide to buy a deal?   Nikolai: Okay, I understand what you mean. So like, for determining your actual purchase cap rate,   James: Yes, correct whatever price that I'm going to pay today because that's what I'm getting into the deal. That's the point of me making a decision, whether this is a good deal, and I'm going to be raising money and telling everybody it's a good deal.   Nikolai: The purchase cap rate is a whole other set of statistics and data models. That's more I'd say, determining today's cap rate is much more endeavor of collecting more historical data. Because like I said, let's say JLL Jones Lang LaSalle which is one of the biggest brokerages, they come out with reports and say, Okay, well, the cap rate, let's say in Austin is, 5.2%. Let's say the mean cap rate is 5.2%. Well, that's based on maybe what like 30 or 40%, of actual transactions that happen because they don't have data on like the off-market transactions, or the pocket listings or this and that, right. And on top of that, they haven't normalized the cap rates on whether, let's say, a building traded at a 4.6 cap rate. Well, as we said, if that property wasn't stabilized, well, then that cap rate is off. That's not a good cap rate. So that's a second thing. So for establishing what you should pay to the intrinsic, what's intrinsic value today. that's ultimately what I think the question is, and correct me if I'm wrong, but let's say you're looking at a 100 unit property, what is the actual intrinsic value of that property? What's the real capital I should be buying at? Well, that's a question of having the proper volume of data, Okay, number one. So that's what we're working on right now is making sure we keep on building our database. So instead of our market cap rates being based on the off 30 or 40%, of inventory, or transactions. Well, it'll be based off maybe 60, 70, 75%, therefore, that cap rate becomes more precise. Secondly, we actually look at every transaction and say, qualitatively because that's the first thing is a quantitative aspect, in statistics, we have quantitative, qualitative. So the quality of the data, once we have the quantity, we look at the cap rates and say, okay, that property traded for a 4.2 cap rate. Was that a stabilized property? No, it was not. Once we add the cap x, we have the new revenues. And we adjust the sales price for cap x, but we also adjust NOI. Now we can look at the stabilized cap rate. So that's the qualitative aspects of it. And now we're able to say, here are the market cap rates, here's the low end of cap rates, here's the high end of cap rates, here's the mean, or the media. And here's that range of cap rates. Because cap rates are based on the Capri calculation ultimately, even though people think it's NOI divided by sale price, I'm sure that's not what a cap rate is, that's how you find the cap rate of a soul stabilized property. The actual cap rate calculation or formula is a mathematical equation of R minus G, it's algebra, so are being returned minus g, which is growth. And R is defined as RF plus RP. So the risk-free rate plus the risk premium that you as an investor are looking for or that the market is looking for, a perceived risk premium, obviously. So what we want to do then, that would be like a third step, and we're not at that level right now. But I hope within the next couple of years, we will be, and I'm sure you as an engineer, probably understanding how valuable our ability to do that would become for the market. Is that then you're starting to be able to say, well, right now, that property is being listed at a say, let's say the range for cap rates in Austin is really five to six, obviously, six is going to be in the worst neighborhoods. Five is going to be the best neighborhoods because it's a matter of risk. Well, then you're looking at the property, let's say it's at a 5.7 cap rate. But it's kind of on the limit of a bad neighborhood, good neighborhood. And then you're able to intrinsically say, but the intrinsic cap rate of that property, the real intrinsic value of that cap rate is actually 5.3. Now, if you didn't know that, and you just said, well, the average cap rate is 5.7 well, it's not so much of a deal, I'm not gonna buy that property. But now with this new data, what you're able to see is, wait a minute, it looks more expensive than what it should be but in reality it's not, it's actually cheaper because the real intrinsic value is a 5.3 cap rate. And that would really unlock the potential of what we call value investing, what like a Warren Buffett has built his entire career off of the stock market? Well, he was able to build that value investing exists so much, in the stock market, because of the quantity and the quality of the data. The quantity of data is accessible to everyone, the quality of the data is a bit harder to get the qualitative aspects. That's why Warren Buffett was has been such a great investor, because he invested so heavily into being able to pull out the qualitative aspects of the data, well, now we would be able to do the same thing, you would be able to do the same thing as a multifamily investor. You would have access to the quantity of data needed for you, then to increase your knowledge based on the qualitative aspects of it, and then be able to properly price that acquisition. And then once you're able to do that, well, then you can go say to your investors, look, this is why I'm buying this deal. This is why it's a good deal. And if on top of that, you're able to be more precise with your exit cap rate, and the growth rates of your revenues and expenses and your refinancing rates. Well, you're going to be a much more confident investor.   James: You are making it really what you call a --   Nikolai: It's a more efficient market.   James: It's a more efficient way of actually determining your purchase because you can really just say generally, Austin is what five cap, it's not true, [inaudible00:50:46].   Nikolai: It's kind of scary to say, but we're all kind of invested in multifamily kind of half blindfold. The guys like me and you, and there's a whole bunch of other guys out there really intelligent wrestlers. We're all invested, based on intuition experience, a very strong knowledge base. But we're ultimately kind of invested with one eye closed. Now it's even worse for people who don't have our knowledge base and experience because they're all invested in completely blindfolded.   James: Interesting. So, if you can get that kind of data where you can look at the stock market, and what's the potential, especially if it's in the path of growth. And what's the risk that you're buying? There are some deals, even though you buy it at the lowest cap rate for that market, it could be still the best growth because it could be just like another big explosion, in terms of jobs, is going to be happening in that area just because of the path of growth.   Nikolai: That's so important because if you're a pro forma and you're underwriting you predicted a 2% growth rate in revenue. But in those five years, the analyze growth radio was six. Well, you probably didn't buy that property, when you should have. And the other thing is the same if you predicted a 6% growth rate, and it was two, then you bought that property you shouldn't have, But what most people will say is well, the guy who predicted 6%, he should have put in 2%, like he should have been conservative, but that's not necessarily true. That's a half-truth. That's actually a mistake in logical reasoning because the other guy who says, I'm going to plug in a 2% growth rate because that's what historically happens. What happens if you invest in a market where the growth rate is actually 6%? And that the other intelligent investors knew or predicted that it would be 6%, while they're willing to overpay, according to you for a property, and then you're not buying anything, you're not generating any returns, you're not building your wealth, and you're just kind of sitting on the sidelines there, Bah, humbugging saying, well, the markets paying way too much for the properties and these guys are stupid, stupid money, blah, blah, blah, I'm going to wait for the market to crash and blah, blah, blah, I know guys who've been saying this since 2012. And they have not bought anything since 2012. They haven't generated any returns. All under the pretext of being conservative investors. You know what, they're not conservative investors, you know why because they're not investors. They haven't bought anything, because they take themselves out of the market, and they're sitting on the sidelines, and they're just making up for lack of precision in their underwriting through, this kind of pseudo-conservatism.   James: I think it just depends on the sophistication of the investors. If you look at nowadays, multifamily has become so popular, so many people who did not have the financial education background or the way to analyze a deal. There's a lot of parameters that go into any deals. That's what you mentioned, you mentioned so many parameters, nobody will look at that. Everybody said multifamily is good. I bought it and it went 300%. And they say, Oh, I'm a really good operator. Well, actually, you should have made 500% because the market gave you at least 400%. 100%, you just did 300%, why did you do 300%?   Nikolai: That comes down to what we call the search for alpha. We want to outperform the market. And all these people and there's a whole bunch of them now there's gurus and mentors and coaches, and they're giving all these online classes or seminars or whatnot, or they're boasting about being such great real estate investors. And the reality of it is they don't even know what they did. They're like, well, I generated X percent returns, and I've created X amount of millions of dollars in profit over the last five and 10 years. But that's actually quite average. That's what the market does, as long as you are in the market. Of course, that's what you generated. Now, did you generate more than what the market did? That's the real question. And unfortunately, there are not enough people in the market asking that question. And if you're a passive investor, that's the question you should be asking your syndicator or your GP is not this is what you generated, great. That sounds awesome. You generated 22% IRR annually over the last five years. What did the market generate? The market generated 23.   James: I remember the other day I saw someone, he said, I made 60%. In one year, I bought it in the first year and I sold it in twelve months, I made 60%, I said well, you should have made that 100% because the market went up by that much.   Nikolai: And that's why I'm so bullish on education, and why I think it's so important that multifamily investors get educated and push their knowledge base, because, this is not Nintendo, this is not Xbox, we're not just playing, baseball on our PlayStation three, or Playstation four, this is serious business, and even more, so if you're syndicator. Just in the knowledge base, you know needs to continuously be expanded. And that's why data also needs to be there because knowledge without data is also quite useless.   James: Correct. So coming back to being the alpha in the market. I know you can look at different market appreciation versus how much you are making money. So coming to, let's say, for a decision where you have a deal in your hand, and you're deciding whether you want to sell or you want to refile, or you 10:31 exchange. So can you give us a good methodology to do to make that decision?   Nikolai: To make the decision on whether you beat the market or...   