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Matters of life and death Australia’s death care and funeral industry is big business. We meet death doula Dr Annetta Mallon and funeral industry adviser Martin Tobin, two caring and passionate business owners supporting you and your loved ones through the last step on life’s journey. About the episode – brought to you by Australian Seniors. Join James Valentine for the sixth season of Life’s Booming: Dying to Know, our most unflinching yet. We’ll have the conversations that are hardest to have, ask the questions that are easy to ignore, and hear stories that will make you think differently about the one thing we’re all guaranteed to experience: Death. Featuring interviews with famous faces as well as experts in the space, we uncover what they know about what we can expect. There are hard truths, surprising discoveries, tears and even laughs. Nothing about death is off the table. Dr Annetta Mallon is an end-of-life consultant, doula and educator and grief psychotherapist based in Tasmania. With decades of experience in trauma recovery and personal growth, Annetta helps people understand their rights and options at the end of life – especially those without a strong support network. Martin Tobin is a recognised family name in the funeral business. He is founder of Funeral Direction, a consultancy supporting funeral homes and cemeteries across Australia and New Zealand. A former solicitor, Martin brings legal, strategic and business insight, and is focused on helping the industry evolve through innovation, education and long-term planning. If you have any thoughts or questions and want to share your story to Life’s Booming, send us a voice note – lifesbooming@seniors.com.au Watch Life’s Booming on YouTube Listen to Life's Booming on Apple Podcasts Listen to Life's Booming on Spotify For more information visit seniors.com.au/podcast Produced by Medium Rare Content Agency, in conjunction with Ampel at Myrtle & Pine Studios -- Disclaimer: Please be advised that this episode contains discussions about death, which may be triggering or upsetting for some listeners. Listener discretion is advised. If you are struggling with the loss of a loved one, please know that you are not alone and there are resources available. For additional support please contact Lifeline on 131 114 or Beyond Blue on 1300 224 636. TRANSCRIPT: S06EP03_Matters of Life and Death James: Hello, and welcome to Life's Booming. I'm James Valentine, and this season, we're talking about death. In this episode, we're talking about matters of life and death, well, the final matter, how we say goodbye. Death is big business, and Australia's death care and funeral industry is worth more than $2 billion. And with us are two entrepreneurs, two people who work in this area, supporting you and your loved ones through the last step on life’s journey. We're joined by Dr. Annetta Mallon, an end of life consultant, an educator, and also known as a death doula. And Martin Tobin is a recognised family name in the funeral business and is now an expert adviser on the global funeral industry. Annetta, Martin, welcome to Life's Booming. So many places to start. I'm excited. And Martin, I'll start with you. What's it like when the family business is death? Martin: Yeah, well, it's all I've ever known. When I was, you know, when I was born and grew up, I, we actually lived in a funeral parlour. Um, so when I was, for the first two or three years of my life, uh, the funeral parlour was downstairs. We lived upstairs. So when it's all you've known, you don't think anything different of it. And I suppose all of my friends and sort of social groups when I was young and a teenager thought it was pretty quirky and funny, but for me, it was what I knew. My grandfather and his brother started our family business in the thirties. And by the time I came along, it was well, well and truly established. I didn't really work directly in it straight away after leaving school, but it was always in the background. And so I've always been comfortable with it. James: Yeah. But such an interesting thing. Like what's, what's the dinner time conversation. Did you have a good day, darling? Good deaths? Some good deaths? Martin: Well, all of that. You know, I think that's the stereotype, isn't it, that funeral directors are a bit, sort of weird and severe and a bit morbid, but, but it's, it's far from the truth. You know, I think most people who work in funeral service, and the work that Annetta does, are really warm and loving and gregarious people because you have to have those qualities to really survive and thrive in, in what we do in that space. James: You kind of got to love life, Annetta. Annetta: Absolutely. We are fiercely alive until we are dead. And I think that. Whether it's from the professional funeral side of things or more from consumer advocate and personal support side of things, coming in with a joke – why do we screw the coffin lids down so hard to keep the oncologist out. Great icebreaker: show up with cake. Make jokes, because most of us have a lot of laughter and love in our lives and it's important to leaven sorrow and, and grief. Martin: Yeah. Don't let death just drown out the… James: What's the undertaker's joke? Martin: Oh, there's so many. I mean, everyone used to, I used to get called Stiffy Tobin, that sort of stuff. James: Stiffy, Tobin… Martin: …you know, a bit. So a lot of funeral directors get called Stiffy. Annetta: …that's a 1930s cartoon character, isn't it? James: It's like, it's the, the Millers, the Millers and bakers are Dusty. You know, it's that, it's that era, isn't it? Annetta: You're a Tintin character. James: Yeah, exactly. Martin: Yeah. Luckily I wasn't, you know, I don't fit the stereotype of tall and gray. I'm sort of fairly short and not gray. And so when I joined our family business, I was quite young. So I was lucky I sort of didn't fit that stereotype. And back in the early 90s, there was very few women, very few people, young people, very few people from, from diverse backgrounds. So it's changed a lot really for the better in that sense. So there's no stereotypical funeral director now it's, it's a really, really diverse. James: What's a, what's a doula? Annetta: Well, a doula is someone who supports life's transitions. So I've been a birth doula, and it's a very powerful energy when someone comes into the world, but it's really not my jam. I like the other transition, and I'm better at it. I provide an awful lot of information for people who have questions like, what is this going to feel like? Should I be at home or should I be in the hospital? And the point of a lot of my conversations is not to provide answers, but to support people into recognising what's best for them, which I suspect is actually quite a lot of what Martin does, with the way that you work with businesses. James: When do you turn up? Annetta: A piece of string question. I can turn up pre-need, so there's no terminal or life limiting diagnosis. There's a bit of a myth that we turn up magically, like a fairy, in the last 24 hours of life. That's not really great or optimal. James: So, do some people get you, even if, well, I don't have a diagnosis, but I want to start working with a doula? Annetta: If you're a doula like me who does planning and can answer questions and help people prepare their documentation and their wishes, because that's not anything you want to be doing at the last minute and in cases where there's dementia and cognitive decline. It's too late then to get your planning in place. So I also help to support and foster family-wide and network-wide conversations so that everyone understands if someone's interested in assisted dying, let's talk about that. Does anyone have questions, for example. Or have you considered your pets in your planning? Are you including your grandchildren or just your children? Would you prefer to die in a medicalised environment, ideally, or in a home like environment? James: So you can, yeah, so you're there at any point and really every circumstance is entirely different. Annetta: It is, it's unique every single time. James: Same for funerals? Martin: Yeah, I mean, a funeral really should be a reflection of the person's life and interests and values and philosophies, and sometimes, you know, historically, traditionally, in say the last couple of hundred years that, that often revolved around their, their faith. So these days funerals are quite sort of open-ended, quite, quite unstructured, quite celebratory and people are trying to find some ritual in that and some meaning in that and, and that's the, that's the real change that's happening in funeral service. You know, funerals have been going on for thousands of years. They're one of the early rituals of human, human existence. So, and they emanate from the human need to stop when someone from among us leaves us, and reflect on that person's life, to typically grieve that person, if they meant something to us. So that is, you know, invariably people feel sad, not always, but typically. And people have to then say, well, how do we, how do we move forward without this person? And then for a lot of people, that's incredibly difficult. Grief, grief is just our response to loss. You can't control it. You can't make it go away. So if you suppress it in the early days, it comes back to bite you later. So a funeral is a chance to gather, reflect, embrace the reality of the death and embrace the early stages of the grief, the pain that you'll often experience, and to receive support from your community and to let go of that person because they go from being with you to being a memory. James: It's interesting the way you phrased it or the point of view you expressed there was to me it was the person closest to whoever's died, it's for them. And then it's for the community. It's not for us. Funeral's not for the guy that died. The funeral's for us. Martin: Yep, that's right. And we're finding a lot of people now trying to sort of orchestrate their own celebration and say, this is what I want. I want this to happen, that to happen. And that's, that's got a place, but it's really for the living, for the, for those that are left behind. And, you know, the dead, the dead can't tell the living what, how to feel. But they can give guidance and direction, but I think it's really important that the funerals, funerals are done the way that the survivors feel they need, need to do it so that they, that helps them get back into life afterwards. James: Yeah. Yeah. Would you agree? What's a funeral for? Annetta: I think a funeral is an opportunity to remember why your person was so important to you. One of the big changes that I think we're going to see more and more of in Australia now, with assisted dying nationally available, is a fabulous ‘going away party’, as I call them. So people who attend their own funerals, because basically, especially if you're in a hospital, you know when your time is coming. So there's almost like a bookending effect where we have a celebration with the person and they get to say goodbyes and explain to people why they were important and hear all the good stuff. Then there's probably going to be a gathering of some kind afterwards, possibly ham rolls and whisky will play a part, because, as Martin has said, we need to commemorate the fact that this aspect of our lives is now irrevocably changed. I think for a lot of us, the relationship goes on, but it's very different. I still talk to my mother and my grandmother, both of whom are dead. I don't expect them to respond. But there's still kind of… James: …I think that's the sane way to do it. If you expect them to respond, I don't… Annetta: That's a different conversation. James: That's different. Yeah. We're doing another whole episode on that. Martin: Different podcast. Annetta: Different podcast. James: From Beyond the Grave. Welcome. So again, the funeral's not really for the dead person. Annetta: I've never thought a funeral is for the dead person. It is to really bring us out of the immense shock of the raw grief that – and this is a generalisation – is about 72 hours. And that's not a sustainable emotional state. We get to come together. We get to shift from intense grief, the personal experience of loss and that response – because grief is love with no place left to be put – into mourning, which is a more shared communal public sense of loss, which is a really important transitional period in accepting a death, coming to terms with a death, acknowledging a death. And the funeral makes a space that I think is important, not just for the closest people, but for friends, work colleagues, community members. So there is a space that can be welcoming for a variety of community members, which is also really important. Community can be quite intimate and small, it can be broader and more encompassing. Martin: Yeah, look, I think it does need to, I think a good funeral will reflect the person's life. If, if it's, if it's not authentic, if you go to that funeral and you say, Gee, that wasn't about Fred, then clearly the family have got it wrong. So there has to, they have to be the central character, and that has to, you know, has to really reflect who they were, ideally. But if Fred starts micromanaging his service, his celebration, then I think we're missing the point because it really is for, for those left behind to say, what's going to be meaningful for me to help me, you know, take stock of my life now that Fred's, Fred's gone. A good example is, you know, sometimes people these days will often say, look, let's not go to the fuss of a funeral. Let's, let's have a private cremation or burial and we'll have a memorial service, which is fine. And a lot of people choose that. But if Fred's not there, you know, the emotions around how people feel about Fred and the stories about him aren't really aren't heightened enough for people to really feel what they should feel at a funeral. It's hard to sort of get started with your grief, is sort of the perspective I have… James: …But I suppose there's often that, that's often thought of, we're going to do this in a few days, but the memorials in two weeks… Annetta: I think it's individual. And I also think it is broader culture. So for example, in some cultures, from Eastern Europe, there are marker days. So you will have the funeral on a particular day and then you might do something 10 days later. And then the 40th day might be, for example, in the Macedonian community… I still pay attention to ‘death-aversaries’ and I pay attention to it because it's going to affect my mood and the way I go throughout the day because I will be thinking about that person. And ideally, you have had the opportunity to spend time with your person, whether that's in a hospital room. For example, I did that when my mother died. We were allowed to have the room for as long as we wanted with her. Or at home, and you might keep your person at home for a day or two and sing to them, wash them, sit in silence, cry with them, laugh with them. That's, that can be part of the saying goodbye, which the funeral then when it's done properly and appropriately, I think sort of wraps everything up and ties it as neatly together as you can so that you can move into all of the afters of grief. James: Martin, let's talk about the, the business of funerals. It's a big business, isn't it? Martin: Well, it's, it became an industry a hundred plus years ago, something that people started outsourcing to, you know. And initially it was outsourced to cabinet makers who made the coffin. And then they, the cabinet maker said, well I can, not only can I make the coffin, but I can transfer the body from the place of death and… And over a period of time it became an industry. So, it is there, so it is an organised industry in most, most countries around the world. And so the, the organised funeral director will provide a range of services to, you know, support people who've lost, lost someone. In Australia, it's primarily, historically, made up of family owned private businesses that are multi generational family businesses. But about 25 years or so ago, a lot of the well known family businesses were purchased by larger groups. But certainly they're at, in my view, they're at a competitive disadvantage to a generally family owned local community based, family owned business, because they just don't have that essence. James: Yeah. Is it a strange thing? I mean, you've talked very compassionately about grief and about the humanity of what's involved about the moment of death and what people are dealing with. Yet this is something that you'll make profit from, that the company is going to make profit from. Is that a strange, is there a conflict there? Martin: There isn't really. I mean, you know, sometimes I think a lot of the people who are attracted to the industry, yeah, they're talking to a family and they've gone through a loss and there's a lot of grief and pain and there might be, there might be some challenging financial circumstances too that they glean from the conversation. And yeah, that people feel, feel, Oh, gee, how can we add pain to them, or, you know, add, you know, send them an invoice for $10,000, whatever it might be on top of what they're already experiencing. So yeah, it is a little bit uncomfortable, but I think if, if the business has integrity around its pricing and there's, there's genuine options and, and you know, they're not sort of forced into any sort of uncomfortable decisions, then, you know, most people recognise that a funeral, if it, you know, needs to be done in a certain way, there's going to be a cost to that. James: And do you find that, you know, the, the rise of doulas, the presence of doulas, the change… the way in which there seems to be a lot of, a lot of alternatives to those bigger companies or that standard sort of the mahogany casket approach. Is that in a reaction to this sort of somewhat, you know, industrialisation of, of the process? Annetta: Partially, yes, and from my perspective, I think we can, Okay, Boomer, let's give you a big vote of thanks, because at every stage of life, the Boomer generation, it's a cliche for a reason, they've demanded information and choice, and they want things on their terms far more than we'd seen in the silent generation, certainly, and previous generations. So, what are my rights, options, and choices at end of life? What can we do better and differently? It's made space for things like Daisybox Caskets Australia. I'm not affiliated with them, but they offer a lower and a high quality product, but it's less expensive than mahogany, which you mentioned. Not a bad option for families on a budget, not a bad option for cremations. I think, as we are in such an almost overwhelm of information age, people do want to know what's possible and we can readily see that, for example, in the USA, we've got Katrina Spade, who started with the urban death project. James: What’s that? Annetta: The urban death project was an architectural hypothetical exercise. How can we offer a space for respectful memorialisation and body disposition that is not taking up valuable land. And from this, then we have, recompose, which is natural, organic reduction, nor human composting. In Tasmania, we've got the very first water based cremation service. James: What is that? Because I mean, cremation implies fire to me, not water. Annetta: Yes. So it's alkaline hydrolysis. It's a high temperature, high alkaline process of dissolving everything, which at the end you get a product that instead of gray ashes, white, you get a completely sterile liquid, that I personally don't see why we can't use on green spaces, urban green spaces, but it can go down the drain. James: Just water me in the park. Just go water the flowers with me. Annetta: I quite like that. Martin: Splash me into the ocean. James: Splash me into the ocean. Annetta: There we go. And it's, it's about a seventh of the environmental footprint of a flame cremation. Costs about the same, maybe a little bit more, but we also have a team that will transport statewide. We don't do natural burial, we don't have dedicated natural burial, um, spaces in Australia. The UK does it really well. James: Again, what’s natural burial? Annetta: Okay, so instead of going down six feet, like into colder ground, which is anaerobic, there's frequently a lot of concrete involved, you're in essentially like a hotter ground. You've got more microbes and oxygen, you're going to break down faster. And in the UK, the multipurpose spaces where you might be running, sheep, for example, or growing wildflowers or food. In the USA, when you have the composted remains of people, which turns out to be quite a lot, large in volume, they work with a national park, and it actually goes to beautify hiking trails and to recondition public spaces. James: I like all these. Annetta: I like it too. James: They're kind of positive, aren't they? Annetta: There's options for everybody. So it's opening up spaces for non medical community based people like myself. It also means that there's new and exciting ways for funeral directors to then work with people to make the meaningful, personalised, ritual and ceremony and funeral experience. So, thank you, Boomers. We've got a lot of change. James: Yeah.. And is, are the traditional companies, are they embracing this? Are they seeing the need to embrace this? [00:19:15] Martin: The traditional funeral of being in a church and sort of straight to the cemetery with, with everything sort of reasonably structured, that pattern has definitely broken. We're seeing two things in the Australian industry, that is people trending or consumers saying That doesn't do it for me anymore, I'm either going to go for something very simple that's, like, low cost and, you know, where there's not much of a fuss; or people are saying, I want something highly customised, highly celebratory, highly innovative. And the companies that have stayed quite traditional and conservative are actually losing relevance. And so the funeral directors who are seeing those Baby Boomer-led changes, and are responding construct-- who are responding or actually leading the way themselves and coming up with some of those ideas themselves, they're the ones that are becoming or staying relevant and are thriving. You know, there's a funeral company called Tender Funerals who, whose focus and philosophy is that the family are much more involved in the actual funeral, which is, which is a great thing, which is how it should have, how it used to be. You know, the family themselves would… James: So what might take place? What do they, what do they do? Martin: Well, they might wash and dress the body as, as Annetta said, you know, they might, they might carry the coffin in some of the steps that normally the funeral director would, would only do. There's subtle differences and I don't, I don't profess to know a lot about what they do, but, but philosophically their, their message is let's do funerals the way they used to be done, and not outsource everything to the funeral director. So that's a challenge for the organised industry, because people are responding to that, and because people are saying, Yeah, actually, that's how we did use to do it. And I think the work that doulas are doing is getting people comfortable with the conversation, you know, the fact that we all die and that… Annetta: We've checked, everyone dies. Yeah. Martin: Yeah, we worked that out before. Annetta: Spoiler alert. James: Yeah, that's right. Yeah. Martin: So, you know, the organised industry has to realise that with education and Boomer-led sort of innovation, there's a lot more, you know, sort of change and sort of innovation they have to embrace, otherwise they will become irrelevant. Annetta: Whether you're coming from a more business-like perspective or something that's more community led, we all offer skills and services that have value. People train to be funeral directors and celebrants. People train to be morticians, people train to be doulas. And there's an awful lot of ongoing research and continuing education because the legislation is changing very quickly, in terms of documentation, where it's stored, how it's processed. Assisted dying is constantly changing, as we review the laws. And there is a value to that. I'm not a charity. I like to eat meals and sleep under a roof. So, I think one of the unexpected benefits of having more open conversations, generally, is people can recognise, Oh, well, maybe this much for a funeral seems too much, but this is a reasonable sum and I'm happy to pay that sum because we're getting something of value, in the end. That may be more personalised, maybe more ritualised and traditional, but then we have an exchange of something for something. James: But also those pro, the kind of, you know, those newer processes you were describing, even of how we dispose of the body, a more sustainable approach, is going to reflect a lot of people's values, you know, in a way that a traditional cask of being buried at a six feet under. Martin: Funerals don't operate in a vacuum. You know, they're part of the broader society. James: Yeah. Why do you like working in the area of death? Martin: It's a real privilege to, to work with, I mean, you know, the work that Annetta does is amazing. Like to have an open conversation with someone who is facing their own mortality, must, every day, must be an amazing privilege. And the work that I've done historically is after that. So it's, it's not as, it's not as confronting, because it's happened, but it's just really satisfying work to help people, you know, when they are at a low point to do something for them that's valuable, that's meaningful, and to help them with the long-term journey they're about to embark on. A funeral is just one of the first steps in their, their overall journey without that person. And if you can get them off to a good start with a good, you know, this notion of a good funeral, then, you know, then it's incredibly satisfying work. The vast majority of the people that work in funeral service, and I'm sure in the work that you do, are there for the right reasons. They're there because they, they are people-driven people, they love helping. They want to make a difference for people. So, it's a very satisfying industry. But most of what we have, the stereotype of we're all a bit weird and that it's far, it's almost the opposite. James: Annetta, why do you like it? You said you were better than this. You'd been a birth doula but you said ‘I'm better at death’. Annetta: I am better at death. I like puppies, not children, which probably explains a lot. I'm a good story keeper. And someone who is at end of life or is coming to terms with a life-limiting or terminal diagnosis – maybe a slower decline or more rapid decline – there is still an essence of themselves that they would like to have preserved, which I think feeds into this idea of the meaningful, purposeful funeral. The meaningful, purposeful end-of-life, with quality of life until we die, and then trying to offer a quality of life to people as they come to terms with the death of their person, is values driven, I think, in terms of planning. And also, for me, it's about honoring that person and trying to empower them with as much information as appropriate so that they can make informed decisions. I think there's nothing more empowering. When I've done my job really right, I'm not even involved when someone dies. Sometimes I'm in the room and that's okay, but often I will hear from families afterwards. And there's wonderful stories about the time that was spent while their person was dying, caring for their person's body after death, how the family and the friends came together to facilitate all of that, and then how that relationship of community changes, or stays the same, following that. So people then find meaning in their own life, get more excited about planning. The death literacy snowball is a wonderful thing to watch in action. That's my jam. I really love it. James: What do they do? What, what have people told you about death? Annetta: Interestingly enough, for a lot of people, it's not about death itself. It's about being frightened of dying. My pain threshold's in the basement, I don't want to be in pain. That bothers me far more than my moment of death. The people they loved know that they're loved… James: They want that, they want them to know? Annetta: … They want that. They want to know that love has been expressed, which I think is possibly why we're seeing that uptick, too, and people saying, I'd like this playlist at my funeral. I always start with a playlist with planning, you know, control it, be the DJ. Could we talk about this? I'd like these elements. Because it's a way of caretaking in a sense, the people that they're going to leave behind. The messages that people leave are messages of love. I think that's something the film Love Actually got really right, in the beginning. How do I convey that? How can I try and make that my legacy? So we're seeing it arise in, life writing, the narrative of someone's life so that there might be a digital book or voice recordings. We're seeing that with social media platforms where social accounts can be turned into memorial accounts. But I think also we need to prepare ourselves for the fact that sometimes that is all yanked away with no warning, sometimes, by family members who think that that's the right thing to do. And that can leave people devastated. So I think we're all kind of jogging along together, trying to come to terms with all the changes and make them a good fit for individuals. James: Martin, what do you hear? What do hear people say about death? Martin: Most people dread the day, you know, they're dreading the day, they have to get it, get up there in front of all those people, walk through the gathering and everyone's looking at them. And so there's a, there's a lot of dread. People will say, can we just get over and done with? Can we do it tomorrow? You know, when the death's been today, or whatever. So there is that sense that it's going to be an ordeal. So if, after it's happened and you, the feedback is all the conversations you hear are, Oh, that was really special and it went well and, and what a tribute we paid to Dad or Mum, you know, you know, he would have loved it or whatever. You know, that you've lifted all that dread away, and then they move ahead. So they're off to a good start. Otherwise, if we just die and we, we pause for a few minutes and we get back on the bike and start living again, well, you know, that person, all their, what they meant to us and all their stories and history and what they wanted to be said about them just gets shuffled aside and we get on with life again. So I think we, I think most of us deserve a bit better than that. And a funeral is a really good opportunity to just stop the clock for a while. You know, we don't have to wallow in it for weeks. And some cultures do, they actually, they put a real ritual around it. But as a minimum, just have some, some chance where we can say, his life mattered. I think that's, I think that's really good. Annetta: Yeah. James: This has been such a great conversation. Thank you so much, Annetta. Thank you. Annetta: Thank you for having me, James. It's been a pleasure. James: Martin, thank you. Martin: I enjoyed it. James: Terrific. Thanks to our guests, Dr. Annetta Mallon and Martin Tobin. You've been listening to Season 6 of Life's Booming, Dying to Know, brought to you by Australian Seniors. Please, leave a review or tell someone about it. Head to seniors.com.au/podcast for more episodes. May your life be booming. I'm James Valentine.See omnystudio.com/listener for privacy information.

Let’s talk about death, baby From breaking the stigma to understanding the conversations we need to have before we die, beloved broadcaster and advocate Andrew Denton and clinical psychologist Dr Kerrie Noonan dissect everything we should and shouldn’t say about death. About the episode – brought to you by Australian Seniors. Join James Valentine for the sixth season of Life’s Booming: Dying to Know, our most unflinching yet. We’ll have the conversations that are hardest to have, ask the questions that are easy to ignore, and hear stories that will make you think differently about the one thing we’re all guaranteed to experience: Death. Featuring interviews with famous faces as well as experts in the space, we uncover what they know about what we can expect. There are hard truths, surprising discoveries, tears and even laughs. Nothing about death is off the table. Andrew Denton is renowned as a producer, comedian and Gold Logie-nominated TV presenter, but for the past decade he has been devoted to a very personal cause. He is the founder of Go Gentle Australia, a charity advocating for better end of life choices that was instrumental in passing voluntary assisted dying (VAD) laws across Australia. Senior clinical psychologist Dr Kerrie Noonan is director of the Death Literacy Institute; director of research, Western NSW Local Health District; and adjunct Associate Professor, Public Health Palliative Care Unit, La Trobe University. For the past 25 years she has been working to create a more death literate society, one where people and communities have the practical know-how needed to plan well and respond to dying, death and grief. If you have any thoughts or questions and want to share your story to Life’s Booming, send us a voice note – lifesbooming@seniors.com.au Watch Life’s Booming on YouTube Listen to Life's Booming on Apple Podcasts Listen to Life's Booming on Spotify For more information visit seniors.com.au/podcast Produced by Medium Rare Content Agency, in conjunction with Ampel -- Disclaimer: Please be advised that this episode contains discussions about death, which may be triggering or upsetting for some listeners. Listener discretion is advised. If you are struggling with the loss of a loved one, please know that you are not alone and there are resources available. For additional support please contact Lifeline on 131 114 or Beyond Blue on 1300 224 636. TRANSCRIPT: James: Hello, and welcome to Life's Booming. I'm James Valentine, and this season, we're talking about death. Or, on this episode, why we don't talk about it enough. Death is really easy to talk about, but avoiding the subject just makes things even harder. From breaking the stigma to understanding the conversations we must have before we die, I'll be dissecting everything we should and shouldn't say about death with two fascinating minds. Andrew Denton is the founder of Go Gentle Australia. A charity advocating for better end of life choices, but you probably know him better from so many shows on our TV. And Dr Kerrie Noonan is a senior clinical psychologist and social researcher, determined to increase our death literacy. Kerrie, Andrew, thanks so much for joining us. Do you know one another? Andrew: Yes we do. Yeah. Kerrie: Yeah, along the way. Andrew: We've had a few conversations about death, dying, literacy, all those things. Yeah. James: How did you learn about death? Like when did you, and who did you go to talk to? When did you start thinking about it? Andrew: Well, I think you learn about death the way everybody does, which is you experience it. And the first time it happened to me, I made a documentary about teenagers with cancer, Canteen, the support group, and one of those young men died. And his parents very generously invited me to visit him as he was dying. And that was the first time I actually saw what death can be. And it was, it was very hard to see and then watching my own father die obviously was a profound moment for me because that was an unhappy death. But how I've learned about it since is, I imagine a bit like Kerrie. I've had thousands of hours of conversations with people who are dying and their families and their carers. And, I've learned so much about death I feel I've mastered it and can move on. James: Yeah, true. That's right. Is that, is this what you mean by death literacy, that, that in some ways we just need to be talking about it more? Kerrie: It's, it's talking about it. That, that's one aspect. But it's, it's kind of developing your know-how and being able to put that know-how into practice. So, you can maybe talk about, maybe have some competency in terms of talking or maybe doing one element, related to death and dying. But, when you put it into practice, that's when death literacy kind of really comes to life. It kind of sits, some of the research we've done recently, it's evident that death literacy sits in networks, in-between people, within people, in communities, so it's not just about individuals. James: I suppose I'm wondering about at what point we might have this, or there'd be a difference in death literacy with 20-year-olds than there would be with 80-year-olds, right? Kerrie: Yes, experience changes your death literacy. That's probably the strongest predictor. So we started this research looking at networks of care and how people kind of come together. And so where we're at now is we're looking at what are the predictors and what are the things that we understand so that we can understand more about how to make more death literacy, I guess. So an example, that's your question, well I can give a real example. When my mum was in hospital, we were, we needed someone to help us to move mum from the hospital to home because we wanted to take her home. And we couldn't get the health system or the medical system to do that. So I put an email out, a text message out to my friends who happened to work in the death space. And within an hour we had someone, within two hours, mum was home. And so. That took, you know, that set off a little chain of conversations, emails, texts. And while I was doing that, my brother was getting the medication sorted and other things sorted for my mum. So we really, we utilised, to bring my mum home, we utilised like every bit of knowledge and our networks to do that. James: But you were at the centre of, you know, you, you study this, you're a, you know, an advocate for it, and so you're at the centre of it. You would have a network. I mean, I don't know that I've got the same network. I'd, I could put it out to my friends and they'd go, we could bring wine. Oh, you know, like, I don't know that they'd, I don't know that they'd be that practical. Kerrie: But that's actually helpful too. You need your friends to turn up with wine and, and bread and whatever comforts. So we found that younger people, for example, so we've done two kind of national studies just to kind of demonstrate your point about younger people. Between, 2019, pre COVID, and 2023, we looked at the population and we looked at death literacy and how it changed. And we found that voluntary assisted dying and COVID had an impact on people's death literacy, particularly for the younger people, anyone who's experienced a death, anyone who's been through loss, has higher death literacy than people who haven't. And so, there's lots of things that contribute to that, but, COVID, I think, we're still kind of looking at the data, but certainly voluntary assisted dying because of the way that you need to kind of have conversations, you need to actually reach out to your networks, you need to talk to doctors, you know, there are actually lots of interactions in that that really stretch your skills and, your understanding. James: It's only a few generations back when death was very present in our life. The conversation about voluntary assisted dying has perhaps allowed us to have that conversation again. Have you seen that? Andrew: Yeah, I think that's right. I mean, there's, there's a lovely, witty observation that in Victorian times they talked about death all the time and never about sex. And today it's the other way around. It's not that many generations ago where the body would lie in the house and there'd be a viewing in the house. And so it was, it was a more human thing, the way Kerrie's describing her friends helping her mother come home, that's a communal and human thing. And when I talk about voluntary assisted dying, I must and I want to bracket it with palliative care, because really, despite the fact politically they were oppositional during the legislative debate, they're very much on the same end of the spectrum, which is we're all going to die, and the concept of palliative care, which is also the same idea of voluntary assisted dying, is not, ‘Let's get you to the dying bit, but how do you live as well as you can while you are dying?’ And that dying process could be very short or it could be very long, it could be several years. You, usually you can't be really clear. So the whole point as Kerrie said about voluntary assisted dying and palliative care is you talk about these things. And interestingly, I think there's a paralysis around death, and you know, you said, well, my friends wouldn't know what to do, they'd bring wine, as Kerrie said, that's no bad thing. But if you put out a call to your friends to say, I need to move my fridge, somebody's going to say, I've got a ute. James: Yes. Andrew: …your need, perhaps, to leave hospital and go home, that's the same question… James: They might have a ute. Andrew: …It's just, it's just a human question, which is, I need help. And not only do we get paralysed in the face of death and assume that the experts have the answers, but the experts often get paralysed in the face of death. They don't know how to have those conversations either. So one of the things that voluntary assisted dying absolutely has done, and there was a, a geriatrician in Victoria who said to me. He was ashamed to admit that voluntary assisted dying had made him understand how limited his practice had been, in that he had subconsciously only been asking questions of patients that he had an answer to: How's your pain? James: Right. Andrew: I can treat your pain. What are your symptoms? I might be able to treat your symptoms. Whereas what he asks now is, how do you feel? What is life like for you? That's a much more holistic question. What is it that you need? If we can't help you with it, maybe someone else can help you with it. So I think it's about transcending that paralysis in the face of death. Which is natural, but the greater group that you can talk with it about, the better. I still remember a woman I met several years ago. And she said to me from the moment her husband was diagnosed with cancer to the moment he died, he refused to talk about it. And the, it was like a sliver of ice stuck in her heart because she was frozen in that too. James: Yeah, yeah. Kerrie: Yeah, and I think what we, what we found in a lot of our research too, Andrew, was that, carers were often, had massive networks that the person who was dying didn't know about… Andrew: Right… Kerrie: …as well. So I think that's, that's the other thing, about some of these conversations is that, once you know that you've got community who's up for the conversation or up for whatever around you that a lot of carers are, can have that access to other people. James: And you mean the person dying doesn't know because they don't ask, unless they're talking about it, then no-one thinks to bring it forward? Is that what you mean? Kerrie: Yeah. I think what happens in that situation is a carer can become quite isolated like the dying person. If they don't want to talk about it, there actually are still practical things to organise. There are still things, where are the passwords? How do you get into the bank account? What bills need paying? Andrew: I'm trying that with my wife all the time and she's not even dying! Kerrie: That's right. They continue but you don't get to have the conversation with the person. Andrew: Actually, Geraldine Brooks, a beautiful author, her husband Tony, who is a friend, he died very suddenly, dropped dead in the street, and he was young, in his early 60s. And she's just written a book about this called Memorial Days, about that whole experience. And that's the strongest piece of practical advice she gives, which is, prepare for your death by helping others. James: Yes. Andrew: Like, leave the passwords, explain how these things work. The best things I've learnt about the idea of preparing for death and thinking about death, actually I'm pretty sure came from some of your literature, Kerrie, which was the idea of an emotional will. And an emotional will is not about, to you James, I'll leave my ute. It's actually about, to you James, I'm going to leave, my favourite city in the world. Limerick in Ireland, and here's some money for you to go there, or to you James, I'm going to leave these five songs, which mean something to me. It's actually about, well this poem, it's about gifting something of spiritual life value as opposed to an object. James: Yeah. Following the, the, the legislation in New South Wales, now pretty much in every state, Andrew, where, what do you see now? What do you see in our society now? What do you see happening? Andrew: Look, there's still the same paralysis and fear about death. I think that's, that's kind of natural. You know, one of the people on our board of Go Gentle is the former federal president of the AMA, who's a neurosurgeon, and he said when his dad was dying in hospital, he was afraid to ask for, you know, more help because he didn't want to be annoying. So, you know, I mean, this is the head of the AMA. To me the big question is not so much, how individual families or individuals respond even though it's very important. To me the big conversation is within the medical professions. And I don't actually say that critically. Because we're all equally struggling with the concept of the abyss. And I think, it is an acknowledged problem in healthcare, of futile care at the end of life. It's giving a 90-year-old a hip replacement, for example, just over-treating. Because of the, I've heard it described as ‘doctor as hero’. You know, we give, we give doctors, quite reasonably, a special place in our society. Because we ask special things of them. But part of that training is, we must win. We must treat. When I was first told this by a doctor in Oregon, when I went there. When they said, oh, we see death as a defeat, I actually laughed. I thought they were joking. I said, it's… James: You know you can't win. He turns up with that scythe at some point. Andrew: So I think there's a much broader conversation about what is dying, and how do we have that conversation with people who are dying. And I think… James: I suppose I just thought, I have had a couple of conversations recently with people who have a relative or parent who has gone through voluntary assisted dying… Andrew: Yes… James: …And what I noticed was the way they talked about it, in a sense, wasn't much different to, oh, we went to Europe. You know, we had a nice trip. Like, it was very normal, the way they said it. They went, I was at my uncle's death yesterday. Andrew: It can be. It can be. You know, dying affects different people differently. There are people who have gone through the voluntary assisted dying process who totally support it and are very glad it's there, but still found the experience traumatic. It's not a silver bullet. James: Right. Andrew: It doesn't, it, it's merciful, and it's peaceful, but it doesn't, it certainly doesn't remove grief, and it doesn't remove, for many people, the unreality of dying. We hear many, many testimonies of families deeply grateful for the way in which they are able to say farewell. And I think that's a very important part of voluntary assisted dying. A genuine ability to say farewell. But people are different. There's one man that insisted, who used voluntary assisted dying, and insisted that he be only with his doctor. And the reason he gave, which I find both beautiful and heartbreaking, he said, ‘I don't want the love of my family holding me back’. So, you know, I always maintain when I talk about this. James: [sigh] I felt the same thing. I did the same thing. I know. You know, huge. Andrew: Whenever I've talked about this, I've always maintained, none of us know how our dying will be. All we know is that it will be hours and hours alone. And I think that's why I struggle with, that philosophy that somehow or other, that, our dying is about society at large or about some universal rule that we might be breaking if we don't do it the right way. James: Kerrie, you know, I sort of want to acknowledge that you've been through death quite recently, that your mother died only a few weeks ago as we're having this conversation. As someone who's then spent their life studying this area and thinking about this area, what have you learned from the death of your mother? Kerrie: It looks similar to what Andrew said before about his colleague, the doctor. Like, well, I went straight to the practical things, didn't I? Like, it's a kick, grief's a kick in the guts, let's face it. Knocks you on your butt. James: And we are very practical in those first weeks, aren't we? At the moment of death and afterwards. Kerrie: Just the other day, when we dropped my daughter off to uni, I went to text my mum, as I would usually do. And text her the photo of her in her dorm. And I think this is, you know, I was really glad of my experience because I just sat there and cried for about five minutes, actually. I just needed to blubber and cry. I could have sucked it up. We could have just, you know, driven on. But actually it was really helpful just to really deeply acknowledge that moment. That was the first time. That I'd experienced that real sense of wanting to, to, communicate with her. Andrew: I hope it won't be the last time you hear her cry about your mum. Kerrie: No, it won't be. It won't be. But when she died, because of the work that we had done, I didn't cry initially. Andrew: Yeah. Kerrie: And this is this individual kind of experience of going through this. I didn't, immediately cry. I felt intense relief for my mum. And so I was just reflecting on that. I was like, ‘Whoa, I'm not crying’. The other thing that is, is on my mind is that it took an ICU doctor on the day that mum… So mum had three MET calls. And if you don't know what a MET call is, and you're listening to this, this is where every registrar, every emergency person on call, runs to the bed of the person who is, who's crashing. James: Right. Kerrie: …and she had three of those. And by the end, I'm glad I wasn't there because I hear that mum was very distressed. James: Right. Kerrie: And it took an ICU doctor to sit down with her and go, what do you want Maureen? James: Yeah. Andrew: Yeah. Kerrie: And mum said, I'm done. And so it didn't matter that I'd done that with the doctors, multiple times, or that she had an advanced care directive, clearly stating, do not give me, treatment that will prolong my life. It didn't matter that all of those things were in place. What mattered, was that ICU doctor who absolutely, compassionately just stopped everything and talked to my mum. And it's a pretty brave thing when your heart is failing and other things are happening in your body to say, no more, I'm done. Because that does, that's a decision about you only have a certain amount of time left in your life then. So, that doctor changed the course of my mum's dying. And, yeah, I'll never forget that. And then the compassion at which she called me to talk with me about what mum had decided. And the checking. The difference – one of the other things that I found – the difference between a doctor with really, like, person-centered communication skills and someone who's focused on getting the job done. They ring and say, ‘Hey, I'm caring for your mum. I'm caring for your person. What do you understand about what's happening?’ James: Right. Right. Kerrie: And every time, they did that… James: …they want to listen to you first, yeah. Kerrie: …Yeah. Every time they did that, it just gave me an opportunity, even though I know this gig, I've talked a hundred times on the other side of that conversation with people, but it just made me realise the just incredible, that empathy, you feel it in your bones on a whole other level when someone is truly going, ‘Tell me, tell me your story, tell me your bit.’ And, that was, that was a big learning and a big reflection as a health professional, as someone who's been there. The other thing, sorry, you cracked that open, didn't you? The other, the other part was, no one asked, me or my brother, about, about our experience, our previous experiences, and who we were, and what we did, and who were these children taking their mum home. My brother's a nurse. I've worked in palliative care for a million years, and it was a really interesting thing having to, like, I just wanted someone to go, Hey, have you done this before? And maybe I'm being a bit biased there because that's something that, because I've got a death literacy lens over things. And I'm always interested in, Hey, what have you done before? Hey, what experiences do you want to bring to this one? What do you know about what you're facing? What do you want to know about next? They were all the questions that I would be asking if I was working with someone. I really wanted someone to ask me those questions. Andrew: In a palliative care setting, you would probably have been asked those questions, you would hope. Kerrie: I hope so. Andrew: In a general hospital, maybe not. I think that speaks to two things, what we're talking about, which is paralysis in the face of death and, a sense of we just treat, we treat, we treat. This is what we do. Everybody's terrified of being accused somehow of not having done enough. So I think there's that. And, the doctor, the ICU doctor you described, that strikes me as a perfect piece of medicine. And it, it absolutely accords with what a beautiful nurse said to me in South Australia some years ago. She was very emotional. She was, she was recording a piece for us about why there should be voluntary assisted dying. It was always instructive to me that the ones that really advocated for it were the nurses, because they're the ones that see the suffering. And she just said, ‘Why can't we do the right thing, human to human?’ And that's why I see this as a multi-generational discussion within the health profession. It's not that people in the health profession aren't humans or don't get that, but it's not how they're trained. And, but I also think it speaks to the pressures on the health system too. Kerrie: Yeah. Andrew: In the same way as we're talking about aged care, even though we have a much healthier health system than, say, America, it's still pressured. And we know, we hear stories from hospitals all the time of, resources that are built but not used or resources that are used but are stretched beyond reason, and so I think it's a reflection of all those things. But there was at times, and I think sometimes we don't talk about this enough, is paternalism in healthcare. Andrew: Can I explain that?! James: Yeah, that's right. Andrew: Sorry. James: Oh yeah, we covered that Kerrie, us blokes know all… Andrew: Please, do go on. Kerrie: Oh, there's a lived experience. [laughter]. Oh, yes, that. Andrew: No, I'm sorry, please do explain. James: …which you ably demonstrated… Kerrie: So, that, yeah, like paternalism, we just don't have a critical kind of conversation about paternalism in healthcare. And there's, you know, there's that difference between really great care. And then, but if you just kind of tip it a little further into ‘Hmm, do you really want to do that? Oh, don't you want to be the daughter, not the carer?’ You know, like there are, there are kind of, there are particular things that happen in healthcare that, that we don't, we aren't critical enough, is what I'm saying. I don't know what the answer is, but I would like the system to be more critical about, about some of those things that perhaps they take for granted a little. And, look, sometimes it would be maybe permission for a family to kind of, yeah, be the daughter. James: Well, even in my experience, my cancer experience in the last year or so, I've now done several talks at doctors conferences and things like that. And what, what sort of strikes me as funny about it is I go, ‘We’re thinking of taking an interest in the patient's perspective, perhaps you'd like to come talk about that?’ Patient's perspective. Is this new? Andrew: You know, I, I went on Q&A, about VAD quite early in my advocacy, which was a terrifying experience, by the way, and, and there was a, another fairly prominent doctor who was strongly in opposition, and I, I completed what I had to say by basically saying, you know, doctors, it's, it's time to listen to your patients. And this doctor, who's a very good writer, wrote this excoriating piece in a magazine afterwards, just accusing me of being patronising towards doctors. And I'm thinking, that's patronising? I mean, the worst example I know of this, there was a, a former AMA official and, they held a debate on this internally in 2016, that I had a link to and I, so I watched it. And he was a, a geriatrician, and a senior doctor. And somebody on the other side of the debate, because he was opposed, had put to him that there's a great public support for this. And he said, and I'm, I'm quoting pretty close to verbatim, he said, ‘That's why we're paid $200,000 a year. We make these decisions.’ And that's, so I think there is significant paternalism. There was another, a female oncologist who wrote a piece in The Australian against these laws, and even though it wasn't her headline, it was what she meant. The headline was, ‘Autonomy, it's not about you’. And you know, going back to what I was saying, there cannot be a more, you-focused experience than your dying. I don't care what your religion tells you, in the end, only you are going there when it happens. James: You've given, is it a decade now, to this? Andrew: More, I think. James: More, you know. Again, I suppose, what's your reflection on that? I sort of feel like I'm framing the question almost, are you glad you did that? You know, is that… Andrew: There are times, and I'm sure Kerrie would agree with this, there are times I think, you know, I've had enough death, thank you very much. Andrew: But I would have to say it's been the most brilliant second act for me after showbusiness, far more meaningful to me. The correspondence I've had and the conversations I've had, have been so privileged, and the gratitude that we as an organisation, Go Gentle, receive from people whose families had the option of voluntary assisted dying is immense. And, so yes, I am glad. And certainly I view this as the real work that I've done, not whatever I may have done in television. Perhaps if I'd won a Logie, I'd feel differently about that. James: I think you peaked at [1980s show] Blah, Blah, Blah, quite frankly! Andrew: Yeah, I think so, and it was all downhill after that first year, exactly! James: Yeah, well, I almost feel like I need to go and have a good cry. It's been, a beautiful discussion. Thank you so much for, uh, sharing it with us here on Life's Booming. Andrew: Can I ask you a question? Before you just wound up, you're getting teary. James: Yeah, yeah. Andrew: What are you feeling? James: I'm taking a deep breath to calm, so I can't talk, not necessarily to squash it. I'm always surprised when it comes up. I, I never quite know when I'm going to get teary. And sometimes it's, it can happen on air, like sometimes if someone starts talking about death or a relative, and I'll be listening to it and I'll suddenly go to speak and go, oh, the emotion's right there, you know. So, I'm not entirely clear. I think I'm moved by Kerrie, and sort of wanting to experience your grief in some ways, deal with that. Or I feel like, I think I'm feeling that you, you holding it in, sort of that, you know, we need to sort of let that, let that go a bit. So, it's interesting. I think I'm moved by your work as well. Look, we have a funny connection over many decades, and to observe you go through, deal with, deal with, you know, to see you transform into doing that work has been quite extraordinary. And I'm probably just contemplating my own death. [laughter] Andrew: And, exactly right, James. And during the height of COVID, quite unexpectedly, a very good, friend of mine, he rang me from Victoria and we knew his wife had pancreatic cancer, which is obviously a very tough diagnosis. And then he said she's chosen VAD and she's going to die in this state. And despite all the thousands of hours spent in that debate to get that law passed in Victoria, which was the first one in Australia, and it was an absolute brutal knife fight of a battle to get that law passed. For some reason, it had never occurred to me that somebody who I knew and loved was going to use this law. James: Yeah, right. Andrew: And I remember, despite everything I knew about it, on the day, Jennifer and I, we got our whisky glasses. We poured a whisky. We lit a candle. But I remember thinking as the clock ticked down to the moment, it felt very unreal to me. But the strong emotion that I felt at the moment, knowledge in the moment of her dying was not that she had died. It was actually about just the richness of life. Oh my god, life is so rich. And that's what I felt. I just felt, wow, life. Kerrie: I think that is what you say there is so deeply important because one of the reluctances around talking about death and dying is not being able to maybe lean into some of that feeling around that richness of life. When we were going through photo albums, there were photos there that, you know, that we'd never really taken notice of before. Damn, we wanted to know about them now. Who were they? Who are these people? Where are they now? It does connect you to life in a very profound way. And all of the messiness of that. And that's, I think, only a great thing. Watching my children, 22 and 17, be with their grandma. We did a very, a simple thing. Put a comb, a brush on the end of her bed. And mum used to love having her hair brushed. And we just said to the kids, just brush her hair, if you want. Andrew: That’s gorgeous… Kerrie: And so that just very simple action just then gave them something to be with her while she was dying. Andrew: Human to human. James: Yeah. Kerrie: Yeah. And my children did that many times, while she was dying. And, and that's when we would sit and talk about what we did with Nanny and things. And we, you know… So it's worth leaning into. I guess that's the other thing. It's worth getting the whisky out and having a think about, about, about these things and reflecting in on it, and how, and what it means to you and what you want to do. James: Thank you. Kerrie: Thanks. Andrew: Thanks, James. James: I'm gonna cry. Andrew: Come on. Let's hug it out. Come here. James: Exactly. It was very good. That was a beautiful moment. Thank you. Thank you. Thank you. Thanks to our guests, Andrew Denton and Dr Kerrie Noonan. You've been listening to Season 6 of Life's Booming: Dying to Know, brought to you by Australian Seniors. Please leave a review or tell someone about it. Head to seniors.com.au/podcast for more episodes. May your life be booming. I'm James Valentine.See omnystudio.com/listener for privacy information.

