Podcast appearances and mentions of michael hey

As business owners, we often feel imposter syndrome or worry about our status. Have you ever wanted to elevate your image and be more relevant? In this episode of the #DoorGrowShow, property management growth expert Jason Hull sits down with Michael Sartain, CEO of Men of Action Mentoring to talk about how to make high-status friends and attend VIP events. You'll Learn [03:27] How to Utilize Networking [19:03] Becoming High-Status Using Social Media [26:54] How to be Relevant [38:58] Social Media is Fake [53:21] Authenticity vs Effective Content Tweetables “You need to be the person who always solves problems for other people and ask for nothing in return.” “You're building a brand. Status is status.” “A lot of our beliefs that we're holding on to that are holding us back.” “You make millions of dollars from solving other people's problems, not by doing what you love.” Resources DoorGrow and Scale Mastermind DoorGrow Academy DoorGrow on YouTube DoorGrowClub DoorGrowLive TalkRoute Referral Link Transcript [00:00:00] Michael: Your ability to grow is based on your perceived status, your perceived trustworthiness, your perceived know how. Not your actual know how.  [00:00:11] Jason: Welcome DoorGrow property managers to the DoorGrow show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing a business and life, and you're open to doing things a bit differently, then you are a DoorGrow property manager. [00:00:30] DoorGrow property managers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you're crazy for doing it. You think they're crazy for not because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management business owners and their businesses. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. [00:01:10] Now let's get into the show.  [00:01:13] So I have an awesome guest today. I actually joined his program just for kicks. This is Michael Sartain. Michael, welcome to the DoorGrow show.  [00:01:22] Michael: Hey, what's going on, man? Hey, I gotta be honest with you. Two years ago, I didn't know what doors meant and then I started hanging out with Justin Waller and he's like, "yeah, man, I have 300 doors." [00:01:29] I was like, "bro, what are you talking about?" [00:01:31] And then he's like, now he's got 400 doors. And I was like, "oh, it's like all these different properties." And then my buddy Myron he's got 17 homes that he owns up in Connecticut. He told me about, and I didn't understand how this whole thing worked. And then the property management side of it, like "my company, we're like, we're buying properties because we want to use the depreciation. And we need someone to keep, you know, these places rented, blah, blah, blah." And then the property management, I don't know that much about it. So that's why I was really excited to come on here and check this out.  [00:01:57] Jason: Cool. Well, yeah. And I didn't know very much about like maintaining a presence. [00:02:03] Looking cool, like actually looking cool on social media instead of just trying to look cool. And and so I've learned some good things by being in your program. So let's get into a little bit of background about you for those that are like, who's this Michael guy? And maybe how you kind of got into entrepreneurism and I think that'd be relevant to anybody listening. [00:02:25] Michael: So I'm originally from East Dallas. I grew up on the good side of the tracks and went to high school on the bad side of the tracks. And graduated from my high school, barely like did anything. It was not a very good experience. And I got into UT Austin because I was in top 10 percent of my class. [00:02:39] Went there four years, studied astronomy and business and then got out of there. And then I ended up managing a nightclub for a while, for a couple of years because MCI Worldcom and Enron had gone out of business. So if you know, UT Austin, Enron was like a huge supply of jobs once you graduated you know, as a Longhorn. [00:02:56] Once they go out of business, none of us can find jobs. I ended up working at a strip club for like several years as a DJ. And this is the first point in my life where I'm like, "okay, there's something going on here. There's things that I've been taught growing up, but there's something different now." Of course, I want to preface this. [00:03:10] By no means am I saying that people who go to a strip club or people who work in a strip club are indicative of the median of society. They clearly aren't, clearly are not. What I am saying though is that you can see the extremes in society when you go to places like that and from those extremes, you can see overt reactions. [00:03:27] One of the things that I do in my course is I teach how people can network, get invited where the cool kids sit like that phenomenon of where the cool guys are and the not cool guys, the hot club versus the not club that the club people don't want to go to, or the party everyone's trying to get into. [00:03:42] What is it that causes that phenomenon of popularity and status? There has to be something that can explain it. And so what I've been trying to do for the last 15 years is use evolutionary studies in order to figure out a way in order to do that. And so a lot of times when you do that, you know, you can see subcommunication between a man and a woman and you don't really know what's going on. [00:04:02] They have the internal focus of what's going on, but when you see it in like a nightclub or a festival or someplace like that, you see very overt communication. And from that, you can learn a lot of cool stuff. It's like watching, you know, crows you know, pick at a carcass versus watching a giant white tiger go kill a gazelle. [00:04:18] Like