James: Whether you want to sell a deal, or whether you want to refinance, whether you want to hold it for long term or you want to do a 10:31 exchange? How would you approach it?   Nikolai: Well, I'd approach it on a very individual basis. Number one, I think everyone has a very different investor profile. What I mean by investor profile is, what type of returns do you want? And when? What are the strengths and weaknesses that you possess as either an owner-operator or syndicator or whatnot? What access to capital do you have? How patient is that capital? What's the cost of the capital? Now, if it's your own money, obviously, it's probably the most patient money with the cheapest cost of capital. If you're raising money from other people, well, then obviously, there's a less patient aspect to it, and the cost of capital is going to be higher. If you're taking money from bridge loans, well, that's even worse. So if you're taking money from hard money lenders, well, then obviously, your cost of capital is going to be very, very high. So these are all things that you have to consider, you also have to consider where you are in your career with regards to what it is that you want to achieve, either as annual cash flow or just overall that value and what type of risk you're willing to accept.   So ultimately, you have to be able to answer those questions initially, to be able to decide on the strategies. Because ultimately, people in multifamily investing, what they do not understand is the difference between philosophy and strategies. Now, everyone should have their own investment philosophy, based on their investor profile. Now, once you have that philosophy, what you want to do is adapt your strategies according to where you are in the market, and where you are in your career. That's something that is very misunderstood. People say, I'm a buy and hold investor. We hear that a lot in multifamily. So ultimately, what you're saying that you do not have an investment philosophy, that you think you do. You think your philosophy is to buy and hold. But buy and hold is not a philosophy, it's a strategy. So what you're saying is, ultimately, you're investing all the time throughout the whole of your career, using just one strategy. That's very dangerous because let's say the exit point of that strategy eventually, say the day that you do have to sell upon retirement because even though you're buying a whole, you might not be a legacy buy and hold investor. What I mean by that is a legacy buy and hold investor is someone who's just going to pass down the properties to their children, upon death, or upon retirement, whereas most buy and hold investors, what they really need is, I'm going to buy and hold until my retirement, then I'll start selling off. Well, what happens if, during your retirement, you're in a trough of the market cycle. What if you're in that part of the market cycle, or you're at the bottom of it, that's a really bad time to sell? Well, that's the mistake of always investing using only one strategy. So what I would say is that you have to establish your philosophy, understand that your investor profile is going to change over time. And the market cycle moves through phases, there are different phases of the market cycle and your strategies, you have to be able to use different strategies at different phases of the cycle, and at different phases of your career as your profile changes, or adapts or morphs. And that's how you then establish well, with this property, should I buy it and hold it or should I sell it? Or should I just refinance it? What should I do? And I'll give you a very concrete answer. Once I've explained all this.   I have a student here because I do teach real estate investing courses. We actually built a college we call it The College of the Emmerich's. Now you don't have to, it's not college level education. But what we're saying is that from everyday multifamily investors, if you really want to learn college level stuff without having to go to college, well, we have a couple of courses that we teach you very high-level stuff, very concrete work. You still need coaching from coaches and mentors and all that stuff. We actually teach courses. So one of my students in these courses, he's a very successful real estate investor in Montreal, Canada, Montreal is the most important multifamily market in Canada. It's a very strong multifamily market, very competitive. Now he's up to about I guess, 150 units, all on his own, no outside money, no passive money. And he started having trouble refinancing out of his properties because what he was doing, it seems a very big value add investor. So he was using two strategies value added buy and hold. But he was erroneously thinking that value-added and buy and hold was his investment philosophy, which is not, those are two strategies that are part of the philosophy. So he came to me and he said, well, look, banks have now started to tighten their DSCR ratings, and their LTV, therefore, I'm buying a property at a billion dollars, and putting in $300,000 into it. And now the market value of that property is $2 million. But I'm not able to refine it $2 million, because of the banking standards, they're only allowing me to refine out of 1.6. So now, if they're letting you refine out at 1.6, on a 75%, LTV, what they're saying is when you have to leave in 25% of 1.6 plus $400,000, that's a lot of equity, that it is unable to pull out because he was doing too much of a good job at value add. And the capital markets, the banks are not able to follow market value, banks, especially in Canada, are much more conservative than in the US, but even in the US, there is a lot of people buying properties. And they're not able to refine the whole value, because their total loan dollars are blocked by either LTV or DSCR. What I call economic value, the economic value is not as high as market transaction value. Therefore, instead of leaving 25% of equity, you're leaving 25 plus, in this case, $400,000.00. Now that's where I said to him perfect, I looked at his portfolio, I said, well, you have to adapt your strategies, you have to change the strategies, you can no longer at this moment, use the buy and hold strategy, you have to use the fix and flip strategy.   Because you're too good at fixing value add. And you're not able to pull out as much equity as you used to be through refinancing. Therefore, now you have to seriously consider selling that property. Because you can go and get $2 million for other markets right now. So that's an extra $400,000. Because he was able only to refinance 1.6 out of it. So now he's able to get the full market value, pull that cash out, and he has access to a lot of opportunities. He has a really strong bird document work. So his cost of opportunity is very high. If he's leaving all that equity, in these properties that are all stabilized, he's making way more money by doing more value-add stuff. So he made the decision and now he holds zero properties. He sold all of his 140 units because that has allowed him to get more and more cash rich, with less and less money and equity and properties and gain access to more and more opportunities. And ultimately, his annual portfolio, the total return on investment is in the 40 to 70% IRR. Whereas while he was doing buy and hold his overall portfolio was only returned to him maybe 20% if you consider the weighted average return on investment. So that's how I would attack that. I know, that's a very long-winded answer.   James: I think that's the right answer. So I mean, the return on equity, which is date right now, I mean, on this deal. There's so much of dead equity not producing cash. And if your cost of capital, which is also equal to an opportunity outside is much higher, you might as well just cash that out by selling it off.   Nikolai: Because the refinancing is living you to a liquid.   James: Recently, I mean the banks have been more stringent on refine. So the last refine they did ask me to leave 5% my cash basis, which they never did in the past, things have changed. I think that's okay. That's how the banks work now.   Nikolai: It's okay. But the problem is that on a $15 million property, you know, that's two and a half million dollars less cash you have for the next acquisition.   James: Correct. I mean, it depends on what is the cost of capital outside plus how much you can pull out and how much your equity stuck on it. So, coming back to market cycles, because I think this is one thing that I want to ask you because I think you have studied with Dr. Glenn Mueller. So right now, if I look at the latest Q1 forecast for apartments in the hyper supply market. I don't know if that's something that you are aware or not, but...   Nikolai: Nationally?   James: Nationally yes it's not a local, but lots of markets are in it for supply. It's very, very few markets are in the expansion cycle. And even though they are in the expansion cycle, they are at the last stage of the expansion cycle. And all the markets that are on expansion cycle, or the market that recovered late like Las Vegas, Phoenix and a lot of Econo markets. So can you give an overview of what do you think the market is? And what would the strategy be for investors now?   Nikolai: Well, I think number one, I would say that I try not to look at national or macro market cycles. I think that's the first thing to consider. Because multifamily real estate is so hyperlocal. So I look much more at those markets, cycles of hyper supply and expansion and contraction, I look at more of like a metro area. So like you're in Austin, Texas, I look at Austin, I wouldn't really consider the multifamily market at large, because it's kind of like looking at cap rates on an unstabilize property, it's kind of a waste of time. Now, I'd say that I haven't looked at recent data of where all the cycle, where all the markets are, the phases of the cycle. But I mean, I think it is safe to say that, most of the markets right now are in the later phases of the game, or later innings, as Howard Marks likes to say, in the stock market and capital markets. But also, as he says, we don't really know, see the thing with market cycles, and whether it be with Dr. Mueller, whether it be with Karen Trice, out of Australia, and also all the other various professors and researchers of market cycles, is