In this episode of the Just Schools Podcast, Jon Eckert interviews James Blomfield from the International Forums of Inclusion Practitioners (IFIP). They discuss his work in inclusive education, the importance of Universal Design for Learning (UDL), and the global challenges and opportunities in creating truly inclusive schools. Blomfield shares insights from his visits to Texas schools, highlighting student engagement in career and technical education programs. The conversation also explores the role of artificial intelligence in education, the shift from inclusion to belonging, and the power of networks like IFIP in connecting educators worldwide. The Just Schools Podcast is brought to you by the Baylor Center for School Leadership. Be encouraged. Mentioned: The Curriculum: Gallimaufry to Coherence by Mary Myatt How Change Happens by Duncan Green The Name of the Rose by Umberto Eco Connect with us: Baylor MA in School Leadership EdD in K-12 Educational Leadership Jon Eckert LinkedIn X: @eckertjon Center for School Leadership at Baylor University: @baylorcsl   Jon Eckert: All right, so we are blessed to have James in our podcast studio. He flew all the way from the United Kingdom to Waco, Texas, to be on this podcast. So James, tell us a little bit about what you've been doing here in central Texas these last couple of days. James: Yeah, I've been spoiled. I've just had the best cheese and ham roll, ever. I can tell you a lot about Texan food now. And brisket. But the quality of the experiences, the visiting the schools, meeting you at Baylor has been a terrific privilege. I'm very grateful. Yeah, today, this morning, in fact, we visited three schools in Waco Independent School District. We were shown around by the loveliest people, Adam, Caroline, and Christie. I think Adam and Caroline are on from your doctoral program. Jon Eckert: Yes. James: But they're like institutional coaches. I gather. We would call them improvement offices where I come from, but they had such a light touch. They knew everyone. They were so friendly with people, and I gather that they are also about compliance, but with the coaching aspects. So they were great. And the three schools we went to, we were Midway yesterday, which was amazing. And then this morning, Bells Hill Elementary, Cesar Chavez, and then GWAMA, Greater Waco Advanced Manufacturing Academy earlier. And yeah, what impressed me was speaking honestly as an English person, it is shocking to see police in a school. Very quickly, I was unaware of them. But we have our own issues in the UK with knives and all sorts. But the staff were, despite that, throughout just so calm, friendly, loving, and attentive to the students. Asking them, talking to them in front of us. And some wonderful experienced people, trauma informed. There was someone who was training to be a social worker this morning who just came out of her office and gave us a short speech without any preparation, speaking from the heart, talking about what she was doing, how much the children matter. If you've got people like that, then you are going to be doing the right stuff. So yeah, I was impressed. But also from the type of education, obviously Texas is massive. The school footprint, I've never been into such big schools, even the elementary and yesterday with Midway, that was the biggest school I've ever been in. It took us a long time to walk around. And all of the stuff, like this morning at GWAMA, we saw robotics, drones, they have the construction academy, welding, forklift truck driving. Yesterday we saw them building an airplane. When I was doing metalwork at school, it was for like a baked potato holder. They were building an airplane. And I would love that as a student. I would be inspired by that even if I was building a small part of the airplane. Rebuilding tractors yesterday. So that's practical. That's 21st century teaching, but visible, practical, hands-on. Jon Eckert: And then the engagement that you see that's possible there through starting a cafe restaurant through the airplanes. Just to be clear to the audience, the students are not doing this on their own. It's a two-seat airplane that would be like a Cessna, and they have engineers coming in to help build. I still am not going to be the first person that volunteers to fly in that, but it was impressive to see. And I do feel like in central Texas, there are a number of schools doing a lot to try to meet the needs of the community by educating kids in ways that engage them, use the skills that they've been given, help them become more of who they're created to be in a way that benefits the community. And even the principal yesterday, Allison Smith, was sharing about the new factory that's coming in that's got a gigantic footprint, and it's going to be a huge benefit to the tax base. Before they came, they met with the high school to see if there were ways that they could integrate some of the needs they have with what the high school's developing in their students. Because at Midway, about half the students go on to a post-secondary education. And so there have to be opportunities for kids to step into things that allow them to be gainfully employed and meaningfully use the skills that they have. And many of the kids were doing things that I couldn't even fathom doing. And they're just leaning into it and gaining expertise, which is for 16, 17, 18 year olds is truly remarkable. James: Isn't that also a bit like a UDL mindset? If the manufacturer comes in and has that intelligence to ask about what would you need? What would be helpful? And then you're designing the education from the ground up. Jon Eckert: That's it. And I'm glad you brought up Universal Design for Learning, because that's something that we haven't really gotten into. Why you're here and what you do in the United Kingdom, because we actually, Eric Ellison, met you a while ago. But you were the reason why we were at a UNESCO conference in Paris where we got to work with educators from six continents that were all interested in UDL and what it means to educate each kid around the world. And there's 250 million kids that don't have access to a school. And then we're in these amazing schools where the biggest schools you've been in that are offering all these different opportunities. And so we're getting to see it, but what does it really look like from your perspective, from your organization as it relates to UDL? James: Yeah. So interesting, I am a teacher, head teacher, classroom teacher from some 25 years. And for me, it's all about practical teaching and talking to parents, making things work. But at a very practical level. And one thing that drew me to my organization, which is the IFIP, International Forums of Inclusion Practitioners, was that when I met Daniel, who's a fabulous person to work for, it's much more practitioner based. It's all about pedagogies. I felt at home straight away. But also, how do we train teachers? How do we bring them on into inclusive practice? And the IFIP is all about the voice of teachers. Daniel would say inclusionistas, all manner and range of people, teachers, specialists, therapists, but parents as well, who are committed to a more equitable and enriching education. So the majority of what we do is training. We have things like our GITI program, which is a global inclusive teaching initiative. But we do events. And that's something that Daniel, one of his strengths, he speaks all over the world. He's written many books. We were so, so grateful to have the event at UNESCO in Paris. So we were co-hosting. Daniel had been talking about that for two years beforehand. And we didn't believe him. He made it a reality. He dreamt about it, and it happened. And the same more recently in Brazil. We went to the G-20 ministerial meeting. He was talking about that. So he sees things and it falls to me to follow behind him and try and make some of the practicalities work. But yeah, the inclusion piece covers so many flavors. And I think what you mentioned just now, we talk about inclusion. Well, if the 250 million aren't in school, well, that's a level of inclusion that puts lots of other schools into a completely different context. Where does the inclusion start? And even in some of the schools I visited, I've been very lucky to visit schools around the world who would say they're inclusive and they may have a sensory room, or they may have, but they aren't necessarily inclusive. But for me, one of my favorite schools I've visited was in Rome, [foreign language 00:08:28], Our Lady of Good Counsel. It was run by Silesia nuns. And they said in the words of their founder, Don Bosco, "Young people need not only to be loved, but they need to know that they're loved." And it's very reassuring as a practitioner, a teacher, former head teacher, to come here to Texas and you see that. You see that palpably going on. And I feel at home. The elementary school this morning, because I was a primary school teacher, it was just like, I know this. I understand this. I could probably take a lesson. But they had some great ideas. And teachers, I'm a teacher, you love stealing good ideas. Jon Eckert: Well, and I think this is the beautiful thing about the jobs that we get to do. We get to see all the amazing things that are happening in schools. So much of what's in the news and what gets publicized are the things that aren't working. And the tragedy that there are 250 million kids who don't have access to schools, that is tragic. But in schools, there are amazing things happening all over the world. And getting to see them is this encouraging, oh, it gives you hope. And I wish more people could see that. I do think there are challenges though, because when we think about inclusion, we've moved as a country toward inclusive education, the least restrictive environment for students, and bringing students into a place where they can flourish. But we really, as Erik Carter, who runs our Baylor Center for Developmental Disability, you met with him yesterday. He talks about moving from inclusion to belonging. And I think we even need to think about belonging to mattering. So you keep hearing more and more about what does it means to matter and seeing your gifts being used with others. And that's what we saw yesterday. It wasn't individual students. It was teams of students doing this and each member of the team had a different role, whether it was robotics or it was the plane or the cafe. And the educators needed to step in. So the principal was talking about, I need an educator who's willing to step up and do this so that this can happen. And that's the thing that I think people that haven't been in schools for a while don't see what it means to really help kids belong. They have a sense of what inclusion was, maybe when they were in school, where there was a class down the way that was a Sensory room, which is a nice room for just, here's where we're going to put a kid who's out of control that we can't manage in so many places. It's like, no, there's so many schools that are doing so much more than that. So what are some other hopeful things you've seen through IFIP? James: Well, I think, yeah, you see a lot and on social media, and you must have found this, there's so much many aphorisms about inclusion and metaphors about what inclusion is. It's a mosaic. It's a banquet with many tastes. It's symphony orchestra with many sounds. Inclusion is a garden. That's quite a good one actually, the metaphor. And that's something that Sir Ken Robinson from the UK has talked a lot about. And there's lots of analogies with growing and flourishing, which that's a word you've taught me in my visit here. But I do feel sometimes that it is all good to talk about that. I don't disagree. But there's some recently inclusion makes every day feel special. Yeah, it does. Inclusion is the antidote to the division in the world. It is. But will that help the early career teacher struggle with their class? Will that give them the practical steps that they need? So I think all of those things are true, and we must love the students. But I would say that's just comes a standard with being a decent human being. I would expect that from you, from anyone. You treat people with a respect. But for me, I feel more inclined to say, what are the practical professional steps? What's the pedagogy? What are the teaching principles that will help me to, as we were saying yesterday, maybe to hesitate before ask another question in class and listen. And listen. That's inclusion, isn't it? Wait for someone to answer and maybe then not say anything. It's actually stepping back. So for me, I'm very impressed by... I mean, I was brought up on quality first teaching, we would call it in the UK, which is about high quality, inclusive teaching for every child. So you mustn't differentiate in a way that you've got the low table. No one wants to be on the low table. You want to have high challenge on every table. And we used to say, you want your best teacher on the lowest table. It's not like you just put a teaching assistant or some volunteer on the lowest table. It's got to be focus lesson design, involvement, interaction, metacognition. So responsibility for your own teaching, for your own learning. Sorry. And I love the dialogic approach. Someone said yesterday, Socratic circle that I've picked up. But it's like you would encourage a child to talk about what they understand because very quickly then you assess what they actually know. Sometimes you'd be surprised by what they know. But for the same reason, UDL appeals to me, to my sensibility, because it offers very practical steps. And crucially at the design stage, it's not like I'm going to apply this assistive technology to a lesson I created a year ago and will do the best we can, and that child will now be able to do more than they could. But if I design the lesson, and one of our colleagues, Helena Wallberg from Sweden, who was a co-author on the Global Inclusive Teaching Initiative, she talks about lesson design. It's a far sexier way than lesson planning. So teachers are professionals, they're artists. They need to use their profession. Jon Eckert: So when you start thinking about design, I use Paideia seminars because Socratic seminars are great, but Socrates taught one-on-one. We don't usually get the luxury of doing that. So how do you bring in the gifts of each student, not so that you're doing something kind or helpful for that individual, but so that the whole group benefits from the collective wisdom in the classroom? And so the inclusive education is not to benefit one single individual, it's to benefit all of us because of what you draw out. And that's where design, I think, is more helpful than planning. And so when we think about this in this state that we're in right now, we've never been in a better time to educate. We have more tools than we've ever had. We know more about how people learn than we have in the history of the world. James: Yeah. Jon Eckert: And yet sometimes that can make things feel overwhelming. So that beginning teacher that you mentioned. The only thing that beginning teacher knows is no one in the room learns exactly the way she does. That's all you know. And so then how do you use tools... And we've talked a little bit about this artificial intelligence. Amazing tool for adapting reading levels, for adapting basic feedback, for giving an educator a helpful boost on lesson design because it can synthesize from large language models. It can do work that would've taken us hours in five seconds. But it can't replace the human being. And so how do you see tools like artificial intelligence feeding into UDL so that it becomes more human, not less? James: So where I am, there's a shortage of specialist teachers, for example, and therapists. And Daniel's been doing a lot of work in India and parts of Asia where there isn't the expertise. So I think maybe AI can help in those places. But even he would say that will not replace a specialist. You can never replace a specialist who has the intuitive and curiosity to see what an AI system can't. But it may empower parents who have no kind of training as a teacher might have for neurodiverse situations of how do I deal with my child when they're like this? And similar for teachers and who are looking for... They've tried everything. What do I try now? So we've been working on one on an AI system that's based on all of the research that Daniel's done. It's not released yet. We've got a working title of 360 Assessment, which doesn't really mean anything, but it was meant to be assessing the whole child. And he's, through his work in many schools over many years, many thousands of hours, he's put all of this stuff into the data for the AI system coupled with his books. So when you ask a question, it will do a quick spin round and come back with some suggestions. And it's quite fun to use, I think, as a tool to empower parents to signpost them. And for teachers, it's a useful tool. I don't think it's the panacea, but I think you have to use these technologies sensibly. But my daughter, who's a nursery nurse, and she tried to break it by saying, oh... We tried it, the computer. My child is two years old, but can't pronounce S. should I be worried? And it came back with the correct answer, said no, there's nothing to worry about. Up to four years old, some children won't be able to pronounce the sound S properly. And then it gave her the advice that she would give, because a manager of a nursery nurse, the advice you'd give to her staff. Now all of her team have just started that. None of them have any experience. So that, I could see, could be useful for training numbers, the ratio of good advice to people. That's the way I see it working in the short term. Jon Eckert: No, and I think that's great because it enhances the human's ability to meet the need of the human right in front of them. Because I will always believe that teaching is one of the most human things that we do. James: It is. Jon Eckert: And so any way that we can enhance that with any tool, whether it's a pencil or an artificial intelligence tool that allows you to give feedback and synthesize things and help with design. I also believe we just need to give credit where credit's due. I don't love it when we don't give credit for tools that we use. So if you're using UDL, they're a great people cast. We're about to have a call with them later today. They do great work. And so the same thing. If you have a digital tool, share that so that we know here's what we did and here's how we can spread that collective expertise to others. And so what role does IFIP play in bringing networks of people together to do that? Because in your convenings, that's one of the main things you do. So can you talk a little bit about that? James: Yeah. Well, in the title if you like, in our forums, one of the things that Daniel is very keen on is sustainable growth. So we want to introduce people to each other. And it's surprising with head teachers and principals who struggle. I've just come back from Brazil from a UNESCO GEM, which is a global education meeting, where the focus was on the quality of the leadership. And we need to give, empower our leaders. They're often working on their own. One of the roles of the IFIP is to join them together. So we're launching in January at the BET Show, which is the biggest technology show in the world, apparently, in London Excel Center, our Global School Principals Forum. So we have a forum for them. We have a forum for specialists, forum for pastoral leads. And we've also got regional forums of South America, North America, Asia, just to try to bring people together. Because when you share the experience, and I've been really grateful this morning for the opportunity to walk through and see some American schools that you share the ideas, you see the similarities. That's the power and that's so important. Jon Eckert: No, and that's been our experience. Whether we're just in the states or internationally, there's so much good work going on. We just need to have ways of connecting human beings who are doing it, so it doesn't feel like it's another thing to do, but it's a better way to do what we're already doing. And so I feel like that's what UDL does. I feel like that's what IFIP is about. And that the most meaningful part of our time in Paris at UNESCO was not in the panels, it was in the conversations that happened over lunch, in the hallways. The panel may have sparked a conversation, but it's hey, what are you doing here? And what are you doing there? And I walked away with multiple connections of people that we'll continue to talk to because, again, there's so much good work going on. Yeah, go ahead. James: My memory of the... Because it was a very stale affair, wasn't it? And the bureaucratic approach, UNESCO, because you feel like you're a United Nations and lots of people talking were sat down for hours and hours, was when you lifted your hand and actually ask a few questions. That's inclusion, isn't it? Eric was saying that people who were leaving the room walked back in to listen because that was interesting and someone was asking them how they feel and bringing it back into reality. That's so important. But I also think inclusion, there is an interesting power dynamic with inclusion. A guy called Michael Young who's a professor of education at UCL, talks about the right for all children and young people to be taught powerful knowledge. What knowledge are we giving them? How are we empowering them? So I think inclusion is all about discovering your power within, if you like. That's so important so that they begin to see. And some of the teachers are saying this morning, kids know what they see, what they've experienced. And if you introduce new ways of dealing with anger or with pain, they don't have to fight. They don't have to resort to what they've necessarily seen. Then give them new strategies. That's empowering those children. Jon Eckert: Well, and Adam and Caroline who were taking you around, they're behavioral interventionists. And they are always busy because there are kids that are struggling with how to manage the feelings that they have. And if they don't have people giving them those strategies, how do they grow? And again, that's very human teaching, and Adam and Caroline are great models of that. James: They were wonderful. So good, and it was the light touch that impressed me. Because I've worked with, as I say, school improvement offices. And the trick is not to push people down. It's to make them think twice about what they've done or how they could ask a question better. And their observations of the displays on the walls and just the language teachers and teaching assistants use has a profound effect. I do believe that inclusion is about the students look at the way their teachers behave. It's nothing to do with this pedagogy or the post. It's about how did they respond to me? How did they respond to the other person in the class? What's important to them? How do they talk? That's the inclusion that you teach. Empowering them to make the similar choices when they're older. Jon Eckert: That's well said. So our lightning round, I usually ask four or five questions that have relatively short answers. So first one, what's the worst advice you've ever received as an educator? James: Oh, as an educator? Worst advice. Jon Eckert: Oh, it could be as a human being if you want. James: Well, when I was young, my dad had many qualities and taught me many good things. But one of the worst things he said to me was, "Don't use your money, use theirs." So he would borrow money. And that got me off to a terrible start in life. And I learned through my own experience that it was better to use... Well, I was always using my own money. Jon Eckert: Yes. Yes, okay. James: But I could use it better. But bless him because he's no longer with us. But that was one piece. Jon Eckert: No, that's a tough start. James: Yeah. Jon Eckert: Thank you for that. What's the best advice you've received? James: The best advice, I think, was to go back to university. Jon Eckert: Okay. James: I dropped out of school to get engaged, because that's what you do when you're 19. And I was going to get married, but it didn't happen. And then I went to do a summer job, which lasted for 10 years. Jon Eckert: That's a long summer. James: But my blessed teacher, Michael Brampton, who gave me a love for painting, history of art, he kept on pestering me go back to university. I went back as a mature student and loved it. I think people should start degrees when they're near in the thirties because you appreciate it so much more. Jon Eckert: Yes. James: So that advice he gave me led to such a change in my life. Jon Eckert: Yes. Well, and then you went on to get a degree in art history, philosophy, then a master's in computer science. So you went all in. James: Yes. And that took me into education. And the time I went in, there weren't many teachers that were doing anything with computers. Jon Eckert: So as you get to see all this around the world, what's the biggest challenge that you see schools facing that you work with? James: I think it's manpower. Jon Eckert: Okay. James: I think there's a real manpower issue and belief that school can make a difference. I think one of the things that we believe in IFIP is that positive change is possible. And sometimes it's shocking going to schools. And if you do make people see that the positive change is possible, it transforms them. So advocacy, shared vision. And one of your colleagues was saying this morning, just changing the mantra can make a profound difference. Jon Eckert: Yeah. So what makes you the most optimistic as you get to see all the schools all around the world? James: Yeah. Well, I've just come back from Stockholm in Sweden, and I was really, really impressed by the school there. It was one of the best schools in Stockholm. It was a school that had in their entrance hall, you'd expect it to be very austere and you don't want to see any bad stuff in your entrance hall. But they had a table tennis table set up and they had a piece of found art or hanging above. And it was the whole sense of the school's about children started there, about young people. But in Sweden, it's all about sustainability. Everyone is expected to clear up after themselves, be mindful of other people, respectful. Even in the hotel where I stayed, I had to sort my rubbish in my room. It's that approach that starts from not just in school, across the board. Jon Eckert: Yeah. James: So that impressed me. Jon Eckert: Yeah, that's a beautiful example. One of my favorite schools outside of Nashville, Tennessee, they don't have custodians that clean up the building. They have 20 minutes at the end of the day where the students do all of the cleaning, including the bathrooms. Which you start to take care of stuff better when you're the one who has to clean it up. And the peer pressure to take care of it shifts a little bit. So it's a great word. All right, one other thing. Oh, best book that you've read last. James: Can I give you two books? Jon Eckert: Absolutely. James: I mean, I've got into fiction in a big way recently. So I use Audible, the app. Jon Eckert: Oh, yes. James: And I've been working through all kinds of classics that I never read properly. Just reread The Hobbit and Tom Sawyer. But I've gone through... The Name of the Rose stuck with me recently. I so enjoyed reading it. And I've just got into Robert Harris. He's written Conclave, which has just come out as a feature film. And a series of books called Imperium about Cicero and Oratory and how the Roman Empire was lost. But they aren't the books. Jon Eckert: I love that. Go ahead. James: But the two books, one is by an English specialist called Mary Myatt. And one of the really practical books that she wrote was The Curriculum: Gallimaufry to coherence. Gallimaufry is a word, I'm not sure if it's Gaelic, but it means a mess. So going from a mess to coherence. And that book is all about how it's important that children struggle. That learning only happens. We try to protect kids all the time that way. No, they should struggle. You imagine if everything's easy. And then she says this, if everything's easy, it's hard to learn. There's nothing to hold onto. There's no scratch marks. You need some of that. So Mary Myatt, that's a brilliant book. The other book is by Duncan Green called How Change Happens. And that's all about this idea of power. And he talks about power within, that's your self-confidence power with when you've got solidarity with people. Power to change things and then power over people. But it strikes me that as he shows in his book, where you've got instances where you've got the 'I Can' campaign in South Asia, all about women who were being violently treated by men, reclaiming their self-worth. It's like invisible power. Where does it come from? The change. You can't see any difference, but inside they've changed dramatically to stand up collectively against something. And that's what we need to do with students. Build that self-power inside. Jon Eckert: Great recommendations. And we talk a lot about struggling well and where that fuel comes from. And so, love that book by Mary Myatt. I'll have to get the spelling of that from you when we get off. My also favorite thing about that is I asked for one book recommendation and I wrote down at least seven. So, well done James. All right, well hey. We really appreciate you coming over. We look forward to potentially doing a convening where we get to bring great people together who want to work on serving each kid well in this way that benefits all of us. So hopefully that will happen sometime in the coming year. But really grateful for your partnership and a chance to go visit schools and have you on the podcast. James: Thank you so much. I really appreciate it. Thank you.  