that is overt examples of predation that you can see and be like, okay, this is how biology works. This is how natural selection works, et cetera. And I know for your audience, you're like, "where the fuck's he going with all this?" Yeah. The reason why, just to explain. I got fascinated. I did seven years in the military after 9 -11. [00:04:33] I joined and I flew a KC 135 as an instructor navigator. And then I was I did counterintelligence for about the last two years I was there. And then, so, in that time period, I learned how a very structured business could work and like how accountability works. Accountability and leadership, I learned very much during that time period. [00:04:49] But at that same time period, I was also going out a lot and I was like very interested to me in like, what is it that caused certain men to be phenomenally good with women and get a lot of people to show up to an event and then what caused other men to just not get it. And I always, I also noticed that there was a very small group of men that got it. [00:05:05] And then a very large group of men that didn't understand this concept whatsoever. So I became fascinated with that idea of 2011. I ended up retiring from the military and I ended up moving to Las Vegas and this is the first time when I started going out to some of these nightclubs and these venues here in Las Vegas. [00:05:19] And I meet a lot of real estate agents. I meet a lot of accountants. I meet plastic surgeons, doctors. And it was very clear to me like that some of them got it and some of them didn't get it. I threw a real estate event recently where we took a blue heron home. And then we had a charity event for animals. [00:05:33] And while we're there, I invited every single female influencer in the city to show up. Well, these, some of these girls were interested in getting into real estate, but I just want you to imagine it was just like a regular real estate event that you have, except you're doing it for animal rescue. [00:05:47] So now all these people who are in real estate, mortgage brokers, et cetera, property managers like yourself, they would show up to this beautiful three story house. It was catered. It was beautiful. And then every pretty girl in the city in Las Vegas who wasn't working that night showed up to this thing. [00:06:01] So now you're drinking champagne. There's three times as many girls as guys. Some of you guys are listening to this and you're like, "okay, now I understand. I'm starting to understand what he does." You're able to create these incredible environments and in doing so, just imagine, everyone... I try to teach networking through events. [00:06:17] That's basically how I try to teach networking through small events at your house or large events, you know, like a CES conference. I try to teach networking through those mechanisms. And then I try to show how evolution created humans throughout history. Dr. David Buss writes in his book the evolution of desire throughout history. [00:06:34] The men who have worked in groups and in tandem with one another always had access to more resources and always had access to more women. And so that's the reason why, you know, I teach these concepts. And so what happens is that blue Heron thing that we did, the guy who ran it, he's at the forefront and he goes, "I want to just thank you guys for coming out here and helping me, blah, blah, blah." [00:06:52] He had endeared so much goodwill with every mortgage broker, real estate agent. It was really crazy. All these other real estate agents wanted to train under him. People started sending him business. His business blew up. Another example I give, that's Jeremy Green's name. I have another example of my buddy, Mark Pearlberg, who's one of those also in my program. [00:07:09] Mark is an accountant. Mark started to see the way that I would use zoom calls and on the zoom calls, Mark would go on and show. How he understood accounting backwards and forwards better than everyone else who was listening, he showed himself to be a subject matter expert in the zoom calls. He was hosting in doing so, just imagine Jason, like, you know, I don't believe accounting is your specialty, but if you listen to accountant at first, it's interesting, but after like an hour and a half, you get to the realization, like, "this is interesting, but I don't want to do this." [00:07:37] And then at about the two hour mark, you're like, "This is interesting. I don't want to do this. How much do I have to pay you to do this?" And so because what we did and he started hosting a podcast and because he started hosting these zoom calls with other professionals, now he tells me, he's like, "I actually had to slow down the podcast because I can't handle all the business that I have. [00:07:55] There's not enough of me. In order for me to be able to do this." And he works from home. He just, an incredible lifestyle that he's created. So when we go back to what we're saying before, you know, I learned initially, "okay, what are the mechanisms that cause people to be cool or not cool, to be popular, not popular, to be low status or high status?" [00:08:13] I learned that when I was working in Austin, you know, nightclub, I learned that when I was in the U S military, like what good leadership and bad leadership was. And then I learned it in the last 13 years here living in Las Vegas. And I took all those lessons and I, from the last say, 25 years, and I put them into a course called the men of action course and try to concisely take this 25 years of knowledge and put it into one space so that everyone can learn how to do these kinds of things. [00:08:35] Now, here's where it might be confusing for some of your