Click here to get James' new book, What the Quran Really Teaches About Jesus. Gary Myers: Hi, my name is Gary Myers. Joe Fontenot: And I am Joe Fontenot. Gary: We're the hosts of the Answering the Call Podcast. Joe: This is the podcast where we talk to people who are answering God's call. Gary: Today our guest is James Walker. Joe Fontenot: James has a new book out on the Quran but specifically on using the Quran to show that Jesus is who Jesus is- Gary: Wow. Joe: Yeah, it's very interesting. Marilyn interviewed him in this one and I sat in and listened and I really can't wait to read this book because the Quran essentially says Jesus is God without saying Jesus is God, and if you read carefully you can use it as its own apologetic for Christianity. Gary: That's great. I caught his evening session at Defend and he spoke about the book there and it's an exciting book. Can't wait to read it. Joe: Yeah. And he's also got an atheist Christian book club which he talks about, which I thought was pretty interesting as well. Gary: Very interesting. Well, let's hear from James. Marilyn Stewart: James, you are involved in some very interesting ministries and I want to talk to you about two of those. You do spend a lot of time talking to Muslims and also to atheists, but you have a brand new book What the Quran Really Teaches about Jesus prophet of Allah or Savior of the world. So, I want to start there and give you a chance to tell us a little bit about that book. But the title says the Quran Teaches about Jesus. I suspect that many Christians don't realize this. So, what does it say about Jesus? James Walker: Well, it is a surprise that the Quran has a lot to say about Jesus even more than Mohammed, and there are some things that actually that we would agree with that it agrees with the Bible in some places. Now, I think it's important to understand that it's not the same Jesus that we're talking about. But for one thing, the Quran affirms that Jesus was born of a virgin and no other Prophet, according to Islam was ever born of a virgin. Marilyn: And there are a lot of profits that Islam recognizes. James: They recognize any prophet of God. So, the prophets mentioned in the Bible, Isaiah, Ezekiel, talk about King David and Abraham. Yeah, all these are prophets, and Jesus also was one of the prophets. That's another affirmation that you have. In the book I have the transcript of a debate I did with a Muslim apologist Khalil Meek, and that's where the subtitle of the book comes from Prophet of Allah or Savior of the World. So, basically we started off in the debate with the point of agreement. We're both religions, both scriptures, the Bible and the Quran, both affirm Jesus as being a prophet. Now, we're I took it from there is you have to ask the question, what did Jesus prophesy? There is not one prophecy of Jesus recorded in the Quran. Marilyn: I believe you mentioned this when you were speaking at Defend about a Muslim who went to other authorities to check. Tell us a little bit about that. James: Yeah, one of the things that I'm trying to do in the book is encourage Christians to just engage. You'd be surprised most Christians if they think about it a while, they know a Muslim. It could be their doctor, or it could be a pharmacist, it could be a classmate at the university, it could be a convenience store clerk, a neighbor, but they know someone who's a Muslim. And there's, I think we have this kind of built in fear. I don't maybe want to start a conversation. What if they ask a difficult question, or maybe they would be offended if I ask a question about that. So, What I'm trying to do and what the Quran really teaches about Jesus is in the book, be able to have some great questions to ask or a verse in the Quran that you can ask them to explain to you and kind of start this gospel conversation. So, this particular example I gave, I was at a coffee shop and this guy comes in and I had seen him before but not really talked with him anything, but I noticed this time when he came in he actually had an Islamic dictionary in his hand. And I thought, "Okay, I know ... he's Muslim, but he also, I noticed there was only one seat open in the entire coffee shop. So, basically when I saw him headed toward my seat, I had been reading on my tablet, I'd been reading the Bible, but I just switched to the Quran. So, he sat down next to me and I didn't say anything but I thought this might happen. He must have looked over because he taps me on the shoulder he's big smile and he says, "Oh, you're reading Quran?" I said, "Yes I am." He said, "Oh, you must be Muslim." And I said, No, I'm actually Christian. He said, "huh." And it was like, it was a little bit disorienting to him. He didn't know what to make of it, but I said, "Listen, I'm a Christian, but I want to understand other religions and I want to know what the differences are, and I recognize if 1.8 billion people believe the Quran, this is an important book that I should be able to know. And I was reading in the Quran and I was having difficulty understanding a passage." He said, "I'm Muslim, let me help you." And so I showed him Surah 350 where the Quran ... Jesus is speaking actually. Here's another thing you have the saying of Jesus and Jesus says that you must fear Allah and obey me. So, you fear God, but you also have to obey Jesus. And he said, "But that's true, my friend, you must obey Jesus." I said, "Well, here's my question. I cannot anywhere in the Quran, find the commands of Jesus. If we're to obey Him, where can we find His commands?" Well, that ended up being like several conversations like that one and like two more times were talking about this and he was unable to find any of the commands of Jesus and so I said, "Well, this obviously you can only find them in the gospels like Matthew, Mark, Luke and John." He was a little bit hesitant to go that way but I finally convinced him if he would read Matthew's Gospel with me and see if we can find anything. He would say, "Oh, but the Gospels have been corrupted." I said, "But is there anything remaining of value there?" Well, he hadn't thought. "Well, there could still be something good let's go look and see." So, this is again, a way that just knowing a little bit about the Quran maybe a good verse, know the right kind of questions to ask. Yeah. And it ended up being for better part of probably six or eight months, we had off and on conversations. Marilyn: Now, so, he didn't know any commands in the Quran from Jesus and also prophecies? There were no prophesies in the Quran? James: Yeah, you can take the same approach with the prophecies. Nowhere in the New Testament. In my debate with Khalil Meek, when we both agreed at the very outset, okay premise one, is Jesus a prophet of God? Both affirm. So, my question which is a good question to ask any Muslim, what did Jesus prophesy? Marilyn: What do they say when- James: Well, they assume he must have prophesied what the Quran teachers. There's the idea that in Jesus' original writings that may be he must have taught Islam. Now, we don't have any of these writings because you don't find any of that in the four gospels or in the New Testament or anything like that, but there's this assumption, well, he must have taught the five pillars of Islam. Like any good Muslim and so I asked Khalil on that, "Can you show me the documents?" Now, when I'm going to say that Jesus made a prophecy I'm going to point to ancient documents very close to the time that Jesus lived. The best he could do was to say that those were corrupted and need to be superseded by the Quran. Marilyn: ... Now, that's interesting. So, let me make sure I'm understanding this correctly. Because the Quran does not list any commands or prophecies of Jesus, that presents a problem, but they can't feel comfortable accepting the Bible because they feel the New Testament is corrupted. James: Well, it's what Jesus prophesied. He prophesied that He would be crucified, that He would die, that He would rise three days later from the grave. These are things that not only are not in the Quran, the Quran mentions them and says that they're not true. Marilyn: Yes. Okay. James: But you don't have a prophecy of Jesus saying this. So, if someone is going to be a prophet, is he a true prophet or a false prophet? Of course, I mentioned in the book that, and the Muslim apologist Shabir Ally complains that the New Testament is not trustworthy because the Gospels may have been written several decades after the events they describe. Well, that doesn't mean they're not true, but ironically he's complaining about several decades when the Quran is trying to comment on something 600 years later, 800 miles away. Marilyn: Interesting. So, they then do say some at least that this corruption that took place with the New Testament they assume that these five pillars that's what's been taken out. James: Right. So, he must have taught Shahada, he must have taught everything that we find. So, it's kind of like the ultimate conspiracy theory is the idea that all of Jesus' original disciples were all Muslim, Jesus was Muslim, all his disciples are Muslim. They believe Islam, they believe what you now can find in the Quran and they wrote them down in what they call the Injil, the gospel, but none of the copies remain. Every copy that we have, very early copies that we have match what we have in our New Testament. So, one of the examples was that in the, there's a fragment of John's gospel, the Ryland P52 fragment, which is the oldest extent part of the New Testament that we have. It dates traditionally between 100 and 150 AD. Way before Mohammed. Ironically that little piece of fragment is actually citing a prophecy where Jesus speaks of his death and his resurrection. Marilyn: Yeah, the manuscript evidence for the New Testament just in Greek is around 5,000 manuscripts. And then of course we have other copies and other languages. So, we do have good evidence how the New Testament came to us. James: Right, and if you want to claim that there was another earlier uncorrupted New Testament, I mean, that's an interesting theory but I'd like to see some documents. Where's any proof on this? Marilyn: Sure. Let's go back to where else the Quran says some things about Jesus that we could affirm that do match up with what the New Testament says. James: Well, that Jesus was a prophet of God. We mentioned that His birth, His coming was predicted by the other prophets. They even say in the Quran that Jesus is Messiah. Now, they mean something very different by that than what we do. So, they're not trying to say Jesus was Christ or savior. That is not what they believe. But they do have the title Messiah. So, that would be something that we would affirm. To me, one of the most remarkable affirmations though is that the Quran teaches that Jesus was born of a virgin. And there's a whole chapter about Mary and about the virgin birth of Jesus in the Quran. I'd like to say, in fact, it's kind of the opposite of the Gospels. The Gospels is, 80% of it deals with Jesus' life and then rather, 20%, 25% and then the vast majority deals with those last two weeks. While in the Quran it talks a lot about Jesus but the vast majority talks about His birth and the early years and not so much about the later part of his ministry. But yeah, there's a passage in the Quran where it says that we honor and believe all of the prophets of God. And it lists several, including Jesus, and we make no differentiation between them. A great question to ask a Muslim is, "Hey, we have something in common. You believe in the virgin birth and that's what our scripture says, that Jesus was born of a virgin. Here's the question, tell me what other prophets were born of a virgin?" Marilyn: That's a good question. James: Well, there has been no other prophet. Not Abraham, not Ishmael or Isaac, or they would talk a lot about King David, none of them. So, even Mohammed. Mohammed was not born of a virgin. Marilyn: So, Jesus had this miraculous birth that no other prophet in the Quran has had. James: Yes. And would you have to agree with me then that Jesus is unique among the prophets if no other prophet has this kind of birth. Marilyn: Now, how is it that they see Jesus differently? Where do we disagree on Jesus? James: Well, unfortunately the disagreement on the essentials of Christian faith and the very core of the gospel. So, they're first of all going to say that while Jesus was a prophet He was not the Son of God. In Islamic thinking, and in the Quran actually, is pretty clear on this. The idea of God having a son is reprehensible to them because it implies if you're the Son of God that ... and I would agree it does. Some level, there's a quality there. You're the same type of being the father and the son. And in Islamic monotheism, only one person can be God, Allah and not any