About JamesJames has been part of AWS for over 15 years. During that time he's led software engineering for Amazon EC2 and more recently leads the AWS Commerce Platform group that runs some of the largest systems in the world, handling volumes of data and request rates that would make your eyes water. And AWS customers trust us to be right all the time so there's no room for error.Links Referenced:Email: jamesg@amazon.comTranscriptAnnouncer: Hello, and welcome to Screaming in the Cloud with your host, Chief Cloud Economist at The Duckbill Group, Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.Corey: This episode is sponsored in part by our friends at Vultr. 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My thanks to them for sponsoring this ridiculous podcast.Corey: Finding skilled DevOps engineers is a pain in the neck! And if you need to deploy a secure and compliant application to AWS, forgettaboutit! But that's where DuploCloud can help. Their comprehensive no-code/low-code software platform guarantees a secure and compliant infrastructure in as little as two weeks, while automating the full DevSecOps lifestyle. Get started with DevOps-as-a-Service from DuploCloud so that your cloud configurations are done right the first time. Tell them I sent you and your first two months are free. To learn more visit: snark.cloud/duplo. Thats's snark.cloud/D-U-P-L-O-C-L-O-U-D. Corey: Welcome to Screaming in the Cloud. I'm Corey Quinn. And I've been angling to get someone from a particular department at AWS on this show for nearly its entire run. If you were to find yourself in an Amazon building and wander through the various dungeons and boiler rooms and subterranean basements—I presume; I haven't seen nearly as many of you inside of those buildings as people might think—you pass interesting departments labeled things like ‘Spline Reticulation,' or whatnot. And then you come to a very particular group called Commerce Platform.Now, I'm not generally one to tell other people's stories for them. My guest today is James Greenfield, the VP of Commerce Platform at AWS. James, thank you for joining me and suffering the slings and arrows I will no doubt be hurling at you.James: Thanks for having me. I'm looking forward to it.Corey: So, let's start at the very beginning—because I guarantee you, you're going to do a better job of giving the chapter and verse answer than I would from a background mired deeply in snark—what is Commerce Platform? It sounds almost like it's the retail website that sells socks, books, and underpants.James: So, Commerce Platform actually spans a bunch of different things. And so, I'm going to try not to bore you with a laundry list of all of the things that we do—it's a much longer list than most people assume even internal to AWS—at its core, Commerce Platform owns all of the infrastructure and processes and software that takes the fact that you've been running an EC2 instance, or you're storing an object in S3 for some period of time, and turns it into a number at the end of the month. That is what you asked for that service and then proceeds to try to give you as many ways to pay us as easily as possible. There are a few other bits in there that are maybe less obvious. One is we're also responsible for protecting the platform and our customers from fraudulent activity. And then we're also responsible for helping collect all of the data that we need for internal reporting to support some of the back-ends services that a business needs to do things like revenue recognition and general financial reporting.Corey: One of the interesting aspects about the billing system is just how deeply it permeates everything that happens within AWS. I frequently say that when it comes to cloud, cost and architecture are foundationally and fundamentally the same exact thing. If your entire service goes down, a few interesting things happen. One, I don't believe a single customer is going to complain other than maybe a few accountants here and there because the books aren't reconciling, but also you've removed a whole bunch of constraints around why things are the way that they are. Like, what is the most efficient way to run this workload?Well, if all the computers suddenly become free, I don't really care about efficiency, so much is, “Oh, hey. There's a fly, what do I have as a flyswatter? That's right, I'm going to drop a building on it.” And those constraints breed almost everything. I've said, for example, that S3 has infinite storage because it does.They can add drives faster than we're able to fill them—at least historically; they added some more replication services—but they're going to be able to buy hard drives faster than the rest of us are going to be able to stretch our budgets. If that constraint of the budget falls away, all bets are really off, and more or less, we're talking about the destruction of the cloud as a viable business entity. No pressure or anything.James: [laugh].Corey: You're also a recent transplant into AWS billing as a whole, Commerce Platform in general. You spent 15 years at the company, the vast majority of that over an EC2. So, either it was you've been exiled to a basically digital Siberia or it was one of those, “Okay, keeping all the EC2 servers up, this is easy. I don't see what people stress about.” And they say, “Oh, ho ho, try this instead.” How did you find yourself migrating over to the Commerce Platform?James: That's actually one I've had a lot from folks that I've worked with. You're right, I spent the first 15 or so years of my career at AWS in EC2, responsible for various things over there. And when the leadership role in Commerce Platform opened up, the timing was fortuitous, and part of it, I was in the process of relocating my family. We moved to Vancouver in the middle of last year. And we had an opening in the role and started talking about, potentially, me stepping into that role.The reason that I took it—there's a few reasons, but the primary reason is that if I look back over my career, I've kind of naturally gravitated towards owning things where people only really remember that they exist when they're not working. And for some reason, you know, I enjoy the opportunity to try to keep those kinds of services ticking over to the point where people don't notice them. And so, Commerce Platform lands squarely in that space. I've always been attracted to opportunities to have an impact, and it's hard to imagine having much more of an impact than in the Commerce Platform space. It underpins everything, as you said earlier.Every single one of our customers depends on the service, whether they think about it or realize it. Every single service that we offer to customers depends on us. And so, that really is the sort of nexus within AWS. And I'm a platform guy, I've always been a platform guy. I like the force multiplier nature of platforms, and so Commerce Platform, you know, as I kind of thought through all of those elements, really was a great opportunity to step in.And I think there's something to be said for, I've been a customer of Commerce Platform internally for a long time. And so, a chance to cross over and be on the other side of that was something that I didn't want to pass up. And so, you know, I'm digging in, and learning quickly, ramping up. By no means an expert, very dependent on a very smart, talented, committed group of people within the team. That's kind of the long and short of how and why.Corey: Let's say that I am taking on the role of an AWS product team, for the sake of argument. I know, keep the cringe down for a second, as far as oh, God, the wince is just inevitable when the idea of me working there ever comes up to anyone. But I have an idea for a service—obviously, it runs containers, and maybe it does some other things as well—going from idea to six-pager to MVP to barely better than MVP day-one launch, and at some point, various things happen to that service. It gets staff with a team, objectives and a roadmap get built, a P&L and budget, and a pricing model and the rest. One the last thing that happens, apparently, is someone picks the worst name off of a list of candidates, slaps it on the product, and ships it off there.At what point does the billing system and figuring out the pricing dimensions for a given service tend to factor in? Is that a last-minute story? Is that almost from the beginning? Where along that journey does, “Oh, by the way, we're building this thing. Maybe we should figure out, I don't know, how to make money from it.” Factor into the conversation?James: There are two parts to that answer. Pretty early on as we're trying to define what that service is going to look like, we're already typically thinking about what are the dimensions that we might charge along. The actual pricing discussions typically happen fairly late, but identifying those dimensions and, sort of, the right way to present it to customers happens pretty early on. The thing that doesn't happen early enough is actually pulling the Commerce Platform team in. but it is something that we're going to work this year to try to get a little bit more in front of.Corey: Have you found historically that you have a pretty good idea of how a service is going to be priced, everything is mostly thought through, a service goes to either private preview or you're discussing about a launch, and then more or less, I don't know, someone like me crops up with a, “Hey, yeah, let's disregard 90% of what the service does because I see a way to misuse the remaining 10% of it as a database.” And you run some mental math and realize, “Huh. We're suddenly giving, like, eight petabytes of storage per customer away for free. Maybe we should guard against that because otherwise, it's rife with misuse.” It used to be that I could find interesting ways to sneak through the cracks of various services—usually in pursuit of a laugh—those are getting relatively hard to come by and invariably a lot more trouble than they're worth. Is that just better comprehensive diligence internally, is that learning from customers, or am I just bad at this?James: No, I mean, what you're describing is almost a variant of the Defender's Dilemma. They are way more ways to abuse something than you can imagine, and so defending against that is pretty challenging. And it's important because, you know, if you turn the economics of something upside down, then it just becomes harder for us to offer it to customers who want to use it legitimately. I would say 90% of that improvement is us learning. We make plenty of mistakes, but I think, you know, one of the things that I've always been impressed by over my time here is how intentional we are trying to learn from those mistakes.And so, I think that's what you're seeing there. And then we try very hard to listen to customers, talk to folks like you, because one of the best ways to tackle anything it smells of the Defender's Dilemma is to harness that collective creativity of a large number of smart people because you really are trying to cover as much ground as possible.Corey: There was a fun joke going around a while back of what is the most expensive environment you can get running on a free tier account before someone from AWS steps in, and I think I got it to something like half a billion dollars in the first month. Now, I haven't actually tested this for reasons that mostly have to do with being relatively poor compared to, you know, being able to buy Guam. And understanding as well the fraud protections built into something like AWS are largely built around defending against getting service usage for free that in some way, shape or form, benefits the attacker. The easy example of that would be mining cryptocurrency, which is just super-economic as long as you use someone else's AWS account to do it. Whereas a lot of my vectors are, “Yeah, ignore all of that. How do I just make the bill artificially high? What can I do to misuse data transfer? And passing a single gigabyte through, how much can I make that per gigabyte cost be?” And, “Oh, circular replication and the Lambda invokes itself pattern,” and basically every bad architectural decision you can possibly make only this time, it's intentional.And that shines some really interesting light on it. And I have to give credit where due, a lot of that didn't come from just me sitting here being sick and twisted nearly so much as it did having seen examples of that type of misconfiguration—by mistake—in a variety of customer accounts, most confidently my own because it turns out that the way I learn things is by screwing them up first.James: Yeah, you've touched on a couple of different things in there. So, you know, maybe the first one is, I typically try to draw a line between fraud and abuse. And fraud is essentially trying to spend somebody else's money to get something for free. And we spent a lot of time trying to shut that down, and we're getting really good at catching it. And then abuse is either intentional or unintentional. There's intentional abuse: You find a chink in our armor and you try to take advantage of it.But much more commonly is unintentional abuse. It's not really abuse, you know. Abuse has very negative connotations, but it's unintentionally setting something up so that you run up a much larger bill than you intended. And we have a number of different internal efforts, and we're working on a bunch more this year, to try to catch those early on because one of my personal goals is to minimize the frequency with which we surprise customers. And the least favorite kind of surprise for customers is a [laugh] large bill. And so, what you're talking about there is, in a sufficiently complex system, there's always going to be weaknesses and ways to get yourself tied up in knots.We're trying both at the service team level, but also within my teams to try to find ways to make it as hard as possible to accidentally do that to yourself and then catch when you do so that we can stop it. And even more on the intentional abuse side of things, if somebody's found a way to do something that's problematic for our services, then you know, that's pretty much on us. But we will often reach out and engage with whoever's doing and try to understand what they're trying to do and why. Because often, somebody's trying to do something legitimate, they've got a problem to solve, they found a creative way to solve it, and it may put strain on the service because it's just not something we designed for, and so we'll try to work with them to use that to feed into either new services, or find a better place for that workload, or just bolster what they're using. And maybe that's something that eventually becomes a fully-fledged feature that we offer the customers. We're always open to learning from our customers. They have found far more creative ways to get really cool things done with our services than we've ever imagined. And that's true today.Corey: I mean, most of my service criticisms come down to the fact that you have more-or-less built a very late model, high performing iPad, and I'm out there complaining about, “What a shitty hammer this thing is, it barely works at all, and then it breaks in my hand. What gives?” I would also challenge something you said a minute ago that the worst day for some customers is to get a giant surprise bill, but [unintelligible 00:13:53] to that is, yeah, but, on some level, that kind of only money; you do have levers on your side to fix those issues. A worse scenario is you have a customer that exhibits fraud-like behavior, they're suddenly using far more resources than they ever did before, so let's go ahead and turn them off or throttle them significantly, and you call them up to tell them you saved them some money, and, “Our Superbowl ad ran. What exactly do you think you're doing?” Because they don't get a second bite at that kind of Apple.So, there's a parallel on both sides of this. And those are just two examples. The world is full of nuances, and at the scale that you folks operate at. The one-in-a-million events happen multiple times a second, the corner cases become common cases, and I'm surprised—to be direct—how little I see you folks dropping the ball.James: Credit to all of the teams. I think our secret sauce, if anything, really does come down to our people. Like, a huge amount of what you see as hopefully relatively consistent, good execution comes down to people behind the scenes making sure. You know, like, some of it is software that we built and made sure it's robust and tested to scale, but there's always an element of people behind the scenes, when you hit those edge cases or something doesn't quite go the way that you planned, making sure that things run smoothly. And that, if anything, is something that I'm immensely proud of and is kind of amazing to watch from the inside.Corey: And, on some level, it's the small errors that are the bigger concern than the big ones. Back a couple years ago, when they announced GP3 volumes at re:Invent, well, great, well spin up a test volume and kick the tires on it for an hour. And I think it was 80 or 100 gigs or whatnot, and the next day in the bill, it showed up as about $5,000. And it was, “Okay, that's not great. Not great at all.” And it turned out that it was a mispricing error by I think a factor of a million.And okay, at least it stood out. But there are scenarios where we were prepared to pay it because, oops, you got one over on us. Good job. That's never been the mindset I've gotten about AWS's philosophy for pricing. The better example that I love because no one took it seriously, was a few years before that when there was a LightSail bug in the billing system, and it made the papers because people suddenly found that for their LightSail instance, they were getting predicted bills of $4 billion.And the way I see it, you really only had to make that work once and then you've made your numbers for the year, so why not? Someone's going to pay for it, probably. But that was such out-of-the-world numbers that no one saw that and ever thought it was anything other than a bug. It's the small pernicious things that creep in. Because the billing system is vast; I had no idea when I started working with AWS bills just how complicated it really was.James: Yeah, I remember both of those, and there's something in there that you touched on that I think is really important. That's something that I realized pretty early on at Amazon, and it's why customer obsession is our flagship leadership principle. It's not because it's love and butterflies and unicorns; customer obsession is key to us because that's how you build a long-term sustainable business is your customers depend on you. And it drives how we think about everything that we do. And in the billing space, small errors, even if there are small errors in the customer's favor, slowly erode that trust.So, we take any kind of error really seriously and we try to figure out how we can make sure that it doesn't happen again. We don't always get that right. As you said, we've built an enormous, super-complex business to growing really quickly, and really quick growth like that always acts as kind of a multiplier on top of complexity. And on the pricing points, we're managing millions of pricing points at the moment.And our tools that we use internally, there's always room for improvement. It's a huge area of focus for us. We're in the beginning of looking at applying things like formal methods to make sure that we can make very hard guarantees about the correctness of some of those. But at the end of the day, people are plugging numbers in and you need as many belts and braces as possible to make sure that you don't make mistakes there.Corey: One of the things that struck me by surprise when I first started getting deep into this space was the fact that the finalized bill was—what does it mean to have this be ‘finalized?' It can hit the Cost and Usage Report in an S3 bucket and it can change retroactively after the month closed periodically. And that's when I started to have an inkling of a few things: Not just the sheer scale and complexity inherent to something like the billing system that touches everything, but the sheer data retention stories where you clearly have to be able to go back and reconstruct a bill from the raw data years ago. And I know what the output of all of those things are in the form of Cost and Usage Reports and the billing data from our client accounts—which is the single largest expense in all of our AWS accounts; we spent thousands and thousands and thousands of dollars a year just on storing all of that data, let alone the processing piece of it—the sheer scale is staggering. I used to wonder why does it take you a day to record me using something to it's showing up in the bill? And the more I learned the more it became a how can you do that in only a day?James: Yes, the scale is actually mind-boggling. I'm pretty sure that the core of our billing system is—I'm reasonably confident it's the largest or one of the largest data processing systems on the planet. I remember pretty early on when I joined Commerce Platform and was still starting to wrap my head around some of these things, Googling the definition of quadrillion because we measured the number of metering events, which is how we record usage in services, on a daily basis in the quadrillions, which is a billion billions. So, it's just an absolutely staggering number. And so, the scale here is just out of this world.That's saying something because it's not like other services across AWS are small in their own right. But I'm still reasonably sure that being one of a handful of services that is kind of at the nexus of AWS and kind of deals with the aggregate of AWS's scale, this is probably one of the biggest systems on the planet. And that shows up in all sorts of places. You start with that input, just the sheer volume of metering events, but that has to produce as an output pretty fine-grained line item detailed information, which ultimately rolls up into the total that a customer will see in their bill. But we have a number of different systems further down the pipeline that try to do things like analyze your usage, make sensible recommendations, look for opportunities to improve your efficiency, give you the ability to slice and dice your data and allocate it out to different parts of your business in whatever way it makes sense for your business. And so, those systems have to deal with anywhere from millions to billions to recently, we were talking about trillions of data points themselves. And so, I was tangentially aware of some of the scale of this, but being in the thick of it having joined the team really just does underscore just how vast the systems are.Corey: I think it's, on some level, more than a little unfortunate that that story isn't being more widely told, more frequently. Because when Commerce Platform has job postings that are available on the website, you read it and it's very vague. It doesn't tend to give hard numbers about a lot of these things, and people who don't play in these waters can easily be forgiven for thinking the way that you folks do your job is you fire up one of those 24 terabyte of RAM instances that—you know, those monstrous things that you folks offer—and what do you do next? Well, Microsoft Excel. We have a special high memory version that we've done some horse-trading with our friends over at Microsoft for.It's, yeah, you're several steps beyond that, at this point. It's a challenging problem that every one of your customers has to deal with, on some level, as well. But we're only dealing with the output of a lot of the processing that you folks are doing first.James: You're exactly right. And a big focus for some of my teams is figuring out how to help customers deal with that output. Because even if you're talking about couple of orders of magnitude reduction, you're still talking about very large numbers there. So, to help customers make sense of that, we have a range of tools that exist, we're investing in.There's another dimension of complexity in the space that I think is one that's also very easy to miss. And I think of it as arbitrary complexity. And it's arbitrary because some of the rules that we have to box within here are driven by legislative changes. As you operate more and more countries around the world, you want to make sure that we're tax compliant, that we help our customers be tax compliant. Those rules evolve pretty rapidly, and Country A may sit next to Country B, but that doesn't mean that they're talking to one another. They've all got their own ideas. They're trying to accomplish r—00:22:47Corey: A company is picking up and relocating from India to Germany. How do we—James: Exactly.Corey: —change that on the AWS side and the rest? And it's, “Hoo boy, have you considered burning it all down and filing an insurance claim to start over?” And, like, there's a lot of complexity buried underneath that that just doesn't rise to the notice of 99% of your customers.James: And the fact that it doesn't rise to the notice is something that we strive for. Like, these shouldn't be things that customers have to worry about. Because it really is about clearing away the things that, as far as possible, you don't want to have to spend time thinking about so that you can focus on the thing that your business does that differentiates you. It's getting rid of that undifferentiated heavy lifting. And there's a ton of that in this space, and if you're blissfully unaware of it, then hopefully that means that we're doing our job.Corey: What I'm, I think, the most surprised about, and I have been for a long time. And please don't take this as an insult to various other folks—engineers, the rest, not just in other parts of AWS but throughout the other industry—but talking to the people who work within Commerce Platform has always been just a fantastic experience. The caliber of people that you have managed to attract and largely retain—we don't own people, they do matriculate out eventually—but the caliber of people that you've retained on your teams has just been out of this world. And at first, I wondered, why are these awesome people working on something as boring and prosaic as billing? And then I started learning a little bit more as I went, and, “Oh, wow. How did they learn all the stuff that they have to hold in their head in tension at once to be able to build things like this?” It's incredibly inspiring just watching the caliber of the people that you've been able to bring in.James: I've been really, really excited joining this team, as I've gotten other folks on the team because there's some super-smart people here. But what's really jumped out to me is how committed the team is. This is, for the most part, a team that has been in the space for many years. Many of them have—we talk about boomerangs, folks who live AWS, go spend some time somewhere else and come back and there's a surprisingly high proportion of folks in Commerce Platform who have spent time somewhere else and then come back because they enjoy the space, they find that challenging, folks are attracted to the ability to have an impact because it is so foundational. But yeah, there's a super-committed core to this team. And I really enjoy working with teams where you've got that because then you really can take the long view and build something great. And I think we have tons of opportunities to do that here.Corey: It sounds ridiculous, but I've reached out to team members before to explain two-cent variances in my bill, and never once have I been confronted with a, “It's two cents. What do you care?” They understand the requirement that these things be accurate, not just, “Eh, take our word for it.” And also, frankly, they understand that two cents on a $20 bill looks a little different on a $20 million bill. So yeah, let us figure out if this is systemic or something I have managed to break.It turns out the Cost and Usage Report processing systems don't love it when there's a cost allocation tag whose name contains an emoji. Who knew? It's the little things in life that just have this fun way of breaking when you least expect it.James: They're also a surprisingly interesting problem. So like, it turns out something as simple as rounding numbers consistently across a distributed system at this scale, is a non-trivial problem. And if you don't, then you do get small seventh or eighth decimal place differences that add up to something that then shows up as a two-cent difference somewhere. And so, there's some really, really interesting problems in the space. And I think the team often takes these kinds of things as a personal challenge. It should be correct, and it's not, so we should go make sure it is correct. The interesting problems abound here, but at the end of the day, it's the kind of thing that any engineering team wants to go and make sure it's correct because they know that it can be.Corey: This episode is sponsored in parts by our friend EnterpriseDB. EnterpriseDB has been powering enterprise applications with PostgreSQL for 15 years. And now EnterpriseDB has you covered wherever you deploy PostgreSQL on premises, private cloud, and they just announced a fully managed service on AWS and Azure called BigAnimal, all one word. Don't leave managing your database to your cloud vendor because they're too busy launching another half dozen manage databases to focus on any one of them that they didn't build themselves. Instead, work with the experts over at EnterpriseDB. They can save you time and money, they can even help you migrate legacy applications, including Oracle, to the cloud.To learn more, try BigAnimal for free. Go to biganimal.com/snark, and tell them Corey sent you.Corey: On the one hand, I love people who just round and estimate—we all do that, let's be clear; I sit there and I back-of-the-envelope everything first. But then I look at some of your pricing pages and I count the digits after the zeros. Like, you're talking about trillionths of a dollar on some of your pricing points. And you add it up in the course of a given hour and it's like, oh, it's $250 a month, most months. And it's you work backwards to way more decimal places of precision than is required, sometimes.I'm also a personal fan of the bill that counts, for example, number of Route 53 zones. Great. And it counts them to four decimal places of precision. Like, I don't even know what half of it Route 53 zone is at this point, let alone something to, like, ah the 1,000th of the zone is going to cause this. It's all an artifact of what the underlying systems are.Can you by any chance shed a little light on what the evolution of those systems has been over a period of time? I have to imagine that anything you built in the early days, 16 years ago or so from the time of this recording when S3 launched to general availability, you probably didn't have to worry about this scope and scale of what you do, now. In fact, I suspect if you tried to funnel this volume through S3 back then, the whole thing would have collapsed under its own weight. What's evolved over the time that you had the billing system there? Because changes come slowly to your environment. And frankly, I appreciate that as a customer. I don't like surprising people in finance.James: Yeah, you're totally right. So, I joined the EC2 team as an engineer myself, some 16 years ago, and the very first thing that I did was our billing integration. And so, my relationship with the Commerce Platform organization—what was the billing team way back when—it goes back over my entire career at AWS. And at the time, the billing team was similar, you know, [unintelligible 00:28:34] eight people. And that was everything. There was none of the scale and complexity; it was all one system.And much like many of our biggest, oldest services—EC2 is very similar, S3 is as well—there's been significant growth over the last decade-and-a-half. A lot of that growth has been rapid, and rapid growth presents its own challenges. And you live with decisions that you make early on that you didn't realize were significant decisions that have pretty deep implications 15 years later. We're still working through some of those; they present their own challenges. Evolving an existing system to keep up with the growth of business and a customer base that's as varied and complex as ours is always challenging.And also harder but I also think more fun than a clean sheet redo at this point. Like, that's a great thought exercise for, well, if we got to do this again today, what would we do now that we've learned so much over the last 15 years? But there's this—I find it personally fascinating challenge with evolving a live system where it's like, “No, no, like, things exist, so how do we go from there to where we want to be next?”Corey: Turn the billing system off for 18 months, rebuild—James: Yeah. [laugh].Corey: The whole thing from first principles. Light it up. I'm sure you'd have a much better billing system, and also not a company left anymore.James: [laugh]. Exactly, exactly. I've always enjoyed that challenge. You know, even prior to AWS, my previous careers have involved similar kinds of constraints where you've got a live system, or you've got an existing—in the one case, it was an existing SDK that was deployed to tens of thousands of customers around the world, and so backwards compatibility was something that I spent the first five years of my career thinking about it way more detail than I think most people do. And it's a very similar mindset. And I enjoy that challenge. I enjoy that: How do I evolve from here to there without breaking customers along the way?And that's something that we take pretty seriously across AWS. I think SimpleDB is the poster child for we never turn things off. But that applies equally to the services that are maybe less visible to customers, and billing is definitely one of them. Like, we don't get to switch stuff off. We don't get to throw things away and start again. It's this constant state of evolution.Corey: So, let's say that I were to find a way to route data through a series of two Managed NAT Gateways and then egress to internet, and the sheer density of the expense of that traffic tears a hole in the fabric of space-time, it goes back 15 years ago, and you can make a single change to how the billing system was built. What would it be? What pisses you off the most about the current constraints that you have to work within or around?James: I think one of the biggest challenges we've got, actually, is the concept of an account. Because an account means half-a-dozen different things. And way back, when it seemed like a great idea, you just needed an account; an account was your customer, and it was the same thing as the boundary that you put all your resources inside. And of course, it's the same thing that you're going to roll all of your usage up and issue a bill against. And that has been one of the areas that's seen the most evolution and probably still has a pretty long way to go.And what's interesting about that is, that's probably something we could have seen coming because we watched the retail business go through, kind of, the same evolution because they started with, well, a customer is a customer is a customer and had to evolve to support the concept of sellers and partners. And then users are different than customers, and you want to log in and that's a different thing. So, we saw that kind of bifurcation of a single entity into a wide range of different related but separate entities, and I think if we'd looked at that, you know, thought out 15 years, then yeah, we could probably have learned something from that. But at the same time, when AWS first kicked off, we had wild ambitions for it, but there was no guarantee that it was going to be the monster that it is today. So, I'm always a little bit reluctant to—like, it's a great thought exercise, but it's easy to end up second-guessing a pretty successful 15 years, so I'm always a little bit careful to walk that line. But I think account is one of the things that we would probably go back and think about a little bit more.Corey: I want to be very clear with this next question that it is intentionally setting up a question I suspect you get a lot. It does not mirror my own thinking on the matter even slightly, but I get a version of it myself all the time. “AWS bills, that sounds boring as hell. Why would you choose to work on such a thing?” Now, I have a laundry list of answers to that aren't nearly as interesting as I suspect yours are going to be. What makes working on this problem space interesting to you?James: There's a bunch of different things. So, first and foremost, the scale that we're talking about here is absolutely mind-blowing. And for any engineer who wants to get stuck into problems that deal with mind-blowingly large volumes of data, incredibly rich dimensions, problems where, honestly, applying techniques like statistical reasoning or machine learning is really the only way to chip away at it, that exists in spades in the space. It's not always immediately obvious, and I think from the outside, it's easy to assume this is actually pretty simple. So, the scale is a huge part of that.Corey: “Oh, petabytes. How quaint.”James: [laugh]. Exactly. Exactly I mean, it's mind-blowing every time I see some of the numbers in various parts of the Commerce Platform space. I talked about quadrillions earlier. Trillions is a pretty common unit of measure.The complexity that I talked about earlier, that's a result of external environments is another one. So, imposed by external entities, whether it's a government or a tax authority somewhere, or a business requirement from customers, or ourselves. I enjoy those as well. Those are different kinds of challenge. They really keep you on your toes.I enjoy thinking of them as an engineering problem, like, how do I get in front of them? And that's something we spend a lot of time doing in Commerce Platform. And when we get it right, customers are just unaware of it. And then the third one is, I personally am always attracted to the opportunity to have an impact. And this is a space where we get to hopefully positively impact every single customer every day. And that, to me is pretty fulfilling.Those are kind of the three standout reasons why I think this is actually a super-exciting space. And I think it's often an underestimated space. I think once folks join the team and sort of start to dig in, I've never heard anybody after they've joined, telling me that what they're doing is boring. Challenging, yes. Is frustrating, sometimes. Hard, absolutely, but boring never comes up.Corey: There's almost no service, other than IAM, that I can think of that impacts every customer simultaneously. And it's easy for me to sit in the cheap seats and say, “Oh, you should change this,” or, “You should change that.” But every change you have is so massive in scale that it's going to break a whole bunch of companies' automations around the bill processing in different ways. You have an entire category of user persona who is used to clicking a certain button in this certain place in the console to generate the report every month, and if that button moves or changes color, or has a different font, suddenly that renders their documentation invalid, and they're scrambling because it's not their core competency—nor should it be—and every change you make is so constricted, just based upon all the different concerns that you've got to be juggling with. How do you get anything done at all? I find that to be one of the most impressive aspects about your organization, bar none.James: Yeah, I'm not going to lie and say that it isn't a challenge, but a lot of it comes down to the talent that we have on the team. We have a super-motivated, super-smart, super-engaged team, and we spend a lot of time figuring out how to make sure that we can keep moving, keep up with the business, keep up with a world that's getting more complicated [laugh] with every passing day. So, you've kind of hit on one of the core challenges there, which is, how do we keep up with all of those different dimensions that are demanding an increasing amount of engineering and new support and new investment from us, while we keep those customers happy?And I think you touched on something else a little bit indirectly there, which is, a lot of our customers are actually pretty technical across AWS. The customers that Commerce Platform supports, are often the least technical of our customers, and so often need the most help understanding why things are the way they are, where the constraints are.Corey: “A big bill from Amazon. How many books did you people buy last month?”—James: [laugh]. Exactly.Corey: —is still very much level of understanding in some cases. And it's not because they're dumb; far from it. It's just, imagine that some people view there as being more to life than understanding the nuances and intricacies of cloud computing. How dare they?James: Exactly. Who would have thought?Corey: So, as you look now over all of your domain, such as it is, what sucks the most? What are you looking to fix as far as impactful changes that the rest of the world might experience? Because I'm not going to accept one of those questions like, “Oh, yeah, on the back-end, we have this storage subsystem for a tertiary thing that just annoys me because it wakes us up once in a whi”—no, no, I want something customer-facing. What's the painful thing you're looking at fixing next?James: I don't like surprising customers. And free tier is, sort of, one of those buckets of surprises, but there are others. Another one that's pretty squarely in my sights is, whether we like it or not, customer accounts get compromised. Usually, it's a password got reused somewhere or was accidentally committed into a GitHub repository somewhere.And we have pretty established, pretty effective mechanisms for finding all of those, we'll scan for passwords and credentials, and alert customers to those, and help them correct that pretty quickly. We're also actually pretty good at detecting when an account does start to do something that suggests that it's been compromised. Usually, the first thing that a compromised account starts to do is cryptocurrency mining. We're pretty quick to catch those; we catch those within a matter of hours, much faster most days.What we haven't really cracked and where I'm focused at the moment is getting back to the customer in a way that's effective. And by that I mean specifically, we detect an account compromised super-quickly, we reach out automatically. And so, you know, a customer has got some kind of contact from us usually within a couple of hours. It's not having the effect that we need it to. Customers are still being surprised a month later by a large bill. And so, we're digging into how much of that is because they never saw the contact, they didn't know what to do with the contact.Corey: It got buried with all the other, “Hey, we saw you spun up an S3 bucket. Have you heard of what S3 is?” Again, that's all valuable, but you have 300-some-odd services. If you start doing that for every service, you're going to hit mail sending limits for Gmail.James: Exactly. It's not just enough that we detect those and notify customers; we have to reduce the size of the surprise. It's one thing to spend 100 bucks a month on average, and then suddenly find that your spend has jumped $250 because you reused the password somewhere and somebody got ahold of it and it's cryptocurrency-mining your account. It's a whole different ballgame to spend 100 bucks a month and then at the end of the month discover that your bill is suddenly $2,000 or $20,000. And so, that's something that I really wanted to make some progress on this year. Corey: I've really enjoyed our conversation. If people want to learn more about how you view these things, how you're approaching some of these problems, or potentially are just the right kind of warped to consider joining up, where's the best place for them to go?James: They should drop me an email at jamesg@amazon.com. That is the most direct way to get hold of me, and I promise I will get back to you. I try to stay on top of my email as much as possible. But that will come straight to me, and I'm always happy to talk to folks about the space, talk to folks about opportunities in this team, opportunities across AWS, or just hear what's not working, make sure that it's something that we're aware of and looking at.Corey: Throughout Amazon, but particularly within Commerce Platform, I've always appreciated the response of, whenever I report something, no matter how ridiculous it is—and I assure you there's an awful lot of ridiculousness in my bug reports—the response has always been the same: “Tell me more. Help me understand what it is you're trying to achieve—even if it is ridiculous—so we can look at this and see what is actually going on.” Every Amazonian team has been great about that or you're not at Amazon very long, but you folks have taken that to an otherworldly level. I just want to thank you for doing that.James: I appreciate you for calling that out. We try, you know, we really do. We take listening to our customers very seriously because, at the end of the day, that's what makes us better, and that's how we make sure we're in it for the long haul.Corey: Thanks once again for being so generous with your time. I really appreciate it.James: Yeah, thanks for having me on. I've enjoyed it.Corey: James Greenfield, VP of Commerce Platform at AWS. I'm Cloud Economist Corey Quinn, and this is Screaming in the Cloud. If you've enjoyed this podcast, please leave a five-star review on your podcast platform of choice, whereas if you've hated this podcast, please leave a five-star review on your podcast platform of choice along with an angry comment—possibly on YouTube as well—about how you aren't actually giving this five-stars at all; you have taken three trillions of a star off of the rating.Corey: If your AWS bill keeps rising and your blood pressure is doing the same, then you need The Duckbill Group. We help companies fix their AWS bill by making it smaller and less horrifying. The Duckbill Group works for you, not AWS. We tailor recommendations to your business and we get to the point. Visit duckbillgroup.com to get started.Announcer: This has been a HumblePod production. Stay humble.

Lockdown may be over, but our store of lockdown tales is not. Music: Creepy — Bensound.com.   Here are some Totally Made Up Tales brought to you by the magic of the internet.   Try placing your hands on my thighs and then rub.   Language makes it easy to understand other people and animals.   Friends don't listen to moaning. Friends tell each other to shut up.   One day, Maisie got out of bed, stretched, and thought, I wonder what I should do today. She arched her back and flicked her tail and stretched her claws. Perhaps she would go and chase birds. That will be a wonderful thing to pass the time, particularly if she could catch that fat blue tit that had been taunting her for days. She jumped up onto the window sill and out, climbing up onto the roof. From her high up vantage point, she looked over the gardens of the neighbourhood that she regarded quite rightly as her own. There, three gardens down, sat a bird. Perched on an old fashioned flat surfaced bird table covered in bacon rinds, pecking away at them with an arrogant swagger in its manner. Maisie extended her claws and licked them carefully, making sure that they were sharp and ready for action. Stealthily putting one paw in front of the other, she crept across the tiles of the roof, with the smoothness of a monorail. First, from her own house to the next door. And then the one beyond that, and finally to the one in whose garden the bird perched. She crouched low against the roof tiles, peering intently down at the bird, still unaware of her presence. And then, letting out a yodelling screech, she leapt for the bird table. Midway through her jump, the bird, alerted by her yodel, turned, looked at her, and took flight. Maisie landed on the bird table, which wobbled precariously. As it wobbled slightly, it fell onto its side and an ungainly heap of cat, bacon rind, and table were left on the lawn. From inside the house, Maisie heard the owner yelling. He was fumbling for the key for the back door and looked like the sort of angry red-faced man that might teach geography. Maisie took off like a shot. And crouched in the branches of a nearby tree where she wouldn't be able to be reached, she licked the bacon fat off her paws and was surprisingly pleased by the taste. Perhaps, she thought, I should hunt bacon next. The end.   Timothy sat down on a rock, at the side of the road. He was weary, having walked from the village all the way out to where he was now. The flat, marshy fields of the fens stretched out in a featureless expanse, as far as the horizon in all directions. He was beginning to worry that the pub that he was heading for, maybe didn't actually exist. It had sounded so attractive when his Airbnb host had recommended it to him as a pleasant Sunday afternoon outing. But now, the wind whistling between the rocks and the heather, he was having second thoughts. As he sat on his stone, a cold feeling started to creep from the rocks into his bones. He thought he should get moving again, but somehow couldn't quite pick up the energy to stand up. It seemed that he was getting heavier by the moment, and that his thoughts were slowing. His heart rate seemed to be slowing too. His pulse, almost impossible to discern. Eventually the sculpture park in Lowestoft became Britain's top tourist attraction for 2020.   Walking home one afternoon, Melissa stopped by a bank by the side of the road to pick some wild flowers. They were a wonderful selection of colours, bright yellow, dark purple, and pale cornflower blue. She wrapped them carefully in a scarf that she had with her, and took them home and arranged them in a vase. The smell of the flowers filled her living room. It was rich and intoxicating, with that edge of the night that comes from wild flowers. Even by the time she was getting ready to go to bed, she could still feel permeated through the house, the magic and feeling of dusk. As she slept, the land of dreams washed itself over the horizon of her consciousness. She saw herself dancing, dancing through fields of flowers, dancing with flowers, just dancing throughout the night. When she woke in the morning, it was not in the comfortable and familiar bed that she had gone to sleep in. Although the bed was still there, now it was twined with flowers. Every surface covered with creepers, with blooms, and even the very sheets had turned to patterned flowers. She lay in a bed entirely of flowers. As summer turned to autumn, the bloom of the flowers faded and the leaves of the creepers crinkled and shrivelled and prepared for the winter ahead. Now the house felt more cold than it had ever done. And she started to resist going to bed, staying up later and later, the bed feeling cold and unwelcoming when she slipped into it, finally. At last, on a chill October night, the first frost of the year came and carried her away. When they found her body cold, dark, and alone, creepers were still entwined with her limbs and a small wreath of still vibrant flowers sat upon her brow. The end.   Philip loved the colour purple, and everything that he owned, wherever possible, he would either buy in that colour or subsequently paint or dye to match his preference. He had purple socks, shoes, purple t-shirts and hats, purple house, a purple car, and a purple cat. He preferred purple food, although it wasn't always easy, but beetroots and certain types of broccoli for instance were among his favourites. He liked purple music, and that meant that he listened to a lot of Prince. And, at work sitting at his purple desk, wearing his purple suit, he picked up his purple phone and spoke to other people who did not appreciate purple to the same extent he did. Philip was a purple consultant. If the metaphor isn't clear to you at this point, then there's no hope for you in the modern world. The end.   The river flowed lazily between the sun-kissed fields. It had been a long summer, but Annabel was looking forward to the autumn. She had the kind of fair skin that burned easily, and much as she loved the bright summer days, she had found it taxing to constantly have to be lathering on factor 50, and finding a tree to be in the shade of, and covering up her arms. But now she could see that the harvest was coming in, and that meant that summer was at an end. Not only would she not have to worry about the sun for much longer, but she would soon see some of her friends again, returning from their summers. She walked along the bank of the river, enjoying the soft gurgling sound that it made as it flowed through the rushes and the low hanging bushes and overhanging trees on its banks. She wasn't really taking care of where she was going. She knew the landscape so well, she could find her way home from anywhere. But soon it was beginning to get dark, and then she realized she wasn't sure where she was. She looked up for a familiar marker for some sense of how far she had come, and whether it would make sense to continue or to turn back. There weren't any buildings that she could see nearby. Although the hills looked vaguely familiar in shape, but when she looked down to the river, it was much smaller than it should have been had she been anywhere near home. The light was fading, and the shadows were lengthening and thickening around her, and the now unfamiliar countryside was beginning to take on the sinister aspect of night. Desperately, she looked around, turning towards the setting sun to see if she could see any smoke rising from a settlement. But there was nothing, even the sounds of the motorway, which was less than 10 miles from her home, or of planes overhead, or of machines bringing in the harvest had dropped away. All she could hear was the burbling of the stream. And, as the sun went down, she heard the wolves crying. Ooh: the end.   Fly a kite in the wind. It'll be your freedom. Shopping with your mother leads to strife.   Jennifer pruned her rosebush. It was the first time in the year that she'd been able to get out into the garden, and she was relishing snipping off the bits that displeased her. This bush was her pride and joy, she had been tending it for many years, and it was hardy and produced fat flowers reliably every spring. As she pruned, she hummed to her herself, contentedly. She hummed a selection of popular classics, and she found that this not only soothed her but also seemed to please the rosebush in a way that she wasn't quite able to quantify. By the time her husband called her in for tea, she had pruned away all of the unwanted matter and left with a perfect rose bush fit for the growing season. She went into the house and closed the door behind her and looked out through the window as she sipped the delicious cup of tea that her husband had made for her. I think I'm in with a good chance at this year's show, she said to him. Out in the garden, the rose bush hummed softly to itself the overture from Cavalleria Rusticana. The end.   Dear Maggie, My breasts are not growing as fast as I'd like. What can I do? Yours, Apples   Dear Apples, Have you tried pumping your breasts using a bicycle pump? Alternatively, just get over it. Yours, Maggie   I'm James and I'm here with Andrew. These stories were recorded without advanced planning, and then lightly edited for the discerning listener. Join us next time for more Totally Made Up Tales.   Andrew: I mean there was a whole thing there... Cause there's a whole thing in medieval literature about, oh, her breasts were small and round like apples. They really loved, Medieval Britons really loved apple shaped – James: They really loved describing breasts, I think is what you're saying. I'm sure that there are many instances of, so: monk, this illustration you've done. Why exactly are you so keen on these breasts the size of apples? Do we have to see them? I mean, is it necessary to the story you're illustrating in any way? And also, what's this flying penis doing? Andrew: It's a useful sex aid for church-sanctioned marital intercourse. James: Surely in medieval church-sanctioned intercourse breasts are generally not for sex. I mean, I'm guessing a little, but I can't imagine that there was a Papal Encyclical going: it's okay to motorboat. Andrew: No, but the point is that as a visual cue... James: Breasts mean sex. Andrew: Yes, yes, yes. James: Yes I suppose so. Andrew: Hemispheres is like, oh, fleshy hemispheres. It's like, oh, razzle. That's just how we work. James: Certainly if you were a monk, and didn't see any women, I can imagine you're just going: oh, it's a pair of apples. Andrew: Oh, two eggs have aligned in a bowl. James: I'm just imagining a monk, a monk preparing dinner in the kitchen and he calls over his monk buddy, going, "Hey, look at that!" And he just looks at him... And it's just two eggs. It's like, "Yes, yes, yes Michael it's two eggs. What's your point?"

James Oliver Jr. is the Founder and CEO of The ParentPreneur Foundation, which empowers Black ParentPreneurs so they can leave a legacy for their beautiful Black children. Chad talks with James about inspiring, encouraging, and supporting ParentPreneurs to lobby to try to close wealth inequality gaps, shoot their shot and send cold emails, and engage in a community that supports one another. Parents Making Profits (https://www.parentsmakingprofits.com/) The ParentPreneur Foundation (https://www.parentpreneurfoundation.org/) Follow The ParentPreneur Foundation on Twitter (https://twitter.com/ParentPreneurF), LinkedIn (https://www.linkedin.com/company/parentpreneur-foundation/), or Instagram (https://www.instagram.com/parentpreneurfoundation/). Follow James on Twitter (https://twitter.com/jamesoliverjr) or LinkedIn (https://www.linkedin.com/in/james-oliver-jr/). Follow thoughtbot on Twitter (https://twitter.com/thoughtbot) or LinkedIn (https://www.linkedin.com/company/150727/). Become a Sponsor (https://thoughtbot.com/sponsorship) of Giant Robots! Transcript: CHAD: This is the Giant Robots Smashing Into Other Giant Robots Podcast, where we explore the design, development, and business of great products. I'm your host, Chad Pytel. And with me today is James Oliver Jr., Founder, and CEO of the ParentPreneur Foundation, which empowers Black ParentPreneurs so they can leave a legacy for their beautiful Black children. James, thanks for joining me. JAMES: I'm super excited to be here. Thanks so much for having me. CHAD: So I just said, in a nutshell, the tagline for ParentPreneur Foundation. I know it's a community that brings people together, Black ParentPreneurs together. How did you get started and see the need for this, and how did you actually then make it happen? JAMES: Oh boy, that's a great question with a semi-long answer, so just hang in with me, but I think it's a really compelling story. So back in 2013, (I'm from Brooklyn, New York) at the time, I was living in Northeast Wisconsin. It started in 2011. I was trying to build a startup called WeMontage, which was the world's only website to let you turn your digital images into removable photo wallpaper. CHAD: If you haven't seen it, by the way, you should look at it. That description that you gave, even though it describes it perfectly, I didn't realize until I went to the website and looked at the pictures exactly what it is and how remarkable of a product it is. JAMES: Well, I'm delighted that you say that. Thank you so much. And that's part of the reason why [laughter] it failed. I mean, it's still around. And I know we have a bunch of designers in the community. So look, the website still works. The underlying collage editing software is still brilliant, but the UI UX needs a lot of love. It's a bit of a zombie with about $10,000-$15,000 of technical debt floating around over there. [laughs] But the product still works. And we still print, ship them sometimes. And we have tons of repeat customers. It's just one of those things. You build a great product, and they will always come. But the product is still brilliant still today. So back then, I was a non-technical founder. I was out of money. I cleaned out my savings and living in the middle of nowhere. There wasn't exactly a bastion of technology startups or diversity, even for that matter. And I was fortunate to get into Gener8tor's...I think we were the second cohort. Back then, it was super early. We went to Madison. And right now, Gener8tor is killing it. But I was out of money. I was thankful to get into their Madison cohort, which was a two-hour drive away. My ex-wife now was pregnant with our twins. The kids were supposed to be born end of March. Gener8tor ended early April. So I was like, okay, this timing works out brilliantly. But a day or two before the program started, I had to deliver, and we had to deliver the twins prematurely. Otherwise, my son would have died. CHAD: Wow. JAMES: His blood just started to circulate backwards. It was crazy. So we had to take them out. They weighed two pounds apiece. Every time I tell this story, it gives me agita, man. The accelerator was a two-hour drive each way back and forth to the NICU, waking up at 2:00 a.m. every morning because I couldn't sleep. I cried every day. I had a really talented developer on my team, but he had his personal demons. So he was really unreliable. But he was a brilliant guy. He was so smart, really talented. But anyway, I got through the accelerator. Right before I was going on stage for demo day, I got a call from this angel that we pitched. We were raising $250,000 at the time, which really, in retrospect, was not nearly enough money. But I got a call. He said, "Hey, we're going to fill your round." I don't know. What does that mean? I don't take anything for granted. [laughs] What do you mean? "We're going to give you $250,000." And then I just dropped to my knees. I thanked God. And I cried because I had sacrificed so much to get to that point. Thankfully, my daughter came home after six weeks, and my son came home after ten weeks. The kids are doing fine. They drive me crazy, but they're beautiful. CHAD: [laughs] How old are they now? JAMES: They just turned 9 in January. So after I launched WeMontage, I hired just a really remarkable technical co-founder and just a great guy. We still have a wonderful relationship. We got in there, and when I started out, I was like, well, I'm going to start a blog. I started a blog, and I was like, one of these days, I'm going to use the content from this blog to write a book. CHAD: Before you move on, so in those early days, you had just gotten into the accelerator. You had this thing you needed to deal with with your family and delivering the twins. And did you ever consider dropping out of the accelerator at that point? JAMES: I wasn't going to go, but I knew with that decision, WeMontage never would have come to light because I just didn't have the resources to make it happen. But as a family, we decided that I need to go do that and crush that, and so I made that choice. We raised money. In retrospect, we raised just enough money to fail because, look, the software was cute. We were running around pitching angels. It was cute to show look at what we can do, look at what we could do. When we turned the thing on, it was so unsustainable. It was a black box. And I was on the phone literally with customers holding their hand to get them to place an order, and that was clearly unsustainable. So we made the decision that we need to fix this thing. We need to pull it apart, make it modular, stabilize the code, build on it. And by the time we got done with that, we only had a couple of months' cash left. And I remember...man, if anybody has never told you this to your face, I promise you it's a hard thing to hear. They were like, "We're not going to throw good money after bad." I'm like, well, damn. Like, thanks. We have our first Today Show appearance coming up here next month. So thank you for that. Thanks. [laughs] Man. CHAD: So you actually did go on the Today Show. JAMES: Yeah, we got featured three times on the Today Show. I mean, on my own without a publicist, I got Today Show three times, Good Morning America, Money Magazine, DIY, Martha Stewart, on and on. CHAD: I'm curious, after making an appearance like that, do your sales go up? JAMES: They do. They did with the Today Show. So it was funny, like that first appearance, they didn't even put the graphic on the bottom with the name of the business. When Mario mentioned it, he said, "wemontage.com." Man, our freaking website went crazy. It crashed the website. [laughs] But we were kind of already prepared for it to crash. We had a little splash screen up and information. We got it back up in; I don't know, it was less than an hour. But I spent literally all day getting back to those people. We gave them a coupon code. And we did about $15,000 that month from that one segment, which was great. That was our best month to date. I mean, all total, I've probably done $75,000 to $80,000 in sales from the three times we appeared on The Today Show. CHAD: That's great. We've had clients, or I've known people who have done appearances like that, and it seems a little bit hit or miss. Sometimes it won't even result in a blip, and other times it's huge. And I'm not sure what the trend is when it matters and when it doesn't. JAMES: This is the point: we all love these vanity things. We want to get exposure, exposure. So I have a really great relationship with Seth Godin, and he's a big supporter of the work I'm doing at ParentPreneur Foundation. He gives us scholarships to his marketing seminar, and he comes to visit with us sometime. The last time he talked about...he said, "Stop trying to do things to get attention. Spend your time getting your customers to tell their friends about your business." And that's a whole fact. We love the vanity, but at the end of the day, PR does not necessarily equal cash flow. I had some hits. I got on Good Morning America, and that was not nearly as good as the Today Show. But that was by virtue of the last-minute change that they made in terms of how they were producing the segment. When they introduced my product, they had the camera on somebody else's product. They had people calling me about somebody else's stuff which is like, are you serious? But what are you going to do? You can't control that. So yeah, those things are good. I will say that having that stuff on the landing page is good for credibility. People feel more comfortable, especially if they can see it. So that stuff matters to a point, but I wouldn't be spending a lot of time. I certainly would not be wasting a penny on a PR professional if I was a founder. I just wouldn't do it. All that stuff I rattled off I did on my own. CHAD: Awesome. So you started to build a blog. [laughs] JAMES: Yes. So the intention of that was to use that content to write a book to inspire ParentPreneurs around the world because it's hard being a parent and entrepreneur, especially if you're like early-stage scraping to get some revenue. You can't even talk about product-market fit yet. Can we make some money? [laughs] Can we make a buck? CHAD: So I've done a few things in my life. Writing books is one of them, and I can't say that it's easy. I don't know how you found it. I was doing it with a traditional publisher the first few times around, and it was pretty difficult. How did you find it? JAMES: So I self-published that book. And because of the way I approached it, I already had a bunch of content on my blog. It's funny; I was actually out of town. I was in Midland, Texas, because I got flown out there. I was on CNBC's version of Shark Tank, West Texas Investors Club, horrible experience, by the way. I swear if I ever go on another one of those shows, I'm going to bring the drama. CHAD: [laughs] JAMES: Piece of advice, for any of you guys listening, if you go on Shark Tank or any of those shows, do not leave it up to the creative people to tell a story about you. This is just me; I'm a little crazy, crazy like a fox. But you give them the story. So this is me and you talking, just the two of us. [laughs] If I go on Shark Tank or something like that, I'm not taking those people's money. They're going to be like, "Oh, well, you're just here clearly for the exposure." I'm like, well, so are you. You're doing it too. Why should I give you 20% equity in my company for $200,000 or whatever it is? How much time are you actually going to spend helping me build my company? And by the way, the people who came before you from an investment standpoint already took a ton of risk off the table. So why should you get that money? And how many companies are in your portfolio? 50? So, okay, so are you really going to be helping me or nah? Nah? Right. No, I'm good. CHAD: That'll definitely air. The producers will love that drama. JAMES: That will air, right? See what I'm saying? And the people watching will be like, "Hell yeah, you tell them. Let me Google that real quick." [laughter] CHAD: That's funny. JAMES: But that's just me. But I have no intention of going back on any of those shows again because, at the end of the day, it was a bad experience for me. I only got about $6,000 in sales, but that's because nobody was watching that show. It was canceled. But at the end of the day, if you have a customer acquisition problem which is what we had at WeMontage, those things don't solve your problems. They just don't. Not necessarily. They could; you could get lucky. But it's probably not going to solve your problem. CHAD: So I'm curious. So you wrote the book, and you focused on the concept of ParentPreneurs, Black ParentPreneurs specifically. JAMES: No, actually, so the book was just for everybody who's a ParentPreneur. So the book's called The More You Hustle, The Luckier You Get: You CAN Be a Successful ParentPreneur. So Mario Armstrong, who's my guy from the Today Show, wrote the foreword to my book. We're really good friends. And it's on Amazon. Some people have regarded it as the realest book of entrepreneurship they've ever read. It's unlike anything you ever read. It's the story of my journey, some of those things I just told you, and the up and down the back and forth. It will make you laugh, make you cry, make you wonder. You put it down, come back to it. There are some hard questions that I ask myself, and people read the book. It's a superfast read too. CHAD: Awesome. At what point did you decide to focus on empowering Black ParentPreneurs? JAMES: So that's a great question. So after I wrote the book, I had this idea. I said one day I'm going to sell WeMontage. And maybe it will happen. I don't know; if God can intervene, something could happen. Who knows? [laughter] It's just not likely at this point, and that's okay. But I was like, I'm going to sell this business. I'm going to take a million dollars of my own money and start a foundation for parents who are entrepreneurs because it's really freaking hard. It's so hard. Unless you've been there, you have no idea how hard that is. It's really hard. So then, in early 2020, the whole world falls apart with George Floyd, Ahmaud Arbery, Breonna Taylor. I had my own Karen experience here in my backyard. I live in a really nice neighborhood in the suburbs of Atlanta. And I had to call the police on her. After the second experience, I filed a trespass warrant. Then I started looking at all the Federal Reserve wealth inequality data. And I was like, I'm starting this foundation for Black ParentPreneurs because we need the help the most. We have got to try to close this wealth inequality gap. It's a big problem. I'm doing that. So now to answer your question, prior to that decision, so when I was going to Gener8tor, I met David Cohen and Brad Feld. They just popped up on a Google Meet to meet us. And these guys are co-founders of Techstars, which is one of the preeminent global startup accelerators. And I just stayed in touch with them through their blogs. I didn't want anything from them. I remember I got an email from Brad a couple years back. And he's a voracious reader. He's a prolific writer. He sent me an email out of the blue. He said, "I just read your book. I effing loved it." [chuckles] He said, "I got to feature it on my blog." I was like, wow, okay, dope. So he did that. And we sold some books, which was great. But so I reached out to Brad and David. I was like, "Hey, guys, I'm thinking about starting this foundation for ParentPreneurs in general." And they were like, "Yeah, I'm game. We can go back and forth with you about it," and which is amazing at that level those guys would be willing to do that. I appreciated that. And they were both like, "Eh, foundations are hard. It's a constant fundraising grind, blah, blah, blah." And, look, they're not wrong. [laughs] They're not wrong. But here's the thing, though. For me, telling me something is hard doesn't land with me because I've had to scrap and scrape for every single blade of grass on the field of life. And quite frankly, it's hard being Black sometimes. If I had $1 every time somebody told me that WeMontage would have been successful if I had a white face out there instead of me type thing, it is very frustrating. So then I got an email from Brad Feld out the blue after George Floyd, which was just a subject that said, "Hey, you're game for a 30-minute Zoom?" There was nothing in the body of the email. And I'm just like, yeah, I could as well want to talk to Brad. He's top of the food chain. He's not just a VC and co-founder of Techstars with a portfolio valuation north of $200 billion. He's also a Limited Partner. LPs are the people who write the checks to the VCs who write the checks to people like me and you guys listening who are entrepreneurs. So I'm like, hell yeah, I want to talk to you for 30 minutes, Brad Feld. Who doesn't? I just didn't know what it was about. So he said, "I just want to know what two things you're working on addressing racial injustice, inequality I can put my time on or attention on." I'm like, Oh, hell yeah. Chad, I'm like, he has no idea what I just decided. So we get on to Zoom. And I say, "You know, Brad, you remember that foundation thing I was telling you about?" He was like, "Yeah." I said, "Well, now that's just what Black ParentPreneurs is." He goes, "I'm so glad you did that." And this is the part that knocks me out of my chair every time I say it. He goes, "What would a 12-month operating plan look like? I can throw it up in a Google Doc, and I'll co-create it with you." [laughs] CHAD: That's great. I mean, it is unfortunate that George Floyd being murdered and these other things have instigated people to want to make change and to get involved in ways that they haven't been able to before. That's super unfortunate, but something's got to wake people up. JAMES: Well, that will come up because he was like, "Look, I'm this rich, middle-aged white dude. I've been doing things to support Black entrepreneurs in the past," but he's like, "I got to do more. So I'm reaching out to my friends, and I consider you a friend." I was like, wow, like, I knew you liked me a little bit, but I didn't know you liked me like that. CHAD: [laughs] JAMES: But he is a friend. I have his phone number. I can call him. He's a friend. Him and David these guys are friends. So I got the 12-month operating plan right back to him. He said, "This is great. What would a six-month plan look like?" I got to write back. And he's like, "Assume three things, one of which is a $50 000 seed grant from my foundation to start the ParentPreneur Foundation." So Brad has given now, I don't know, north of $125,000. He got us into the Techstars Foundation, which has been phenomenal. My relationship with David has blossomed. I went on the Techstars Give First Podcast with David, and David's a friend as well. I just love those guys and how they move, and they've been super helpful. And so our foundation, at the heart of what we do, you mentioned this at the top, is we have a community of now almost 1,800 Black ParentPreneurs hosted on Mighty Networks, which is phenomenal because it's not on Facebook. That's the thing I love the most about it. [laughter] CHAD: I actually have some questions about Mighty Networks on my list. So we don't need to take a tangent in there right now. We can come back to it. I want to ask you about Mighty Networks. JAMES: Love it. Love it. Love Gina Bianchini. She's the CEO. I actually had her on my LinkedIn live show a couple of months ago. CHAD: Well, let's do it now then, actually. So as someone who has built software before to put together a company, did you ever consider that for this? And why not? And why use Mighty Networks? JAMES: To build a community platform? CHAD: [laughs] It's a very loaded question, James. JAMES: Yeah, why would I do that? Listen, by the time I got done with my prototype with that; these guys would be like two versions past where they are today, which would be infinitely better than my little stinky MVP, right? CHAD: Yeah. JAMES: And these people live, eat, and breathe community. Is Mighty Networks perfect? No, of course not. But they're constantly making improvements. I think I told you at the top I'm actually about to launch a new podcast. I just signed a national podcast distribution deal. So we're launching a podcast on the HubSpot Podcast Network. You guys have heard of HubSpot, right? CHAD: I have, yes. JAMES: So it's for ParentPreneurs in general, kind of like my book, to empower ParentPreneurs to be the best parent entrepreneur they can possibly be because being a ParentPreneur is hard. And we came upon this opportunity. I saw an article; maybe LinkedIn, I don't remember, talking about HubSpot launched a new podcast network last year. And I told you I got all these PR opportunities. And I got that because I'm not shy about shooting my shot. A lot of people are too scared to shoot their shot, or they don't know what to do, how to do it. But cold emails I'm really good at sending cold emails. So I sent a cold email to the CMO of HubSpot. He was mentioned in the article. I went on LinkedIn. I scraped his email address using my favorite email scraping tool, GetEmail.io. It works on LinkedIn. You get their email address. I sent him an awesome email. Of course, he didn't follow up right away; well, not, of course, sometimes they do. He didn't follow up right away. I sent a follow-up email. And when I send follow-up emails, I like to give some kind of update. So in my follow-up email, I wasn't just like, "Hey, did you get my email? Please respond." It wasn't that. It was like some other update. I can't remember what it was, but it was an update following up about my email. He got back, copied somebody on the team. They got back, copied somebody else. They were like, "Do you have a clip or an excerpt of an interview?" And it just so happened we did because we knew we needed to get ready. So we did an interview with Neil Sales-Griffin, who's the Techstar Chicago Managing Director, and so we sent them an excerpt. They were like, "This is great. Do you have a whole episode?" So we edited that thing down right here that day. It was a Friday, sent it to them. They were like, "Thanks for sending. We'll get back to you by Monday with the decision because, by the way, we have this new program, this emerging podcast voices program. There'll be six to eight podcasts in this program. And we'll listen to this and consider it." So they got back to us Sunday night at 11:00 o'clock. "This is amazing. You guys are pros." I'm like, that's not me. That's really Mario. I have no idea what I'm doing at all. CHAD: [laughs] JAMES: But thanks, Mario. "And you guys are stars. You can't teach stars." But I'm like, hey, all right. I've never done a podcast. But hey, glad somebody other than my mama likes me. This is awesome. And they were like, "We want to invite you to be one of the companies in this new cohort with a new podcast," and just a swoop in at the last minute like that all because I shot my shot. So if anybody's out there listening, don't be afraid to shoot your shot, man. It's a mindset. You got to know what to do, how to move. But you've got to first have the mindset like, yo, I am going to shoot my shot. CHAD: I think as long as you...and you already said this, but you're making it real. Like, when you're following up, you're not just saying, "Hey, did you get my email?" You're finding ways to make it real and authentic. You got to show that you're real and not some bot. JAMES: Yeah. So I will say in terms of the cold emails, I send them all the time. Cold emails is how I ended up collaborating with Nasdaq Entrepreneurial Center. We're big partners with them. We're part of this grant project with them with this major Wall Street Bank Foundation they're about to be announcing this year any day now. We got a grant tackling the problem of Black or Brown founders, underestimated founders not getting access to early-stage venture and angel funding. So we're part of that with my foundation all because I sent a cold email to some guy at Nasdaq. I don't even remember who it was, Western president. Sent him an email, he copied the executive director from Nasdaq Entrepreneurial Center. The rest is history. My last round of grants, they co-sponsored the last round of grants. They put in some money. Great relationship with Nasdaq. They got 30 of my people from our community featured in the Nasdaq Tower in Times Square, let that sink in, all because of a cold email. So if you're going to send a cold email, just a couple of tips off the top of my head. You need to have a compelling subject line. Keep the emojis to a minimum. [laughter] If you can use the person's name in the subject, I think that increases your open rate by like 20%. The email's got to be right to the point. Hey, my name is James Oliver, CEO of ParentPreneur Foundation. Put a link to the ParentPreneur Foundation in that instance. We got funded by Brad Feld, co-founder of Techstars, and put a link to Brad Feld's article. Establish credibility right away and get to the freaking point. Like, what do you want? Make an ask. What do you want? Get right to it. That's it. CHAD: And then when you don't hear back, and you should follow up? JAMES: Oh yeah. You absolutely got to follow up. I'll follow up a couple of times. I know Mario is like, "I just keep following up till they tell me to stop." [laughter] He's gangsta like that. I'll follow up three or four times. But after that, I know when people are pestering me. At that point, you're pestering. I'm not interested. If I was interested, I would have responded, so knock it off. But I also respect the hustle when people are coming to me with something that's legit. And I will respond because I am them sometimes too. I'm like, "Hey, thanks for reaching out. I really appreciate it. I'm just not interested," or "I'm not interested now. Ping me back in six months." CHAD: As someone who gets cold emails, I do the same thing when it's a legitimate...and you can tell. You can tell the ones where they're just blanket sending the same thing to a bunch of people. And you can tell when it's someone legitimately sending you a cold email. JAMES: Because if you mention something about what they do specifically and how that's relevant to your email or your ask, that increases your chances of getting a response. Hell, I sent a cold email to Mark Cuban, bro. CHAD: Awesome. JAMES: He said yes. I interviewed him on my blog. I don't write on my blog anymore. But he got right back to me, and I interviewed him on my blog. He was great. CHAD: So I don't know if everyone does this. Like you said, even if it's not a fit for me or I can't do it right now or whatever, if it's a legitimate thing, I will almost always actually respond to it eventually. Mid-roll Ad I wanted to tell you all about something I've been working on quietly for the past year or so, and that's AgencyU. AgencyU is a membership-based program where I work one-on-one with a small group of agency founders and leaders toward their business goals. We do one-on-one coaching sessions and also monthly group meetings. We start with goal setting, advice, and problem-solving based on my experiences over the last 18 years of running thoughtbot. As we progress as a group, we all get to know each other more. And many of the AgencyU members are now working on client projects together and even referring work to each other. Whether you're struggling to grow an agency, taking it to the next level and having growing pains, or a solo founder who just needs someone to talk to, in my 18 years of leading and growing thoughtbot, I've seen and learned from a lot of different situations, and I'd be happy to work with you. Learn more and sign up today at thoughtbot.com/agencyu. That's A-G-E-N-C-Y, the letter U. JAMES: So, if I may, I just want to talk a little bit about the impact in the ParentPreneur Foundation. CHAD: Yes. JAMES: Because we have 1,800 people now. This current round of grants makes $95,000 in the last 19 months since we launched. We do micro-grants of $1,000 apiece. I think I just tweeted this morning that it just seems like people look down their nose at a $1,000 grant. And I'm like; clearly, these people are not or never have been a super hustling, early-stage entrepreneur and definitely not one of those with kids. So $95,000, again, keep in mind, I don't know anything about a foundation, a non-profit. I've never done it before. I've never started a community, but I don't care; it doesn't matter. [laughs] You know what I'm saying? In this instance, there's a tremendous founder-market fit because I am them. And that shines through brilliantly in all the things that we do. And the thing that I'm most thankful for that we've done in the community is we've paid for 320 mental therapy sessions for our community members. And that's important because historically, mental health is stigmatized in the Black community. And there's this belief of epigenetics, which is basically you can pass trauma down through your DNA to your descendants. And if that's true, Black folks got a lot of trauma, and we need to get it worked out. And when we do it in our community, people jump right on it. So I'm so proud of those guys that they take it very seriously. And that's really legacy, and that's impact because we're creating a legacy of mental wealth for the people in our community that influences how they show up for themselves, for their businesses, for their partners and spouse, for their children, all of which impacts how their children show up in the world. So it matters a lot. CHAD: I think the therapy sessions are a great example of when you have an authentic, unique community, something is going to come out of that which is so specific to that community. The impact of that is huge but also, where did that idea come from? Was that you? You said, "Hey, this is a need we have to do this"? JAMES: Yes. CHAD: Did it come from the community itself? JAMES: No. And see, this is why I'm talking about the founder-market fit. I don't know all the things that my people need, which is why a lot of times I ask them, "What do you want? What do you need?" But a lot of things I already know they need before they even need them because I've been where a lot of those guys are, and some of them ain't been there yet. I already know what you're going to be looking at in six months, bro. You need to pay attention a little bit. So right from the beginning, we use betterhelp.com. We created a BetterHelp account. And it's so easy. We use Typeform. Typeform is another partner of ours. They've given us lots of free codes, and VideoAsk is a new Typeform company. We use that for our application process, which is just brilliant. I keep getting compliments about how amazingly seamless and elegant our application process is for the grants using VideoAsk. But we use Typeform and first come, first serve. It fills up, and then I just get the email addresses, and I just drop them right into Betterhelp's account. And they reach out to people in the community, and they get them set up. It's so easy. CHAD: That's great. What happens in the community? Is part of the value of the community just support from each other? JAMES: Well, that's a big part of it. So that's a great question. So one of the things in the Seth Godin marketing seminar is he talks about tension and why it's important in marketing and how it drives change and drives people to action. And the assignment around tension I couldn't think of like what the tension was for the ParentPreneur Foundation. But when he came to meet with us, and we were talking about it, he said, "If I'm on an airplane and we're sky jumping, and they're like, 'Well let's jump out,' and it's a perfectly good airplane," the tension for him is what if the parachute doesn't open? And the answer is like, "Well, don't worry. We have a backup chute for you." Okay, banzai, let's go. [laughs] But for the ParentPreneur Foundation, the tension is what if we fail on this rocky road? What if we fail in our journey to leave a legacy for our beautiful, Black children? He said, "It doesn't matter because we have each other's backs on this rocky road." So I'm like, yes, that's exactly right. We have each other's backs. And I'm telling you, man, I see it. A lot of stuff is taking place; I have no idea. But I hear about it from time to time, just organically. People are collaborating. It's just amazing, man. It's just great. So yeah, I know it's lonely being an entrepreneur, a lot of different challenges, unique challenges of being a Black entrepreneur. And it's just great to have a safe space for that. We do a lot of different things. We paid for virtual assistants. We paid for when kids were being virtual schooled. We paid for some virtual tutors for some of the children. Social capital is another thing that I talk about a lot. We pay for people to improve their LinkedIn profiles and understand how to move properly on LinkedIn and build and increase their social capital, which to me is as problematic as a dearth of financial capital because, without social capital, you can't even imagine what's possible. And it was Albert Einstein who said that imagination is more important than knowledge. And it's just so true. So we're doing all the things. CHAD: So, do you have a sense of what the split is between moms and dads in the community? JAMES: Yeah, just off the top of my head, I think it's around 75-25 moms and dads, and that's interesting. Women like to build community, men we don't. We're like the king of the jungle. We're all okay by ourselves. [laughs] We don't want to build community. But, man, women love to build community, and they hold down our community in a big way, and I'm just so thankful for them. CHAD: So you started in 2020. One thing that I've seen, and I think it makes your timing good, is that a lot of people either had change forced on them because of the pandemic, and they lost their jobs. Or they felt like they needed to make a change. And a lot of people faced with that decided to do something on their own and make something happen. So there has been a surge in entrepreneurship from my... And another thing there's been a surge in is people going to coding bootcamps feeling like yeah, I lost my job, or I no longer want to do this job that I can no longer do remotely. I want to make a change in my life and learn to code. Does that resonate with you as something you've seen in terms of people who have never been entrepreneurs before who had it forced on them or making a conscious choice to do it, joining the community? JAMES: Yeah, absolutely. To a certain extent, at the beginning of COVID, when everybody was freaking out, because I understand that within every crisis exists an opportunity, I was looking for that opportunity. I was like, all right, where's the opportunity here? I was asking the questions. And then, I had a chance coffee meeting with some acquaintances and told them my intention of starting the foundation one of these days. And they were like, well, what are you waiting for? Why don't you do it now? And I thought that was like the answer to my question. And I was like, oh damn, like, yeah, what am I waiting for? Let's do it now. So yeah, a lot of people are moving towards entrepreneurship. I think a quick Google search will bear that out. I don't know to what extent, but I know it's a lot. The application for new businesses are increasing over the last few years. So yeah, I get it. People kind of hate their corporate jobs. They hate going to the office. I get it. My goal in life is to never have to wear a suit and tie again. [laughs] CHAD: Even when you go on Good Morning America. JAMES: I might wear a suit, but I'm not wearing a tie. Knock it off. [laughs] CHAD: Well, I'm sure everything you mentioned that you've been fundraising all this stuff costs money. Does the majority of your funding come from bigger donors? I know that you have a link to donate, and I encourage people to do that. But how much time do you have to spend fundraising? What is the donor mix? And how can people help? JAMES: It's just weird. We get in our own heads. I used to say, man, I kind of suck at fundraising, but I don't. We raised almost $300,000 since I started this thing with no experience. That's not somebody who sucks at fundraising, right? CHAD: Yeah. JAMES: But in my mind, we should have a million dollars in the bank so I can hire an executive director, and we can ramp up the programs that we know, or I can scale this thing up and do some other things. I have some other things I want to do. I want to do a startup studio. I'm trying to partner with Techstars right now. With Techstars, I'm already talking to the right people. I want to do a pre-accelerator program with them for Black ParentPreneurs and putting like $20,000 in people's pockets. That's going to cost money. We need a sponsor for that. But to answer your question, you can visit parentpreneurfoundation.org click donate. And $25 a month it all helps. It all adds up. We have things that we have to do to keep the platforms going and tools and resources that we use to keep it all going. The big chunks have come from people like Brad Feld and David Cohen. And Fred Wilson even donated $10,000 one-time but yeah, we need more. I'm just biding my time. And the work we're doing matters so much. It's making a big impact. We are literally helping people raise money and get their businesses off the ground. And one woman who just went through the Techstars Founder Catalyst Program with JPMorgan Chase here in Atlanta she went because I introduced them on my show. And she got in, and she just raised $250,000. And then she just told me she got a commitment for another half a million dollars. And this other woman she got a $250,000 grant from Wells Fargo because of our relationship with Nasdaq. And another guy got a term sheet for half a million dollars because of the introductions we're making. So we're literally out here building capacity for the members of our community in so many ways. I'm thankful. I'm honored. I'm humbled to be in this position to do this work. But this is purpose work for me. This is my purpose, and I'm thankful to have found it. It's like Mark Twain says, "The two most important days in your life are the day you are born and the day you figure out why." I encourage people to go figure out why. CHAD: And if you are Black ParentPreneur hearing what we're talking about and saying, "Yeah, now I know about this. This is for me." You also go to parentpreneurfoundation.org and sign up there. JAMES: Yes, sir. Click the join community button. Absolutely. CHAD: Well, James, thanks for stopping by and sharing with me and all the listeners. I really appreciate it, and I wish you and everything that you're doing all the best. JAMES: Yes. And, Chad, thanks for reaching out, man. Look at you; you're on your hustle. It wasn't you that reached out to me. There was somebody else. CHAD: It was, yeah. Another member of my team. JAMES: How'd you find me, man? CHAD: I think she's very good at LinkedIn, and you're good at LinkedIn and so -- JAMES: [laughter] Well, I got a big [inaudible 36:11] show them the receipts, man. Show them the impact because that's what you got to do. CHAD: Are there other places where if folks want to get in touch with you or follow along with you? Where are the other places they can do that? JAMES: Yeah, they can do that on IG. We're parentpreneurfoundation on IG. I'm not super active there, but we're there. You can follow me on Twitter. I talk a lot on Twitter. I don't think anybody's listening, but I talk a lot on Twitter. CHAD: [laughs] JAMES: That thing doesn't come on until you actually earn those blue checkmark thingies, I swear. Because I will say something I think is really profound, and it's crickets. And I see somebody with a blue checkmark say the exact same thing, and I'm like, okay, I see how it is, but whatevs. [laughs] So I'm on Twitter @jamesoliverjr, jamesoliver-J-R. Follow me on Twitter. That'd be awesome. Shoot me a tweet. Tell me you heard about us, heard about me on The Giant Robots Show here. I would love to connect, engage, and build and learn with your audience. So thanks. CHAD: Awesome. And for all of you listeners, you can subscribe to the show and find notes for this episode along with an entire transcript of the episode at giantrobots.fm. If you have questions or comments for me, email me at hosts@giantrobots.fm. And you can find me on Twitter @cpytel. This podcast is brought to you by thoughtbot and produced and edited by Mandy Moore. Thanks for listening and see you next time. ANNOUNCER: This podcast was brought to you by thoughtbot. thoughtbot is your expert design and development partner. Let's make your product and team a success. Special Guest: James Oliver Jr..

 Find out real founder direct tactics to help build your business Learn about real conversations and remove all those false expectations Find out how podcasts help you grow your business at the same time support other entrepreneurs Resources/Links: Get FREE access to Grindology magazine digital publication: https://grindology.com/pages/farmgirl Summary Are you struggling to monetize your podcast? Have you thought of finding real conversations straight to the founders who build businesses so you can replicate their mindset? Do you want real tactics that truly work and not just inspire? James McKinney is a serial entrepreneur with a cemetery full of failed startups. Those failures are what led him to establish The Startup Story podcast as well as Grindology. In this episode, James McKinney shares how the challenges you come across are not solely your own; other business owners experience them, too. The reason why you need to connect with other entrepreneurs and share ideas with them -- they may have thoughts and ways that can apply to yours. Check out these episode highlights: 01:24 - Jame's ideal client: "My ideal client would be any entrepreneur, anybody with a side hustle, anybody who's maybe working a nine to five and has a book full of dreams and ideas." 01:47 - The problem he helps solve: "The problem that I'm solving is, I'm bringing real founder direct tactics to you, the listener, not the thought leaders, not those who are just posing in front of a Lamborghini, we're talking real tactics from real business builders." 02:46 - Symptom's clients are facing before meeting James: "They have this idea, this false expectation because of the headlines in the media, there's an idea that you have to be a technical founder in order to create some type of SaaS solution." 04:17 - The common mistakes people make before meeting James: "The biggest thing is they go all in too early." 05:12 - James one Valuable Free Action: "Listen to the podcast that's free but you would be amazed for all of you listening and watching. Just reach out to someone as an aspirational goal in your sector market. You may have a product that you want to bring to market, you're like, this person has done this already. Reach out on LinkedIn. I say it in every episode, start for entrepreneurs, support other entrepreneurs, and that is so true." 06:05 - James Valuable Free Resource (VFA): Get your FREE subscription to Grindology's magazine. Click here: https://grindology.com/pages/farmgirl 07:01 - Q: Are the problems that are unique to entrepreneurship, whatever it may be -- cash flow, hiring practices, marketing, whatever the case may be, are they truly unique, or are they really just unique to you? A: They are simply unique to you. The challenges you are facing have been faced by hundreds if not thousands of entrepreneurs before you. They are just unique to you. Do not isolate yourself; connect with other entrepreneurs. Tweetable Takeaways from this Episode: “Do not isolate yourself, connect with other entrepreneurs. Brainstorm, ask the questions, have the discussions, find out what other people have learned in their journey and watch how applicable it is to yours.” -James McKinneyClick To Tweet Transcript (Note, this was transcribed using a transcription software and may not reflect the exact words used in the podcast) Tom Poland 00:10 Greetings everyone,

A dream came true for Blake and James

Let’s get this out of the way now: most companies will not have someone go from intern to CEO in a matter of months. That’s a situation unique to James Standley and Solé Bicycles. What isn’t out of the ordinary, though, are the many challenges and hurdles that James and his team had to deal with when scaling Solé into the success it is today.On this episode of Up Next in Commerce, James takes us through the trials and tribulations of the Solé journey, including various shipping and manufacturing disasters and lawsuits that nearly bankrupted the company, and he explains how he worked his way out of those troubles and what he learned along the way. Plus, he gives some secrets on what’s working well for Solé now, such as the strategy of finding different touchpoints to reach customers in a way that has absolutely nothing to do with selling to them. Main Takeaways:Starts With Heart: While the relationship with your supplier or manufacturer might seem like a cut-and-dry part of business, it has to go deeper than surface level. f you are working with overseas partners, taking the time to meet, and understand, the people you work with in person and form a relationship with them will carry you further and ease some pain if there are ever problems in the supply chain process.    What You’re Known For: Through unique partnerships and marketing opportunities, there is potential to reach people in different ways, even if that means you’re not necessarily selling them a product with every touchpoint. Having a relationship with customers is more important than selling to them at every opportunity, because if they know you for one thing and then find out you sell something else, they are more likely to buy from you across the board. Shot on an iPhone: There will always be a place for highly-produced, glossy marketing materials. But, more and more these days UGC and lower-budget content is what is resonating with consumers. As opposed to showing potential buyers something they have to aspire to, like a model, highlighting people and experiences that are familiar to them as they are now will convert better. For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone. This is Stephanie Postles and you're listening to Up Next in Commerce. Today on the show, we have James Standley. He's the president and founding partner at Sole bicycles. James, welcome.James:Hey, how are you guys doing?Stephanie:Doing good. Thanks for joining us.James:Yes, I'm super excited to talk about all things ecommerce with you guys.Stephanie:Yeah. I was just looking through your website and I am very excited to get a bicycle after this. I didn't even know I needed one, but now I do.James:Totally, totally, yeah. We have tons of great bikes and yeah, and tons of cool different colorways and options and a bike for just about anyone's kind of need.Stephanie:Awesome. Tell me a bit about how you started Sole. I think it was in college, right?James:Yeah. My business partners, that I ended up starting the business with and I, we met back, funny enough, my first venture, which was a music festival I helped start back in college. We were both partners in that.Stephanie:It was called the Coachella for the Mountains, right?James:Yeah. It was called Snowball, and the idea was Coachella meets on the mountains. Yeah, there was this guy, Chad Donnelley, who I knew through the lacrosse world. I played college lacrosse and he came up with the concept and I was always involved in music. Growing up, I was a concert pianist, and I had DJ'ed in college and been in bands growing up. We met through the lacrosse world, and he came up with this idea. He had reached out to me just to ask my opinion on the project and what I thought about it. At the time, I was a freshman in college and he was asking me about it and I ended up just going back to him and say, "Hey, I want to be a part of this. I think this is amazing."James:I was part of that initial team. We kicked off this event with ... Our first, we had Edward Sharpe and the Magnetic Zeros, and Bassnectar, and Pretty Lights, and Diplo and all these amazing artists come out and sold like 15,000 tickets. It was a really cool first venture and a first event. Yeah, so Jake and John, my original founders with Sole, they were partners in it as well, and they helped get some of the money for the project. We met, first year was a huge success and we stayed in contact. At the same time, they were coming up with the idea for Sole, and going back that summer, between my freshman year and my sophomore year of college, they were looking for some additional help on Sole.James:I said I'd come in and I've got a more like operational financial sort of background or mind, and they were more of the creatives and the visionary type of people. I came in, helped clean things up. We got the business off the ground. Then going through the summer, they ended up going and raising some money and starting another business, and I ended up taking over the business. I went from being technically an intern in May to the CEO in August. Yeah, so that's how I got involved. Shoot, that was 2011. So, we're going on nine years ago, and I've been CEO ever since.Stephanie:Wow. Very cool. That's a wild story. How many bikes were you guys selling when you took over, and where are you at now? So I can get the scale of the company.James:Totally, totally. Yeah. Our first year we were featured on this big Forbes article and the business sort of took off, and I think we sold maybe a thousand bikes our first year, which was a lot for a first year business. This past year we're going to sell about 15,000 bikes.Stephanie:Wow.James:Yeah. We've grown quite a bit.Stephanie:That's great. What is the selling point of Sole bikes? How's it different?James:Totally, totally. Yeah, for us, our main selling point is you go look at the bike and it's just going to look different than any other bike you've ever seen before. We're really heavy on our marketing and design and colorways and wanted to make something that's really, really simple, easy to use, easy to maintain, but also looks really beautiful, and something that has a personality, and really people can relate to. I think a bicycle, for most companies, is more of a utility product, something that's really spec-driven.James:For us, we wanted to make something that people were really, really proud of, and it's like, they can relate to, and find a colorway that really matches their personality, or they could this store music fixed tapes or find these other ways that people can relate to the product. That's really allowed us to set ourselves apart from other bike brands.Stephanie:Cool. It seems like pricing is also a big thing. The one thing I've always thought is, why the heck are bikes so expensive? Why? How'd you get your guys cost down so much?James:Totally. Totally. Yeah. Yeah. The biggest way we do it is we work directly with a manufacturer and we sell directly to our customers. Just the natural, by cutting out some of the normal distributors or middlemen, we're able to offer what would be a traditionally higher price point products for a lower price and pass those savings onto the consumer by selling direct.Stephanie:Tell me a bit more about that, because what did that look like finding a manufacturer? I think I saw you found, in the early days, your manufacturer on Alibaba. Right? Which I was like, oh, that's interesting because I feel like Alibaba ... I've been there before and there's a lot going on. There's a lot of people. It's hard to know who to trust, it's hard to know if they're going to send me something good. How did you guys go about finding a manufacturer there? Did it work out well? Give me some behind the scenes.James:Totally. Totally. Yeah. Our first, when we got the business kicked off, we actually were involved in this Ali-Baba business plan competition. Back when we were in college, Jake and John had applied for this business plan competition. They won it and we got a $15,000 grant from Alibaba. That grant or that money paid for them to initially go over, meet our first supplier who Alibaba had helped set up, and we got our first order of bikes in. That's what the initial financing that got the business kicked off. But over time, went through a few different suppliers and really had to iterate our process.James:I spent a lot of time over in China meeting with different suppliers, refining the product, getting it to a place where it is today. It took a lot of trips over there and a lot of refining.Stephanie:In the early days when you're picking your suppliers and manufacturers, what would you do differently this time around? What lessons did you learn or what things did you maybe stumble on in the early days that you can avoid if you were to redo it now?James:Totally. What I would recommend is, we got placed with the supplier via Alibaba, and we just worked with the first person we were placed with. I think we ended up switching a few different suppliers over time, but what really ended up getting us with a supplier that we were super happy with is we went over there, and I went to one of the big trade shows, and we ended up visiting another 15 or 20 during this trip I went on about year two or three, and that trip we ended up finding the supplier we worked with, still to this day.James:We really got to go out and meet these people and do your diligence and find the supplier that makes the most sense for you, and not just use the first one that you end up getting placed with or you end up meeting with. You got to go over there and develop a relationship with them. I mean, it's so important. They have this saying there. It's first, you drink tea, then you drink Maotai and then talk business. What I mean by that is, they want to meet you, the different suppliers and the different people over there want to meet you. They want to build a personal relationship, and then they want to talk business because it's so important there to have a personal relationship, as well as a business relationship.James:If you're going to try to source something from China or overseas, I'd recommend going over there and meeting these people and spending time with them, and learning, meeting them as people, and really developing a relationship, because that's going to help that business relationship over time and make a really, really strong business relationship.Stephanie:Yep. If you don't go and meet them and you didn't really do your due diligence, what kind of problems could a new company encounter? Did you encounter any issues in the early days with some of your suppliers that you stopped working with?James:Totally, totally. Yeah. The supply chain for a bicycle is pretty complex. For our product alone, there's over 50 parts. Those 50 parts come from 20 different other suppliers, and then those have to come into an assembler, the assembler puts the product together and then it's shipped over. There's a ton of different things that could go wrong. A good example would be we had one of our biggest shipments ever, at the time for the business. We had put in an order for summer, and it was like 2000 units. We had also set up a big sale online with a company called fab.com. At the time, they were having ... I don't know if you remember the company, fab.com, but they were one of the fastest companies to a billion dollar valuation, I think, and people were talking about it as the next Amazon.James:It was having this really big moment. We were selling really well on there. We partnered with them and we were like, hey, we're going to bring in a bunch of units. Let's have a really, really big sale. We have this massive sale. We sell like 1,500 to 2,000 units, pre-sell them, and ends up being the biggest sale ever on fab up to that point. So, do the sale, goods come in, and then we ship all the product out. Well, our manufacturer had packaged the bikes slightly incorrect to where ... The crank arm usually woven through the front wheel, which is detached, and then tucked to the side of the bike when it's shipped. They were all packaged slightly off that almost every single bike came with one of the spokes popped off.James:You get your brand new bike that you just bought offline, brand new, beautiful bike, you open it up, and one of the spokes popped off, which it's like ... You can't ride it, but it's a small problem, but it's not an easy problem to fix. Oh my gosh, that situation almost bankrupt us. What ended up happening we-Stephanie:What did you guys do?James:Yeah, we had the product on credit. We had given we had been sold the product on credit, so we went back to the supplier and we were like, hey, this is going to bankrupt us. We got to figure something out, and they refused to take any discount on it. Then, our advisor was like, "Hey, we're going to just hold payment until we get something settled." They ended up serving us a lawsuit. They came to America, served us a lawsuit.Stephanie:Oh my gosh.James:So we were served, and had to go through this entire ... Mind you, I'm like 21 years old at the time. I'm still in school. We get served a lawsuit. I'm like, oh my gosh, what is going on? So, we had to hire a lawyer who was our body. He was only like 30 and we didn't have a ton of money. We had to put together a case and actually go out and defend ourselves.Stephanie:Yeah, did you win?James:We go through this, and we hired this lawyer, and he's like, "Look, you guys don't have the money, [inaudible] afford me, so I'm going to teach you how to build this case." I went and actually built this timeline of everything that's happened, and we came up with a case theory and counter sued them. They responded and deposed me. I had to go through this 40 exhibit eight hour deposition. But we held our ground and got through it. After that, it got to the point where it was like, financially it made the most sense to settle and were able to settle for what ended up being about half off of what the original was. Yes.Stephanie:That's wild. I'm just imagining being in college, dealing with it. How was that experience being in college? I'm just thinking, all of a sudden, you have this company and you're having to go to China and now you're getting sued. What was the college experience like for you when you were having something very different than probably a lot of your peers go on?James:To be honest, it was really exciting. You felt like it was just so cool to be building something and going through this. We were so ignorant, I think, going through a lot of this stuff, which I think ended up actually helping us. It was just very shoot from the hip and like figure it out. Yeah, so many of these different scenarios could have totally bankrupt us or ended us, but I think it builds a lot of character by going through these different situations and surviving it and learning from it and growing from it. Yeah, it was exciting. It was really fun and exciting. The goal was just like, don't go bankrupt, don't die. Keep fighting and figure it out.Stephanie:That's good. I like that. I could see it also just making it seem like, well, what else ... Nothing can really scare me. I've gotten sued. I almost went bankrupt. There's nothing too scary out there after that. I think it's a good place to be.James:Yeah. I think it's part of building a business. You're going to face adversity and a lot of ... There's a reason nine out of 10 businesses fail. There's so many things that can go wrong with building a business, but you have to learn to embrace those challenges and know that you just got to fight through it. There's not always a way to figure it out, but there's oftentimes, if you keep working at it and keep fighting, you can find ways to get through these things. If you do get through them, these are like business cards, I guess you could say, or things that'll stick with you and you could grow and build on as you continue to build your business.James:After going through all this stuff over so many different situations over so many years, we've now learned to embrace the challenge and just know, hey, here there's going to be some new challenge, every year, there's going to be some new thing that's going to ... we're going to get hit with, and you just have to learn to embrace it and take it head on and not let it beat you up.Stephanie:Yeah. I love that. You guys seem really good at partnerships. I've seen some of the very well-known companies that you work with, who they get their own custom bikes built, and you've got things with artists going on and music and all that. How do you how do you view that strategy in your playbook to be able to access new customers and new markets, and how do you even develop those partnerships?James:Totally, totally. A lot of that was built from, again, when we started the company, we weren't the traditional bike guys. We were coming from the music background and fashion background. A huge art scene. We had all these relationships early on, and just out of pure having those relationships, we intertwined it in business, and you have the fixed tape series, which one of our early employees was a professional DJ, so he's like, "Hey, I got this idea. Let's create an hour long mix to listen to while I'm riding our bike, and we'll go get some other DJ friends to do it." That piece of content. Just that, that we created that and it's been rolling ever since. We just launched the Sofi Tukker one, which was, I think our 76th mix tape.Stephanie:That's cool.James:Then that artist creates that mix, and some of these DJs are very globally known DJs. We posted on our SoundCloud and they showed on their SoundCloud, and it creates this nice piece of content that people can come back to and find Sole, or find that mix each month. It's funny because we're not ... you wouldn't think of us as a music business or a bike business, but there's people out there in the world that only know us as the fixed tape company. There are people who'll find out, they'll be like, "Oh my gosh, you guys sell bikes. I thought you were just the fixed tape company or something." It's just organic sort of different little marketing tricks that we've, or little tactics we've built over the years.James:They just are organic, unique way to reach new customers and relate with our customers. We do the different partnerships. Again, I'll use the Sofi Tukker example. They're a big DJ group. If you don't know them, they're a big DJ group, globally known. I think one other fun facts, I think they have a platinum record in every country in the world except Antarctica. They're pretty big and they're up and coming. They had a song that's called Purple Hat. One of the lines in the song is purple hat cheetah print. We thought, how cool would it be to make a purple hat, their purple cheetah print bike? So, we had connections.James:One of their agencies or marketing companies or whatnot. So, we were able to get a pitch in front of them and they were super stoked on it. Yeah, now we're selling purple hat cheetah print bikes. Again, it's a cool way to ... What other bike companies are selling purple cheetah print bikes? It's just a unique way to reach new customers and provide a unique product and put a cool product out in the world that no one else was doing. I think it's just thinking that way with the bike industry has allowed us to build up these partnerships and set ourselves apart from other bike companies.Stephanie:Yeah. When you're doing these partnerships, these partners can also sell it on their website. Right? So, it's not all being sourced back to your website as a central hub. You're essentially letting these partners also sell the bikes on their websites as well. Right?James:Totally, totally. Yeah. For each partnership's bespoke and different in their own way. Sometimes like, we did a partnership with Wildfox, which is a women's centric fashion brand. We did these like really beautiful floral prints all over a bicycle. They took them in and they sold them through all their retail shops, as well as their partner wholesale shops, as well as their website, and we sold on our website. There's a bunch of different ways we can structure it. But yeah, it's usually just bespoke to whatever that partnership is.Stephanie:Well, that's a good segue into, I mean, when you're thinking about, you've got these mixed tapes going out and partnerships that aren't anywhere close to like the biking industry, how are you tracking conversions? Is your goal to try and get people to listen to these mixed tapes and then come back and buy bikes? Or how do you think about what your goals are around these different projects that you're doing?James:Totally, totally. With the fixed tapes, I think we're trying to push out a certain amount of content each month and each quarter. Then we go out and we build content calendars around what are different initiatives that we can tap into? I think when we're thinking about content, we like to look and start with email. Email is like one of our highest converting marketing channels. We're constantly filling and adding to our email list, and then from there, we're trying to push out two to three emails a week. We're mapping out our email pushes. We say, what are the different content initiatives that we can tap into? So, we try to do a fixed tape every two months. We try to do artist series every quarter and large-scale partnership once or twice a year.James:We map out all these different things we're trying to do, and then we funnel, and then that leads into email. With email, where you can't really just send very bland marketing type style emails every month. You're not going to get good engagement. So, we have to create stuff that's engaging. I think we've just gotten so good at creating this stuff very cost-effectively that it ends up paying for itself through the conversions of email. It's also a great brand building. They're all great brand building initiatives, and they all kind of build on themselves.James:If I do a big large-scale partnership with like a Sofi Tukker, that's going to come back and open up new opportunities down the road for other potential brands, or other potential artists. It's sort of all builds on itself as we go bigger and bigger.Stephanie:When you're talking about emails really high, when it comes to converting customers, how do you think about creating that engaging content? What pieces of content are working or what emails work best?James:I think one of them more interesting fun little emails that we came up with years ago and it's like the easiest thing [inaudible] to create ever, is we do what we call Sole Saturday. Sole Saturday, it's one photo by the Sole team and then three user-generated photos. Every bike we ship out has a little tag on it that says tag at Sole bicycles hashtag, and you use hashtag of the bicycle for a chance to be featured.James:Then, what we do is as we're spelling product, customers are going out and taking photos for us, and every Saturday we feature three of our customers. That, again, it's just like ... we're using user generated content and it's creating a nice email that people can go back to and see if they're featured. It's actually very high converting as well.Stephanie:That's fine. Do you think having actual customers and photos is where a lot of brands are going to be headed, less about the models and the people who look perfect and more about ... Is this someone who reminds me of myself and I can see myself riding that bicycle, yeah, feeling a better connection with them?James:Totally, totally. It's funny you say that. Because even when you look at ... you go to our paid spend or paid marketing, a lot of times the [inaudible] produced sort of content where it's on a really ... Get a really expensive content creator to produce it and it looks very professional, versus like content that's shot on iPhone or content that's just shot with customers' photos. That ends up converting a lot better than the higher produced stuff. I think that's just the people can relate more to it.Stephanie:Yeah. I agree. What kind of channels are you putting that content or the more natural looking content that your customers are creating? What channels are you finding are working best right now to convert customers?James:We're constantly testing when we're doing Facebook and Instagram ads. I've been serving different type of ads to different audiences on Facebook and Instagram with different types of content, the more professionals type of content versus the more just shot from iPhone vibe. Even like, over the last year, we've had a big uptick on our online business because of COVID, and people being at home and wanting to find a way to get outside and escape from this madness.James:One of the craziest things that we found was iPhone ads or the story ads-specific, so had to build just enough format for iPhones were converting at like crazy, crazy higher row ads versus just more static or traditional images or ads on the Facebook or Instagram. That was like a crazy thing we came up on this year.James:There's a very beautiful, simple ad where it's just like the bike on the beach and you have the sky in the background and then the sand below it. Then just the brand and a little copy below it. That little ad actually absolutely killed it for us this year.Stephanie:That's great. Are you still using, maybe not that ad, but still putting new ads into the story section on iPhones?James:Yeah. I recommend any brand out there that's doing ... I mean, I've been learning a lot of this as we go and trying to get better at it, but when you're creating your ads on Facebook and Instagram for when you're setting that ad up, you can actually split it so that it's like, you have this certain photo for the stack set up and then you have a different photo for when it's served on story. My biggest eyesore, or I hate is, when you're on a story and you get an ad, and it's like an ad that's built for the display. So, it has the kind of squared picture and then it has the words under that.James:I don't know if you guys have seen that, but it's such an eyesore to me compared to a beautiful ad that's like really built for the stories. Just making sure that you have the ad set, the story specific ads, it'll help your conversion so much. That's helped us a ton.Stephanie:Yeah, that's a really good point. What kind of return on spend should a brand expect from the iPhone story ads versus maybe Instagram or Facebook or Tik-Tok.James:That's a tough question. I think it's specific to the brand and the product they're selling, and then, even the time of the year. For us right now, our ROAS is way lower than like the middle of summer. It's almost like a 10th of what it was during the summer. That's just because it's seasonality, our product. We saw specific ... static first story during the summer, I think it was converting 3 or 4X of what it was static. But that's specific to us. I think every brand is different, every product's different. But yeah, I think that can give you an idea of the potential.Stephanie:Yeah, very cool. Is there any other new marketing channels that you're trying out, that you're like, I'm not sure if this will work, but we are allocating some funds here to try this out?James:No, for now we're focusing just on Facebook, Instagram. We're doing Google AdWords and media retargeting. I want to dip my toes in some other things. I want to try the Tik-Tok and I want to try some Pinterest. I've heard about the Tik-Tok, but the tracking is not that great on it. We haven't done anything yet. Also, Tik-Tok's I think for a little bit lower age or younger demographic than what our target audience is, so we haven't tried-Stephanie:I don't know. We've had a lot of people on here saying Tik-Tok works well. That originally, it was just the dancing videos and younger people and all that. People are like, it seems like there's still a good arbitrage opportunity on Tik-Tok right now, because the attribution and tracking might be worse, but you still get a lot of the benefit of going onto a new platform before they increase the pricing and actually understand what kind of conversions they're hitting. I don't know, [crosstalk] to check out.James:Totally, totally. There we go. That's my takeaway from this. We'll give it a go. We'll give it a go.Stephanie:Yeah, give it a whirl and see. When new customers are coming on your website, I want to talk a bit about like, how do you guide them through the funnel? How do you personalize things and show them, not only content, but also maybe a bike that would work for them or that might peak their interest?James:Totally. Totally. It's an interesting ... there's a few things we do. We have about our bikes page, where it's like, which Sole are you? That walks them through the different, we have like six different models. You have the single-speed fixed gear, you have the City Bike, you have the Dutch Step through, you have the three speed City Bike, and then you have the Coastal Cruiser. Top Bar and Coastal Cruiser are down and slanting more. We have a page that we'll walk the customers through the difference between all of those and the pros and the cons of each of those. That can explain the style.James:Then once you know the style, what we do different than maybe other companies is we actually ... Each product, each colorway has its own product variant versus like, you may go see a single-speed version of one of our competitors and they keep all the colors on one product page. We create the personality and each colorway has its own personality and its own page. It really helps customers, like okay, I like the red bike, and see the lifestyle on it, and just for that red bike. The red bike would be [inaudible] for a walk and it's got its own story, help the customer really fall in love with that product, and tell a story around each of them, versus them all being bundled up on the one page.Stephanie:That's great. Very cool. Then, I was seeing a couple of retail stores that you were partnering with, probably pre-COVID, but it seems like there'd be a really good opportunity to have those partners also kind of market and share for you while they're getting in front of their own new customers as well. It seems like they would kind of take on the budget, the marketing budget to then share your brand under their brand, if that makes sense.James:Totally, totally, totally. Yeah. We're seeing a big uptick with like these online third party wholesalers and distributors. That's been, for us, I think our product, it's got such a great look and feel to it that it can transcend from, not just traditional sporting goods or traditional bike-centric channels. We can sell on sites like an Urban Outfitters or on Zola, or some of these other more lifestyle driven sites that want a cool lifestyle product in the bike space.James:That's one of our big initiatives that we're trying to get on more of these like third-party digital wholesaler channels, because in the last year, what we've seen the biggest takeaway from all this is like, everything is going digital much faster than it was prior to COVID.Stephanie:Yep. Are those partners showcasing your brand? Are they more white labeling, like ordering the bikes and then putting under their brand to say, okay, this is an Urban Outfitters bike, or are they actually saying no, this is Sole [crosstalk 00:33:32].James:Yeah, we're selling us as Sole. Yeah, we're selling us Sole through these third parties.Stephanie:That's good. That's awesome. How are you getting in front of these big partners? Urban Outfitters is huge and super popular. How did you even get in front of them and convince them to partner with you guys to sell your bikes?James:Yeah, just cold email them. Right?Stephanie:I hear you cold emailing. Tell us your secrets. Come on, James.James:Very easy. Yeah, we'll go out there. If we believe our product could fit in someone's store or someone's space, then we'll hit them up. We're very confident in our product and our brand and we'll sell them on it. It works a ton. Then there's other partners that have reached out to us and want us to work with them. I think, a good example we were connecting ... Target reached out to us and we've just recently started selling on Target's website, which I think is ... It's interesting with them. Target's trying to, in each of their product categories, bring a more 21st century brand in. I think like we really fit that really lifestyle driven 21st century brand for a product.James:Normally, there's not a lot of brands in the space that have that kind of fit. I think we really fit those as well. That's an exciting one for us. Then, like I said, the Zola. Zola's a massive, or one of the biggest wedding registry sites. We're one of the only bike brands on there as well, and do really, really well on there.Stephanie:Ooh, that's a good angle. I wouldn't think to put a bike on a wedding registry website, but that's awesome, because a lot of times it's just the same old, same old. You're like, I don't need more plates, but I can go for a bike. I would put on my registry.James:We sell so many likes there. You'd be really, really surprised. It's a great wedding gift. We have a his and hers, so almost every single order that goes there, it's two bikes, obviously.Stephanie:Yeah. That's awesome. Really good strategy. How are you keeping up with fulfillment in the backend? Especially when you're integrating all these partners like Target and Urban Outfitters, what happens if target has a big surge and they've got a bunch of traffic come to their website, and all of a sudden, you've got 500 bike orders? How are you guys keeping up behind the scenes to make sure that you don't go out of stock or have issues on the backend?James:Totally, totally. This was something that this year that we've invested a lot of time and energy and effort into, is leveraging technology to make sure all of this stuff runs super smooth. We're using a third party warehouse that has their own systems. Then, we have to use an EDI software or partner to connect to a lot of these systems. It's just spending the time, energy and effort to really automate all this stuff and make sure all these systems talk to each other, and there's inventory pushes going out multiple times a day. You put in the front end work to automate all this stuff so that you can avoid those problems.James:There's systems that say, hey, there's inventory pushes that happen multiple times a day to all these systems, so if there's a big spike on say Target, that inventory is removed and pushed out to the other channels so that there's no overselling or minimal over selling. That still happens a little bit here and there because the inventory pushes don't go out all the time. It's a couple times a day, but yeah, it's just about leveraging. There's a ton of technology out there, like using the technology to your advantage to automate the stuff.Stephanie:What are some big bets that you guys at Sole are making over the next couple of years? Where do you think the bicycle market is headed? What are some things that you're betting on that you're not sure if they're going to pay off or not over the next couple of years?James:Yeah, totally. I think it goes back to digital. We're super focused on digital right now and we're super bullish on digital. We're investing in this technology to make sure that we're set up the scale and then we want to continue to expand where we're selling and who we're selling in front of. Then, on top of that, it's continuing to expand how we market our product and where we market our product and the media partners we can use to get in front of these different people. I think the biggest thing ... People having a stay at home as a result of COVID has set all these new habits. I think they say like, it takes three weeks to set a habit, and what? We've all been at home since April.James:Everyone's having to shop from shop online and shop at home. Once we come out of COVID, those habits, I don't think are going to go away. For us, we're super bullish on making sure we have a really solid foundation with, not only our website, but the online e-retail partners that we're selling through so that, as we come out of COVID, we continue to have really strong distribution digitally to the future.Stephanie:Yep. I could see some of the retail partners leaning on you guys also for maybe advice and best practices. I've seen some of the bigger companies kind of looking at, not that you're a startup, but looking at startups, looking at people who are able to be agile and move quickly, and trying to figure out like, well, what are you guys doing? Tell us what are the best practices right now, because what we've been doing for the past couple of years was just thrown up into the air and we have to rewrite how we do things now. So, do they ever hit you up and be like, "Hey James, how should we set this up? Or how are you guys doing this so we can replicate this?"James:Totally. No, no, no. There's always like other people in the industry that we're talking to. There's always people that we ... Whether it's people in the bike industry or other businesses, other friends that have businesses. Again, always happy to talk with them. For us, you say that we aren't a startup, we are a startup. We've been doing this for 10 years, I still feel like it's a startup. Our team's still pretty lean. There's only 10 of us. We're super nimble and able to move quick, which is great and allowed us to pivot and make changes when things like COVID happened, that bigger companies can't do.James:Once we find successes, we can double down and grow on those. Yeah, we're staying nimble and going with the flow and learning quick. Yeah.Stephanie:That's great. All right, cool. Let's jump over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, James?James:I am ready.Stephanie:All right. Stephanie:What is your favorite business book that you think about or refer back to [crosstalk 00:40:28]?James:It's not a business book per se, but it is You Can't Hurt Me by David Goggins.Stephanie:Oh, okay. I like that. I actually have not heard of that. I don't think.James:The quick hitter on it, it's about overcoming adversity and pushing yourself. I think that's so important in business is understanding that you can overcome adversity and always setting your bar higher and higher. Again, it's not technically a business book, but I think there's ton of good business lessons you can learn from it.Stephanie:I like that. That sounds good. I'll have to check it out. If you were to have a podcast, what would it be about, and who is your first guest be?James:Oh my gosh. If I were to have a podcast, I would talk about ... Personally, my favorite thing outside of business and bicycles is traveling. I would do a travel blog and my first guess would be, Oh my gosh, I would pick Barack Obama.Stephanie:There you go. I'd listen to that. That sounds good. What is the nicest thing anyone's ever done for you?James:Oh my gosh. The nicest thing that anyone has ever done for me. The nice thing, oh, this is big.Stephanie:Heavy.James:My friend, Mario and Ken, in the early days when we started up our USC shop, these guys would come out every year and work for back to school, which is our craziest time of year for that shop. We sell like a thousand bikes in two weeks, and they would come out and stay at my place, crash on my floor and help us every year for the first four years. So, shout out to Mario and Ken.Stephanie:Oh, that is really nice. That's a good answer. What trend or tech do you not understand today that you wish you did?James:What trend or tech? Tik-Tok.Stephanie:There you go.James:I don't get it, but I feel like I need to get it.Stephanie:Okay. I've had some other people say that as well, so you're in good company. Others don't also do not understand it. All right. Then the last bigger one. What one thing will have the biggest impact on ecommerce in the next year? It can't be COVID because we've had too many people say that.James:I think the big thing impact on ecommerce, I think it's going to be shipping. I feel like shipping is going to change drastically over the next one to five years. You have like Amazon starting to do their drones. We're starting to see in LA these little robots that are delivering food. Then, on top of that, FedEx and UPS are just killing everyone with all their fees and their pricing. We've been in peak surge charges since July. I just feel like there's so much potential for disruption there, shipping.Stephanie:Yep. Oh, that's a good answer. Yeah, I agree. I see a lot of companies, a couple of them actually are in Canada who are trying to get one and two day shipping. I think a lot of more companies will be leaning into that once they figure out how to make that work, and they also see how reliant they are on the FedExs, the UPSs, and how much it disrupts businesses.James:Totally, totally. Please someone come out here, please help us [inaudible 00:43:54], it's so expensive to ship bikes.Stephanie:Well, maybe James, that can be your next business. You've done a lot in your day. You might as well just start a shipping company as well.James:There we go. There we go.Stephanie:All right, James. Well, thanks for coming on the show. Where can people find out more about you and Sole bicycles?James:Totally. You can check us out at solebicycles.com, or our Instagram, which we update daily, @solebicycles, and then my personal is @JimmyStans.Stephanie:All right. Thanks so much.James:Thank you guys so much. Appreciate it.