other person. If you ascribe the attributes of God to any other person, even Jesus, it is tantamount to the unpardonable sin. It's what they call the sin of shirk. Marilyn: And this is unforgivable, unpardonable, it is a major problem for Muslims. James: Yeah there's some Muslim folklore that's not explicitly said certainly in the Quran and not even really explicitly taught in the Hadith, but the idea is if you're a Muslim on the day of judgment and your bad deeds outweigh your good deeds, the Muslims all agree, you go to hell. But there's a caveat there, this idea that if you did not commit shirk and you were Muslim, that you potentially can get out of hell later. Marilyn: Okay. So, there's a way out. James: Again, that's not in the Quran. I asked a friend, one of my Muslim friends I was talking to, "I cannot find anywhere in the Quran where you get out of hell tell me where this comes from." And he, "Oh, it's not in the Quran it's in the Hadith." And I say, "Well, you know my Imam friend told me that Hadith is not totally reliable." And he's, "Well, it's not totally reliable." What if the part about getting out of hell is in the unreliable part? Marilyn: Gosh, that would be a bad situation. James: It would. Marilyn: Now, the Hadith, explain what that is and how it's different from the Quran. Just a brief explanation. James: Well, when Mohammed dies, and this is actually like a century or two after the death of Mohammed. The collection of the Hadith begins. And this is where you're trying to gather together a corpus of data on what Mohammed did and said, is extremely important in Islam because Islam is very much focused on orthopraxy, doing things the right way. I mean, everything. Every aspect of life, there's a right way to do it. It's based on the pattern of what Mohammed did. Well, that's based on Hadith. So in Hadith what they're doing is, they're trying to gather these statements, these sayings or deeds and they're trying to build a chain of custody on them. So, you have this saying, the story, and how do we know it happened? Well, this particular person said that he talked with someone who was one of the Friends of a companion of Mohammed. And so, they they connect the dots, try to get it back to the life of Mohammed, and there are several collections of Hadith. Many, many volumes of work. So, the idea is the Muslims will try to weigh how reliable that Hadith is. Is it highly reliable, is it somewhat reliable, and they base that on that chain of Custody. But I would say in a practical sense that what Islam is today is based at least as much if not more on Hadith than it is on Quran. Marilyn: Oh, is that right? James: Yes. Marilyn: And so, this shows some, it shows how important their thinking is on following a certain, I don't know if works is the right way to say it, but there is a path laid out for them that they must follow. James: Yeah, even the five pillars you don't find it at all clearly in the Quran. There's implication and stuff, but that you're to pray five times not six or seven, that's Hadith, you don't get that in the Quran. Marilyn: Very precise. James: Exactly. And so that's, on a practical level, extremely important in day to day Islamic life. Marilyn: So, it lays out a step by step thing that they must do in order to be right with Allah. James: Yes. Marilyn: So, there is no savior in Islam, is that correct? James: Yeah, and that was, we included as a chapter the entire transcript of my most recent debate with Khalil Meek and the title Jesus Christ prophet of Allah our Savior of the World, and Khalil is adamant that Jesus is not the Savior. But one of the debate issues that came up, if Jesus is not the Savior, who is? Who's the Savior then? And the tragic part of Islamic theology is, it's not just that Jesus isn't the Savior, there is no savior. Marilyn: Do they realize that they need a savior? Do you find that longing in their heart to this understanding that they are not quite good enough, that they haven't followed that path as closely as they need to? Do you get the sense that they have that desire to have a savior? James: I think not so much initially. Part of what I'm trying to do is get that Muslim friend with me into the Bible. So, I'm going to start with the Quran, but I'm trying to shift over, "Can we see what the gospel say about this." And try to get them to hear the stories of Jesus and you get a very different picture of God in the New Testament. You get a God who so loved the world that He gave His only begotten Son. Well, in Islam Jesus can't be the begotten son. It says in the Quran, "Allah neither begets nor has he begotten, but even more disturbing you don't have a God that's love. You have a God, Allah is merciful, but there's a big difference between merciful and loving. In the same way the God in Islam cannot partner with or share His attributes with, He can't have a son or He can't be a son. This idea imply that He can't have that love relationship either because he's separate and distinct and totally apart from creation. Marilyn: And so, they do not think of God as a heavenly father as Christians see Him? James: Not father at all that's anathema to call Jesus father. And even in the doctrine of the Trinity, there are several places in the Quran where it says, stop saying, seize saying God is three. And in parentheses Trinity, sometimes they'll put the parenthetical in case you don't know what we're talking about. We don't believe in the Trinity doctrine. So, technically, is a monotheistic religion and it does cause confusion with Christians. We hear from our news media, we hear from some of our politicians even. Oh well, Christianity and Islam they're both monotheistic religions, they are both religions of Abraham, they put their roots back in Abraham. So, they believe in one God, they believe in the same God. Well, I would beg to differ on that. The believe in one God doesn't mean that we're talking about the same God. I've never met any Muslim, any Imam, any cleric, any even rank-and-file Muslim who would ever say that God is the father of Jesus Christ, you can't say that. Marilyn: So, we do worship different gods. James: I would say so. Marilyn: And we can start with the things that we do affirm about Jesus but it is important to lead them to the Gospels and finding out who Jesus really is. James: I do find some parallels ain how the Apostle Paul dealt with the Epicurean and Stoic philosophers. So, the Areopagus, and Athens, and Mars Hill. When He is talking to them and when he's confronted by them and he's trying to explain the gospel, it's interesting he never quotes any scripture. If he had quoted it, those guys wouldn't have known what he was talking about anyway. He does elsewhere quote their philosophers. And so what he does is he finds a point in common. There was a shrine to this unknown God. And I think, Paul, thinks, "Hey, I don't believe in Greek mythology, but this is too easy to use. Even they've acknowledged there might be a God they don't know about. This is the one I want to tell them about." Marilyn: And this is why your book is so helpful because you pull out some passages from the Quran that is a great place for Christians to start as they're talking to a Muslim. Some of those passages about Jesus and how He is, the things they agree with about Jesus and where it is different. So, your book came out this year? James: Well, late last year, it's already a new year now. Marilyn: Well, that's true. We're in 2019. James: Less than a year ago. We can say it that way. It seems like, and I tell you, I do not really embrace and enjoy the writing process. I do it. I am not happy to write, I'm happy to have written. Marilyn: And you are a good writer. It's very clear. James: Well, thanks. But it's, sometimes I think that writing a book is the closest a man can ever know to what it's like to give birth. So, it's like the labor pain. Marilyn: No, giving birth is worse. James: You've done both so you would know, but yeah, I don't enjoy the process but I'm glad that it's done. I like the product, had a lot of people helping me. I had our editor at Watchman Fellowship at my ministry did a lot of work to help, and then at Harvest House, the senior editor there, Steve, he's just so good at what he does. Marilyn: Excellent. Before we leave Islam, I want to give you a chance to talk about tips. You've mentioned a couple of things, but for Christians that want to make a friend of a Muslim and lead that Muslim to Jesus, to a loving God, you mentioned several tips at Defend, and I know you use the word task that this is our task, I just wanted to give you a chance to explain that to us, give us any other tips for getting to know Muslims, how we get to know them, how we approach them, anything like that you'd like to say. James: Yeah, I would just say just in general, and this is not just Muslim, this is really trying to build relationship with anyone for the gospel. I have a Mormon back, I used to be Mormon before I became a Christian, and when I first became a Christian I kind of did it all wrong with my Mormon friends. I could prove them wrong and I have all this evidence I want to hit them over the head with and looking back on it I should have known better because nobody responds well to when somebody says, I can prove you're wrong 10 different ways or something like that. So, over time, what I, here's what I've learned. It's really all about relationship. What did they say. No one cares what you know till they know that you care. And so, on the building on the back of relationship, you earn the right ... first of all, you know the person and you spent time with them that they can see that there's something different about you. They can see Christ in you, hopefully. And also you earn the right to ask the question. And there's a feeling of safety that, they know that I'm going to be their friend whether they're Muslim or not. And so it's not about if you convert to Christianity, then we can be friends. No, we're friends. If you convert to Christianity, I'd be thrilled. But we're friends either way. Marilyn: That's a good point. James: And building that relationship. So, it's all about that and asking the right questions. At the end of most of the chapters, we have a series of good questions that would help further that gospel conversation and gospel discussion. The other thing I would encourage people to do, I thought, many, many years ago, I had been dealing with reaching Jehovah's Witnesses, reaching people involved in the occult and I'll put in this Muslim thing. It's just like, I have this kind of fear. If I start talking to the Muslim, they're going to say, "I'm Muslim, I'm not interested" or something. And I found the exact opposite. What I found was, "I'm Muslim. I'm very interested." Marilyn: And this is fascinating. I think a lot of Americans felt that way, still feel that way. A little afraid to speak to a Muslim. James: Well, you know, we were the generation that lived through 911 and we see the terrorism and it's connected with radical Islam and sometimes there's an actual fear, every Muslim that you see, is there a bomb involved or something like that. I'm not going to minimize that that's not a bad problem. The vast majority of Muslims do not interpret the sword versus, when the Quran says that you're to smite the infidel and strike their necks and stuff, my friend Khalil that I did the debate with, he would tell me, "James, when it says to kill the infidel it's about the infidels on the Arabian Peninsula during the time of Mohammed and the warfare that was going on. It doesn't mean kill all infidels everywhere all times. It's a specific." He'd make a comparison to the Canaanites and the Exodus. Marilyn: In the old testament. James: It doesn't mean we're to go conquer every land and kill all the inhabitants and drive them out. So, if that's what most Muslims believe it's probably not my best strategy to talk them out of that. "Oh, no, right here you're supposed to smite infidel, that's me, you're supposed." No. If that's what they interpreted, it is what it is. There are Muslims that do interpreted it in a terroristic fashion. So, I'm so appreciative of our military, our first responders, and those politicians who make the right decisions to help protect us from all dangers, foreign and domestic, including religious terrorism, but my job as a Christian, I'm not the Air Force or the army, I'm not Homeland Defense, I'm part of the church. So, I feel like my job is the gospel, not so much to be involved in military or political solution. I really kind of feel we may be beyond, on the case of radical Islam, we may be beyond a political or military solution at this point. The only real solution I think might be the gospel of Jesus Christ. Marilyn: And it is a great opportunity. We say we are people of the Great Commission and God does seem to be bringing the nation's to us even from nations that we can't get into as missionaries. So, this is great. James: I've noticed a lot of pushback from people who, they're disturbed by there's so many Muslims moved to America in a 10 year period according to our most recent census, Islam is growing by 160% in just 10 years in America. But we have to say, well, you look at the other side, these people, a lot of them are coming from countries where it is illegal to share the gospel. Now that the Muslim is your next door neighbor or is your classmate at school at the college or something, you don't have to get on an airplane, you don't have to go through the red tape, is a mission field that comes to us let's see if we can take advantage of that. Marilyn: So, what are the things that we have in common with Muslims in terms of, they are people that love their families, love their children. And in terms of developing relationships, surely they are things like that, that we can connect to. What would you say to that? James: Well, one of the things, you're dealing a little differently if you're dealing with a Muslim, from Saudi Arabia, or even from Pakistan or Indonesia, Muslim country, Sharia law, you're dealing with a little bit different mindset when they come to America versus an American Muslim, but just understand that a lot of Muslims are confused when they get here because they assume that America is a Christian nation and everything that they see, everything that they see on the internet, everything that they see on TV and the movies, they think, "Oh,, this is Christianity." And to help them to see that not everything American means Christian. A great question to ask is, when you've built that relationship with the Muslim is say, "Let me ask you my friend, have you ever came to the place where I share with you how I became a Christian?" And sometimes there's this confused look, "Well, you were born in America." Marilyn: Sure. James: "Well, yes I was, but to be born in America makes you an American, but to become a Christian you have to be born a second time." And it's almost like John chapter three. Is usually like, "What do you mean to be born again?" It's just like, they've never heard this before. Marilyn: That's great. James: And this was my life before you should be able to do this in 90 seconds, but I wanted to please God, but I was concerned that perhaps I had sinned against God and there may be a day of judgment where I would stand before God and what if I fail what would happen to me? and I realized at a point in my life I needed help, I needed a savior. And that's when I realized that Jesus was more than a prophet. That He actually came to be my substitute, to offer me eternal life. Just that little kind of communication and it's almost you can see, I can remember vividly seeing it's like childlike like, this is they've never heard this story before. Marilyn: Interesting. Well, the gospel of course is a great message and He is a God of love so I could see where this could draw Muslim very easily if we are genuine in our faith and in our walk. I do want to change the subject now and kind of shift gears and go to something that you do that is also very fascinating. That's the Atheist Book Club. So, how in the world did you get into an Atheistic Book Club? What does that look like? And whose idea was that? James: Not mine. The actual title is the Atheist Christian Book Club. So, it's atheistschristianbookclub.com, and this is something an atheist friend of mine kept bugging me to do. It's a long story how I got invited to this atheist gathering that they have like a fellowship. And just out of curiosity I went and they were actually kind of really nice and had a lot of questions. And I would try to go at least maybe once a month or something. And we got into all kinds of great discussions about everything from, Big Bang cosmology to the source of ethics, and intelligent design, and the Dallas Cowboys and I mean, all kinds of things, but over time I-

TD Ameritrade: Cordier Gives New Oil Price Forecast James Cordier Ben: Welcome back to Futures with Ben Lichtenstein. Traders, with OPEC’s recent decision to increase production, crude has been the focus for many. To help us take a look at the recent price activity in the energy markets and the impact from the recent OPEC decision, traders, we’ve got James Cordier, the President and Founder of OptionSellers.com, joining us this morning. James, welcome to Futures with Ben Lichtenstein. Crude rallied on the news but no follow through. Does this point to the decision having already been priced into the market? For the most part, was this move expected? James: Ben, it’s really interesting, the movement in crude oil after the announcement. I think what OPEC and, of course, plus Russia was trying to do was give a soft landing. I think they’re very familiar with the fact that oil prices can’t continue to escalate as many U.S. economies, as well as in China and Europe, are slowing. We have PMI in Russia and both China not doing so well. Of course, we have China down 25% from their recent high and a soft landing is very important. Needless to say, having the market just fall out of bed is now what they wanted either, so we had a very quick $8 decline in prices. We’ve now rallied back about half of that and it’s possible that we’ll fall into a nice equilibrium here with plenty of supply but not too much to cause prices to go higher. Ben: Yeah, it looks like we have a bit of a range forming up above 64 and below 73. James, I’m wondering, how much of a boost in production is to slow the pace at which they’ve been reducing inventories, and how much is to combat the reductions in production that we’re seeing related to sanctions and issues in Venezuela, because the $1 million increase in production isn’t going to be enough to balance off both. James: It’s really not. You can add Libya to that last, as well. The fact that we had over compliance coming into this meeting allows both Russia and Saudi Arabia to actually pump more than what the report came out here 3 days ago. The fact that we’re talking only 600,000 additional barrels, that is not going to be enough, you’re correct, to take care of what’s coming offline in both Iran, Venezuela, and in Libya; however, there is a lot of fudge room right now available. The fact that both Russia and Saudi Arabia now have the green light to pump more oil, I think we’re going to see in the 3rd and 4th quarter probably closer to an additional 1 million or 1.1 million barrels. The 600,000 that was announced is not enough to slow down this market. Ben: Yeah, it seems to be the case. We’ve been hearing a little bit about distribution issues as far as the WTI production as it nears that 11 million barrels per day level. Is some of the narrowing that we’ve been seeing in the Brent/WTI spread related to the bottleneck that we’re seeing in distribution? James: That’s exactly right. What’s going on right now in the United States is we do have a great deal of new supply coming on, but there is a bottleneck and it is allowing the Brent/WTI to narrow. I think we’ve seen that just recently and we’ll probably see it narrow another dollar or two in the next upcoming weeks. Ben: James, talk to us a little bit about what’s going on here as far as what you’ve been seeing and hearing regarding Canadian oil sands and the outage. Is this impacting the spread or impacting price at all? James: Not as of yet, but it’s very interesting, the price of oil coming up and then the Canadian dollar coming down recently is a really interesting conundrum there. What’s going on in the Canadian oil sands will come out to play in the next several weeks. There hasn’t really been a big market moving affect there yet, but that will be coming up if it doesn’t get straightened out soon, I think. Ben: James, I’m curious because everyone’s joking about OPEC plus one right now, meaning that Russia seems to be more and more influential and I’m curious if you could talk to us about the role that Russia had in the recent OPEC decision. Is Russia’s involvement a good thing for the stability of energy markets? James: You know, with Russia, Ben, being the 2nd largest producer now in the world, they have to be in just about every conversation. The compliance between OPEC and Russia right now has just been fantastic. I think it’s almost like the most incredible central bank right now in reference to oil. The Saudi and Russian compliance right now it looks excellent. We think that Vladimir Putin’s going to be in office for probably over the next 10 years, so he doesn’t have to be a short-term thinker. He can think long-term, find out the exact price that the global economy can withstand without throwing it into a recession, and that team right now has been excellent. I think Russia would be really happy with a $75 Brent price going forward and I think that’s the equilibrium we’re going to see. I could see a $10 trading range for oil the next 6-12 months and WTI in the mid 60’s and I think everybody would be happy with that. Ben: Yeah, except for those traders that are looking for a high volatile market but, James, let’s talk a little bit about the dollar correlation to the crude because we’ve been watching the crude come off. The dollar, for the most part, has been hanging out around that 95 level. I’m curious, what are you seeing in terms of that inverse correlation breaking down a little bit recently but I’m wondering if, now that we have the OPEC news, if that correlation is going to start to come back into play a bit? James: Ben, the interesting part is the U.S. dollar and the strength of it over the last several weeks. Clearly we’ve come off just a little bit recently but we have negative rates continuing throughout Europe, we have one or two more hikes coming in the United States over the next 3-6 months. The dollar is going to continue to be underpinned and that is going to probably help keep a cap on oil prices, as well. Of course, oil being priced in U.S. dollars, a firm dollar, I think, through the rest of 2018, will help also balance what I think is a balanced market right now. Ben: All right, well that’s definitely giving us a little something to watch here today. James, I appreciate you coming on the show and joining us on Futures with Ben Lichtenstein. Traders, that’s James Cordier, the President and Founder of OptionSellers.com.