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.

James: Hi, listeners and audience, this is James Kandasamy from Achieve Wealth True Valued Real Estate Investing Podcast. Last week, we had Rich Fishman(?) with 8,000 units. Almost half of which he owns by himself and he had bought over 20 years across five to six different states. And he gave us an outstanding overview of what happened during the crash of 2008. Was it true that everybody needs a roof above their heads? And that's what a lot of gurus are telling us in multifamily or is it true that multifamily has the lowest default rate? You will definitely need to listen to that podcast. Because he went through the whole downturn with all his multifamily(s) and came back up after the cycle and he gave a lot of awesome perspectives. Today, we have Kevin Bob. Hey Kevin, do you want to introduce yourself? Kevin: Hey James, I'm excited to be here. Yeah, I'll give you the quick overview for sure. So, I have been investing full time in real estate going for on 20 years now and I got started like a lot of folks did with single-family investments. It was just what my mentor was doing. It's what he was good at and what he taught me and so I didn't reinvent the wheel. I did exactly what he told me to do and that evolved into multifamily investments and other types of commercial real estate. That led me up to the crash of 2008. That's a very challenging time. It kind of was reborn in 2011, 2012 and was introduced then to mobile home parks. Which is what we focus on today. So, for the past seven years now, we've been solely focused on mobile home communities. We own parks in thirteen different places throughout the US and that's our niche of choice as of now. James: Awesome. Awesome. I mean, Kevin is being very humble. So, just to give you guys some background when I was in my W2 job, one of the first podcasts that I listened to was Kevin's podcast. I mean, the podcast is called Real Estate Investing for Cash Flow With Kevin Bob and it's an awesome podcast. It focuses a lot on commercial real estate and I really learned a lot when I was in W2 and I was listening to it in the car. Are you still doing the podcast, Kevin? Kevin: I am. Absolutely. I do two podcasts. So, I do the Real Estate Investing for Cash Flow Podcast and then about three and a half years ago I thought it was a good idea to start a second podcast as if I wasn't busy enough already. And I started the Mobile Home Park Investing Podcast, which is specific to that topic. James: Got it. Got it. Kevin: James, I remember the first day we met. Not to interrupt you but I always joke with you every time I see you because I got a weird memory. I forget a lot of things but I remember the odd things and I do those free Friday calls. I've been doing it for like five years now. And I remember that's how you and I originally met. It was during one of those 30-minute calls on a Friday and I don't recall why I remember this part of our call but I had been making lunch with my Bluetooth in while we were talking about a multifamily deal that you were taking down in San Antonio, Texas. James: Yeah, it was my second deal. I was buying 174 and have you found it on our yellow letter marketing campaign. It is very interesting because when you had your podcast, you announced it that you're giving thirty minutes of your time and I was like, ‘Wow, that's awesome. I'm going to talk to a celebrity.’ Right now, I do offer like fifteen minutes of my time for whoever wants to talk to me. You just have to send me an email at jamesatachieveinvestmentgroup.com. We're not big celebrities.  We're just normal people. Kevin: I get as much value from those calls as the person on the other side. That's how I like to think and you just never know who you're going to meet on the other end of the phone, right? I mean, that's how I that's how you and I met. You just never know and so I think that you have to keep that normalcy in your life and I enjoy those calls. I’ve met a lot of great people on the way. James: Surprisingly, I still remember the day you called me and the moment you called me. I'm not sure why but that was like probably five, six years ago. And I don't remember my other calls. Kevin:  Yeah, yeah. I have been on for five years. Yeah. James: Yeah, that's awesome. Awesome. So, I mean, I want to dive deeper into mobile home parks. I can see you have like a 150 million real estate transaction. Is it all mobile home park? How many parks do you own right now? And can you give those kinds of details? Kevin: No, we don't have. Our current portfolios are not 150 million. That's just that's like my transaction for the principal. You know, investments over the years. James: Thanks for being honest, Kevin. Because a lot of people misuse those big numbers to do their marketing and then we find out they don't have anything. They're probably on a passive investor and that's really awesome that you're being very upfront with that. Kevin: Yeah, I’m the majority principal in the parks we own as far as on the GP side and things like that. So, we'll get that clarity out there as well. James: Awesome. Kevin: We're not really sellers. So, to answer your questions about what we own today. We've been teetering around like the 2,000 mark. We go above it. We go below. We have a park that going to be closed in a week and a half. We sold a park earlier this year and then we're going be selling one in probably February next year. That's in contract currently. We got one that we're closing on in 45 days, which is 215 lots and so we keep teetering around this 1900-2000 mark. We've really been evolving our portfolio by selling off some of the smaller properties and by selling off some of the properties that we don't really have an interest in scaling in a particular marketplace or maybe it's just one that just doesn't fit our model moving forward. I don't know how else to answer it other than that. So, that's where we're at today. We're really long-term cash flow investors, though. That really is our business model. It just as far as the selling side of things I like to take advantage of an opportunity when it arises. That's one thing I did not do before 2008. I never would sell anything and it came back to bite me at that point. So, I am not a seller. However, I will sell when the timings right the price is right. James: Yeah. Yeah. Let's talk about that experience. Because I heard about that in your podcast and so you are doing single-family homes before 2008 and you were doing very well. Kevin: And multifamily but mostly single-family was our focus. That was our business model. It's what we were very competent at. We had acquired a few hundred multifamily doors over the years almost by accident. We didn't really put much effort into it because deals would just come our way like small multifamily stuff. Thirty-six units forty-eight-unit type properties that we just kind of threw into our rental pool. However, the biggest part of our model and the thing that took the most time and energy was a single-family. You know, buying the single-family rental properties and managing a portfolio across multiple different counties was just very inefficient. And it's unfortunate because I think we just got very complacent with our model. You know, we were we felt we were really good at it and we never took the time to be honest with ourselves about how inefficient that was and that we should have just taken our efforts and converted them over to multifamily at that given moment. I think that we would have fared through the downturn a lot better. The single-family properties… it wasn't really the single family that sunk us during the downturn. It was a whole mixture of ingredients. You know, Florida was ground zero for the crash. A lot of our properties, not only did they lose within a year but they also were upside down. Our leverage point on the front side was originally somewhere in between the 65% to 68% range. So, we were very low leverage. Most of them were upside down underwater within a year. Another big thing in Florida that really was a major impact on us was there were a lot of speculative single-family builds happening back then. I don't know if you remember back in that heyday. I guess you could say that was back when a new build property in like Vegas or Phoenix or Southwest Florida would literally flip three times before it was ever even occupied. Before it was ever finished. It was crazy. There was like thousands of new home builds happening in Southwest Florida for a population that wasn't really coming in. So, the big nail in the coffin for us back then was a lot of these builders that had these properties who weren't selling and they started renting them out. And so now, they started pulling the populations away from our rental properties and they offered better incentives. Because what they had was a new product. So, we had an occupancy issue. We were under wonder water value and like it's just a perfect storm and it was ugly. It wasn't fun at all. And the banks at that point weren’t willing to work with us. This was like a year within entering into this downturn. The banks didn't have loss mitigation departments. They weren't prepared for this and so we struggled with a majority of our lenders to even do work out deals or loan modifications. James: Yeah, I read some books about how the lenders can be nasty during the downturn but now they're super nice. Kevin: I think they got a lot more flexible. Because they had to. In the first year of the downturn, no one knew how bad it was really going to get. It was like ‘Are we at the bottom? Are we at the bottom?’ I feel like that question was asked for many years before it's like, ‘wow, it's 2011 and it's still messed up like things are still fairly bad.’ You know, I think it took the bank's a while to realize that and they even put the infrastructure in place to manage all these defaults. It was a disaster for the banks as well. I mean, they had more defaults than… they had to build entire departments within their companies to manage this onslaught of default. So yeah, it was a challenging time for everybody. James: Do you think you could have done better if you had a lot of non-recourse loans? Kevin: Yeah, absolutely. I mean, as far as my personal assets being attacked and things of that nature absolutely. And I think there is also a lot more flexibility with the non-recourse lenders to work with a borrower because they have quite a bit of leverage. You know, another thing that hurt us pretty badly on our part was a lot of our apartment properties and a lot of the commercial loans and a lot of times we would package up like eight to ten or twelve single-family properties and put a commercial loan on and it takes money out. That was kind of our model. A lot of that debt was shorter-term recourse debt. It was five years,you know, either resets or five-year balloons, twenty-year [inaudible10:23]. What happens we didn’t default on multifamily. However, after all the credits were going bad on the single-family stuff and we started having issues there. We couldn't get new loans when the time came due for them a couple of years later. We couldn't get any debt in place. We had to sell things for basically fire sale prices and give them away. We basically either gave it back to the bank or did some minor workouts, did short sales or had to sell at fire-sale prices. It is what it is. I learned a lot from that period and things move on and I've learned a lot from it. And I think I'm a stronger investor and a better investor nowadays because of it. James: Absolutely. Absolutely. So, you brought up three or four cities that are very, very high growth right now.  We’re at the late stage of this cycle. Which is similar to 2008 before that. They are Phoenix, Las Vegas and Florida, right. So, do you think we're in the same stage right now because they are one of the highest growth rental rates for multifamily? I would say I'm not sure how much you would be able to compare multifamily at that time.    Kevin: I think the reasons behind the crash back then are a little different. I mean, back then the lenders were so loosey-goosey. Because anyone could get a loan and I mean anyone. Even a waiter who just started the job yesterday. Who had no provable income could get a loan on a property. You know that that's one thing that hasn't gone back to the way it used to be, lending restrictions are still very tight. So, I don't think that we have that fear. I'm not an economist and by no means am I an expert here but I don't think our fear should be related to anything that was similar to back in the 2007, 2008 crisis and what caused that. So, I'm not sure what it could be. I know that there's a huge demand for multifamily. There’s a pent-up demand for supply still in a lot of these markets based on population growth. I think that the bigger risk lies and like A class stuff or like some new developments as far as like, you know, the game of musical chairs. It’s about who's ultimately left holding the bag. I think that what you do as far as like BNC grade apartment complexes are very similar to our business and that as long as you provide a clean, safe and high-quality product at affordable prices. There's always going to be a demand for it no matter what happens. I'm a firm believer in that and that's played out time and time and time again and that you were making mention of the last guest you had on. I'm going to give listen to the show but what was his take? You know, what did he tell you was the ultimate outcome of his multifamily holdings through that downturn? James: Yeah, it was very hard for him during that downturn. I mean, He has to cut down a lot of it and if I remember correctly the default rate was pretty high. It was like almost 8% where a lot of people did lose their property to the banks. Kevin: I wonder if that was because they were over leveraged but I'm not talking about him though. I was talking about the operators. See that's it leading up to that recession and the last time people were overpaying for apartment complexes and if you recall one of the big the big hot trends were buying an apartment and doing a condo conversion. So, you saw people buying apartment complexes for valuations that had no relative nature to the actual NOI that was in place. It was all based on a pro forma exiting out as individual condos and a lot of those condo things failed miserably. Anyway, how did the guy you interviewed fare? James: I think he was not talking about condo conversion. He was just talking… Kevin: I mean as far as multifamily investments. How did he fare? How did his investment go? James: He did say that it was pretty bad for him and for a lot his friends and who were buying at that time. Kevin: Specific markets or…? James: Across the country and he has been down twenty years right now. I mean, he has like a thousand units right now. The key thing is I mean everybody says ‘everybody needs a roof over their head.’  But he's a says that people become creative on how to get a roof above that they’re head. They double up. They live in their basement. So, it's not like everybody's going… Kevin: Yeah. Well, I think another thing that changes is  the quality of your prospect changes as well. You know, people lose their jobs. People miss payments on their credit cards.  They get bad credit. They get into this revolving cycle or downward spiral. And so, although everyone does need a roof over your head, the quality of that prospect might change. It might actually deteriorate over time but what you can really get to fill that unit which a lower quality resident typically is going to equate in a higher turnover, rate higher expense and maintenance costs associated with running that property. So, I think that there are other factors that are derivative of a downturn  even though everyone does really need a roof over their head. James: Do you think the optimism that you had or the entire market had before 2008 crash like in 2006…  I'm sure everybody was optimistic. Nobody knew about the subprime mortgage. Because nobody really knew in detail, right? Do you think that the optimism that people had during those few years before the crash is the same as now? Kevin: There's some Deja vu that I've had and I think maybe a lot of that has to do with even just watching like social media feeds and things of that nature. A lot of the kudos and congrats are given to folks just because they like buy a property and that’s only a part of it. James: They just started running. They haven’t done the marathon yet. Kevin:  It not what it looks like today but it’s can you execute the plan accordingly? What does it look like three years from now? Because you bought something doesn't mean that you've won yet. It's easy enough to get on the front side. So, that's a different form of that optimism. James: Social media has increased the FOMO syndrome. Kevin: Yeah, that's it. Success seems to be equated on social media to actually just doing a deal. Whatever it means to get the deal done: overpaying for it, over raising investor capital, putting capital your investors capital risk. I mean buying bad markets and I think that was a very similar sentiment that was shared by a lot of people back prior to the crash. ‘If we don't buy now, there's like anything left. We’re going to get priced out of every market and then will never own real estate. Let's buy whatever we can. Let's get that 95% loan.’ So again, the lending standards have not gone back to what they were then. Which was a big cause of that crash. But I do think that there's some Deja vu that I've had.  You know, the FOMO thing… the fear that you’re missing out, that's real. We've seen things be much more competitive over the past year. We bought nine properties last year and we wound up buying two this year. So, we did get side-tracked a little bit this year with building a property management company. And we that's another discussion but even then, I don't think we would have bought more than maybe three or four properties. If that was our sole focus but we're very conservative. I think we had seven or eight deals in contracts that we ended up killing… for various reasons.  There just a lot of hairy things out there and you can make money with hairy deals but you got to really know what you're getting a deal go to. James: Yeah, exactly. I mean, that the experience of going through the crash will make you’re really a conservative person, right? Because people have never gone through it [inaudible17:59] including me. I didn't go through it. So, I didn't know how painful it was, right?  But I do read a lot of publications and try to feel the fear at that time. I mean, you can be too much of an optimist. I'm not so engaged in the height of optimism right now. So, you did single family and you went through this 2008 crash and suddenly you started doing mobile home park. Why that mobile home park asset class and why not go back to the single-family apartments? Kevin: Well, it's a great question. So, I answer the second part of that question first about why not go back to like single family properties. You know, I finally had an internal point of reflection probably like two years after the crash started. There were a couple years where it was pretty challenging to even think about what was happening in my life. So, there were a couple years, I don't like to say that I put my head in the sand and buried it. But somewhere around, 2010 to 2011 I would go through like a reflection point in my life where I tried to look back and just really be honest myself like, ‘what I should have done differently.’ What I ultimately felt went wrong and I came to a quick realization and I kind of knew it back then.  You know, you're comfortable and complacent you know we should have made the switch. Our model is very inefficient with the single-family properties. You know, running multiple maintenance crews and management crews amongst many different counties. You know, having a home here, a home over there, home over there, hundred something that way. It was incredibly inefficient and it was very hard to scale. You know like just going out and trying to buy one by one by one and buying a hundred and twenty, a hundred and fifty, two hundred single family properties is a lot of work. That’s two hundred individual closings. That takes a lot of effort to make that happen. And you'll being honest with myself, I knew that those same efforts could have been multiplied like 10 x but by actually putting that effort into multifamily and that multifamily is much more efficient to operate. It could truly provide that cash flow and help me get back on top much faster than trying to go back into the single-family space. I didn't have an interest in the single-family. It was what I was taught at a young age and I rolled with it and I did really well with it. And then now, I felt more grown-up and it was time to make a big change in my life and I knew multifamily is going be it. And so I went on this exploration journey, knowing that it was going to be multifamily. What I wanted to do, James, I wanted to go back and talk to everyone. I went on a six-month binge of interviewing and talking to everyone I could, locally and on the phone, who have either been in the multifamily and made it through the crash and you'll just get a sense from them how things have changed today?  How the landscape has changed? I always spoke to those who just got their start. You know, what's their perceived notion of the next couple of years? What the lending environment look like? Where are they finding opportunities? Where was the risk? I just wanted to get an update because I basically stepped away for years from real estate. And things had changed over those three or four years, right? And during this period, I was introduced to a guy named Randy through a mutual friend. And Randy had mobile home parks here in Florida. He owned three of them. He had been a banker for thirty years and I like meeting new people. So, I said ‘let's grab lunch. You’re local to me. So, let's grab lunch.’ And we did. I didn't go there with the intent of like, ‘I want to learn about mobile home parks.’ I just wanted to meet someone new who had been quite successful in their life. And that after like a two-hour lunch with Randy I walked away, saying ‘I'm going to buy a mobile home park.’ I need to either prove or disprove all these great things that Randy had to say about this niche and this asset class. And that's what I did. It took me about 12 months.  I bought a park up in Atlanta. We still own it today. It was a small part of a highly distressed Park and I bought that one and then I bought a second one and I bought a third one. I just spent a couple of years of my own money proving the concept. And then ultimately once we proved the concept and went full cycle on a few things. I went out and actually built a business out of it.  Where we started hiring multiple team members and investors into the game and that's where we're at today. James: What were the top three ‘aha’ moments from that discussion with Randy in that one-hour lunch that you had with him? Kevin: Yeah, and this isn't to compare multifamily to mobile home parks. I mean, but this is what he told me. This is how his conversation went with me. He was like ‘You know, the bottom line being C class apartment complex is great. Everyone needs to roof over their head.’ Just like we talked about. Affordable housing is in high demand and that demand… James: And what year was this? Kevin: This is in 2011. James:  2011 which is supposed to be one of the lowest and best times to buy. I guess, right? Kevin: Yeah, absolutely. Absolutely and so he went on to say that one of the big challenges with multifamily that he found in his career, and he wasn't a multifamily guy but from a theoretical standpoint was the turnover and you're turning 50 to 60% of your tenant base every 12 to 18 months. In mobile home parks, he's like, ‘95% of our residents owner their homes and it costs a lot of money for them to move their homes.’ So typically what happens, Kevin, is if they want to sell that home or they want to go somewhere else move. They don't move their homes. They just put their home up for sale and they move and go buy a home somewhere else. And basically, you never lose that lot rent. That lot rent continues to come in day after day and you don't have that down period like you might have an apartment and you don't have to that make-ready costs like you might have an apartment. So, that was one of the big ones. Another big one that really piqued my interest was the just really the barrier to entry and that there's really no new supply coming in the marketplace. You know, municipalities don't like our asset class. It's got a bad stigma attached to it. And so, no new parks being built and so if you find a good quality park in a great market, you don't have to worry about competition coming down the road. It’s not going to happen. It's just not a chance of it happening. James: It's not like a straightaway somebody can just come and build something in front of you. Kevin: Right. Right. Exactly. So, that was a big one. I liked that and then another big thing that he sold me on was just the management side of things. You know when the residents own their own homes you're not maintaining the roof, you’re not maintaining their plumbing, you're not maintaining their electrical. You’re not maintaining anything whatsoever that happens to their unit. They just like a homeowner, they call that vendor. They call the HVC company. They call the roofer. They call the plumber to fix it. You're not in charge of that. Our only requirement is to maintain the infrastructure. So, the roads, the water and sewer lines leading to the houses and the electrical infrastructure and that's pretty much it. And so I was like, ‘Wow, that's interesting.’ So, like low turnover, fairly lower management responsibility and very rarely is there ever a point in time where you have a down unit or a lot that's not paying you rent. So, the fourth, you asked me for three but the fourth big thing that really sold me on it was He's like Kevin there's a lot of first- and second-generation park owners still out there. Either they built these parks or their father built these parks and now they're aging out. All of these parks were built in the 50s and 60s and 70s and these owners are getting very old. You know, like five years ago the statistics were that 85% of Park owners only owned one Park. And so, to me that means they're a mom and pop, right? They're not a big professional or institutional operator. And so, his point that he made was that these individuals have been working these parks not like you or  I, where we run them like a professional company,  but with their bare hands. They are working these things from day to day. And they're either getting old or their health is becoming an issue. They're getting tired and they're aging out of these things at a very fast rate. And so, there's the opportunity to get in and run it like a professional. You know, get markets up to the market rate in the area and run it more efficiently and do a better job of collections and whatever they might be doing wrong there. So, that was a big thing that piqued my interest as well is working through that ‘mom and pop’ generation and finding opportunities that had a lot of meat left on the bone. Those were the big ones he threw at me and many others as well. But those are some of the big ones that just really sold me. I was like, ‘I’ve got to learn more about this.’ James: Yeah, that's awesome. When I learned about mobile home park, I went for like some three-day class and I really learned it. I love it. I mean, it's a really good asset class and I didn't want to do it because I believe in focus. I mean sometimes as entrepreneurs, we are like, ‘Oh, mobile. Oh, that's so cool. The self-storage let's go do this.’ Kevin: Shiny objects. James: And I realized that to be really good at something you have to have focus. So, that's the one thing I wrote in my book, right? Whenever a passive investor chooses your sponsor make sure that your sponsors focusing maximum to asset class. There are so many details in this asset class but with this market being hard a jack of all trades can’t really make money. Kevin: True. James: Some of their mobile home parks are a bit small, right? I mean, it used to be like 3 million for like a hundred parks or something like that. So, we were like all in doing like large deals and we thought, ‘Okay, we're just going to stick with apartments and stay focus and make sure we get good at it.’ So, that's important, I think. And so, at a very high level can you explain how the cash flow is generated in a mobile home park? Kevin: Yeah, absolutely. It's pretty straightforward. You know, we own the entire community and in a perfect world, this is how we’d like to own the community, where we own zero of the home. So, let's just give an example: we have 149 space mobile home park in Buffalo, New York. In that community, we own zero of the homes that are in there. There are 140 of those lots that are occupied with residents. Who again, they own their roof above their head and they pay us on average $428 a month in lot rent. They also pay their water and sewer; you bill it back for the trash usage. So basically, our job in that community is to maintain the roads and make road improvements as necessary. We cut the common areas of the grass. We trim trees throughout the community. Just making sure that the community or the subdivision is up kept and their responsibility is to pay us for the renting of the lot that they're homes are sitting on. That's it. We make money in that manner. That is the sole source of our revenue. Now I’d say, ‘In a perfect world, we don't own the homes.’ Unfortunate, we're not in a perfect world, James, are we? So, we have our portfolio of approximately two thousand lots that we own and it changes every day. In somewhere between two hundred and fifty and two hundred and seventy of the mobile homes and some parks we own zero homes and in other parks around twenty. It just really depends on how that older owner who we bought it from was operating it. And so, our goal with those homes that we own is to get out of the ownership as fast as possible. And so, what that means to us is that we'll go in and we'll do a very nice builder-grade renovation on them. We’ll sure make everything is operating as it should and make them look good and ultimately try to sell them at a breakeven or we'll even lose money on the homes if we can find a cash buyer, who will come in and purchase. Who we know once they own it outright that they will be a very sticky resident and they'll end up staying there for a very, very long time. And so, our goal is really good to get it back to the lot rental model. Because at that point our management and our maintenance responsibilities are incredibly minimal. James: Yeah, let me try to summarize this for the audience. It’s like a parking lot for a car, right? But it’s Just a car that doesn't have a wheel to move. Kevin: We’re the home parking lot specialists. James: You make a lot of money, right? Because I just own the land, right. The earth is one of the best business on earth. Kevin: Yeah, that's a good way to put it. We are definitely a parking lot.  Except the homes are very expensive to move… I don't want to say that's a great thing about our resident base because that's not the best way to put it. But typically we cater to workforce housing. That's what we have. You know, so good hard-working blue-collar folks. And the average single-wide cost about 5-6000 to move and reset in another the community and a double-wide 10-12,000 and the average folks who live in our communities do the average do not have that type of money lying around to move their home but some of them. And so normally, like I said what happens is that they sell it. Just like you would sell a stick-built home. They put it up for sale and someone else buys it and that person comes in and takes over the lot rent responsibility. So, it's a beautiful thing. James: Yeah, it's a beautiful thing. So, just in terms of the lot itself are there any other issues with the city? Or do you just own the whole lot? Kevin: Issues with the city meaning…? James: So basically, you own the entire park. So, that whole thing is an SL real estate, right. Kevin: That's correct. James: The city doesn't own any of the things inside. Kevin: Sometimes, every park is a little different. We have a few communities where the main road going through it is owned by the town or the city and we own the park. So, they maintain that one road. We have other communities where the water company direct build the water and sewer lines. So, when that park was built the local municipality handled the water and sewer and they literally put the lines and they own them. And we're not responsible for water leaks or anything like that. In most communities, we own the lines but there are some communities that are just anomalies. They are kind of stand alones, where we don't have to maintain them. Every park is different but normally, we own everything. For the most part, we own everything in the park and we have to maintain it. James: So, do you get a lot of depreciation because you just own the land? Compared to like multifamily? Kevin: You do. You do. You know, we did a bunch of cost ex studies last year and we were actually pretty shocked. In fact, Tom Wheelwright from Rich Dad Advisors… I didn't know that he's good friends with the person who does our cost ex studies. He personally reached out to me because he had never looked at a study from a mobile home park before and she shared one of ours with him. And he's like, ‘You got to come to my show. I'm actually baffled at the amount of depreciation that you guys able to gain.’ So, the infrastructure… So, all the improvements in the land. Most of the value of that property because we're not buying the homes. Most of the value is in the improvements of the properties. Because a lot of our property that we're buying it’s not like a path of progress. I mean, the dirt itself isn't worth the money. It's the infrastructure that's there that is really worth the money. And so I don't want to just off the cuff share with you some of the cost ex studies but it's a fifteen-year depreciation schedule.  And I think we've been able to, on a couple of our deals, depreciate it like upwards of 60% of the actual purchase price within the first year. So pretty significant. James: [inaudible34:57] the bonus depreciation. Kevin: With the bonus depreciation. James:  Got it. Got it. So, is it fifteen years or is it similar to like twenty or fifteen? So, mobile home parks[inaudible], okay. That's something that I didn't know. That's very interesting, Okay. That's really good and what about what is the primary value at the mobile home park? Kevin: Yeah, there are a couple big ones. I kind of classify them as like low hanging fruit, middle hanging fruit and then the high hanging fruit. Which is hard to get to. The low hanging fruit for us are simple operational changes. You know, the heavy payroll. We will go in and…  they’ve basically got their family members and their cousins and their brothers on payroll and we'll go in and chop it down to what it really needs to be. That's very low hanging fruit for us. Some other low hanging fruit for us are just your rent increases. There have been many communities that we have purchased that literally have not had a rent increase in fifteen years or twenty years that’s a long, long time. And so that's very low hanging fruit. Medium hanging fruit to us would be controlling the water and water sewer and other utility expenses. So, a lot of these parks when they were built back in, back in the day, water and sewer weren’t expensive utilities. They just weren't. It was included and was factored into the lot rent. You know, the infrastructure was new back then. So, there weren't leaks or wasn't waste or anything like that. Over time the infrastructure gets older and leaks that happen. People tend to abuse water. Water and sewer are expensive in most parts of the country. And that's normally a very large line on the PNL expense statement. And so, we'll go and we'll basically buy individual water sub-meters. They’re pretty advanced meters that are digital and have remote reads. And then we will install them to a lot and will essentially start building the residents back for their own usage. Proportionately speaking we will do the reads each and every month build them back. So, number one: we'll save anywhere from 20% to 40% of usage because people now get responsible very quickly when have to pay for it. And then they'll all those savings basically good to our bottom line. So, it costs us a little bit of money but typically in a normal-sized Park, we will recoup that entire investment of the water meters within like 12-14 months. It's pretty quick. And then the high hanging fruit of the value-add side is infilling of new homes on to vacant lots and so a lot of communities that we own they might have some vacant lots of them. Some more than others. So, I'll give an example: we buy a mobile home parks 100 lots in size. It's got eighty that are occupied with trailers that are paying. The other twenty they were fully developed when the park was built. They've got infrastructure there. However, they do not have a mobile home sitting on them. We've got dealers license in every state that we own a park in and so we can buy wholesale from the retailers and the manufacturers. And we’ll go buy brand new home inventory and we'll bring it in and will basically create a retail program and find buyers for those homes to infill those lots. So, we'll buy the homes. We’ll bring them in. So, I say that's high hanging fruit because it's very capital intensive. It costs money to purchase a home and that money is tied up until you sell that home. So, there are different programs out there that help you to facilitate that but it's still very capital intensive. And there are a lot of logistics involved with moving homes in and setting them up and things like that. So, those are the big ones of how we add value to communities. James: Got it. Got it and I believe the mobile home park homeowners compared to multifamily which are renters, right? So, it’s a completely different mindset when it comes to pride of ownership. Kevin: That's it. That's it. That's why we try to convert them to a homeowner as fast as possible. I mean, you still have your homeowners who you have to kind of kick in the butt every once in a while, to keep your house in order, to keep the yard in order. We’re pretty strict with our screening processes and for the most part, the homeowners within our communities have pride of ownership and take care of their units quite well. James: Got it. Got it. Got it. So, let's go back to the property management side of it. Because I remember when I was listening to your podcast about five years ago, you were always saying or the apartment guys had it easy. Because they have their own property management. They are more professional. Finally, after five years you are going to be moving your property management company under yourself.  You going to self-manage, right?   James: Yeah. So, you guys do have it easy. All you have to do is pay it and just hand it off. Buy it and... Yeah, joking. I know there's more to it than that. So, up until a little over a year ago, we managed all our own assets in house. And unfortunately, the property management side of any business there's a certain size to where you can actually break even and we were nowhere near that size. And so, it was a losing endeavor for us. And so, sometime in the middle of last year we were introduced to a property management firm…. we’d never considered property management in the mobile home park space. Only because we were always told that the options of the companies that were out there were poor, very poor. And I was told so by many different people, many different veterans of the industry and so we never really explored it. And so, we always manage it ourselves but last year we were in contract to buy a property up in Michigan. It was in receivership and the bank had engaged this management company, a national management company, a property management company that were mobile home park experts in the business forty years. They were engaged to actually manage the day to day of this thing while it was in receivership. We were buying a note on this thing and we got introduced to this property management company. We got to see them in the real world. James: [barking] My dog has been like a... Alright, Kevin. So, one thing that I got to know since a long time ago is apartments have an easy way of getting into third party property management and buying it and giving it to third party property management. More recently, you have been trying to get your own property management company or maybe you already done it. So, can you explain why that is? Kevin: Yeah. Yeah. So, in our space it is not the norm to hand off to a third-party management company. I think we're like the redheaded stepchild or the anomaly of the real estate industry. Because pretty much every other asset class multifamily, office, retail, all of them have multinational property management companies and lots to choose from, right. They can choose from many different people in the space, best in class things of that nature. I had always been told in the mobile home park space by many industry veterans that it just doesn't exist here that there are only a handful of property management companies and most of them aren't very good. So basically, in the initial years of us owning parks, we managed it ourselves. However, in order to build an appropriate property management company that's profitable, you have to have a certain scale and we were never there two years ago. We just weren't large enough. And so, it was kind of a losing endeavour for us. We're okay with it. But it was prohibiting our ability to grow at the scale that we wanted to. We were good at finding great opportunities and we were good at raising capital. The roadblock was actually the operations of all these different parks were buying.   And so just by happenstance, we were buying a note on a distressed property up in Michigan and it was in receivership. And during that transaction, we got introduced to the management company that was running the show and it was this large group. They've been in this space for 40 years. They are the largest fee manager in our business and they've had a footprint nationwide. And I saw them first-hand and it seemed like they were doing a great job within the first couple of months of us being introduced to them and of them managing this asset that was not yet ours. And so, I flew up and met their team and flew my team up to meet their team. I got to see their operations. I got to learn about them and everything seemed great. I mean, I was impressed. Again, they had a lot of experience… way more experienced than us in this business. They knew everyone in the industry. They knew all the intricacies of the business. They had different departments to manage those things whereas we were basically were trying to wear a million different hats. And it seemed like a perfect match made in heaven. And so, after another month or two of kind of testing them out on this asset. We were buying this and we said ‘You know, let's hand them the majority of our properties and let's see how they do.’ And we kind of did it like two different chunks. And long story short, they're great guys. However, no one's going to ever manage your property like you would. No one's ever going to care as much as you do. And so within four or five months, we started seeing some pretty readily available signs that things were not going as planned. The promises weren't coming true. You know, decisions that should have taken three minutes to make were taking three months to make. Everything was moving like a snail's pace and nothing was getting done and we were actually regressing and it was frustrating. However, what happened during these first six months of us being with them is that we literally acquired like another nine properties. So, we doubled in size. So, unfortunately, it wasn't as easy as us making a decision saying, ‘Hey, we're going to give you our thirty-day notice and we're going to take it back in house.’ Because we surely did not have the infrastructure now to actually manage our assets because we literally doubled in size in a short period of time. And so over the last six months, we've been kind of behind the scenes building out a legitimate property management company with systems and processes and in hiring new team members. We didn't want to bring it back in and fumble. We want to make sure that we brought it back in, we basically built our own best in class operation that we could do it better than anyone else. Whether it be for ourselves or current assets or new assets that we were buying. If we woke up one day and we ended up going crazy. We thought that we wanted to do a third-party management for other people that we would be best in class. I don't think that's going to happen. But that's what we've done over the last five or six months and that's actually side-tracked some of our acquisitions we've only bought two properties this year. We probably could have bought a lot more but anyway I guess long story short, James, is I'm somewhat envious of you guys in the multifamily space. Because there's a bar that set with property management companies and if one company is doing poorly you’ve got other options to go to and typically they kind of keep each other in line a lot of times. And I know that they’re still never going to treat your property like you would yourself personally. However, You've got options and things that might not be working with one company you know that you could probably actually go and get served correctly at another company. We just didn't have that option. We just didn’t have that option. This was the once and done. There were other companies out there but these are the best in class and I'm like, ‘If these are the best in class, we got to build our own. Because there are other options for us.’ That's what we did. We brought it back and so that just happened on November 1st. That’s when we actually truly brought everything that had migrated back in was November 1st. So as of the time of this recording, it was like six weeks ago. James:  Got it. Got it. So yeah, it's a different ballgame, right?  of course, it's going to slow down in terms of acquisitions because now you're also managing the property management. But I think overall, in the long run, it’s much better for you. Right? Kevin: Absolutely, at the end of the day the amazing strides that we've made just in the construction side of our business and the marketing side of our business as far as like sales are concerned…like we've done more in the past two months then was completed in the past year. I'm not even joking. It's been absolutely amazing. So, I'm excited. I’m like, ‘Hey if I'm going to screw up, I want it to be my fault. I don't want it to be someone else's fault that our properties aren't performing.’ I'm okay taking accountability if they're not performing if it's me that's running the ship or driving the ship, right? But if it's another company and they're doing a poor job and we can't control it. I've got issues with that. So, that's kind of where we're at. James:  And I also think that when the market turns people with their own vertical integration will have a lot more leverage in terms of control, right? I mean a lot of property management companies are doing a mediocre job right now but they escape because the markets are super strong right now. Kevin: That's right. The market props everything up. James:  When the market turns then we will know how good they are. Because now we have to be answerable to our investors and we have to go to third party. So, one other thing that I want to touch on about the way you do business a lot of times you raise money and not deal by deal but you use fund model. Can you explain what's a ‘fund model’? And why is that beneficial? Kevin: Yeah, to keep it somewhat simple… I mean, it's really not much different than your deal-specific syndications other than the fact that we've got multiple properties that we're putting underneath that fund umbrella versus just one individual property. So, an investor is going to get their investment diversified amongst multiple properties and possibly multiple different markets rather than just one. So, simply put that really is the only true difference between probably how our business operates and how your business operates. The reason that we decided to go that route happened about three years ago…We were going into the end of the year and we had just founded Sunrise Capital Investors. As like a formal company, rather than just me and buying parks on my own. And we had a pretty stout pipeline and a lot of deals kind of fell apart. And we were like, ‘Oh, we only have two deals now. They're going to either going to close January or February next year. This is due to individual deal-specific raises.’ That's fine. And then all sudden like within like two weeks somehow all these other deals came back to life and we all of a sudden had five deals that absolutely looked like they're going to close. We had like four to five money that went hard and anyway we're like, ‘Okay, well now we have five and they're all going to end up dropping like in the same like week or two. Logistically speaking, it'd be an absolute nightmare to try to do five deals specific syndications. Because of the paperwork and logistics behind it and then the legal costs associated with it and that just didn’t make any sense.’ They're going to close right at the same time.  I think there's more of a benefit for our investors to give them diversification amongst all five of these versus just one. You know, one individually. And so we didn't know what the feedback was going to be and we put it out there and it was well-received. So, it was great for us. It gave us a little bit more flexibility on the buying side. Gave them risk diversification amongst multiple different assets and markets and so it's been a win. So, we did really well with that. That was kind of our test fund and you're last, actually about eighteen months ago, we launched our second Fund. Which is a little bit larger fund twenty-million-dollar fund and it did the same thing. So you know, we're a little different, though.  A lot of funds… a lot of institutional funds will go out and they'll get really aggressive. They'll raise all the money. Let's say it's 100-million-dollar fund to go out and raise I'll spend all their time and energy raising 100 million dollars. And once they've got the commitments for, let's say, maybe 75% or maybe more than that. Then they'll actually start going to buy it. You know, once that money's there and the costs of capital is very high. We didn't want the money sitting around idle. And so, we just continued our building our pipeline and we would only bring money in tranches. So, we'd only bring enough in during that fundraising that we actually knew we're going to need or the next like two months to close deals. So, although it was an eighteen-month buying period over the last fund, we would raise it in tranches. Which meant our investor capitalism is sitting around idle, not collecting a return. We weren't occurring pref on money on millions of dollars that were sitting being around idle. And it just held us accountable and it held everyone accountable which I like. Our interests were very much aligned with one another. James:  So, you basically do capital calls whenever you need the money.  Kevin: That’s it. That's it. James:  These are good capital calls, not the other bad capital calls.  Kevin: Right. Exactly. Like the verbal soft commitments are there. And some of them might not come through but the majority of them do.  You know, I think about 5% drop out of folks. James:  So, you basically make a verbal commitment. And when you have a deal, you say now let's make it hard. Kevin: Yeah, absolutely and each one of these two funds that we started, we actually already had deals and contract going into them. So, it wasn't like we were raising a blind pool like, ‘Oh, here's what we're going to do. We're going to raise this much money, and then we're going to buy.’ It's like we got X amount of properties in contract right now. So, while there might be more properties in this fund, you can physically see and see the performers in each one of these. These are going to be properties that are in this fund. So, there's something tangible there. That's another thing so different about us and how we do these funds. We don't go into it blind. Where we're just raising money and then we're going to go do what we say we're going to do. We're actually doing it simultaneously but we've got deals coming in. We've got deals in contract money hard--- James: ‘Semi blind’ I would call it. Kevin: Call it ‘semi-blind.’ That's a perfect way to put it. It sounds like a rock band. James:  Right, right. Right. Alright, Kevin, can you give some advice to people who are trying to start up in this business in real estate or even in mobile home park? Kevin: Yeah. Yeah. Trying to get started up I'd say go try to mute a little bit of social media because everyone's on social media now, but I’d try to mute a little bit of that and go find the one individual girl or gal who is actually doing what you want to do. They can prove to you that they're doing what you want to do.  They're an actual GP. They're not they don't have five thousand units of very minimal shares as an LP and they're touting that. I know that's happening a lot out there. So, you know try to mute all that crap because I know it gives people anxiety. You know, like social media gives people anxiety because they see how everyone else is doing deals and ‘I’m like stuck here I can't get going.’ Just try to mute it out. Silence it and go find the James. Find guys like me.  We're very good with our time. We’re not going to just give everything away for free per se. We only have like so much time today but like find an authentic individual like us,  I don’t want to tout ourselves here, who will actually like give you some real advice that can give you some proper guidance or at least give you some nuggets get on your way and let all that other noise go. Because I think that that that that bottlenecks people a lot. That fear of missing out man. That anxiety creates just this internal turmoil of like, ‘I'm missing out’ and then like you get nothing done right. You’re like, ‘I'm going all these conferences and I'm reading all these books. I'm doing all these things.’ And you feel like a… James:  And you pay big money to some gurus out there. Kevin: Yeah and I think that a lot of folks’ mistake that with like productivity of …attending things like that. It's great. I do it all the time. You do it obviously. We're part of a mastermind together. But like you've actually got to like at some point get granular and you actually have to take some risk and take that leap. It's easier to do when you know someone like you or someone like me or there are other people like us. That one person who you can just kind of lean on and get some general advice from and get the real picture from as well. You know, what's real and what's not.  James:  Absolutely, absolutely. Kevin, why do you do what you do? Kevin: Why I do what I do? I really enjoy it as far as investing in real estate, I really enjoy it. I mean, I love the people I work with. I love our team here. I really enjoy being active and so everyone likes different parts of the deal like as far as what I do I'm not an Excel junkie. Not like my other partner he'll sit in from an Excel platform and run the model many different ways over like five hours. I want to shoot myself when I think of that. I'd rather be out in the field, I like executing on the plan. I like taking something from what it is today and actually seeing the end result of our hard work and effort over a period of six to twelve to eighteen, twenty-four months. And I also like seeing the smiles on the faces of residents. When we take something that's been blighted and actually make improvements to it. Especially folks who have lived there for many years. That's pretty rewarding to be seeing that kind of stuff. Especially, you get the one residence like, ‘God, I’ve been in for twenty years and this place over the last ten years was just scary and I didn't want my family to come over. Now, I have dreamt of the day that it will be the back to its former glory.’ And I like that kind of stuff. So, I like the lifestyle that that real estate provides, right? I get to spend a lot of time with my wife and my kids and friends and family and things like that. James:  Absolutely and was there any proud moment towards your real estate career that you can never forget? That will stay with you.  Is there one proud moment that you were like I’m so proud of myself. Kevin: Yeah, actually there is one. It was the very first mobile home park that we bought. If you got time, I'll tell the story. It's probably two- or three-minutes story but anyway, I'll try to keep it short. We were buying a very, very distressed park in Atlanta, Georgia. It was in a good little town but it was in the southern part of Atlanta. Which was got hit really hard with the recession and was slower to recover because there were a lot of the new developments that were out that way.  Anyway, we're buying this park that had been receivership for two years. It was fairly poor condition. Lots of squatters, all kinds of bad stuff happening there. The chief of police and the mayor's office were right across the street like a catty-corner. They had to drive past this place every day and we got it tied up and it was a small enough town and corporate town that we actually got a meeting with the mayor and this entire city council including the chief and everyone. And we went in there with his grand plan of how we're going to literally spend hundreds of thousands of dollars to clean this place up and to improve it and make it a proud part of their community.  And we gave this big sales pitch to the mayor's like this really tall guy with a bald head and the handlebar mustache. He is a really mean looking guy and this was in Georgia. He had like a rifle on the wall and a fox. He was a  very intimidating guy but he let us talk. Everyone's kind of looking like shaking their heads. I thought we were like getting their acceptance and he let us talk for fifteen minutes and then he looked at us and he said, ‘If you guys buy that park, you're wasting your money.  Get out of my town. I've been trying to shut that thing down for years now and I'm not going to stop until it's completely closed down. So get the hell out of here. Take your money somewhere else.’ So, we walked out of that room and we and I looked at my partner I said, ‘What do you think we should do?’ Because we weren't getting financing, we were paying all cash for this thing, too. Because it wasn't financialable. So, it was like basically all the money we had at that point. We bought it anyway. ‘So, let's buy it. I mean what are they going to do? Listen, let's just show them what we're going to do. I mean, how are they going to truly stop us, right? Let's do what We're going to do. We know we're going to clean the place up. He doesn't believe us but let's prove them wrong.’ We did that cleaned it up. We became really good friends with code enforcement officer that's kind of that was our like our foot in. We got her gift cards and made her like us and it was a very very open with our communication to her. So, if there was ever an issue, we addressed it right away.  Anyway, twelve months later I got a call from Mayor Bobby Carter's that his name and we got a call from him and I answered I didn’t know it him and he said, ‘This is a Mr. Bobby Carter.’ He has a southern accent. He said, ‘I just want to take a moment to apologize. I want to apologize for the way I treated you guys. I want to apologize for thinking that you wouldn't be able to execute on the beautiful plan that you have done over here.’ It was a long apology and he's like, ‘I just want to take a moment today. I've been meaning to call you over the last six months as I've seen progress being made but it's a year later and this place is great and actually, one of my staff members lives there.’ James:  He was holding it off until he had to tell you. Kevin: That was pretty cool. He literally wrote me a letter then he wrote a letter of recommendation to another Mayor who we were having an issue within another state in another town. Basically, saying like, ‘I thought mobile home parks were the problem. I thought this and the other and that's not the case. And these guys proved me wrong.’ And that's pretty cool. I'm pretty proud of that one. James:  Yeah. It's a big change especially with one of your first ones.  Kevin: He was the very first one. James:  You must have been really scared. I like how come the is not behind your back. Kevin: Well, we could lose that money either. I didn't have much at that point. In 2012, I was pretty broke back then. So, I had to make the money work. James:  That must be the fuel that launched your rocket and your motivation I guess. Kevin: Yeah, that's it. James:   So, why don't you tell our audience how to get a hold of you and your company? Kevin: Yeah, the best place to reach me personally is my website, Kevin Bob. You can find me on LinkedIn and Facebook as well. As far as our company if you want to learn what we're doing in the mobile home park space, you go to sunrisecapitalinvestors.com and get signed up there as well. We don't have an offering open today but get signed up. We have a secure portal and get updates from us when you know we have deals coming about and things of that nature. But other than I'm not too hard to track down. So, it’s pretty easy to find me on iTunes. I've got a couple of podcasts as we've mentioned earlier. You can find me in many different places. And now you can also find me on Jame’s show. James:  Yeah. So, thanks for coming. It was an awesome podcast. It was a lot of value that you gave us and I'm happy to have you on my show. Kevin: Thank you. Thanks for having me, James. And it's been a pleasure knowing you. I appreciate all you do with the podcast. I know how much work it is to put these things out. So, thank you for taking the time to get back to everyone. So much appreciated.  