Another episode of tales at sea. Following on from the mysterious tales of the Dark Gentleman, we find another curious passenger on board…although will they turn out to be any less disturbing to the crew? Music: Creepy — Bensound.com.   Andrew: Here are some Totally Made Up Tales, brought to you by the magic of the internet. This week: The Stowaway. James: Martin, the First Mate, thought he knew everything about this ship, as First Mates really ought to. Andrew: It was not the largest ship the world had ever seen, but nevertheless it contained many nooks and crannies and corners that men who had served on it across journeys of several months had still not managed to explore. James: Martin, however, knew them all. But something was not quite right. Andrew: There was a strange energy on board the ship, that was quite different to the masculine peace that settled aboard the boat once the shore was safely left behind. James: It reminded him of the one or two times when they'd transported families from Southampton across to the New World looking for a new life. Andrew: It was not as strange as the time when the famous occultist traveled with them and disappeared halfway across the ocean, but it was still something not quite right. James: Martin didn't like it when things weren't quite right, it upset the smooth running of the ship and it made the men grumble, and that was one of the worst things to contend with. Andrew: He decided that he would determine for himself whether there was anything untoward going on, on the ship, but he would do it in a subtle and determined manner. James: He drew up a schedule where he could regularly walk every turn and every corner of every deck, both above and below. Andrew: He began his exploration and very soon began to have an even more acute sense that there was something either just ahead of him or just behind him, but it was as if, whenever he turned his head, the thing it was that was following him or that he was following — and he could not be sure which it was — had disappeared, and he was left once more alone. James: He had first had the sense a day or two out of port, and it continued for a full week, gradually making him more and more frustrated, until one day, Timothy, the old cook, came to him. Andrew: Timothy was a grumpy man, perpetually red in the face with irritation, and missing his right leg. He had adapted his kitchen galley successfully so that he could navigate his way around, but in all other areas of the deck he moved on traditional sailor's wooden crutches. James: He came to Martin with a complaint about theft. Andrew: An entire barrel of biscuits, which he had been intending to use later that week, had disappeared from the kitchen, lock, stock, and barrel. James: Martin knew that none of the men would have tried to secrete an entire barrel anywhere else about the ship, it was a ridiculous and foolhardy notion that you could even get away with it, and so he continued his pacing about the decks until he discovered the barrel, now empty, in one of the smaller holds. Andrew: Scattered on the floor around the barrel here and there were biscuity crumbs. James: Martin spent some time checking the rest of the hold, looking behind the crates and boxes, and underneath the tarpaulins, but he could not find any indication, other than the barrel and the crumbs, that anything was amiss. Andrew: Later that day, in the evening, he sat down with the Captain for dinner, and the Captain turned to him with his customary question and said, "Well then, First Mate, what are the news?" James: He recounted how Timothy had come to him and his investigation and what he'd discovered, and the Captain looked at him with suspicion crossing his face, "Have you felt a presence onboard ship?" he asked. Andrew: "Well sir, as it happens," Martin replied, "I have felt a rather different atmosphere on the ship than usual… it has seemed that there has been something here." "What do you make of… this?" said the Captain. He opened the draw of his work desk and took out a piece of paper covered in a strange childish scrawl, and laid it out in front of the First Mate. James: "Was that? It looks like it was drawn by a child, sir." Andrew: "Yes, it could be a child or possibly a madman, or I'm not entirely sure. I dismissed it entirely of course, read it through for me." James: "I can't make it out at all, sir. It doesn't seem to be written in English, or indeed any other language as I recognise." Andrew: "Yes, I thought that," said the Captain. "But here, look, when you hold it up to a mirror, now try." James: "Oh my word," said Martin. "You're right. It's a diary." Andrew: "Yes, that's right. A page from a diary. A diary that's been kept while on this ship. I found it fluttering along the passage outside the door to the hold." James: "Do you really think so sir? We have a stowaway?" Andrew: "I think we should consider the possibility. Nothing has been quite right on this ship since the time that mysterious man disappeared after saving us from pirates, and I wonder if the forces of the occult have returned to haunt us." James: "I shall organise the men to do a thorough inspection, sir. I'm sure we will catch them." And indeed Martin was sure that he would catch the stowaway. Andrew: Duly assembled, the men set out in groups of two around the various passages of the ship in search of the mysterious diary writer. James: Creeping down the passageways, hunting through the holds, peering into the dark corners, the men gradually covered every inch of the ship. Andrew: Each pair in their turn, returned from their searching to the main deck to report to the First Mate, and came back empty handed. Not a sign, not a scrap, not the slightest clue as to the writer of the diary had been found. James: Two by two, Martin ticked them off in his head until there were five pairs still out, then four, then three, then two. The last pair that had gone down into the holds below reported that they could see nothing out of the ordinary, and he was just wondering how the other pair was getting along when the sound of a struggle came from the cabins that they had been searching. Andrew: The cries and thuds muffled by the several layers of decking nevertheless could be heard and stirred an immediate call to action in the First Mate. He grabbed two of the pairs nearest him, his trustiest men, and set off down the hatches to go and investigate for himself. James: He burst in, the men hard behind him, on an amazing scene. Andrew: Inside the passengers' cabin, standing quietly and unassumingly in the centre of the passenger cabin was a small elfin faced girl with close cropped hair, beaming at them with her hands on her hips. Lying on the ground of the cabin in front of her were the two burly sailors, out for the count. James: A thought flashed through Martin's mind, wondering how on each how such a small child had managed to overcome such large men, but he was too well trained to voice this concern. "Seize her!" he cried. Andrew: The men who had come down with him and to whom his order was addressed looked at the girl, looked at their fallen comrades, looked nervously at each other, and hesitated upon the threshold. "Didn't you hear me, men?" said the First Mate, "in and seize her!" James: Greg looked at Harry, and Harry looked at Greg, and neither of them wanted to be the one to make the first move. So Martin reached forward and grabbed the girl by the scruff of the neck. Andrew: At once, she burst into tears, and paying no heed to her bawling, Martin dragged her through the passageway, dragged her up onto the deck, into the Captain's cabin, where he threw her roughly to her knees in front of the ship's commander. James: "Good work, Martin," said the Captain. "And what are you, eh?" Andrew: The little girl looked at him, sobbing, wide eyed, and said, "oh please sir, please, have mercy on me." James: Martin nudged her with his foot. "Captain asked you a question," he said. Andrew: "Oh, oh, I am ..." The girl took a deep breath in and looked directly at the Captain imploringly and said, "I am but a poor child, sir. My father was a sailor of many years standing and spent his life at sea and one day in a tragic accident was killed when his ship caught fire. My mother was unable to support herself, me and my brother, and my brother signed up to sail to the New World in the Navy and I decided that the only way forward for me was to follow him and so I ended up here on the first ship I was told was sailing to the New World and I hid in the hold." James: The Captain looked at her sternly. "I cannot just let stowaways use my ship as free transport between the continents." He said. "We cannot throw you overboard, we're in the middle of the sea, but if you are to remain here, you must work to earn your keep." Andrew: "We have no use for you on deck, this is man's work requiring a man's strength, but the kitchen is short of a boy, you shall serve there for the remainder of the voyage. Go, at once. You will be directed by Timothy the cook." James: And so Martin took her down to the galley, and introduced her to Timothy, and Timothy immediately put her to work scrubbing the Brodie stove to keep it clean or at least as clean as Timothy deemed necessary for basic sanitary food production purposes. Andrew: With a dedication and an application and a thoroughness that seemed uncharacteristic for someone that looked outwardly so delicate, the little girl scrubbed at the stove, scrubbed and polished and shined. Bucket after bucket of dirty water was emptied over the rail into the sea, until the Brodie stove was as good as new. She turned to the cook and said, "sir, I have scrubbed the stove. What would you have me do next?" Tim looked at her and said, "sir? I'll have no sir in my kitchen! I'm Tim the cook, and what's your name?" James: In a small voice, Elsie introduced herself and told her story of how she had come to be on the boat. In return, Timothy gave her a history of the vessel, including some of the rare goods that they had transported and the confusing and perplexing tale of the Master of the Dark Arts, who had recently bought passage with them to the New World. Andrew: Over the days that followed, Tim and Elsie built up an extraordinary rapport. The cook, who was usually one of the grumpiest and least sociable fellows aboard the ship, had taken a shine to this little girl, and she to him. The atmosphere in the kitchen changed from one of shouting and swearing to one of laughter and camaraderie, and the quality of the food rose remarkably as a result, raising the morale of the rest of the crew. James: Over dinner one night at the Captain's table, the Second Mate, Will, turned to the First Mate, Martin, and mentioned sotte voce that perhaps they should have a stowaway on every voyage. Andrew: They laughed, looking at their empty plates wiped clean by freshly baked bread, when suddenly they were interrupted by a cry from the lookout tower. "Ship ahoy!" James: Coming onto the deck, the Captain looked at the lookout, who was pointing hard astern. Behind, somewhere in the darkness, there was a light. Andrew: A half a mile off or so it seemed, there was a ship shaped object bobbing backwards and forwards with the motion of the waves with an eerie glow that seemed almost otherworldly. James: Slowly, the shadowy shape was gaining on them. Andrew: The Captain summoned the crew to their action stations, called for the sails to be hoisted full up, and observed the mysterious shape still gaining on them. James: The faster they went, the faster it pursued. As the spectre came closer, the lanterns from their own ship, and the light inside it, gradually made the shape clearer. Andrew: The First Mate turned to the Second Mate and, furrowing his brow, said, "this is going to sound like a very strange thing to say, but does that look to you like a ship made out of smoke?" James: "Not any ship," said the Captain. "That is the ship that we saw burn to the waterline." And it was true, the superstructure looked identical, the rigging, the position of the masts and sails. It was the pirate ship that had chased them so recently. Andrew: And as it came closer, the mysterious glow that had revealed it when it was at a distance to the lookout resolved into the flickering embers of the final burning pieces of wood floating on the water underneath the smoky shape. James: "Can we even fight that, sir?" asked the Second Mate. Andrew: "Do we need to fight it, sir?" said the First Mate. "What's its intention? It's just smoke." James: "It's evil," said the Captain. "Prepare the cannon." Andrew: "How do you know it's evil, sir?" said Will. James: "I just have a feeling," said the Captain. "The feeling that evil has been dogging us ever since that ship burned." Andrew: The cannon trundled forward on its heavy wheels to the ship's rail and was being loaded by the men responsible for it. They turned to the Captain and said, "Ready to fire, sir", and the Captain said, "Very well, fire at —" But before he could finish the command, a small tug on his elbow revealed that Elsie had come up to the deck and was looking at him with a serious face. "Please sir," she said, "don't fire on the vessel, it's me that it's come for. Please let me go and speak to it." James: Agog, the Captain let her pass. Elsie walked right up to the rail and held her hand out towards the ship that was now only a few dozen feet away. Andrew: Out of the swirling mass of smoke that made up the shape of the ship, with its amorphous and shifting edge, there seemed to solidify an additional shape of a man standing opposite Elsie, face to face, where the rail of that ship would be if it had a rail, and it seemed to that an arm came out from his smoky body and extended across the water and gently, gently, gently made its dark tendrily way to her hand until it touched it. James: As soon as it did, the smoky ship started to dissolve and waft away on the fresh breeze coming in from the ocean behind it. "Daddy," she called out gently. And in response, a deep thrumming sound seemed to make the word "Elsie" from across the water. Andrew: With the contact between the two having been made, the form of the smoke ship dissolved and it became once more the mists that roll over the seas at night and ceased to have any shape or solidity. James: And as it dissolved, so too did Elsie's form gradually fade away until the Captain, the First and Second Mate and the crew members could see plain through her. Andrew: As she was on the verge of disappearing before their very eyes, she turned looking at the crew in turn and taking them all in with her penetrating gaze, finally her eyes rested on the Captain and she said, "thank you" — and vanished. There came from the hatch leading down to the galley a sobbing which caused the First Mate to turn and there to his surprise he saw Tim with his face buried in his cook's apron, uncharacteristically emotional. James: The crew were quiet for the rest of the journey, less banter and less grumbling than usual. In the Captain's cabin, a number of hushed conversations over dinner attempted to discern just what Elsie had been and where she had gone — but without coming to any conclusions. Andrew: The only thing that everybody could agree on was that the quality of the food had improved, and from that day forward it remained the best on the high seas.

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 ...    

The Legends Of S.H.I.E.L.D. Agent Stargate Pioneer, Agent Haley and Supervillain “Lab Rat” Lauren discuss Agents Of S.H.I.E.L.D. season 3 finale episodes “Absolution” and “Ascension.” The hosts continue their Marvel Collector Corp Civil War crate giveaway. The hosts end the podcast running down the weekly Marvel news, respond to listener feedback and interact with live Blab streaming chat comments.   THIS TIME ON LEGENDS OF S.H.I.E.L.D.: [02:02 ]   - Giveaway: Star Wars The Cantina Box - Agents Of S.H.I.E.L.D. season 3 finale - The weekly Marvel News - YOUR feedback!!!! - Highlights From The Live Chatroom   LEGENDS OF S.H.I.E.L.D. MARVEL COLLECTOR CORPS CIVIL WAR CRATE [02:22]   The hosts continue their next giveaway contest. Tell us which one Mutant you would like to see cross over to the Marvel Cinematic Universe. We’ll be giving the crate away on our live streamed podcast recording on June 1st, 2016.   JOIN THE NETWORK – LIKE AUDIBLY EXQUISITE [03:32]   Audibly Exquisite #60 with Mark Waid and Neal Adams   AGENTS OF S.H.I.E.L.D. “ABSOLUTION” AND “ASCENSION” [05:07]   - Meaning Of Absolution -- Mack gives Daisy Absolution -- Hive is trying to give humans absolution -- Absolution Montana   - Meaning Of Ascension   - Lincoln’s Death/Sacrifice (Pay for all their mistakes) -- Consistent with Daisy’s past vision of her not dying -- necklace/jacket hot potato -- Had to put up with Hive’s “connection” with Daisy -- Find meaning conversation with May -- Not swayed at the end -- Epic last moments with Hive - Daisy -- Sway addiction -- Lash prevented it forever -- Unhinged -- Simmons Only one sent to commuicate with Daisy -- Mack beaks into her -- Could NOT kill Hive - Quake Rage -- Maveth Dream significance? -- Superhero take off -- Goth Daisy - Hive -- Capture good way to memory montage -- Statis boxes return -- Superhero landing - Talbot -- Does Talbot bet on wrestlmania? -- Part Of The Team; probably burned himself with General Andaz -- Even Batty comments On The Mustache - Science Babies -- Seychelles -- Simmons duping Primatives 100 degrees -- Prof xxxx 3rd year trick? - Coulson -- Help Me Obi-wan -- Smart Hand - Mack -- SHOTGUN AXE -- Yo-Yo ship - James -- Not all of them have to be primatives, right?   - Multiple Slo-Mo action scenes - SP is soo glad he wasn’t one of Dr. Batty’s Primatives - Coulson reading the nuclear code - Was faith overdone? Subtly done? - Still have the Zephyr - Where are the Koenigs? Will they get along with the Ronalds? (Patton Oswald on Archer) - Dr Batty’s AI Birthday! --- From Coulson’s smart hand? -- AIDA = Artificial Intelligence Data Analyzer - New Director? - Quinjets have rockets?   "Absolution”   Directed by: Billy Gierhart (21 Total Credits) http://www.imdb.com/name/nm0317382/?ref_=fn_al_nm_1#director 6xAoS 4xOnce Upon A Time 6xTheWalking Dead 1xJessica Jones 10xSons Of Anachary 4xTorchwood Multiple Camera Credits as well since 1997   Written by: Chris Dingess (10 Total Credits) http://www.imdb.com/name/nm1096268/?ref_=fn_al_nm_1#writer 1xAos 3xAgent Carter 9xBeing Human 11xMen In Trees 5xed Since 2001   Written by: Drew Z. Greenberg (12 Total Credits) http://www.imdb.com/name/nm0338503/?ref_=fn_al_nm_1#writer 6xAoS 6xArrow 8xWarehouse 13 1xCaprica 19xStar Wars: The Clone Wars 2xDexter 3xSmallville 1xFirefly Since 2001 PRODUCER FOR: AoS Arrow Arrow Year One Warehouse 13 Caprica Dexter The OC   "Absolution”   Directed by: Kevin Tancharoen (18 Total Credits) http://www.imdb.com/name/nm1160495/?ref_=fn_al_nm_1#director 1x12Monkeys 1xArrow 6xAoS (Spacetime, Purpose In The Machine, The Dirty Half-Dozen, One Of Us, Face My Enemy) 19xMortal Kombat: Legacy 2xThe Flash 1xSupergirl Since 2004   Written by: Jed Whedon http://www.imdb.com/name/nm1871590/?ref_=fn_al_nm_1#writer 13xAoS 1x Ax Men 2xSpartacus War Of The Damned 16xDollhouse Since 2008 PRODUCER FOR: AoS Spartacus War Of The Damned Spartacus Gods Of The Arena   NEWS [51:50]   AGENTS Of S.H.I.E.L.D.   AoS Timeslot move http://www.insidethemagic.net/2016/05/abc-moves-marvel-agents-of-s-h-i-e-l-d-to-10pm-time-slot-for-season-4-promises-edgier-darker-tone/   Crew talks finale fallout http://www.ew.com/article/2016/05/18/agents-shield-finale-deaths-season-4-spoilers?xid=entertainment-weekly_socialflow_twitter   Chloe Bennet says Marvel doesn’t care enough about AoS http://io9.gizmodo.com/agents-of-shield-star-says-marvel-doesnt-care-enough-ab-1777057136   X-MEN   Simon Kinberg talks Gambit delays and Deadpool influence http://uproxx.com/movies/channing-tatum-gambit/   MARVEL   IM3 female villain and female roles were cut because of toymaking decisions http://www.ew.com/article/2016/05/16/iron-man-3-shane-female-villain-toy-sales?xid=entertainment-weekly_socialflow_twitter   FEEDBACK [67:02]   - TWITTER   Christy ‏@adanagirl  May 17 Christy Retweeted DisKingdom.com @LegendsofSHIELD Christy added,   DisKingdom.com @DISKingdom Agents of S.H.I.E.L.D. Come To Marvel LEGO Avengers http://ift.tt/1qqwnZD  #disney   andiminga ‏@andiminga  12h12 hours ago @LegendsofSHIELD overall I'm impressed how they managed to keep the final reveal a secret from me.   *******************   Legends S.H.I.E.L.D. ‏@LegendsofSHIELD  22h22 hours ago Hell hath no fury like a woman denied her happy juice. #AgentsOfSHIELD   Following andiminga‏@andiminga @LegendsofSHIELD Was happy juice an euphemism?   ********************   Dr. Gnome to you ‏@MrParacletes  5h5 hours ago @LegendsofSHIELD Also to be killed by an Avenger, according to Fury.     Johnny ~R ‏@BornToEatBacon  16m16 minutes ago @LegendsofSHIELD Ooh, I dunno been busted! Ginja Ninja, Ginja Ninja, Ginja Ninja, Ginja Ninja, Ginja Ninja, Ginja Ninja, Ginja Ninja...   UPCOMING CONVENTION APPEARANCES [79:30]   Comicpalooza   OUTRO [75:33]   Haley, Lauren and Stargate Pioneer love to hear back from you about your top 5 Marvel character lists, your science of Marvel questions, who would you pick in an all-female Avenger team, or who’s Marvel abs you would like to see. Call the voicemail line at 1-844-THE-BUS1 or 844-843-2871.   Join Legends Of S.H.I.E.L.D. next time as the hosts discuss the Jessica Jones finale season 1 episodes ”AKA Take A Bloody Number” and “AKA Smile” You can listen in live when we record Wednesday nights at 8:00 PM Central time at Geeks.live (Also streamed live on Spreaker and Blab). Contact Info: Please see http://www.legendsofshield.com for all of our contact information or call our voicemail line at 1-844-THE-BUS1 or 844-843-2871   Don’t forget to go check out our spin-off podcast, Legends Of S.H.I.E.L.D..: Longbox Edition for your weekly Marvel comic book release run-down with segments by Black Adam on S.H.I.E.L.D. comics, Lauren on Mutant Comics and Neil with his pull list run-down. Legends Of S.H.I.E.L.D.: Longbox Edition is also available on the GonnaGeek.com podcast network.   Legends Of S.H.I.E.L.D. Is a Proud Member Of The GonnaGeek Network (gonnageek.com).   This podcast was recorded on Wednesday May 18th, 2016.   Standby for your S.H.I.E.L.D. debriefing ---

Get your controversial red Starbucks cups, dump out the PSL, and fill it up with wine as we delve into the history, science and fun facts about java, joe, dirt, mud, wakey juice, morning jolt or C8H10NN4O2!   This episode's wine: Veijo Feo 2012 Carménère from Baeza Family Cellars in ChileThis episode's cheese: Tallegio James was especially excited about this topic, but not as excited as some fanatics. It's hard to believe there are people out there crazier than James, who grinds his own beans and uses a French press.   We also question if we're actually old enough to drink coffee. James gives us some of the theories about its origin, in addition to a tour of coffee throughout the ages, from the penguins of Yemen to the Incest commercial in 2009.   And, despite being ubiquitous in the '90s, as well as featured in "Friends," "Seinfeld" and "Frasier," coffeehouses were even more popular in 17th century Europe and were the hotbeds for news, philosophy and revolutions.   And, even though we recorded this episode before the red cup "controversy" became the big news this week, we still made sure Starbucks and the Pumpkin Spice Latte were mentioned ... along with some grumbles from Emily. And, if you listen to Good Job, Brain!, one of our favorite trivia podcasts, you would already know the two-tailed mermaid on the coffee cup is called a Melusine.   James somehow holds himself back from his usual rant about how our consumer-driven lives are the worst thing to happen to humanity. But, he doesn't hold back when it comes to criticizing 1950s commercials, in which wives are chastised by their husbands for making bad coffee.   And, for those who like reading too much into the acting in commercials, James walks us through the questionable incestuous relationship depicted in this 2009 Folgers commercial.   We don't want you to think all we talk about on this podcast is incest, even though we mentioned it before in our Cheers to Back to the Future episode. But it's weird how it keeps coming up. (Although Emily doesn't remember much about that episode -- Thanks, Chambong!)   But, just remember these parting words from James: "Not all coffee is incestuous."Go ahead, Tweet that quote so others wonder what you're listning to!Special Thanks   Special thanks to Adam Centamore for his book, "Tasting Wine & Cheese," which we used for this episode and we'll be using for our wine and cheese pairings for the next few episodes!   Listen/subscribe/leave a review on iTunes, Stitcher, Spreaker, Overcast. Visit our website at www.classylittlepodcast.com for show notes and extras!   Cheers!

Part 1 of my conversation with guest James Gralian as we discuss the future of podcasting. I've also got music from Mean Creek, Foxy Shazam and Nothing. Show notes: - Recorded via Skype - Check out James' show The Avs Hockey Podcast - Also produces podcast for Denver Symphony Orchestra - We last spoke on this topic four years ago - 10th anniversary of podcasting - Tools are more accessible than ever - James: Don't see as many quality podcasts as I expected - Apple has played big role, positive and negative - James listens to Radiolab, Welcome to Nightvale, Definitely Not the Opera, 99% Invisible, among other podcasts - There are many "two white guys talking" podcasts - Waiting for the next interesting thing - Most podcasters aren't in it for the money - James: Not sure whether sponsors are getting a good return - Trying to have fun and be creative with Avs Hockey Podcast - Professional podcasters vs. hobbyists - Marc Maron is a podcasting success story; turned his entire career around - Commercial radio is much less interesting these days - Parallels with late night TV and Letterman's retirement - More freedom on basic cable for Stewart and Colbert - Are podcasters using their voice? - Having guests can bring new energy to a show - What constitutes success in podcasting? - To be continued Completely Conspicuous is available through the iTunes podcast directory. Subscribe and write a review!   Music: Mean Creek - Johnny Allen Foxy Shazam - Brutal Truth Nothing - Bent Nail   The Mean Creek song is on the album Local Losers on Old Flame Records. Download the song for free at Soundcloud. The Foxy Shazam song is on the self-released album Gonzo. Download the album for free (in exchange for your email address) at Noisetrade. The song by Nothing is on the album Guilty of Everything on Relapse Records. Download the song for free at Amazon.   The opening and closing theme of Completely Conspicuous is "Theme to Big F'in Pants" by Jay Breitling. Find out more about Senor Breitling at his fine music blog Clicky Clicky. Voiceover work is courtesy of James Gralian.