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

What does the band For King and Country have in common with the Christian vocalist Rebecca St. James? They are all Helen Smallbone’s children, and she’s with us today on Pardon the Mess. Helen Smallbone and her husband moved from Australia to Nashville with their seven children, hoping for a new beginning after literally losing everything financially. Once they arrived in the US, their family was forced to start over in all respects, working together to put food on the table and rebuild their lives from the ground up. All of the Smallbone children are grown now, giving Helen a wonderful perspective on raising kids. I loved her thoughts on the importance of fixing bad attitudes in children and not just focusing on their behavior. She also had a great word on the priority of building lasting relationships with our kids, especially when it’s so tempting to focus on the temporary things that can easily fill our days. And her thoughts on taking a parental time-out to pray for the Lord’s guidance . . . well, that was definitely a word I needed to hear. Helen Smallbone is another fun interview from our Nashville series, and I can’t wait for you to hear her great parenting wisdom! Get your Advent devo today: https://raisedonors.com/christianparenting/advent-podcast

James: Hey audience, this is James Kandasamy from Achieve Wealth Podcast. Achieve Wealth Podcast, talks to and interviews, a lot of commercial real estate operators and focusing on a lot of our discussion about value-add real estate investing. Today, I have Neal Bower. Neal Bower is from Grow Capitas Commercial Real Estate Investment Company. He negotiates [00:32unintelligible] and acquires commercial real estate properties across the US. He has almost 400 investors right now. A total portfolio size of 1800 units, in which, like around 1400 is multifamily and another 400 student housing. And I would like to welcome, Neal. Hey, Neal, welcome to the show. Neal: Thanks for having me on the show. James. Very excited to be here. James: Good. So, Neil, he has been on a lot of podcasts and you know, a lot of discussion goes around the data collection and experiments that you do in your asset management and in terms of your operation and just finding the right cities, right? [01:14unintelligible] and also operation leasing. So there's a lot of data that's being collected. Right. So we can go to that in a short while. My question to you, Neal, in the first place, why did you start collecting all this data? Neal: Well, I started collecting the data because I screwed up big time. So I started my real estate career in reverse. I mean, most people will start with a single family rental, right? I was a technologist and I got a chance to actually build campuses from scratch. My boss, you know, helped me. He was the CEO of the company, I was the chief operations officer. This was a technology education company and we were growing so much that we decided we were not going to rent offices from somebody, we would build our own campuses. And so that project of building that campus was insanely complicated because, I mean, I hadn't even built a single-family home. Here I am, building a 27,000 square foot campus that's mixed use. It's got classrooms, administrative areas, and restrooms and I had to learn everything from, you know, egress and fire codes. And you know, doors that lock when there's a fire and you know, ceiling heights, air conditioning, cooling, heating, and 500 other things related to that. So it was a trial by fire. I learned very quickly and did that in 2006 and so 2003 then again in 2006 and got very confident about real estate. I think in my mind, I got overconfident and so I went and bought 10 single family homes in California, I timed them correctly due to no credit of my own. It was just, you know, 2008, 2009 and got crazy confidence. I thought I knew it all. I mean that the fact was I knew nothing and I didn't understand that. And so I went to Chicago and bought 10 triplexes and I screwed up really big time. I made massive mistakes. None of those 10 properties really ever made any money and I realized just how little I knew and I start because of that disaster, which basically was a million and a half that got tied up for five years with no returns in the middle of one of the greatest, you know, gain markets of all time, I realized that I needed to learn more. So I started collecting data about why those units never made any money. And what it came down to is that I was spending too much time looking at the rents and looking at the units themselves and not spending enough time looking at the area quality. The quality of the tenant base, the demographics of the area, the income levels, job road levels, the population growth. All of these demographics are mega factors that affect every single thing that we do. And they affect them in a way that's very difficult for us to ascertain. It's almost like you're being carried along on a boat that's going somewhere at 50 miles an hour, but you cannot see outside the boat, right? That is a situation that is the reality of what is happening. And so I started doing a lot of research and data collection. And the more I collected data, the more I realize how powerful it was if I could go beyond data collection to doing data analysis and applying the analysis from one city to another, applying these analyses from one neighborhood to another, from one state to another. And the more I did it, the better I got at it. And so I decided to do more and more and more of it. And that's how my journey started. James: Yeah. I think demographic analysis has been missed by a lot of gurus out there who are teaching real estate investing, especially even on the multifamily side, right? People are just looking at numbers right now and I think commercial real estate consists of two things and what is the user and the space, right? So and we are missing out the demographic side of it, which shows that the demand and I think that's what you're talking about in terms of demographic and also what is the submarket demand, right? What is changing over there? How is the crime rate, who is staying there, what is the renter profile, right? What's the percentage of renters versus owners? It's just not many people know how to analyze that and that's a very important factor. Neal: They don't even look at it. I mean, keep in mind a neighborhood that has 30% homeowners and 70% renters is very different. Both good and bad from one that has 70% homeowners, 30% renters, right? So these things matter so much that if you ignore them, then if you think that you're in control, that is an illusion. That is an absolute illusion because those things are really driving either your profit or your lack thereof. That's really what's driving things, right? And so one example is, I mean, I teach a course, it's called Real Focus. It's about the power of demographics and how to apply them to create profit. And I teach it Live to about 4,000 people a year. And I teach it online, to another 4,000 people so there are about 8,000 people that take that course. And one of the examples that I like to give people is this, one of the most common statements, in fact, it might be the most common statement of all in real estate is that real estate is local, right? So you hear that all the time, real estate is local. Well, actually real estate is not local. James, real estate is hyper-local. So one of the cities that I use in my examples when I'm doing demographics labs for students is I talk about Columbus, Ohio. Columbus is a good city to invest in, right? So doing really well, population growth, job growth, income growth, all kinds of good things are happening there. So in Columbus, there is a small neighborhood that has an average median household income of $183,000 right? That is not an A that is like an A++. So you couldn't really go much higher than that unless you're in the San Francisco Bay area, you couldn't get much higher than 183,000, no. Well, the point is that 500 yards away from this neighborhood is another neighborhood where the median household income is not 183,000 it's not even 18,000, it's 6,000. 500 yards between the richest neighborhood in Columbus, I think it's the second richest actually, and the poorest neighborhood in Columbus, that's how hyperlocal real estate is. And if you don't understand how much that impacts you, obviously in this $6,000 income area, that's a condemned area, no one there pays any rent. Everyone lives there for free in abandoned buildings to this underneath $83,000 area where there's absolutely no cash flow, right? Because the income levels there are very high, there's really nothing available for sale. Everything's taken, everyone there is rich, you know, single family homes that you know, probably are like 1 million bucks. The differences there are staggering. And that 500 yards shows you how much you're missing if you don't understand how demographics drive everything. James: So I mean, I definitely agree with you because I've seen deals in the hottest market in the country and people just talk about the city, right? But they don't talk about the submarket itself or the particular location, right? So how would you go about defining the boundaries of where you want to define the demand for a specific deal? Neal: You know, that's a very interesting question and what you're really talking about is, you know, where does the neighborhood stop? Where does the neighborhood end? So you could say something like half a mile from me is a Whole Foods and next to it is a Starbucks, therefore I'm in the best area. But the reality of the situation is half a mile is also a very long distance. It's a very short distance and it's a very long distance. Remember 183,000 to 6,000, right? That was half a mile. So what really could be the case? Is that right where that Whole Foods is, a hundred yards beyond that, there's a street, maybe it's a railway line, maybe it's a freeway, maybe it's just a regular street and everything beyond that is a different neighborhood, right? Different quality of neighborhood. So you can't really compare this neighborhood to the Whole Foods and Starbucks side. And maybe, just maybe that neighborhood is only half a mile wide and right where your property is, that street actually is another neighborhood, even lower class. So it's very common for people to say half a mile from me is Whole Foods. But actually, they are not in the Whole Foods neighborhood. They're not even in the neighborhood next to Whole Foods, which is lower grade, they're in a third lower neighborhood themselves, like two grades lower now. And that's what everyone has to figure out if you're looking to do syndications or if you're looking to invest in projects. How do you figure these things out there? There are many ways to figure them out, to figure out where neighborhoods start and where neighborhoods end. I use paid tools, so we'll talk about those and I'll also give you some free tools. Neighborhood Scout is the best neighborhood tool I've seen. I've seen many of them, but neighborhoodscout.com allows me to do two things. It allows me to basically plug in an address so it could be a 200 unit property, I plug in the address, I basically take, pull out a report and it shows me the neighborhood and it also shows me the micro-neighborhood. Now there's a difference between those two, right? The neighborhood itself is very powerful because it'll tell, you know, income levels, crime levels, you know, degree-granting levels, is it walkable? It'll tell you an insanely large amount of extremely useful and immediately actionable information. But the micro-neighborhood part is even more powerful. So you'll see a map and on the map, you'll see the neighborhood, right? You can clearly see what roads are part of this neighborhood, where does the neighborhood start, where does it end? Does it go all the way to that Starbucks, does it not go all the way? But then, inside of that map, you'll see a yellow dotted line, which will show you a micro-neighborhood, and the property that you just plugged in, the address is always inside that yellow. And what neighborhood scout is trying to tell you is, okay, the greater neighborhood, maybe it's a mile by a mile, right? That's the typical size for a neighborhood. You know, one mile by one mile is this, and then your property is part of a micro-neighborhood inside of that. And how does it figure that out? What it does is, it looks at your property, let's say it's a single family home and it looks at the home opposite it and says, are these comparable? Okay, yes, they are. Then it goes another block, are these comparable? Yes. Are these comparable? Yes. Are these comparable? No. This is a completely different kind of unit. So it says, okay, those units are really not inside your micro-neighborhood. Something changes there. Something's different. Maybe they're really ghetto or maybe they're really brand new. And so the neighborhood quality changes right at this line. So that dotted yellow line is very important to me because the moment I see that dotted yellow line, I put it on one of my monitors and on the second monitor, I bring up Google and I go switch into street view and I drive around the edges of that yellow dotted line because I'm driving around the outside edges of the neighborhood that I'm investing in. So that gives me a feeling about that neighborhood. And then I'd drive the insights of the neighborhood, it's a micro-neighborhood, so you can on Google, I can basically drive it in about 15-20 minutes. It gives me a really good idea of what's going on in that neighborhood. Obviously, boots on the ground are better, I get that. But at this point, I've just received this property and I want to make a decision on whether I even want to, you know, spend any time on the property and this gives me that information. And Neighborhood Scout is very inexpensive. I think you can even get like Neighborhood Scout for 39 bucks a month and you get 10 reports out of that. So essentially for $4, less than a cup of coffee at Starbucks, you're going to learn an astonishing amount about this neighborhood. James: But I mean, end of the day, we want to get rent comps and so let's say the property they're looking at is within that yellow dotted line but there's not a rent comp and now you have to go out of that yellow dotted line, you would you look at your rent comp, how would you compare the rent comp that point of time? Because it's two different demographics. Neal: It definitely is, right? So there's an art and a science to the rent comps. Some of your rent comps will be inside the dotted line so there'll be good and some of them will be outside the dotted line. I think it's still useful because it's telling you where's your micro-neighborhood and where's your neighborhood? But normally you'll find that the vast majority of the time, the comps from the broker are not inside the yellow line and they're not inside the neighborhood. James: They are in one-mile circle radius. Neal: Exactly. And so people are like, well this is only a mile away; are you kidding me? I mean, in San Jose we have areas where the average home value is $1 million and half a mile away, the average home value is $400,000 right? And those are bad areas like really high crime areas. So everything can change in a mile. And I think what this neighborhood scout does is it allows you to basically firstly figure out if you should even be using that rent comp, right? So it might only be three-quarters of a mile away but Neighborhoods Scout shows you that your neighborhood, your property, the one that you're looking at, is actually just at the end of that neighborhood. So that neighborhood is ending right next to your property and then this is three-quarters of a mile away in a completely different sort of neighborhoods so you shouldn't go in that direction looking at rent comps. But another rent comp that the broker provides, it may not be in the neighborhood, but it's on the edge of that neighborhood, it's still only three-quarters of a mile away. But that one makes more sense because your neighborhood ends right next to that comp. So that comp from the broker actually makes more sense. I'm not saying that every comp from a broker is fictional, that's not true. A lot of brokers work hard on the comps. All I'm telling you is that out of five comps that a broker will give you, truly two or three are your neighborhood's comps. And this tool will show you which ones to pick. And then there's going to be a couple that are going to be, geographically speaking, still be in that one-mile radius, but they have nothing to do with your neighborhood and that this tool will allow you to basically ignore them. And then on top of that, obviously there's rent comp tools, there's you know, tools like Rentometer and a number of others. That four a five or 10 you know, dollar report. There's another one, for the moment, you know, also starts with the word rent. There are these tools where you paid $14. I remember paying $14 for this report, rent something and it gives me a report that is specifically about a single family and multifamily rents, right? Nothing to do with anything else, not demographics, simply about rents. And it gives me all kinds of rent criteria, you know, it gives me occupancy levels. Now I'm paying another 14 bucks and I've got rental information for my area, right? It's not giving me comps, it's basically explaining the per square foot rent. It's explaining how many units in my neighborhoods are one bed, two bed, three bed, those sorts of things so that I understand what the unit mix in that area is and if it's a good unit mix. So now I've spent $18 but I've gotten a huge amount of information. And what I find is people are unwilling to spend these $18 right? And syndicators are unwilling to spend these $18 and here's my message to you, right? As a syndicator, you only make money if your clients make money because they usually have a pref, right? So they're going to make money first and then you have to make money. You realize that on a 300 unit property if it does well, you can make $1 million or even 2 million and if it does really, really poorly, you make $0 million so you're paid less than the janitor that cleans that property. And it might be that the only difference and I know this is best case scenario, but it might be that the only difference between that 2 million bucks and not even making the janitor's salary, it might be those $18. Because you forgot that part. You look at everything else in the property and you fell in love with it and it had a beautiful pool and it had a beautiful clubhouse and it had a beautiful this and a beautiful that but you forgot to look at the demographics. Because one of the things I can tell you is some of the worst properties have the best looking clubhouses, right? So don't look at a damn clubhouse because they made it that good looking because they want to sell the fricking property to you and get out. James: Yeah, yeah, yeah. I mean demographic analysis and in some markets like what we're discussing right now, it's very, very micro. And how do you really decide the deal has an upside in terms of rent, that's why we look for in a value-add deal. Unless you're not buying value-add deal, you just want cash flow. Neal: Well, I think more and more of those deals, I mean more and more of the value adds are becoming cashflow. I mean, let's be honest here, James, nobody that I know of, no syndicator that I know of is able to drive up rents as much today as they were two years ago and certainly not as much as they were four years ago. So I think that true value add is becoming less and less available. Even the deals that are a full value add where we say, okay, we're upgrading 80% of the units, I get that, that technically speaking, if you're upgrading 80% of the units, that's a full value add. But I would challenge whether 80% of those units would receive $150-200 rent bumps. Some will, some won't. I mean the market is changing, the environment is changing. There's only a certain number of people in that neighborhood that can afford to pay that higher rent. And as you rehab more and more and more of the properties in that neighborhood, it becomes more and more and more difficult to achieve those rent bumps. So I think more and more people are doing light value add. At least that's where I'm seeing the industry moving to. James: Oh No. Even myself, I moved from deep value add two years ago to lighter. I mean, I still do value add, but it's no more the deep value add I used to do and just because I'm doing more agency loan nowadays, no more bridge loans19:47inaudible] Neal: I think that's really wise because we have to be cognizant of where we are in the cycle. And so I think you're doing the right approach because a lot of these deeper value add projects, there's another name for them and that is they're higher risk. James: And you also pay a premium for it, right? Neal: Yeah. Yep. Absolutely. James: Nowadays, the sellers and brokers, you know, you're basically overbidding the price up and you're basically taking the value away by paying more. Neal: Unfortunately that's the case. I mean, our company right now has three rules. Number one, everyone is overpaying. Number two, everything we buy, we've overpaid. And number three, if you don't find new ways of adding value to the property after we buy it, we weren't at our performance. These are our three fundamental rules today in everything that we do. And none of these rules existed two years ago. James: Got it. So coming back to the submarket analysis because I think you have talked about a lot of CT level analysis in lots of other podcasts so I don't want to repeat that again here. Coming to sub-market analysis, so let's say you're trying to prospect a market, right? So let's say I know you like Boise, Idaho, right? That's the top market that is. So let's say now you have Boise, Idaho, how do you go about prospecting within this city, right? How do you look at whether the deal, because the cap rate in the southern part of the city may be different in a certain part of the city, right? So how do you go about prospecting or do you just get the deal and start going? Neal: The true answer is that you know, several years ago I didn't have the kind of broker and partner operator relationships that I have today. My initial approach was to use a tool like city-data. I use a number of different tools, but neighborhood scout is my favorite, neighborhood level tool, city data, plus local market monitor, plus housing alerts, these three are my favorite city level tools. And then, of course, there's Costar. Costar is not just a demographics tool, obviously. Costar has a huge number of other benefits. The biggest benefit of Costar is supply. It understands incoming supply in the market, which as far as I know, no other demographic tools understand. Simply because Costar has these 50 Prius cars that drive around 50 US Metros on a daily basis trying to figure out all new construction that's going on and totaling it up and trying to figure out if demand is in excess of supply. And in many great neighborhoods, really good neighborhoods, demand is often not in excess of supply.That's because the neighborhood is so great that people are building 3000 units in a two-mile radius of you, which means that everything might be hunky dory now, but two years from now you'll be in trouble. So I don't have a cheap answer to give you when it comes to neighborhoods supply levels, really, Costar is the best option to look at supply and make sure that you don't end up in a market where you'll have 3000 brand new units, you know, delivering and they'll have, you know, two months off as concessions and basically tank your rents for a year. So that's my feedback on supply. Now away from supply, looking at demographic trends, you can do that analysis on a tool called city-data.com. So when I look at city-data, there's a map on city-data so you plug in the city. So it could be Houston, could be Columbus, could be whatever city you're in; it works better on midsize and large-sized cities. Doesn't work well on like a really teeny tiny city like Saint George. You're not going to get as much value out of that too. So let's say you're in Houston, right? So go look at, you know, scroll down, you'll see this very nice blue colored map of Houston and you notice something very unique. This is something I haven't seen in any free tools. That map of Houston is already broken up into bits. And you'll notice that some of the bits are really tiny, like half a mile by half a mile and some of the bits are big, two miles by two miles, three miles by three miles. And what city data is telling you is that that tiny little bit, everything inside that resembled everything else inside there, but that big one that's next to it, the two mile by two mile, once again, the same principle applied, everything inside of that two mile radius resembled everything else. That's why some of these neighborhoods are tiny, some are mid-size, some are large size. So what you're really looking at in that map are the neighborhoods in that particular city. Right? And if you click on any one of those little tiles, a box will pop up and that box will give you information specifically about that neighborhood. And there are five metrics in that box that I like to use. Now keep in mind if you pay for neighborhood scout for that particular address, you'll see more information than this, but obviously you're paying for that. If you want something for free here it is. That box, the first thing we want to see in that box is the income level in that micro-neighborhood, remember it might be like 400 yards by 400 yards. You want the income level, the median household income level in that neighborhood, you want it to be above $40,000, 38 is still okay in some of the Midwest states, but what I find is when you're down to 35 it doesn't matter where in the US you are, you're going to have delinquency trouble. So the median household income of 38,000 is the minimum acceptable level for multifamily projects. Obviously, this number has to be higher if you happen to be in San Francisco, it has to be higher if you're in New York. So I'm going to basically say the rule doesn't, that 38K number is really for markets that cashflow, right? So Texas markets, Florida markets, you know, maybe not Miami, but the rest of the Florida markets, that cashflow, maybe not central Austin. So understand what I mean by cashflowing markets. Here's what you'll see at 38K; when that number, the median household income in that box, when it starts going below 38 K, your delinquency levels start rising. And the true killer of profit is not occupancy. The true killer of profit is churn. And churn is tied to delinquency. Delinquent tenants, some of them do care about their credit, and so they just simply move out. They just leave a key and move out and they basically say, yep, you know, I'm going to skip and let's see if this guy's going to chase me. Because they know 90% of the time, it's not worth your while to chase them and try and get that money. You just move on. You rent out your unit, you move on with your life. And these skips and the delinquency connected with them, the repainting, the time that it takes, the marketing costs, the effort, the people time, kills your profit. And what I found is by the time you dropped from $38,000 in median household income to 30, the property and the project, for the most part, has become viable. I do not know of any syndicators that can make a profit in a neighborhood that is under $30,000. I've made that mistake myself. I haven't been able to make money. So to me, that first number that is an absolute is, go into a neighborhood that has the income to support what you are trying to do. Keep in mind, you're trying to raise rents, right? So even 38 is kind of borderline, right? I tend to basically use 40,000 as my minimum number. I have properties that are at 42 44 46; if you're in the fifties you're doing really well. If you're in the 60s then your property is getting closer to a 'B' and by the time it hits $70,000, you are in a 'B' area. So a 'C' area, one of the definitions, my favorite definition of 'C' area is 40 to 70,000 income, right? And a 'D' area is $30,000 and below. So 'C' minus is 40 to 30. And obviously, these are metrics I made up myself. You could successfully come to me and argue, no. In my area a C minus is not 40 to 30, it's 35 to 25 I'll just say, okay, that's fine. These are rules of thumbs that appear to work in the vast majority of the United States that people are investing. It may not work in your area, no argument, but I think that within the bounds of them being rules of thumbs, they do work really well because they allow me to understand the quality of an area. James: Got it. Neal: There are states that have lower delinquency. Utah for example, for cultural reasons, you can go a little bit lower than that simply because 10% of their income is going to the church, right? Everybody in Utah, very religious people, they contribute 10% of the church, which means that when they do get in trouble the church helps them out, right? So many times in Utah you can have lower delinquency even in markets that are under 35K. So that's a cultural issue, a cultural benefit that they have, but it doesn't necessarily apply to most parts of the US. So that's the first thing that comes up in that box. Remember, we're in city-data, we're looking at the blue map. We're looking at the tiles and we're clicking on them in a black box comes up. Well, the first thing there was income. The second thing that comes up on that box is the poverty level, right? It's very much tied back to the income. And poverty level, you want to be below 15% as much as possible. If you can be below 10%, you're going to do really well, but 15% I think is acceptable. And if you don't mind taking more risk, if you're in a noose indicator and you really need to get going, then maybe 20, but I can tell you if that number is 30, you can't make money. It doesn't matter how high the rents are. It doesn't matter how many units have been bumped up by the previous guy and they have $200 in rent bumps and 300 and all that wonderful stuff, it doesn't matter. At 30% poverty levels, you cannot get 12 consecutive months of rent from your tenants. James: So do recommend, I mean, I know that's the job of the active sponsor when they find deals, right? So even the passive investors should go and look at deals... Neal: Why not? Everything I told you, if you, you know, take this podcast and it's going to be on James' website, you can go to Florida or whenever the heck you feel like. Right? So it shouldn't take you as a passive investor more than 10 minutes, the rule still applies. And keep in mind that a lot of class 'C's are going to be borderline on this so don't expect that good syndicators are really buying properties at 5% poverty levels. 5% is not a good deal; at 5%, that's a class A area. And your syndicators not going to make you any money, so there's no problem with it being borderline. You just don't want it to be too far from these numbers that I'm giving. James: Correct. Correct. So let's say you get a deal today on the neighborhood that meets all your criteria, right? Poverty level, household income and all that, so how would you go about underwriting that deal? What's the first thing that you will look at? Neal: Well, I look at the numbers, the same demographics numbers to determine what my delinquency numbers are going to be. Because I find that I can raise a property's occupancy so there are certain levers that I have that are typical syndicator doesn't have. Syndicators don't have marketing teams, right? Syndicators basically have a property manager. That property manager might be good at marketing or bad at marketing. They're typically bad but they're never excellent, right? So we basically decided early on that that extra value add that we have to add in that no one else is adding in, is marketing. And by marketing, I don't mean investor marketing, I mean tenant marketing. So for every property that we have, we're actually adding more leads on top of what the property manager is generating. For some properties, it's 30% more than they're generating; in other properties, it's three times more than they're generating. So they're generating a thousand leads a year, we're generating 3000 leads a year and giving those leads to them. So I can basically move occupancy numbers up, you know, and I'm very confident about those. So I go back to delinquency. So I look at the delinquency of that particular area. Obviously, Costar gives you delinquency numbers, so that's very good, useful information to have for that particular neighborhood. The other thing that I like to do is, and this is not always available, is you can get bank statements from friendly sellers. Not every seller gives it to you, but some do. And one of the nice things about the bank statements is that some property managers, previous property managers have basically put all the money in like in one check. But most of them actually put the money in like every few days. So they collect the checks and then they go to the bank every day or every other day and they put the checks in. So to understand what the quality of the tenant basis and what they're capable of absorbing in terms of rent hikes, simply look at the checks to see how much of the money is coming in in the first five days, how much of it is coming in the next five days, how much of it is coming in the five days after that? Then the five days after that, then the five days after that. They might be saying that my delinquency rate is 2% but what if their delinquency rate was 25% on the 15th of the month? Well, that area, that kind of area where you still have 25 30% of the rent hasn't come in on the 15th, you have to be careful about not being over bullish on how much you can really raise the rents. There's a limit in that market, right? It may not be $200, it might be $120 that you can raise. And accordingly, you want to also cut down on your rehab budget. Because your rehab budget can be 6,000, it can be 8,000 give me 12,000 but in an area where you know, overall income levels are low, let's say 38,000, and you can see that 20 30% of their tenants don't even pay until the 15th, I'm not sure there's any benefit to doing a $12,000 per unit rehab. I'm not even sure you want to do an $8,000 per unit rehab. I think six or four might be better. Rehabbing does have benefits. The velocity at which your lease increases tenants, like the newer units, but beyond a certain level, it's not that they don't like the units, of course, they love it, they're just not able to pay for it. And when you don't want to end up in a situation where the tenants, all of your new tenants that have come in, those are the guys that are becoming delinquent because really their capability was to get $850 a month units, but they're all in the thousand dollar upgraded units. And so now, all of your upgraded units are the ones that have very high delinquency so when I'm underwriting, those are the sort of things I'm looking at. James: Got it. Got it. Yeah, it's very interesting to see delinquency and you say Costar has the delinquency data? Neal: Costar has neighborhood level delinquency data. Yeah, some market levels. So you can basically go in. That very long report, that's like 86 pages, it has averaged delinquency for a particular market. I'm not sure how they get it. No, I have no idea. But what's nice is they also have expense data, right? So they have expense data. Obviously, you talk to property managers about expense data as well but Costar gives you, you know, kind of the average expense for the submarket, the average payroll for that particular submarket. I find that people trying to beat the average payroll by 20%, it's wishful thinking. James: Yeah. How do you differentiate delinquency between the property management's skill versus real delinquency for the area? Because it could be just the property managers are not doing a good job, right? Neal: I think so. So one of the services that we provide on in properties that have higher delinquency, sometimes we have operating partners that don't want to do it but most of the time we do it is we make my staff, our staff, not the property management staff, will make delinquency calls on the sixth or seven. So we don't do it all the time, we don't want to do it. But let's say the property has consistent delinquency problems, consistent; one of the ways to figure out the answer to your question is, is this a tenant problem? Is this a PM problem? Hire somebody, give them a script, have them call every tenant that is not showing as having paid by the sixth of the month, make three phone calls, actually make two phone calls and two text messages on the sixth and the seventh. Repeat the process on the 10th and the 11th. If you do that for three straight months and your delinquency is still high, it's not a property manager problem. James: Well, you find that out after the fact, after you bought the property. Is there any way to find before you buy? Neal: Well, other than the demographics information I gave you? No, not really because the truth is that it could still be a tenant-based problem. But it could be that the previous owner was self-managing the property and let a bunch of deadbeats that should not have been in there. That in my mind is a management issue but not a property manager issue and that's also an opportunity. You bought this property because you think rents can be at 1100 with low delinquency. Right now, they're at 900 with high delinquency. Maybe the guy just let in a bunch of deadbeats so you can ask for credit reports of the last 25 people that have been put in, what was the actual credit report? Some owners will give it to you, some won't. If they're not giving it to you, you have to question yourself why that is the case? Was he just basically trying to just fill up the property? And, in that case, it's not such a bad thing. You just have to know that when you go in, you're going to have a lot of evictions to deal with. But in that case, it's not a tenant base problem. It's not a property management problem. It's a previous owner problem and you are going to benefit once you churn through all those bad tenants, you're going to have four years of good tenants in your property so you can still hit your performer. You just need more maintenance budget, you need more operating budget and you need your investors to be a little bit more patients because your first 12 months are going to be very rocky. James: Yeah, absolutely. I'm sure you've seen a lot of financials when you're underwriting a deal, right? So is there any dirty secrets by sellers that you have found from the financials or when you walk the unit and see, aah, they are tweaking these numbers here to make the property more appealing to the buyer? Neal: I mean, everybody has their own stories about these financials, right? So the one that I find that is fairly common is that you're going into a property, you want to be able to tell during your due diligence, don't do this during their contract negotiation. But during your due diligence, you basically call them and say, hey, we'd like to talk to a bunch of your tenants. And you randomly, always pick a bunch of tenants to talk with and make sure that there's nothing shady about their rent. So you have a tenant that's at $900 and everybody else is at 800, let's pick that tenant and let's talk with him. Let's make sure that there isn't some side deal where that tenant actually is paying 900 bucks and is being reimbursed $200 in cash. James: Has that happened? Neal: that has happened; not in a 250 unit type property, but in a 70/80 unit property. Basically, what had happened was all the new tenants that had started in the last four months, were all receiving cash back, right? I think there were 12 tenants and between them, $2,400 a month of artificial rents were created, which is $2,400 a month is $30,000 a year, $30,000 a year at six cap is basically $480,000. So that $480,000 for the seller was created by him negotiating direct deals with those 10 people and giving them $200 kickbacks. So his cost was 2,400 a month for three months and his profit was 500. James: Wow. I never heard that. That's really sneaky. Neal: Very sneaky. But you think about how much of an incentive that guy has to do it, right? Technically it's not illegal, by the way. James: It's not illegal? Neal: It's not illegal. He has to disclose it to you that there's a side arrangement, but you can't actually send somebody to jail for this. I mean, you can't sue them and win, in my opinion. James: You can't say it's a fraud? Neal: I think you can. I think that that's going to be fought over in court. In my mind, it's something that you should basically, in due diligence, if you look at higher numbers, make sure you talk with those tenants. It doesn't take that much time; during due diligence, you're at the property for multiple days. Right? Why not have conversations with four or five people and make sure everything's above board. Say, hey, we were looking to buy this property and just checking your rental contract and it shows $900 a month, is that correct? And if there's anything shady, that guy is not going to fall on his sword for the previous seller. James: Yeah. I mean, I've done all the due diligence for my properties. I never talked to the tenants. Do they allow to talk to the tenants when you are doing? Neal: Usually they do. I mean, obviously, they won't allow you to talk to a hundred tenants, but if you randomly pick three or four, they do. It's just not something that people ask for commonly, but there's no reason for them to have an objection. So that's one that I've seen commonly. The other one that I've seen commonly is that everything that you're looking at is actually coming out of the property management software, not from the bank statements. So you look at the property management software and it says $111,000 in monthly rents. But when you look in the bank, it's just 88. So what they're doing is basically they're not allocating for bad debt properly. And they're saying, oh, I'm sorry, this the way that our property management, Blah Blah Blah Blah Blah software works. What they're trying to basically say is, Oh, I'm sorry you caught us, but we're going to try and explain it away as some idiosyncrasy of the way our property management software works. But you know, yeah, we didn't actually make 111 that month, we only made 88,000. So I think reconciling bank statements to what the property management software says, is very useful. They may not be trying to screw you over or anything so the difference may not be 88 to 111; it might be 88 to 91 but it still shows delinquency in that property. James: So have you had any of these cases and you backed out of the contract? Neal: Yeah, I have. James: Okay. It's also tricky nowadays, in the hot market nowadays because people are paying day 1, hot money. Neal: It's very difficult. That's what scares me a lot. I mean, you pay hard money and then you find something where they've tricked you. The only way to get that money back is to sue them. James: Correct. Because people are paying like in a hot market... Neal: Even $200,000. I mean, it's ridiculous. I mean, that tells me that something is wrong. In my mind, there is no conceivable reason why anyone should pay $200,000 hard on day one. This is all frenzy that has been created by brokers and it's a sign of an unbalanced market. There is no reason why that should ever happen. James: Yeah. Yeah. I mean they do have something called early access agreement where you can go and see the rent roll and all that, but you can do a thorough due diligence. Some sellers allow it, but nowadays, even that nowadays they don't allow. Neal: Well, in my mind, James, I mean, if that is their intent, why don't they just say, okay, well we'll go hard on day five. When people want you to go hard on day one, there's no way to tell if they are doing it because they are unethical or simply because they weren't, you know, somebody who has enough skin in the game and enough confidence in his ability to close. The majority of the time, the reason is perfectly legitimate that they want you to close and so they want you to go hard on day one but I don't think that that's the reason 100% of the time or anywhere close to 100% of the time. James: Awesome. Yeah. It's a bit scary when you do day one hot money. So coming back to value-add, I presume all the deals that you're doing is value-add deals, is that right? Not a deep value-add or not completely. Neal: I have some deep value-adds but a lot of them are, you know, standard $6,500 type value-adds. James: So what is the most valuable value-adds that you see? Neal: Oh, it's easy. The single most valuable value-add are USB ports. One in the kitchen and one in the bedroom. So of all value adds, nothing comes close to that. James: Really, especially just because everybody needs a USB. Neal: Because everybody that comes in comments on it, right? So everybody that comes in comments on it and this is one of those universal things where men and women comment on it equally. And the better value add is, you know, these days, the wall plates, right? You get the wall plates with a two USB ports, correct? So if you wanted to really wow people, the new USB Dash C standard, pay $4 extra for one that has two standard USB ports, but the one in the middle is that new USB Dash C. So I think those are incredible, incredible value adds; they give you a hundred X return. James: Awesome. Awesome answer. That's absolutely helpful. So now let's go to a bit more personal side of questions, right? So why do you do what you do? Neal: The truth is I fell into it, right? So this hasn't been a conscious thing. I did technology. I started doing real estate because I was paying 50% in tax. So basically tax avoidance was the primary reason why I fell into real estate. But I think the bigger thing was that on the technology side, when I had W2 income, you know, many years I made more money than I made in real estate but I always felt nervous. It's like when you have $150,000 salary, you're always nervous about your position. Like, I always have to perform, I can never have a bad year, right? Because they might start thinking, well, we could hire two guys for 175 k each and get rid of this guy, Neil. So there was always that nervousness about not being in control of my destiny. And I don't feel that now. It doesn't matter if I have a bad year and I only make a hundred grand, but I still have control of my destiny and always make it up next year. So to me, I think it was less about ownership and more of our control over my destiny. James: Okay. But you will keep on buying deals? I mean, is that what your plan is? I mean, where do you want to stop? So what drives you to bite the next deal Neal: In my mind, what drives me is that I still feel like I'm creating value in each additional project. I'm finding some way to make those projects work. I'm contributing and I'm making investors happy and also, you know, increasing my own net worth. Will I keep doing it? No. I think that truth be told, I mean, I admire people like JC Castille who just love it so much. He says, Neil, I'm going to be doing this for 30 years. And I said, if I know one thing for sure, I mean you're very sure about what you just said JC, I met him recently. I know for sure I won't be doing this in 30 years and I know for sure I may not even be doing it in 10 years. I mean, to me, I think that life is an evolution and I don't mind telling my investors, look, I'm going to do this for five to 10 years and then I'd like to do something else because my career is very diverse. I've done solar education. I've done basically businesses around nursing. I've done high technology; like three different kinds of high technology, staffing, consulting, education services. I've even been a primary investor in a gas station. I'm an entrepreneur and what that means is at some point, I want to create the systems and processes so other people who are smarter than me can continue running the business forward. And so my most coveted title is not founder and it's not CEO, it is chairman. And so the longterm goal is that at some point, I want to switch to doing that. But I would not hesitate to shut down the business if I didn't feel I was adding value. This business only survives when it adds value if it doesn't add value, making it or forcing it to survive makes it a parasite. James: So when you say add value means, add value to your personal life? Neal: Add value to my investors. So by default, I don't say add value to my personal life because if I add value to my investors, the adding value to my personal is automatic. It happens by default, right? So to me, the only kind of add value that we should be looking at is adding value to our investors. And if it doesn't add value, we'll do something else. It doesn't mean I'll go out of real estate. You know, one of the things is I'm a very unusual syndicator in that half of my projects are new construction. And the project that I'm coming out with this week is called The Grid. It's a $30 million student housing project, new construction. And so why? Because as the market shifts and Class C properties become so expensive that everyone's buying six cap on actual or five and a half cap on actual, then in the back of my mind, I'm going, well, you know, I can make a brand new class A for seven cap. I know it's risky during construction, but let's say I get through the construction phase, isn't it less risky? Because at this point, you know, maybe it's not seven cap, maybe six and a half cap, but don't I have a six and a half cap, Class A building? What's the worst that could happen? Do we have a recession after dropped rents? So what? It's still a seven cap building and it's a brand new. That part of it is not going to change if I can't raise my rents. So I look at that and I go, you know, there's this whole business of buying Class C's at five and a half cap is scaring me. James: Yeah. I was talking to a broker the other day. He was trying to get me to buy a 1960s product at six cap. He says Austin is good now. Then I say what about the B class 1980s? Oh, it's like five and a half cap rate here. I'd rather buy the five and a half cap than buy the six cap; doesn't make sense, right? Neal: I agree with you. And honestly, you should not be, you know, between a B and a C, if there's a half gap difference always, by the B. James: Yeah. Yeah, exactly. So is there anything that you do in your daily life that you think has contributed to your effectiveness in becoming very successful? Neal: I think structure. I'm a robot that has some human, characteristics and I like being a robot. I am extremely structured, absolutely structured, all the time and I feel that it's difficult for people to tie themselves to structure. That's a very hard thing to do because we feel like we are losing something about ourselves. We feel like we're losing a part of our humanity. What I have found is that it's actually the reverse. I'm very structured. I start my work, I work with an extremely high intensity and then I stop and when I stop, I completely stop. I have nothing to do with work because I make sure that every second of those 11 hours or 10 hours that I work really count. And to me, I think that that makes me have a significantly greater output than some other folks. James: Got It. Got It. Any advice for newbies who wants to start at multifamily? Neal: Yes. Right now be careful. Please understand that while there is no crash on the cards, I don't believe in all this nonsense about, you know, prices going down 20%. People say that they clearly don't understand macroeconomics, but you are buying at the peak. This may be a peak that is sustained for a significant amount of time, due to the fact that basically, it's very difficult for prices to come down because of macro reasons, but you certainly not going to see the kind of all ships rising effect that we have seen in the last five years. You're starting now, please do not apply the past to your present. This is a tough time. It's going to be very hard. If I was starting today in 2019, the 2013 version of me would advise the 2019 version, not to start. That's how frank I have to be. If you're starting that's fine, but I think you should be cautious and be aware of what kind of environment you're in. James: Got it. Got it. Well, Neil, thanks for coming to the show. Can you let the audience and listeners know how do get hold of you and how to find you? Neal: Sure. I think the best way is through education. I'm an educator, I connect with people through education. I have a portal called multifamilyyou.com. We have about 50 webinars that we do every year on multifamilyyou.com. We archive all of them. They're deep dive webinars. They're very different from podcasts because there's a lot of displayed content and tens of thousands of people attend those webinars each year. So that's probably the best way to connect with me. I don't mind people having my direct email address. My email is Neal, that's the Irish spelling, n e a l neal@multifamilyyou.com. So you connect with me. I also connect with people on Facebook. I think about 10,000 people connected with me on Facebook. And then multifamilyyou.com. If you want to learn more about demographics, I have a free course. It's at udemy.com/RealFocus. That course, I think right now has about a thousand people enrolled. So it usually has 1,000-1200 people enrolled at any given point in time. So that's also a completely free course. We don't believe in pitchers, if you're a presenter and would like to present our platform, approach us, but it has to be pitched free. James: Awesome, Neal. Thanks for coming and adding huge value to our audience and listeners, I'm sure everybody would have learned a ton of things today. Thank you. Neal: Thanks so much. Thanks for having me on the show. Bye, James.

James: Hi Audience. Welcome to Achieve Wealth podcasts where we talk about value-add and real estate investing. Today, I have two great guests. The company's called Raven multifamily, we have Ramana Korada and Venkat Avasarala, both of them own almost 2000 units right now, class B and C in the Dallas market and they're under contract on another 300 units and they had been looking at other markets as well. But let me get them to introduce themselves to you. Hey guys, welcome to the podcast.    Venkat: Hello James. Thanks for having us.    Ramana: Thank you, James. Thank you for having us.     James: Yeah. Did I miss out any of the introduction a section for you guys? Do you guys want to add anything about yourself?    Venkat: No, I think that that sums it up.    James: Okay. Okay. So you guys had right now all your deals in Dallas, right? And you are looking at or you did have some deals in the other markets as well. Can you explain what were the other markets and why did you guys focusing on Dallas or exploring other markets?    Venkat: Sure. So myself, hi, I’m Venkat Avasarala and along with Ramana, we partnered back in 2016 to get started with apartments and we both live in Dallas. But Dallas, as you all know, it's a pretty tight market, a very competent to market and you need to have a resume in order to land a property, right? I mean most often than not. So as we did not own any properties back in 2016, it was even so hard to even buy a 60 unit property awarded to us just because we didn't have any resume. So Ramana came up with this thought, you know what? We can keep doing that eventually, probably will get something. But if you want to expedite this, let's get out of the DFW market. Prove ourselves outside the market where the market is not very competent.  So that's why we went to Oklahoma, we bought a hundred unit property there, it's a C class property, but in the town of Norman, Oklahoma College town, and we showed that expedience and bag the 120 units deal in Phoenix. And Phoenix, back in 2016, was a really mellow market; right now, it's very hot. But back in 2016, not so much. So we showed this 100 unit experience from Oklahoma and we got the 120 unit deal in Phoenix. Then we showed both of these and bought our way back into Dallas where we live and ever since we were buying in Dallas and we didn't go back outside of Dallas ever since. But it had to be that way back then.    James:  So you guys went out of Dallas because you thought Dallas was overpriced and came back to Dallas once you have some track record, right?    Venkat: No, not really. Not all of time because it's just that we were not being awarded the deals.    James:  Oh, okay. Got It. Got It. That makes sense. Ramana, you want to say something?    Ramana: Yeah, same thing. We were not able to get hold of any brokers or sellers attention because we didn't sell any properties in our portfolio. These two properties from the other markets helped us to get in the Dallas market.    James: So that's very interesting because starting 2015, you guys went to Oklahoma or is it 2016?    Venkat: June 2016.    James: So 2016 to 2019 now, which is still early 2019, you guys have accumulated 2000 units. That means you have found some secret sauce in Dallas market on how to win the deals. Can you explain what is that secret sauce?    Venkat: Yeah, Ramana, you can weigh in man, how about you want to take this?    Ramana: No, I think you'd do better.  Venkat: And we strongly believe that real estate is a people's market, right? I mean it's a relationship based business, so it's what you can influence other people, right? So, I don't know what exactly it is, I cannot articulate, but basically, I think we heard it from brokers and other investors and our peers also. Basically, we come out very thoroughly prepared. We are both from IT background and you can relate to this yourself because you had enough background as well. We don't walk into any meeting without prep, right? So we prep and we prep and we prep and when we have the meeting we run it in an organized fashion. We come out very prepared and organized. And after the meeting we take meeting minute notes, right? And basically, we work towards every single day of getting things done on a timely basis.  And this is something that we brought along with us from our IT background and I would like to think that, you know, we kind of impressed upon our brokers or whoever we were working with and also we have a track record, right? So we try our level best and then some to always do exactly what we say. And when you keep doing that, you kind of develop a track record and people like to work with you. And I would say that other than that, it's not rocket science at all.    James: So let's go a bit more detail into that, right? Because it's important because a lot of people cannot find deals or could not win the final interview. We know whenever they go in the best and final round so I think that's what you mean when you go into a meeting with the broker or the seller, you guys are really prepared. So let's dig down deeper into that. So let's say when a deal comes, I know you guys underwrite it and you submit your deals and I think it's as usual, you want to make sure you go to the best and final, right? So and after that, let's say you go to the best and final where you get interview into the seller. So what exactly do you guys do to the confidence of the seller?    Venkat: Sure. I mean, so let's take an example off the 306 unit property, our very first property in DFW, right? So we didn't have, yes, we own about 220 units outside Dallas, but nothing in Dallas. But our very first property in Dallas had been 306 units, it's called Tradewind Apartments. Marcus [06:21unintelligible] sold that us so we were underdogs there. We won this particular property in an interview, a literal interview. Like where the seller was actually interviewing us and one other party and then they chose to award it to us. So again, the idea is the best and final, these interviews are just the closing part, but the whole process actually starts well in the beginning, right? The day when you go to actually tour the property, you better show up with all the relevant information, thoroughly analyzed and reviewed on your side and just don't go ask some basic questions.    Show the broker that this person actually wants this deal. They invested a lot of time and effort into this thing and come up with some relevant questions that you cannot get out of an OEM or a T12 or a rent roll, right? And then discuss with a broker, basically, get some help with underwriting on, just enroll a  broker into the underwriting process. I'm not saying that you should just underwrite based on exactly what the broker says, but involve them and make them a part of the process so they will get also invested into this process of your acquisition process. So you build up from that and then you put yourself in broker shoes and seller's shoes and say that if I'm a broker, what would I want to see in buyer if I'm the seller, what I would want to see in the buyer?     So in that particular case, we came to know that the seller was thinking to refi it and they were working with one particular lender at that time. And guess who we tried to get the courts from? And guess who we put on the interview call? We brought a broker from the same exact company.     James: These are the lender's broker, mortgage broker, right?     Venkat: This is a mortgage broker. And actually a DUS lender, in this particular case actually we put a DUS lender on the call and the mortgage broker, but from the same exact DUS lender that the seller was trying to use and they had the loan, they already had the loan with that particular DUS lender and they're trying to refi the loan with them. So again, remember, this is our very first deal. We don't have a lot of track record and we have zero track record in Dallas. See when you are well established and you probably don't have to try this hard, but you always have to assess your current situation and try to put yourself in other people's shoes and see what they are looking at, you know, when they're looking at you, what are the seeing and try to see what I can do to gain advantage. And in that case, that made a hell of a difference because we brought the same DUS lender and they felt instantly comfortable because the DUS lender batted for us and say that, yeah, I mean, these people have checked out, this is what we are looking at on the loan proceeds and all that. So instantly they became comfortable and they awarded us the deal.    Ramana: I know we close two more deals with the same Marcus broker, that's how best to get the DUS lender on the call. If it was a fast deal, they wouldn't care to join. But that kind of helped us, [09:38unintelligible] helped big time.    James:  Okay. Yeah, that was one of my question. How did you know the right DUS lender, right? So how did you guys find out that this was the exact DUS lender that the seller was using?    Venkat: This is Yardi and all that. This is common knowledge, right? I mean if you actually go into Yardi and put the property name, we know who did the loan, what is the loan amount, the terms and all that. Luckily, we happen to use the same exact DUS lender for our property in Oklahoma and Arizona so luck kind of favored us there. But even if that wasn't the case, we would have gone and got that particular DUS lender onto the call one way or the other. We already figured out all the details, but always how to work towards what's the end goal.    James: Okay. Got It. Got It. So just to clarify for the audience, DUS lenders are usually, DUS stands for delegated underwriting services. Basically, Fannie Mae gave like, I can't remember how many, 30 or 60 DUS lenders, how many?    Venkat: 40    James: 40 DUS lenders across the nation, which is the delegated underwriting portion of it to these lenders to help them underwrite because it's just as a part of their scheme for them to do the business. So basically, you can get access, I mean, you can Google DUS lenders and get access to them or you can go to your mortgage broker to get access to a DUS lender. That's right. So coming back to the preparation to meet broker when you're doing your tour because I think that's important. A lot of people, including me, I just go and say hi and bye to the broker, but usually I underwrite my deals if I go and see them.  But how to be really, really prepared when you go and meet a broker because I think that's important as you mentioned, it gives a lot of perception to the broker to say that this guy is really serious. They are the liaison to the seller and if they can give a good word out to the seller, that takes a long way. What are the things that a person need to be prepared before they meet the broker for a tour?    Venkat: Sure. So what I would say is that number one is there are three components in my mind that I have to check, right? So one is the business plan itself or am I buying into this business plan or not? Because every broker has a pitch, right? Sometimes, right? And the more repeated the broker is, the more accurate at whatever they put in the OEM that you can subscribe to that, right? I mean the more repeated the brokerage is. But still, you have to wet that. Like for example, one of these brokers always puts, you know, you do the small patio extension and you're going to get $50 rent bump. It might be true in some cases, right? I'm not saying that doesn't work at all, but may not work in every submarket, in every neighborhood, right? So you have to go look for the comps and all that and you can drop those names of those.   Like for suppose, let's say if I go to see this particular property and I tell the broker, hey, I read what you wrote in the OEM. So basically you're saying that if I spend about $800 extending this patio, then I'm going to get a $50 rent bump and I cross-checked with that, that that property and those two properties are already getting it. So I kind of agree with you. So this is how you make a connection and involve the broker onto the team. And I'm not saying that you have to agree on everything, but find the common points. And also even when you try and go into the negotiations into tough negotiations or anything at all, start with the yes. Find something which we both can agree upon and start hitting those points.     And once you build up a yes, momentum, yes, yes, yes, yes. And then you come to a point where we don't disagree, but since you have established the Yes momentum, right? So you both parties would be more willing for a compromise. That's a small detour from your question, but that is what I tried to establish. So basically I go through all the business plan and then discuss the same with the broker and kind of establish a rapport. Seeing that, yes, you wrote that, I verified it, checked out, it checked out. So I'm trying to build a rapport here. Then comes to this question, say water savings. I see that you think we can make that kind of water savings but in my experience, that didn't quite happen that way or all the time; what do you think? Where do you think you got that?    So what I'm trying to do here is I'm trying to build a rapport with the broker on every aspect that shows that, you know, this guy really spent time, effort, made calls, did everything he has to do. So in the broker's mind, you're trying to get ahead of everybody else because and not many people may not do all the ground the legwork before showing up and touring the property. The second thing is debt right? Obviously, you have to pull debt, you know, debt quotes and also you have to share that information, right? You may not have to share exact terms and all that, but some general idea on who you're working with debt and try to give that comfort feeling and everybody knows everybody these days, right? But if the broker knows that, yeah, you know, okay, you're working with that broker, I know him really well. That's kind of, again, the second leg of coordination over there.     And the third thing is equity, right? The broker will not ask you all these things. He will not, most people don't feel comfortable quizzing you like this, you are kind of [15:06unintelligible] there. So they're trying to show you the property, trying to sell you something, but they're not going to interview their, right? So they're not going to ask you how prepared you are, they're not gonna ask you where you're bringing debt or equity from. But if I think, I take the initiative of sharing the way I'm approaching on these three friends, the business plan, how I'm underwriting, how I'm bringing my debt, how am bringing my equity. I share that with the broker and I personally think that will help you go several rungs up the ladder and the ice with the broker.     Ramana: Just to add there, you have to make sure that you go through all the financials that the broker provides. I mean obviously accurate, but you test if it fits into your business plan. You know, make sure that, for example, water conservation, if you want to do this conservation, we have to make sure the water bill is high enough so that it will help you reduce your expenses. I mean you have to read through rental like left to right, right to left, top to bottom, bottom to top. Make sure to find anomalies, you know, just to make sure you're not getting into something you really don't want to. You can tune up the property but not be unbearable neighborhood, right? So make sure you understand what you're getting into. Like when concerned, if you plan out on the equity and debt and as long as you're well-prepared, you have a pretty good chance chunk, but you can get into it.    James: So you guys would have done underwriting and ready to go. You wouldn't be for meeting the brokers, is that right?    Venkat: That is correct. We only will show up at that property only if the numbers work, otherwise, we won't.    James: Yeah. Yeah. Same thing with me. I learn everything first before going and see the broker. I know a lot of people who whenever a deal comes they say, well let's set up a tour first. And then later go and underwrite it. But I think the bad part about doing the second option is basically you missed the opportunity to show how serious you are with the broker. Especially on a hot market like Dallas. Because you know, they want to make sure that people come prepared and spend their time wisely, I guess.    Venkat: No, I would say that no reputation is better than a bad reputation. Again, if you start hitting up all these brokers without prep and if they get a gist that you know what? This guy is just showing up, you know, it won't work well. But I concur with you there. The prep is the key.    James: So do you guys look at every deal that you get through the mail, through the broker email blasts or is it more through personal relationship or what?    Ramana: We do take a look at each and every bill that comes into our mailbox, but doesn't mean that we underwrite each and every deal. We want to make sure the location, location is critical, right? We want to make sure we are buying the properties in the right area. The median income, demographics, traffic, the property has to be located on the road if it's not near the main road, yeah, you have to spend extra dollars to market the property. So we have a few pointers that we look for in each property. If it doesn't qualify, we just delete the email.  James: So can you list down the top three things that you look for? It's basically a sniff test, right? What you're doing is the sniff test?    Ramana: Absolutely. So location is critical, median income; the look and feel of the property. I mean, we can improve the property, but you cannot make a class C property into a class A property. But location, demographics and median income, those are the things that we start with.     Venkat: To add to that, if you want to dig deeper on that let's say, we see a small culvert or a stream or something like that, we immediately check the flood zone. I'm not saying that you should not buy flood zones, but you know what the insurance will go through the roof. So as long as the underwriting works with a bigger number of insurance, then it's fine. And another thing is let's say if you're trying to buy 150 units and right next to it there is a brand new 2008 built low-income property with 450 units, I wouldn't go there in there because it's hard to compete. It's a much nicer asset, a newer asset, larger asset, and low income. There is no way I can turn a profit there any easy way possible. So these are the kind of things. Again, the first thing is this, you actually need to read the OEM and reading OEM literally takes about 20 minutes.   You can skim the data. You don't have to read every word. There are a few sections, like a section where the broker actually talks about the strength of the location and talks about the strength of the property, right? The asset itself, like it has new rules, things like that. So as you read them, what happens is you will have a farther need to look into few things and obviously, you look at the property and the Google maps kind of thing. And also read the reviews. Google reviews, apartment.com reviews, oh my God! I mean it tells you a whole lot about the property.     James: So you look for good reviews or bad reviews?    Ramana: I only looked for bad reviews.    James: Absolutely. It's value add, right?     Ramana: Yes, yes. For example, recently somebody sent us a large property on MacArthur. Now, this is Mac Arthur Irving and what's there not to like, right? You know, decent. But then again, we started looking at it and we see that 95% of them are one bedrooms. Nothing wrong with that. It's not something that we are very thrilled about. It's hard to keep tight on the families there with one bedroom. We want larger units to at least two bedrooms where people pile up all the stuff and you know, there should be a barrier to move away from your property. All they have is a [21:18unintelligible]  and a bicycle.    James: Yeah, the turnover is really high. What about the median household income, what's your criteria? Because that's part of your sniff test.     Venkat: Yeah, so I would say that we wouldn't look at anything less than 35; 35 is like really, really bottom so everything else should be strong. Like there should be a strong value add component. If you are buying at $35,000 one mile, only one mile matters. We don't even consider, we don't even look at the three miles and five miles and all that. Only one-mile matters in our book. And if we are trying to buy a property with $35,000 household median income, everything else better check out very well, right? Meaning the quality of the assets should be okay. The demographic mix should be okay, we don't want any concentrations. And then there should be at least like 50, $7,500 rent bump. Then we would venture into 35. Anything less than 35, it's just not worth it.      I'm not saying you cannot make money on this. I know a lot of people who really do well buying roughest properties. It's just that we are syndicating these deals so we are taking money for investment, we are taking money from working people who actually had to work a year or two to amass that 75 or $100,000 that they're giving to you. It's just not a proper way for us to take that money and going to riskier assets. Maybe the reward will be good, but it's just the risk is also high. So we just don't look at that lower end of the market. We try to sit between 35 to about 60,000 median income. Obviously the higher the better.  Ramana: [23:00unintelligible] Definitely. That is something we don't need to spend a lot of time--- of course, with the property we will come up with some value add strategy but we don't want to buy a C class property 23:18 when you can buy class A for 5 cap. That's another item that we look at before we delete the email  Venkat: Obviously, in order to get the whisper prize and it's all the stakes, again, once you keep doing that, you'll just do it subconsciously, right? I mean, you don't sit there and make a spreadsheet to track all these things, but you know what the key items that you need to know, the deal breakers basically. So for us, right now, if you see a large flood zone, it's a deal breaker. If we see a concentration of a particular demographic, it's a deal breaker like that. So basically once we weed out all these deal breakers and spend about 10 minutes, 15 minutes, and Yardi is a great tool to do this, right? So once you run Yardi, it just becomes so much easier to check these properties out.    James: Absolutely. Do you guys look at the rent range? I mean, you can buy a big property as well, right? Like a big townhome, right? Do you guys look at that and I know you don't look at the one bedroom, there are too many one bedrooms. I mean you're not thrilled about it so much. So do you guys look at the rent range?    Ramana: You mean to say like surrounding properties like single-family properties..?    James: No, no, no. Not Single family. So let's say you can buy townhomes, right? Which is like 1500 1600 a unit rent per month. Do you guys look at the kind of deals or it doesn't matter?    Venkat: So we don't own any townhomes yet. We are not opposed to it. But again, what we're looking for is renters by necessity, right? So as the rent actually goes up and up, let's say, 1300 1,416 or 1800, you better be in a really nice location, right next to a big financial business district or something like that so that you don't have to worry about, you know what? Yes, my rent is $1,800 but I don't care. You know, once this tenant moves out then somebody moves in. Unless that is the case, the higher the rent, I personally perceive it to be risky to play in that area. We don't want to be at a 500 $600 rentals, so the sweet spot is something like on a one bedroom, maybe 800 to let's say 1200, 1300 on the higher end. That is our sweet spot.     Again, this is where you get renters by necessity and also the larger the unit, what happens is they accumulate stuff and it's hard to wow. Because I was a renter once and when I was in school all I had was like my cycle and a couple of suitcases and that's it. It was so easy. I moved like four different places in two years. But that experience is something that I can never forget. So we want people to come in and also not just because of the luggage, we want people to stay there because it's a nice place for them to be as well. So again, we look at the rent roll, that's obviously the next step, right? If  like 90% of these leases originated in last one year, obviously that tells us something. So we're dealing with a high turnaround on the property and it's really tough to operate those kinds of properties as well.    James: Yeah. Yeah. I would say the volume of renters reduces at the binomial curve. You have the binomial curve in the middle where you have certain brand range where you have a lot more renters. When the market shifts and goes towards the end of the tail end of that curve, you're going to have a less number of people. And when the market shifts, you know that people may not be there anymore. They're like class eight people. So it's a slightly different market.    Venkat: So renters by choice, that choice can change at any time. Maybe a guy go meets a girl, they get married, have kids. Well, they don't want to live in an apartment anymore, they want a house.     James: They're not going to go to a high rise building. Right?    Venkat: Yes, there you go. So we want people that they are renters by necessity, so they'll continue to rent. Now then what happens is, okay, what do I do to just keep them there? Just treat them well, take care of their work orders. If they really want to move out, offer them an upgraded unit for a smaller bump or whatever the retention measures kick in at that time.    James: Okay, got it. I mean in the beginning you had a lot of on market deals, right? Where you see OEMs and all that. I'm sure at this point in time you get a lot of off-market deals, right? So it is that right?    Venkat: We do, but unfortunately this is the nature of the off-market. Off Market is technically not off-market. We bought this property called Surround in Irving and we closed it on February 21st this year. So very close to that, there was another 200 unit deal which came off-market and they were asking 95 a door. It's not penciling in 95 a door. So it's like no, the seller is going to list it; let's move, let's move, let's move. And then what happened, the next week a very big brokerage actually listed it and their risk for price is like 88. That's $7,000. So more often than not, what happens is that owners want to test the markets before. They obviously have some kind of thought on who they want to list the property with, but before they do that, they just flood the property around.    James: They want someone to underwrite it for you.      Venkat: Just to see if anybody will take a bite. It's worth the shot. I mean, it doesn't cost anything, so why not? But we do get, I would say about our nine properties, I would say about one, two, three, four;  four of our nine properties are off-market, they're true off-market. Meaning, nobody else is looking at us. It's just us and nobody else. That is how we define, they're very far and few between so we're not going to hold our breath for that but we sift through all the so-called off-market, which come through our table looking for the next off-market. But we are not opposed to buying the listing deals also. And one of the issue with the listing deals is the smaller the deal, the greater the number of bidders.     Right now there's a lot of euphoria and the market equity and the debt, everything is available and that translates to the bidding wars, right? Up until October of 2016, oh no, actually February of 2018 we were buying around 140, 150 unit, that asset class, right? I mean that size of the properties. Then what we notice is like every time we had to fight with so many people, we compete against so many people. So in order to elevate ourselves from the competition, then we started buying 300 units plus and our last four deals, including the one which we are buying. So we did the HRV, Cielo Surround and this one. So yeah, I mean our latest four deals on average, the average size of this is 350 units and here you get a lot less competition. So you get a much nicer product for a decent price. So that's what I would say.     Ramana: So on the same topic, the market is so hard.  Sellers are trying to get off-market. I mean off off-market. Definitely, they're just testing the market and giving to the broker who can get the best. But is it really happening? Not in every case. For example, we looked at a property in Jacksonville, this broker was displaying at 87 a door but ended up being sold at 78 a door; $9,000 per unit difference. Sometimes we get scared, not scared, but to tie that off-market prices not making sense at all. No property is getting right there. The market is so hard, so nobody is going to, I mean I wouldn't say nobody, but it's tough to make these off-market deals work out.    James: Yeah. It's called off-market premium. For me, off-market means unless the broker knows you, that you are the best buyer for some reason. And they come to you and say, Hey, you know, we only are giving up to three people and that we think you would be one of the better ones because you have properties nearby or you like this kind of deal that's an off-market, right? Or the deal falls out of contract and they want someone to close it quickly, that could be an off-market. Or, you're buying it directly from the seller, that is a real off-market. All other things is actually on-market but the term off-market to make it sound sexier thing, right?    Venkat: In our case, all these four properties, we got to buy them weeks. All four of them [32:24unintelligible] getting listed. So actually they had a listing agreement and they're working on the OEM and it takes them two to three weeks at least to launch them.  Because they had to send them somewhere to take pictures. They have to right up, underwrite and all that. So while that is happening, probably some brokers feel comfortable showing it to some of their clients. And all these four properties had we not buy these four properties, they would have hit the market with the same listing agent.    James: I think even for brokers is much easier for them to find a buyer and just close it off-market. Otherwise, they have to do [32:59unintelligible] they have to do your best and final. There are so many processes, there's that's property management stuff, getting visits and all that. So much pressure, right? So you'd rather do it the off-market, but I think they want to find the right buyers and the right buyer needs to move very quickly in the off-market situation if the numbers work out.    Venkat: And I think the seller psychology from what I have seen in the transactions. Our transactions and the other transactions, what I saw James, is there are two types of sellers, right? Hey, I got in at 40 a door. As long as I get 75 a door, I'm more than happy, right? I'm way past my projections. My investors are happy. I'm happy, I want to get it done quick because now time's money, right? Because I'm planning what to do with this money. The interest rate might go up, then maybe I will not get 75. The smart sellers, sometimes what they do is they work pretty quick, right? They are very agile so they work with one broker. Sometimes you won't believe, you get the same single deal from half a dozen, it happened to me. Over the period of two to three days, six different big brokerages call me with an off-market property and this seller didn't know what he was doing. He just blasted it out to all the brokers and that's how not to do it, right?     But all these properties that we bought are something like, you know what? They understood that a lot can change between now and four months, which it takes to actually market the property and sell it that way. So if somebody wants to move quickly and if they have a number in mind, as long as somebody is gonna pay that number, they'll transact off-market so that hasn't been the case. The other kind is, hey, I'm not in any hurry. I don't care what I bought at that. I want to see every last dollar, maybe 75 is not going to, maybe somebody will pay 78 a door, let's see what happens; a little bit more adventurous kind of people. And especially if people do that if they have nothing to worry about, right? I mean, they don't have a big prepayment penalty and interest rates are pretty stable or whatever the case, they will go that route. So we try to work with our brokers so once in a while, they get to transact with this type of seller, which we just talked about in the first case. Whereas, as long as you pay them this price, they're happy, right? So that is the kind of properties that we want, those are the true off-market properties if you ask me.    James: So Dallas is a super hot market, right? What are the things that you guys are doing differently in the contract terms to get these deals?     Venkat: Ramana, you want to hit it?    Ramana: You mean to say PSA?    James: Yeah, what are the tips? Like day one, had money, feasibility period, the water. What are the things that you guys think is essential to win a deal there?  Ramana: So we are being [35:53unintelligible] there, we want to work with sellers and brokers in order to make everything smooth for them. The market is like, I think 30 plus 30 or 30 plus 45, but based on our experience, we can close even much shorter time period. But just to keep or build some wiggle room, we are doing 21 days DD and got 39 days for closing. Usually, we have a question for a couple of extensions with additional hard money. I've seen some cases like a couple of 30 days extension. [36:36unintelligible] everybody's case is different, but it's working that way as well. We are doing, before getting into any property, making sure that this is the property that we want to buy so we are comfortable giving the day one hard money. Not a whole lot like on 1% on every deal but what is reasonable for the deal, we are just coming up with the hard money, day one.    Venkat: And James to add to that. So our comps are not vastly different but here's the differentiator on us, right? We work really hard to close the property ASAP. And the worst case scenario, one day before the 60-day mark, right? Just like Ramana said, obviously, we're not trying to be a cowboy here. We have signed a 60-day contract with couple more 15-day extension. So technically we have 90 days to close but we won't use it. We work as if we only have 55 days to close. We do it for a couple of reasons. When we close this property well before the 60-day mark, it really makes the broker look like a hero in front of the seller. The seller will be like ecstatic, oh my God, I mean you got me the best buyer, right?     So we work towards making our brokers look like superstars, that's the mindset that we have. Like, suppose we purchased a 400 unit property and we went into contract on a Friday; Monday, Tuesday, Wednesday, all the duties are done. We do ask for 21 days due diligence, but Monday, Tuesday, Wednesday, all the duties are done; on a 430 2-unit  property, with two different lenders, walking all the units, checking everything which needs to be checked. And the reports will be spit out by, by Friday, the following Friday, right? So it's just that we work so fast, so agile if you will, and in a very organized way with a lot of communication, a broker doesn't call me.   Right now, we are under contract to buy this property 330 2-unit property in Fort Worth. It's been a while since I spoke to the broker ever since we went into contract about two weeks back. That broker doesn't even call us because he knows that things get done. So that is the reputation that we carry forward, every deal, we close it that way. And even in this case, we have a 5/27, on May 27 to close the property; right now, we brought it forward by 5 days so we working to close by 5 days before. And we are even working harder to see if we can even close on May 15th. The idea is to treat your seller as your customer, right? And treat your broker as your customer and give them the best possible experience. Smoked, right? I'm not saying that you agree to everything that seller says or the broker says, that's not what I'm saying at all. If the  the more you prepare, the more organized you are, the smoother the transaction would be. I don't wait until a lender asks me. Ramana and I, keep everything ready, anticipating that broker will ask that, a seller will ask that, a title company will ask that. So just run a tight ship and more importantly, equity. Equity is nine out of 10 times that is the one that gets delayed. So as soon as the LOI is signed, we start working on a flyer, we send a flyer out in the same email, we schedule the webinar. And then we do the webinar asap so that we can quickly get the money in the bank to do the transaction.    James: Yeah. Yeah. Brokers love buyers who are very, very organized and get them to look like a rockstar. Ramana, you were saying something.    Ramana: Yeah. So just to add one more thing on the PSA. Like you know, nowadays with the day one hard money, also in the agreement, get enough time to check on few high-cost items would be a good idea. Some sellers would allow and some do not. But you have to make sure you have like an applied GC who can do an inspection if they can come up with some numbers, some check-boxes that would help buyers as well.    James: Got It. Got It. Got It. Yeah. The smoother we make our broker's life, which is what a buyer's responsibility should be. I mean, you have to be really, really prepared in terms of aligning every equity, lining up your debt, lining up your insurance guy, you know, so that the broker doesn't feel the pain and that's where they're going to get more deals coming to you. Because for them it's like, oh, this is so easy to make money with these guys. I mean, I have to convince the seller to a certain price. Now I have the right buyer, let's do more deals. I mean, ultimately everybody wants to close deals and get their commissions. So that's important.    Venkat: So just to add to that; in a market like Dallas or Phoenix, the hot markets. A seller might ask, why should I hire a broker when I'm getting unsolicited offers, people with good resumes and all that? So why should I need a broker? So the brokers kind have to justify, and it's just not meeting expectations, but they have to exceed the expectation if they want to be the top player in the market. Because 20%, in our case, I think maybe 10% of the brokers in the Dallas market does 90% of the deals. If a broker wants to be in the top 10%, they have to consistently exceed the sellers' expectations so they're already working under a lot of pressure. So if you can make their job easier, their life easier, oh, they'll love you for that    Ramana: Oh, absolutely. Yeah. It's not one-time business. It's for your life. That's repeat business that comes in the picture.    James: Absolutely. Absolutely. So let's go into a little more detail into the value add stuff. So you guys do a lot of value add. I mean, how deep of a value add do you guys do? I mean right now on the recent few deals that you guys have been doing,    Ramana: So last October, it appeared that interest rates are going to take off, they're not gonna come back. What? We hit 325, I think, on the 10-year treasury and people started doing loans at 5.4% 5.2%. I mean it was crazy. So then we had a big mind shift, right? So if you want to go buy something with a bridge loan and try to settle it into a permanent loan, God knows. I mean, it seems bad once it starts raising traditionally until they go all the way to there. We kind of started take and also we are so late in the cycle, right? I mean usually, a cycle between recession is about nine to 10 years and it's been nine years. The last time the recession ended was back in 2009 and we are in 2019. So we are actually at the end of one of the greatest periods of economic expansion in this country. So right now, we are off taking some different sub posture. What that means is again, we don't want to do a straight yield place. Yield is good because you go there [44:01unintelligible] 10%. If they don't have the value add, next year, maybe your expenses will grow faster, you earn your income and maybe that'll become 8% and then 6% and then 5%. So we definitely are not looking for very deep value add distressed assets, nothing like that. But as long as if there is at least a 30 to 50% left meat on the bone, then we are going into these deals with an expectation that we are going to do that value add and it's a good yield place. The good yield place usually gives you a good leverage. On our latest deal, we got what, 83% LTV, 70 in FIO and 154 spread. So right now, we just locked the rate a few days back and our locked interest rate is 4.19%. So good cash-flowing deals, make sure that you get a good deal on the debt side as well. Then there's some value add left.     So that is the portion that we are taking. We have to see how this 29 goes because we're keeping our ears close to the ground. The reason is if there is anything coming our way, but we don't want to be caught in a very deep distressed asset doing the major value add where interest rates take off on us. Or even worse if that decision was to come here. So that is our current state. But even when we are most aggressive, we always go for 90% occupied property; we don't believe in buying 40 50% properties.   Again, the kind of equity that we are using right now, we don't want to assume that kind of risk. Obviously, it's a high-risk value-add game, but we are accepting equity from individual investors. Most of these people are not super rich or anything like that. Most of our investors are wealthy but they're not like super rich or anything like that. They really need their money back, what they gave and the profit that we projected. So we are only buying 90% occupied properties with a verifiable value add. When I say verifiable, either the seller prove it to us or within the same property, he has to prove it to us or we have to be able to verify with the--- it should be 46:08  of debt. You shouldn't have to dig deeper to see the value add. If we have to dig deeper, that means more often than not...    James: There's no real value-add.     Ramana: That's only a good value for the next buyer.     James: So in your experience doing all this value add, light value add, I know slightly heavier value add, what is the most valuable value add that you guys think makes the most bang for the buck?     Venkat: I would say floors, definitely-- before we go into the floors and all that. Right? This is what, when we start the business, we couldn't care less about how the exterior look. We were always about interior. Our thought process was, hey, where does the tenant wants to 99% of the time when he's on the property, where does he live, inside the property, not staring at the buildings, right? It makes perfect sense to spend, let's say if you only have $1100 only spend it on the interior and make it look nice and that gives you a bump. Well, we kind of dial back from that kind of mindset. Right now exterior is more important to us as we saw a lot of deals being done, even up from our deals and all that. What we realized is first you should be able to attract a quality tenant, right?     A quality tenant has several options, you know, because we are a capitalistic society, there's a lot of competition in every single thing and apartments are not different. So everybody has some kind of upgrade or some kind of special, hey, my property has a water view or whatever. So constantly they are competing for our tenants here. So in order to first attract a tenant, as soon as a good tenant sees your property, that person has to take a U-turn and come see us, right? In order to make that happen, obviously, your exterior should look good. Otherwise, if it looks like crap and they're not going to stop.    James: They are just going to pass right by.      Venkat: They're not going to come at all. So that I would say, I mean, let's say if you have a very limited budget, you can just do the exterior. Obviously, what that includes is the paint and what I would tell people is, again, just change your mindset on how you see a value add at a C class property. I mean, 10 years back, Dallas is a second tier, it's still a second-tier city, but nothing to speak of, right? But a lot has changed in Dallas in the last 10 years or several Metros like San Antonio, Houston, a lot has changed. So treat these C class properties with some respect. And what I meant by that is higher a designer. Please don't pick your own colors. Hire a designer, see some renderings and make sure that you incorporate the elements. They're not really expensive, right? Corrugated metal, horizontal cedar planks, things like that, right? Throw some design elements into it and basically, the whole idea is this; there's only so much you can do to a 1960 property to make it look modern but a little bit of design with almost the same money. You don't have to spend a vast amount of money.     We spend about five to $10,000 in design and it's really well worth it because we get renderings, very good recommendations and all that and make the property really pop. So that would be my first step value add. And then we dial into these things. Like if you go into the interior side, obviously, your floor, number one, then appliances. Number two is appliances. And we love appliances. Let me tell you about appliances. The beauty of appliances is as soon as you go into the property, if you see new appliances because everybody's directly going to the kitchen, everybody's curious to see how the kitchen looks like, right? They would forgive you everything else except for appliances because that's something that they use almost everyday. The touch, the feel, even if they host somebody they don't want to cook on bad appliances and all that. The beauty of appliances is it does not cost you a single dollar in labor. You call somebody, they drop it off on the day when people move in; zero labor and you can mostly sometimes you can buy gently used appliances. You don't even have to shell out 1500 2000 anymore for a BNC class finish out. And you can sometimes see 50, $75 in [50:30unintelligible] so appliances in my mind is number one for me, but we kind of put it in the number two because the floor is obviously important because you cannot miss it. If it looks bad, you gotta deal with it. So those are my top two.    James: Ramana, you agree with that?    Ramana: Absolutely. So we've been doing the same thing in pretty much all the 2000 units. Right? And to that, definitely, the cabinets and the backsplash has to pop up in the kitchen so that, you know, they'll spend that extra time while you're cooking or whatnot. So all that is good is like electric and the plumbing fixtures, accent wall.  Every little thing adds up. On the exterior side, to attract the right tenant like Venkat said, you have to make sure it'd be [51:24unintelligible] Landscaping is good enough, you have to focus on that. The signage. Signage has to be good. [51:35unintelligible] with bad landscaping and not good signage.[51:44unintelligible]  you have to make sure it presents to the current market standard. So if you do that, you can attract the right tenant. A quality tenant is crucial in this business. The guy has to come in and he has to like the property and he has to pay the rent on time. If you don't find the right tenant, then the entire business plan falls off.  James: Correct. Absolutely. Absolutely. So, let's go to asset management. I mean, what are the tools that you guys use to asset manage your property? Because I know you guys don't have your own property management company, you guys are using third-party property management, right? But what are the tools that you guys use to do asset management?    Venkat: I mean there's not a lot of tools. We definitely have processes and procedures, obviously. We have our weekly meetings with them, but myself and Ramana, we run the meetings. We don't let our property management run the meetings because here's the thing. Usually more often than not a regional [52:53unintelligible] on the other side. And we have a deal with our management company where they allow the manager to be on the call as well because who's on the property five days a week? The manager; not the regional, not the owner, not the asset manager, not nobody else. The manager. Now oftentimes than not, most property management companies, they don't put the managers on the call for whatever reason that is. So a regional is responsible for so many other properties. So we kind of take any [53:21unintelligible] on them, Ramana and myself and we come prepared to the meeting. Obviously, the regional will bring the numbers and few updates, but then we have different sections, right? So obviously we go through the collections, vacancies, evictions and we will bring up discussion points. Every call is not just simply giving updates, our calls run as a brainstorm sessions. Obviously, there is nothing concerning. Obviously, we skip, skip, skip, as soon as we hit a point which is concerning, we brainstorm. And we treat our property management as experts and we constantly tell them, please don't look at us owners, just forget that we are owners. We're not here to make decisions. You make the decision, you are the experts. Our job is to just bring things up for discussion so that we have a good brainstorming session and just like how we do it in IT.     I mean, we could not use the policies and procedures that we used in IT. So we bring that here and also it gives a very good feeling for a manager because nobody's telling them what to do. Rather, people are respecting their views. One other thing is like you give responsibilities to some people and expect results. Hey, this is your responsibility, you got to do that. But then again, you have to give some power as well. Again, that's what I was exposed to in when I was IT. When my manager was managing me, they definitely have expectations for me, they said Venkat, this is all your call, not going to tell you how to do it, but this is the end result that we are looking for. So we try to give the same to our property management as well.    James: Okay. Okay. Awesome. All right, you guys, so we're at the end of the podcast. Why not you guys tell the audience how to reach you guys? What's the best way to get hold of both of you?    Venkat: You can reach me at my phone number is (281) 727-9238 or email me at venkat@ravenmultifamily.com Raven as the bird, multifamily, all one word.com.    Ramana: Yep. My phone number is (214) 799-9127 and email is ramana@ravenmultifamily.com.    James:  Awesome. Thanks for joining us today. And I think that's it. For the audience, join us on our Facebook group, Multifamily Investors Group, where we are having a serious discussion about multifamily. So thank you, guys.    Ramana: James, one last thing. You bring lots of value to your investors and multifamily, a whole multifamily group. Thank you so much. I mean, it's really educational and you provide a lot of insight to what you do.     James: Awesome.     Venkat: I'm in so many groups, but I never feel like asking things and bringing things for discussions and all that, but I feel very comfortable doing that in your group. I don't know why, it's just the way I feel. It's really a great group that you have created on Facebook.    James: Awesome. Awesome. All right guys. Thank you for the comments and nice chatting with you.    Ramana: Thank you.    https://ravenmf.com

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-

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

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

Michael: Hello everyone and welcome to your June edition of the Option Seller Podcast. This is Michael Gross of OptionSellers.com. I’m here with head trader James Cordier. James, a lot of talk this month about bull market in commodities. It’s been getting a lot of media attention, obviously crude oil has been leading the charge, but what are your thoughts on that? Are we in a bull market right now or is it just speculation? James: You know, most often, Michael, at the 3rd and 4th and 5th year of an expansion economically is usually when prices of commodities start going up. There’s usually a glut of commodities during a recession. As years go by, a lot of the excess commodities are then purchased and consumed, and usually that is when you start normally getting higher prices. I do believe we’re in a bull market in commodities. It is lead by energies, which of course was pretty much facilitated through OPEC cuts in production, but let’s face it, practically everything comes from a barrel of oil. Whether it’s cotton or soybeans or coffee or what have you, everything derives off of a barrel of oil or a gallon of gasoline. Of course, energy prices have really risen quite a bit over the last 18 months. That leads us to believe we are in a bull market in many commodities. There are 1 or 2 that have certainly oversupply in them, but the commodity market has been in a nice uptrend. Usually, this does happen 3 or 4 years after the beginning of an expansion and its kind of textbook so far. Michael: So, we have oil markets possibly leading the charge here. Some of the grains have been aided by some weather issues. Do you see this spreading to all commodities or is it primarily limited to a few sectors? James: I think it’s limited to a few sectors. If you look at the price of sugar or coffee, we’ve got just massive production expected in South America this year. The coffee market recently hit a 12 month low, the sugar market recently hit a 12 month low, so it is really a market that needs to be picked, if you will, to be in a bull market. A lot of commodities do have up trends, but some of the major commodities that we follow are over supplied. I think that’s why we really enjoy doing what we do best, and that is analyzing fundamentals on the different markets, simply buying a basket of commodities or selling a basket of commodities. I think you can be more sophisticated than that, and that’s what we try and do here, of course. Michael: Yeah, in the media they like to get a story line, “Bull Market in Commodities” and that’s what they tag and they really maybe only focusing, as you said, on a few markets, some of the other markets. That’s why you get that play within the commodities where they’re not really as correlated to each other as maybe stocks. James: Certainly not. That’s where diversification comes in. If you’re long or short the stock market, basically you’re living or dying by if it goes up or down. Of course, in commodities, we follow 4 different sectors about 10 different specific commodities and they really do have their own individual fundamentals, and that’s what makes following the same commodities for so long very prosperous, because you do get to know them. They all do have personalities. You don’t simply buy a basket of commodities like you do stocks. It’s different than that. Michael: So, the person watching at home now and they’re saying “boy, it’s a bull market in commodities. This must be a good time to sell options”… that’s really kind of irrelevant if you’re an option seller, isn’t it? James: You know, the interesting commodities, I think, is what bodes well for us. Whether you’re selling options on your own or you’re doing it with ourselves, it does increase premiums of options on both puts and calls. Certainly, the interest by the speculator, whether it’s a bank in London or whether it’s a hedge fund somewhere in San Francisco, it does increase the value of the options. If you are picking up bull or bear market, it allows you to get in at very good levels, sometimes 40-50% out-of-the-money depending on which market it is. Michael: So now matter which side of the market it’s on, the media coverage of prices going up brings in a lot of public speculators and that drives premium. James: Whether you’re selling options on your own or you’re doing it with us, it really plays into your hands… it really does. Michael: Great. We’re going to take a look at a couple of these markets that’ve moving pretty good to the upside or we feel we have some pretty good opportunities to look at this month. Why don’t we go to the trading room and get started? Michael: Welcome back to the market segment of this month’s podcast. We’re here in the trading room with head trader James Cordier. The title of this month’s podcast is taking advantage of the bull market in commodities, and we’re going to feature a couple of markets this month that are leaders, what’s driving the bull market in commodities, but how to take advantage of it might not be exactly how you think it would be. A lot of people might think, “Oh, well I’ll just go out and buy a commodities index fund or maybe I’ll buy some individual commodities stocks or what have you”, and the problem with that is, one, as James mentioned earlier, sometimes these commodities aren’t all going to move together. So, you may buy one commodity and it’s not going to participate in that bull market like other stocks wood. Also, we don’t know when this bull market might end, so we want to position ourselves so, yes, we can keep taking advantage of this if the bull market continues, but also if it stops tomorrow we still want to be able to make money. So, we’re not going to position how just a common traditional investor might try and position. We’re going to talk about selling options here. Let’s go to the first market for this month… the cotton market has been one of the leaders of the commodities bull here. Obviously we’ve had a pretty sharp rally here since last October, James. We’re up almost 25% in prices through this week. What’s going on here as far as prices go? James: Cotton’s another example of one of the bull markets of 2018. We do have some more demand out of Asia than we thought. They were speculators that thought that supplies in China were slightly less than what early was previously expected. Cotton production in China is supposed to be down slightly because of some weather. Of course, the big news is we had just an incredible drought to start out the planting season here in west Texas. Basically, commodities like soybeans and cotton, everyone’s so concerned about the weather and when they talk about dry conditions or there’s drought going on, speculators come and bid up the market. A lot of the end users then need to get insurance and they’ll buy futures contracts for cotton, as well, and that really boosts up the price usually right as growing season is beginning. That’s what we’re here looking at again today for the cotton market in 2018. Michael: Okay. So, that drought has been pushing up prices, but here in the last couple of weeks, that started to lessen a little bit. We’re looking at a map here of Texas, west Texas, big cotton growing region. If you would’ve looked at this map, the darker colors indicate a severe drought portion, so we still have some going up in northern part of Texas, but if you would’ve looked at this chart 3-4 weeks ago, almost half of Texas was in that red. So, this has mitigated quite a bit to where we are right now and that has allowed a lot of these planters to really make some progress in planting over the last couple of weeks. As a matter of fact, stats we just pulled today, James, at the end of the week of May 13th they were 28% planted. At the end of the week of May 20th, Texas farmers were 43% planted, so that’s a lot of progress to make up in a week and that’s due to that they finally got some moisture. They were able to get the crop in the ground. 5-year average is only 33%, so they’re actually ahead, quite a bit ahead, of where they normally are in a 5-year average, so that moisture they did get has really done a lot of good for the Texas crop. USDA just came out with their most recent/first estimate for the ’18-’19 crop. You’ll see here, James, ending stocks actually above last year is what they’re targeting. James: Really a weather market right now. Anyone who lives in the United States, especially in the eastern half of the United States, I know we have clients and viewers from all over the world, but here in the U.S. it’s raining all the time. Precipitation is just dominating the weather market right now and, in the chart you just mentioned, for the Texas state, that was truly an extremely dry condition and that has mitigated quite a bit. We’re now 5-6% above the 5-year average for plantings. We now have precipitation coming in. We’re going to wind up having a larger crop than a lot of people thought about and then we’re going to have carry-over in the United States, the highest level in 10 years. I know a lot of people are going to look at this, “well, the carry-over was much higher 8-9 years ago”, but cotton was also around $0.40-$0.50 a pound then, too. That’s a big difference. Michael: One other thing we should probably bring up that’s really carrying a lot of weight here is that cotton also has a very strong seasonal tendency. Actually, it doesn’t even really start to break until about mid-June. What’s usually behind this? What causes this? James: Just as we were describing, Michael, if there’s any type of weather fears in Alabama, Mississippi, this year it was Texas, generally speaking, until the crop is planting and until the weather conditions look favorable for production that year, generally speaking that’s going to be the high point of the year as planting’s taking place in the southern states of the United States. As the planting is completed, it’s 85-95% completed, which will be probably in the next 2-3 weeks, weather comes in, the dramatic dry conditions no longer are pushing up prices. Sure enough, as you start harvesting the crop in October, November, December, big crop once again, U.S. farmers are the best in the world, and once again we had a lot bigger crop than most people anticipated. That’s what’s winding up in timing right now looks perfect for the seasonal average and it’s setting up the same way into this year. Michael: Yeah, it does seem to be lining up pretty well. If the rains continue, we don’t have a big drought surprise, this seasonal looks like it’s set up to be pretty close. So, we’re looking at a trade here. I’ll let you talk about the trade, James, but you’re looking at a December call right now. James: Exactly. We have cotton trading in the low-mid 80’s recently. There was a recent spike up with a lot of discussion about the problems in Texas. Generally speaking, we do have the market rally May, June, and then July it usually rolls over. We are now looking at really decent call buying by speculators and hedgers alike at the $1 and the 105. There are no guaranteed investments in this world, but selling cotton at 105 looks like a pretty darn good one and if it does follow along with the seasonal, if it does follow along with the idea that supplies are going to be at 10-year highs at the end of this year, cotton will go from 80’s to a 105 looks very slim chances to us. We think this is going to be one of the better positions going into the 4th quarter of this year. Michael: So, when you’re talking about taking advantage of a bull market rather than buy into cotton, what James is talking about is the bull market creates interest in these deep out-of-the-money calls. So, how you take advantage of it and sell these deep out-of-the-money calls, we don’t know if the drought’s over. It sure looks like it’s taking a lot of big steps towards mitigating, but if we’re wrong and they don’t get rains and somehow the second half of the planting doesn’t go as well, cotton can still go higher from here. So, we don’t want to bet on that it’s going to turn around right now, right on seasonal. It could keep going. We’re just going to sell calls up here and it can do whatever it wants. It can keep going, it can mitigate, or it can roll over with the seasonal. Either way, there’s a pretty good chance these calls are still going to expire worthless. James: We really like that as an opportunity selling those calls. Michael: Okay. If you’d like to learn more about trading these types of markets, taking advantage of upward markets by selling calls, you’ll want to pick up a copy of our book The Complete Guide to Option Selling: Third Edition. You can get it now on our website at a discount than where you’ll get it in the bookstore or on Amazon. That’s www.OptionSellers.com/book. James, let’s move into our next market we’d like to talk about this month. James: Okay. Michael: We’re back with out second market we’re going to talk about here in our June Podcast- How to take advantage of the bull market in commodities. That second market is one we talked about here last month… that’s the crude oil market. We’re going to update this trade a little bit to give you some insights into how these type of strategies work. James, last month you talked about selling a strangle on the crude market, the February 45/90 strangle. Why don’t you update us on how the market has done and how that trade is doing? James: Let’s talk about both sides of this investment. Just 6-12 months ago, there was considered a 300 million barrel oil surplus globally. That has evaporated to approximately 30 million barrels. The market is practically absolutely flat right now. Every barrel of oil that’s being produced right now has an owner before it even comes out of the ground. That fundamental will not be changing in the next 3-6 months. They’re not just going to find oil, it’s not going to go from a 30 million barrel surplus to a 300 million barrel surplus overnight. That’s not going to happen. That’s going to keep oil well above the $40 level. The $45 put that we sold, I think, is excellent sales-ship, not ownership… you don’t want to own those. Crude oil over the next 6 months is likely not going to this level. The call side, what’s developing over the last 60-90 days really is what’s going on in Europe. Basically, the European Union has been dealing with quantitative easing for as long as the United States have. Of course, now we’re no longer doing QEs. The U.S. economy is doing extremely well. Europe? Not so much. We have quantitative easing still in Europe and PMIs in Germany, England, Italy are going straight south. Consumer confidence in Germany is at one of its lowest levels in years. The European economy is starting to roll over while it has quantitative easing. Europe produces practically no oil whatsoever and they are very susceptible to oil shocks. Oil at Brent commodity is up to $80 a barrel. In the United States it’s around $71-$72. That level is practically double of where it was 12 months ago and Europe is really feeling a brunt about that. What OPEC is very keen to know is to not kill economic growth. Oil just went from basically $45-$50, recently now up to $80 on Brent, and economies in Europe, especially, can’t sustain that. We’re looking again about discussion about Greek bonds and if that market rolls over again, and if Europe goes into slight recession going on in the next say 4th quarter of this year 1st quarter of next year, stock markets start to slide, U.S. economy starts to slide. Then, OPEC can basically claim a big part in slowing economic growth. They don’t want that. OPEC is producing oil for $35-$40 a barrel. Rent is up to 80. They’re likely going to start rolling back some of the production cuts and that’s what makes the $90-$95 calls a great sale, as well. Oil is likely not going to be hitting $90 going into the 4th quarter of this year. That’s the shoulder season, that’s when demand worldwide is at its lowest. That should make the $95 a very good sale. We like being short in 90 and 95. We love being long at 40 and 45. This is probably one of the best strangles available right now in all of commodities and the reason why those premiums are so high, as you mentioned Michael, is because the bull market in commodities. It gets people out buying options that they normally wouldn’t, reaching out for higher levels than normally they would, and that’s what makes cherry-picking in puts and calls, selling commodities in options right now, I think, the timing is just about perfect. Michael: Yeah, the trade we recommended last month, you were talking about this trade… 45/90 February. You’ll notice last month we were about here, so the market has bumped up about $3 a barrel, but it’s still right in the middle of the strangle and this strangle is actually profitable now from where we recommended it. So, just what we talked about last month, we’re not trying to pick highs or lows or guess what the market’s going to do. We don’t care as long as it stays between these levels. This strangle is performing just about optimally as how you’d want it. James: This form of investing is much more simplistic than trying to pick exactly where all these markets are going. This could look like Apple stock and trying to figure out what Apple is going to do next week or next month. Basically, selling options, especially on a strangle, you’re throwing the football to where you think the market is going to be. So, if you’re in the lower 3rd of the trading range and you still think the market has got a little bit higher to go, look where we’re winding up right now with the $2 or $3 rally. We’re right in the middle of the strangle… right where we like to see it. Michael: Okay. Now you did mention you think oil prices could be starting to slow here over the next several months. Again, we’re not calling a talk, but you think as it goes along there’s going to be a second conversation here with OPEC as far as their quotas. James: I really think so. 2 years ago, Saudi Arabia and Russia got together and said, “We’ve got to try something. We just saw oil for under $40 a barrel, we’re basically making little money.” They basically said, “Let’s try and reduce production by 3%, 4%, 5% and see what happens. The U.S. is now the largest producer. We have to do something or the market’s going to stay low.” That conversation worked extremely well… oil at Brent to $80. The second conversation now is let’s not get greedy. If the oil goes up another $2, $3, or $4 a barrel what difference does it make to you as a producer? If you’re making $40 a barrel or $42, it doesn’t make that much of a difference, but to consuming areas like the Euro area, another $3, $4, or $5 can tip that economy over and that is a big deal. I think that’s the conversation they’re going to have in June when OPEC meets. Michael: James, you just gave this talk you had on the oil markets to TDAmeritrade and they’re, what, 11 million trading customers? James: Yeah, we had a lot of investor eyeballs on us today. It’s quite interesting how many people actually do invest in commodities. There is an advertisement on TV recently… people aren’t investing in this and they aren’t investing in that and they aren’t investing in commodities. They really are investing in commodities and we certainly saw that this morning with the viewership that we had talking strictly about options on commodities. We really blew it off the charts today. Michael: Great. You can see that interview on our website probably later this week or early next week. It’ll be on the blog. The full interview will be posted there and you can take a look at that. If you’d like to learn more about some of the things we’ve been talking about here, you’ll want to take a look at the June OptionSeller Newsletter. That should be out on or before June 1st. If you’re already a subscriber, it’ll be in your e-mail box and your physical mailbox around that time. Let’s go ahead and move into our Q & A section and see what our readers have to ask this month. Michael: Welcome back to the Q & A portion of this month’s podcast. James, we’re going to take some questions from some of our viewers and readers here and see if you can answer what they have to ask. Our first question this month comes from Omar Fallon of Galveston, Texas. Omar asks, “Dear James, I am currently selling options with the assistance of your excellent book, The Complete Guide to Option Selling. I’m also following your 200% rule that you recommend. My question is, do you still follow the 200% rule when you’re writing a strangle or is there a different risk strategy for a strangle?” James: Okay. Omar, thanks for the question. We often consider that every time we do write a strangle. From time to time, of course, one side or the other goes against us slightly while we’re waiting… patiently waiting in most cases. I do like using the 200% rule on the total value of the strangle itself. If you take into consideration the fact that both sides of the put and the call combined premium has to first double before you exit the trade, that is truly putting a lot of room between you and the market and giving you a lot of time, hopefully, to hold onto that position. I do recommend using a 200% rule on the total value of both the put and the call sale. Michael: And that’s primarily because if the market starts moving against one of your strikes, that option on the other side of the market is balancing that out. So, you can afford to let it go a little further because you’re making some of that up on the other side of the market. James: Exactly right. Omar, if you sold your option fairly well, you’re going to have a really good opportunity for the market to stay inside that strangle and, as you approach option expiration, if you choose to hold on to it the very last day, we don’t always do that; however, that window should be extremely large and I do like giving the whole 200% risk tolerance on both the put and the call. If you sold the option fairly well, the market should wind up inside that window when it is time to close them out. Michael: Let’s go to our next question. This one comes from Jonathan Hartwig from Springdale, Arkansas. Jonathan asks, “Dear James, I’ve noticed from your videos that you seem to focus more on some commodities and less on others. I traded commodities about 11 years ago and did markets like hogs and orange juice, even pork bellies. Is there a reason you don’t feature these markets and how many markets do you actually trade at your firm?” James: Jonathan, great question. It sounds like questions from my favorite movie, Trading Places… orange juice and pork bellies. Those are certainly near and dear to our hearts here. Basically, we ant to be in the most liquid commodity markets that there are. Pork bellies, lean hogs, orange juice is a very domestic trade here in the United States. Orange juice, of course, is produced 90% in the United States, pork bellies is certainly a U.S. domestic commodity in market. Lean hogs, of course, is a U.S. domestic market. What that does is it allows the fundamentals to change dramatically in a very short period of time. We like investing in crude oil produced in so many nations. Gold, silver, sugar is produced in over 2 dozen different nations and coffee is produced all over the world. Wheat is produced in almost every nation of the world. So, if the fundamentals or dry conditions in one zone of the United States or in part of Asia, 90% of the world is going to have a different weather pattern or a different structure that’s causing the market to move. That’s going to give the commodity a lot more stability. We always want to sell options based on fundamentals, and the fundamentals in every sector of the world rarely are going to change at the same time. Where if you’re trading a domestic market like orange juice or pork bellies, a small freeze, a terrible draught in a certain location, swine flu in Iowa can determine the entire investment. Here at OptionSellers, we want to be in markets that are extremely liquid and will not have changing fundamentals on a small whim. We sell options based on a 3, 6, 12 month time period. If you’re trading and investing in options that are based on commodities that are grown all around the world, produced all around the world, you’ll rarely have a really brief quick change in fundamentals. Right up our alley for the way we do things. Michael: Yeah, a lot of people are surprised when they’re asking about what commodities you actually trade. There’s really only about 10 or 12 that we follow and those are those high volume markets you’re talking about. It’s not like we’re following 500 stocks here. There’s 10 or 12 markets, you just get to know them really well. James: They all have personalities, Michael. I’ve been trading silver and gold, coffee and sugar, natural gas and crude oil for decades. That doesn’t mean we’re right all the time, but they do have a personality. You get to know the fundamentals and when there’s a little headline or blip here or there it really doesn’t rattle you, nor should it with your investment. Michael: So, the point is, Jonathan, if you’re selling options you’ll probably want to stick to your highest volume markets that are going to have the highest volume, most liquidity in the options. That’s where you’re going to get the safest type of trades. If you’re watching this at home, thank you for watching this month’s podcast. I hope you enjoyed what you learned here today. James, thank you for your insights on the markets. James: Of course. Always. Michael: If you’d like to learn more about managed option selling portfolios here with OptionSellers.com, you’ll want to be sure to request your Option Sellers Discovery Pack. This is available on our website for free. It comes with a DVD. You can get that at www.OptionSellers.com/Discovery. As far as our account openings go, we still have a couple openings left in June for consultations. Those would be for our account openings in July and August. So, if you’re thinking about possibly, you want to make an allocation this summer, now is the time to give a call and get your consultation/interviews scheduled. You can call Rosemary at the office… that’s 800-346-1949. If you’re calling from outside the United States, that’s 813-472-5760. Have a great month of option selling and we’ll talk to you again in 30 days. Thank you.

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

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

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

Welcome to the second episode of Totally Made Up Tales, an experiment in improvised storytelling in the digital age. We hope you enjoy our tales of wonder and mystery. Let us know what you think! Music: Creepy – Bensound.com.   James: Here are some Totally Made-Up Tales, brought to you by the magic of the internet.   This is the story of Dr. Rich. Andrew: Once upon a time, there was a doctor who specialized in curing diseases only of the very rich. Inevitably of course, they were in some way or other. James: He would travel round in his large, black car made specially for him by Mercedes-Benz himself, and visit them one by one, his rich clientele, ringing on the doorbell and asking, "Are you ill?" Andrew: In fact, one of the things that he had identified, and the reason why he himself was so successful, was that he realized that money did not in fact make you happy, but filled you with a deep sense of malaise. James: In fact, to put it simply, money made you ill. Andrew: His expertise was to remove money from the rich in order that they could feel better, and indeed many of his patients who were bankrupted by his bills went on to lead happy, fulfilled, virtuous lives. James: Even before they'd got to that state, merely at the point that he presented them with the bill for having cured their sniffle or subdued their pox, or whatever it is that he had been called upon to do today, they felt better, relieved, as if the air was flowing more freely through their lungs, as if the blood was moving more smoothly through their veins. Andrew: The problem was that over the course of his long and successful career, he himself became extremely wealthy, deeply unhappy, and died. James: There was no one who could minister to him in his last days. He was as ill as you could possibly get from money, and indeed was quite capable of diagnosing himself as dying of wealth, and yet, without having trained an apprentice or one to come after him, there was no one who could cure him. He died sad, despondent, very, very wealthy, but utterly ill.   Josephine Andrew: wanted James: children, Andrew: but James: her Andrew: husband James: was Andrew: emperor James: of Andrew: France. James: "Not Andrew: tonight," James: he Andrew: said James: repeatedly. Andrew: The James: end.   Keyhole Andrew: surgery James: is Andrew: performed James: using Andrew: keyholes, James: which Andrew: are James: available Andrew: from James: B&Q Andrew: and James: similar Andrew: retailers.   Judith James: went Andrew: to James: Cardiff Andrew: for James: her Andrew: sister's James: wedding. Andrew: It James: was Andrew: a James: beautiful Andrew: weekend James: full Andrew: of James: dancing, Andrew: sunshine, James: and Andrew: happy James: bridesmaids. Andrew: The James: bride Andrew: herself James: was Andrew: sick, James: and Andrew: vomited James: all Andrew: over James: the Andrew: vicar. James: The Andrew: end.   Victor James: went Andrew: to James: war Andrew: and James: fought Andrew: bravely James: time Andrew: and James: time Andrew: again. James: When Andrew: he James: returned, Andrew: he James: discovered Andrew: his James: country Andrew: had James: changed Andrew: and James: he Andrew: no James: longer Andrew: belonged. James: The Andrew: end. James: Now, Abigail the Mistress Milliner. Andrew: Abigail was a milliner, and made the finest hats in the kingdom. James: She was renowned from city to city. The aristocracy would always use Abigail's hats, or risk the disapproval of their peers. Andrew: She was totally dedicated to her craft. It was her life's work, and every fiber of her being, every drop of her blood was dedicated to the making of hats. James: Since she had passed from apprentice to journeyman to master hat maker, she had had one perfect master work in mind; the ultimate hat. Andrew: It was a hat that she knew once she had made it, there could be no better hat made by human hand until the end of time. James: She had resolved at the tender age of twenty-two to dedicate her life to creating the best hats she always could while always striving towards the perfect hat. Andrew: It was rumored that she kept in her safe at the back, behind the box in which she kept her money and other valuables, a small box in which she was working on a secret project. James: Many rumors were started about the project. Many rumors were started about the safe and about the other things that she had done to protect her most vital and important secrets. Andrew: Other milliners throughout the kingdom were jealous, suspicious, and met together one evening in the back room of a dusty tavern to discuss their suspicion. James: One of them, Brian the Hatter, was convinced that she had already created the ultimate hat, but was withholding it for fear that others would copy her work. Andrew: "There is only one way for us to find out, brothers and sisters," he said, "and that is, we must take possession of the box within the safe." James: So began the most delicate planning. Milliners around the country contriving a way to steal a box from within a sealed safe that even the most dedicated cat burglar would have had difficulty getting near. Andrew: "Let us hold a festival," they proposed. "Yes, let us hold some kind of celebration, some distraction, some occasion on which everybody's back will be turned." James: They worked their connections long and hard, and finally were able to persuade some lady of the court, and through her some gentleman of the court, and through him some knight of the court, and through him, some lady of the bedchamber, and ultimately to the king and queen themselves that there should be a grand banquet where all the greatest people of the land would come, and of course the desire for the best hats would be unrivaled throughout history. Andrew: So it was that in the following days and weeks as the banquet was made ready that there were queues around the block to every suit maker, every boot maker, and every hat maker in the kingdom as more and more finery was demanded so that everybody could appear at their very best at this once-in-a-lifetime feast to be given by the royal family. James: Of course, nowhere were the queues longer nor more densely packed than outside the shop of Abigail the Milliner. For many months, she serviced the next person who came through the door, measuring them, measuring their head, considering the weight of their brow and the movement of their lips and of their nose, and taking into account the other clothing that was being made for them. Day and night, she would work in the back, making hats from the measurements she had taken. Andrew: Each customer demanded a hat finer than the one that the customer before had received, and so it was that after a lifetime of training, even she was nearing the end of her store of creative energy as each masterpiece, slightly better than the one before, went out the door in its beautifully wrapped box. James: Meanwhile, Brian the Hatter and his cohorts were plotting how to get inside the safe. Andrew: "Would it be better for us to cut a hole in the wall and slide it out into a side street, or cut a hole in the floor and let it down into the vaults of the cellars or the sewers below?" James: "Perhaps we should cut through the top of the building and employ a crane or some small children with rope to haul it up high into the gables and from there escape across the rooftops of the city." Andrew: "May I make a suggestion?" Came a voice from the back of the room.   "Of course, go ahead brother. Tell us your suggestion."   "What we should use is the psychology of the artist." James: Well, they were all very impressed with this idea, even though most of them didn't really understand, and they voluntarily gave up control to the owner of the voice, Mr. Jim Blacklock. Andrew: "The true artist is only satisfied when his or her craft is applied as close to the standard of perfection as it is possible for human endeavor to reach. Each person has demanded a hat more superior than the one before. How many more hats can this woman make before she is forced to reveal the greatest hat of all time?" James: The hatters, from their conniving congregation, went out back into the land and plied their connections and persuaded the lords and ladies who had got early hats from Abigail the Milliner to go back for better ones now that there were better ones available to their peers. The line once more became long and winding throughout the city, and Abigail, working as hard as she ever had, wracked her brains for more ideas to top the last ones that she had put out. Andrew: Finally, when the line had dwindled to one person, and that person had been handed their finely-wrapped box and left and the door swung closed and the little bell rang and she was left alone, she knew that she was spent. She had no more hats available for her to make. It would be impossible for her to service another customer, and indeed there were no more customers. Everybody owned a hat of hers who had a head to wear a hat on. James: Just then, there was a knock at the door. Andrew: "Who could this be?" She thought to herself. "A customer who had left behind a pair of gloves, or wanted a duplicate invoice for tax purposes." James: She got out of her chair and felt her way across the dark shop front and opened the door. In front of her was the king. Andrew: "Your majesty." She said, and curtsied low, for she was a very correct lady. James: "Abigail," began the king. Andrew: "If your majesty has come in search of a hat, I'm afraid I must disappoint you, for I have no more hats left to make." James: "Come, come," said the king, for he was a kindly man, but also used to getting his own way. "Come, come, you would not disappoint your monarch." Andrew: "It would pain me to do so, sir, but I really do not see how I could supply a hat finer yet than any that I had supplied without ... " James: There Abigail stopped. Andrew: "Without ... ?" Said the king. James: "I should not have spoken." Said Abigail. Andrew: "Yet you did speak," said the king, "and now you must surely explain yourself." James: "The only way, your majesty, that I could hope to top the previous hats that I have made for all in the land and to satisfactorily clothe your royal head, would be to open the book that I have been keeping these last forty years as I have worked on perhaps an impossible dream of the perfect hat." Andrew: At this, the king's eyes lit up, for he was a man who liked the finest things, and the idea of owning the most perfect hat that had ever been made or could ever be made appealed very deeply to his regal heart. James: "I must have it." He said, and left. Andrew: Abigail wept, for she knew that the hour had come where either she must make the most perfect hat of all time, or she must leave this place that she called home, abandon her shop, her career, her profession, and begin a new life somewhere else, for no one had ever successfully denied the king his wish and lived. James: Uncertain of what her choice would be, she stole back to the back room and opened the safe, and within it moved past the money boxes and the certificates of birth and death and the other precious objects that were necessary for a satisfactory and legal life in this complicated time, and at the back pulled out a small tin which contained folded paper of her notes over the years. Andrew: She reviewed the scraps, shuffled them, paced, lit a fire, made tea, stoked the fire, paced, shuffled the papers, and so continued through the night, all the way through to the crow of the cockerel and the rising of the sun. James: She was still pacing when her young apprentice entered the shop in the morning, expecting to be up and at the business before she was. He was surprised, and did not attempt to hide it. Andrew: "Mistress Abigail, whatever is the matter? You seem troubled, agitated, as if you haven't slept." James: "I haven't!" She cried. "I can't sleep. I cannot sleep until I ... Until I at least try." Andrew: So it was that they embarked together on making sense of the diagrams that she had drawn, and little by little began to compose the finest hat that had ever been made. James: There was every conceivable material, Andrew: and yet somehow, even though it was composed of parts as diverse of silk and leather, it formed a beautifully coordinated whole in which every part was neither too much nor too little, but in perfect proportion and place. James: Spent, they sat on the floor and looked up at the perfect hat. The ultimate hat. The end, indeed, to millinery itself. Andrew: As to the rest of the story, well of course the king collected it and wore it and achieved universal admiration. The great feast was, exactly as it promised to be, huge, memorable, spectacular, once-in-a-lifetime experience, and Abigail was, as you would expect, done. Done with her career. There was no way that she could continue now. James: As for the other hat makers, well, walk down a high street in your town any day you like and try to find a milliner's shop. They're all gone now. All gone.   I've been James, and I'm here with Andrew. These stories were recorded without advanced planning and lightly edited for the discerning listener. Join us next time for more Totally Made-Up Tales. Andrew [outtake]: "Would it be better," they said, "if we cut a hole in the floor and let it down into the core of the earth?" No, no, that's a ludicrous idea. Sorry.