audience, the mechanisms that men use in order to show status with women in order to date them and the mechanisms that men and women use in order to pitch an idea or to sell a product are the same mechanisms. They are the same. This is difficult. A lot of people don't grasp this. if you guys ever want to see a great example of this, great book you should all read is Oren Klaff's book called pitch anything. Listen to some of the words he uses. Jason, you remember eliminate neediness. [00:09:06] Do you remember that? Eliminate neediness. Where does that come from? Where does that come from? It didn't come from self help. Eliminate neediness is a dating concept. Okay? Avoid beta behavior. Do you remember? Oren Klaff says this in his book. He goes, "avoid beta behavior." Where does that come from, Jason? [00:09:21] That is a dating concept. So where do these things come from? At the highest level Jordan Belfort, he calls it goal oriented communication. So goal oriented communication is, "will you go on a date with me?" Goal oriented communication is, "Ken, will you invest in my project?" Goal oriented communication is, "will you come work for me?" [00:09:36] Goal oriented communication. I'm doing this because this is like the apex of community of goal oriented communication. All these places meet at the apex, and that is the understanding of basically Dale Carnegie's how to win friends and influence people, get people to talk about themselves. You can find common interests, figure out ways to break rapport, all these different things. [00:09:53] And like what I teach my clients, Jason, the number one thing I teach my clients when it comes to high stats networking is you need to be the person who always solves problems for other people and ask for nothing in return. A great example is, do you remember Harvey Keitel in the movie Pulp Fiction? [00:10:08] You remember he's the wolf? Do you remember Pulp Fiction? I haven't seen Pulp Fiction. Okay, so tonight you're going to watch Pulp Fiction. Every single other person watching this has watched Pulp Fiction. [00:10:17] Jason: I know, everybody else has watched it but me, so.  [00:10:19] Michael: There's a point, there's a point where they have to clean up a dead body and they have to call this guy named the wolf and he just, he fixes things. [00:10:25] He's a cleaner. The wolf shows up in his Acura NSX, it's Harvey Keitel and he just fixes things. He goes, "are you going to listen to me or do you want to go to jail?" And he does, he just fixes everything. That's what I become. I'm the guy who fixes things for other people. I have a bunch of friends. I help them find people for their sales team. Most of my friends have met their boyfriends or girlfriends through me. I help people find their employees. I'm the hub. I'm the hub of the social wheel. And that's what I teach you to do in my course. If you cannot replace your social circle, your girlfriend, or your job in 15 minutes, you don't have enough abundance and I need to teach you how to have more abundance. [00:10:56] And so how do you do that? There's just certain mechanisms that people who have an abundance mentality and understand networking have, and when they use those techniques, then they can have anything they want. They get into any door. So another example, Jason is like the guy who goes to the Tai Lopez conference or the Taylor Welch conference or goes to see Cole Gordon or goes to see Wes Watson or goes to see whoever. [00:11:17] The guy who is like, "Hey man, thank you for your time." The one who like goes and pays Patrick bed David for his counseling. And then there's the guy who Patrick Bet David who goes to see Patrick David for his counseling. And then Patrick David was like, "Hey man, can I come visit you and hang out? Come meet my wife. Let me take you out to dinner." Does that make sense? There's a mechanism you'll see, like with a lot of people have asked me this before. Why is it that, you know, other people are like paying to listen to Justin Waller speak, but like Justin Waller and I are like close friends? [00:11:42] Why is it that other people like buy Rollo's book, but Rollo is one of my best friends? Why is it like all these other people call me and I'm not trying to say this to brag, but the reason why I'm trying to say this is there's a status line that you get to where you're a customer, and then you're his friend. [00:11:56] How do you cross that status line? This is such a key for those of you who are like, trying to get into sales or trying to understand networking. It's just like, I'm paying this guy, like how much, like I'm paying Tony Robbins. I'm a customer. I'm customer. Now Tony's like sending me messages on my birthday. [00:12:09] What is that status line? Some people's like, "well, you just need to have more money." And I'm telling you that is not what the case is. That's definitely not what the case is.  [00:12:15] Jason: Who would want to connect with people that they're only connecting with you because of money? I mean, that'd be a really shitty reason to be connecting with somebody.  [00:12:22] Michael: In the beginning, you will. But after a while you learn, whenever I go up and talk to my favorite influencer, let's say I paid for his coaching program is my voice cracking or my eyes getting big is my vocal tonality changing because I see this person as high status. [00:12:38] Am I dressing too fancy to try to show off? Am I doing too much or am I just like just the normal dude? I am. Oren Klaff, one of my favorite YouTube content creators. I don't know if you are not Oren Klaff. I'm sorry, Orion Terriban. All right. His name is Psych Hacks. Well, I had him on my show a couple of days ago. [00:12:54] He kind of converges behavioral economics with evolutionary psychology. And he basically talks about the sexual marketplace as far as economics is concerned. Okay. Really great person. Have him on my show. Ask him a bunch of stuff during the show. One of the things I talk about is like, "Hey, Orion, I know that you do some sales stuff, some coaching stuff. If you want my help, I'll help you how to, you know, put out a low ticket offer, high ticket offer, how you can like buy back your time." he's like, "yeah, you know, I can't scale myself that much." I was like, "okay, so you're going to read buy back your time by Dan Martell." [00:13:21] And then I gave him a bunch of books, you know, that would probably help him. And then at the end, I was like, bro, anytime you want to call me and you ask me about any of this stuff, I'll help you. The guy who has the world, you guys look it up. The guy with the world record in the high jump on planet earth is a guy named Darius Clark. He went to Texas A& M. He's the leading scorer in slam ball. Have you ever seen slam ball, Jason? Remember the trampolines and the basketball, they go dunk on each other. Anyways, I bumped into Darius at a slam ball game. We started talking and I'm, and then Darius is like, "Hey man, I want to level up my social media." [00:13:50] And I'm like, "Darius, let me figure out ways that I can help you level up your social media." So it's like one guys are like a professional athlete. Another guy's an accountant. You might be saying like, "why is it you're able to do all these different things?" And the reason why is because these are evolutionary problems. [00:14:04] These are evolutionary challenges that all men we're looking for. There are three things that really differentiate men from women. Three massive things. There's more than three, but these are the three biggest ones. Jason here. Number one, this is the most obvious one. It's upper body strength. Men are about two standard deviations stronger than women as far as upper body strength, meaning the medium grip strength for a man it puts them in the top, you know, 98 percent and top 2 percent of women. Makes sense.  [00:14:27] Jason: Yeah. Which also throws off our balance is higher. Yeah.  [00:14:31] Michael: Correct. Also. Yeah. It also, there's a reason why some of the reasons why men live shorter lives is because they keep their weight up here around their waist. [00:14:37] Whereas women keep it below their hips. And that's really, it's further away from their heart. There's a couple other things according to that now that's the first thing. The second one is a variety of sexual partners. Men are again, two standard deviations. Yeah. Far more like meaning the median man is interested in more women than the other way around but puts them in the top 2%. [00:14:55] But the third one, and this was a really interesting one and I knew this one, but it was Tai Lopez I was at his house last Wednesday. And he was explaining this, do you know the main thing where women just do not care that much about at all? But men are obsessed with, you know what it is? It's in your title. [00:15:09] No, it's in your title.  [00:15:10] Jason: Let's see, friends, high status, what I don't know?  [00:15:13] Michael: Status. Women in general do not care as much about status as men do, meaning women don't kill each other over status as men have been doing for the last hundred thousand years. So in fact, Dr. Buss, women care about men having status. [00:15:26] Jason: Women care about men having status.  [00:15:28] Michael: Women care about the men that they're with having status, yes. Yeah, okay. Yes. I see. Meaning they care about status as an object to obtain, but not as a something for themselves. Or rather, if you've ever, if you've ever lived on a military base, it's one of the strangest things. [00:15:41] Whoever the base commander's wife is, she's like the leader of the wives. It's so weird. She did nothing. She didn't go to officer school. She didn't do shit, but because she's married to the 06, the base commander, whenever they have engagements, she is... it's so funny. Anybody who's been in the military, you know, this is true. [00:15:58] Whoever the base commander's wife is. She's all of a sudden like the leader of all the events, even though why? Because she's married to the base commander. That's the way it works. So men, women in general in gendered into themselves, don't care as much about status as men do men severely care about status far more than women do. [00:16:16] And so because of the, these concepts, that's why you'll see like with a lot of the stuff I'm saying when it comes to sales, this is for men and women, but when it comes to dating, women do not sit there and have to show their status in order to attract men. But the other way they do. Does that make sense? [00:16:29] Yeah. And that's why it's like an important differentiation to make. And that's one of the other things I teach in my course. Like when you also, when you're selling to men versus women, it's something that you need to understand. You don't necessarily need to sell to women based on status. Like how, "Hey Sherry, how'd you like those big shoulders to show off those muscles to get those guys?" No, they don't. It's that's a status thing shoulder to waist ratio is like a male strength machismo testosterone status thing that women just aren't as interested in, you know, so there's just interesting concepts like that. [00:16:59] This divergence innate differences between men and women and where do we find these differences? We find them in evolutionary studies.  [00:17:05] Jason: So I think it's really interesting what you talked about earlier. You mentioned like this gravitation towards basically what works, right. And we see this everywhere. [00:17:14] Like I've been in lots of different programs. I've worked with lots of different mentors, coaches, read lots of different books and I'm noticing more and more I evolve as a human being. I'm noticing more and more parallels between the best ideas. Like I just read a book on kids. It was like how to talk so kids will listen and how to listen so kids will talk. And it's probably one of the best communication books I've ever read. Like anybody could learn from reading this book because to some degree, we're all little kids in bigger. [00:17:44] Michael: Even without kids.  [00:17:45] Jason: And also I was like, this is brilliant, like self talk like psychology even in this book. [00:17:51] And I'm like, this could be applied to so many different things. And it talks about empathetic, like being empathetic in your communication. I'm like, this is brilliant. This will work so effectively for sales or for anything. And people think, "oh, it's for kids." Right. And so what works works. [00:18:05] And I read another book, something about relationships by David B. Wolfe. It was a really good book, and this was for grownups, but there were so many parallels between these things. And you had mentioned also with dating and you know, for example, sales really, there's so many parallels between going out and trying to get clients and trying to get dates. [00:18:27] Michael: The higher you go, they're not parallels. They're exactly the same. When you get to the top, they're exactly like what I'm saying is when you get to the top, meaning like Hugh Hefner, like when you're at the top and then you just see, it's just a total presentation and it's nothing but just showing status. [00:18:42] Oh, it's the same thing. It's the same. I bought a Tesla that like Playboy is a brand. Tesla is a brand. You start to see they're doing the same thing to your brain.  [00:18:51] Jason: So for the business owners, listening to this, who are not trying to be Hugh Hefner. Right. They're not, and maybe they're married like me and they're not like trying to get women, but they do want to increase their sales. [00:19:03] They do want to increase their status and they want to figure out how to attract more business. What are maybe some of the things that they could do to be more attractive to the real estate investors that they're trying to get as clients?  [00:19:18] Michael: Yeah, I will tell you the first thing is you need to be a way more cognizant of how you are perceived socially and for a lot of people, one of the things you have to understand is the more things become digital and the more your image can be spread across social media platforms, the less your actual merit of your business matters and the more the perception of your business matters. [00:19:40] Jason: Yeah. How do they get an accurate view of how they're perceived?  [00:19:46] Michael: You could ask other people. I mean, generally the market is going to tell you, right? What is the price of of a commodity? The market's going to end up telling you right. In a free market economy, but it's like when you make social media content, you need to make them the content to market your business in a sexy, fun way that catches people's attention, but it doesn't have to be extremely representative. And I know this is really hard for a lot of people to do because they're like, "no, I'm just going to be myself and make content that feels organic." And I'm just telling you that doesn't work. [00:20:14] I don't care what Gary Vanderchuck told you. That is not the way the world works. Everyone else is stunting. Everyone is using FaceApp and Facetune. All these other people are just showing images and pictures of the best parts of their life. I post on social media all the time. I did not post anything about me feeding my cats this morning. [00:20:30] Like, the people want to see the cool stuff. That's just generally the way it is. So, you're, the way you are perceived on social media again, that's what we, you know, Men of Action, our group, is when you're in a community that gives you accountability and feedback to let you know, hey man, this is not a good post or this is a good post. [00:20:45] When we are on Instagram specifically instagram trades, a currency and that currency is called status. That's all Instagram is. Facebook is not like that. By the way, you guys will notice for those of you do any kind of marketing, Facebook is going to work really well for your 38- 40 year old audience and older. [00:21:01] And Instagram is going to work for your audience below 38 to maybe 28 and then maybe to 25 and below 25, it's going to be TikTok. And you'll notice, depending on which audience you're trying to get to, that's where you're going to see the most prevalence on those different platforms. Also, you're also going to see the most politically progressive of those platforms will be TikTok and the most politically conservative all those platforms will be like Twitter or X. So you, these are kind of the things that you have to learn. What you need out there is a perception that people have of your business and you have it as an entrepreneur. So you need to be trustworthy. You need to seem like, you know, more than everyone else, like you're a subject matter expert and you need to seem extremely motivated. [00:21:40] And in doing so as well, when you show images of your business and you personally, you need to show relevancy, competency, access to scarce resources, and social proof. Those are the things that will help. So what I mean by social proof? Other people in the industry following you on Instagram is a great way to almost look like a testimonial or maybe they leave comments. [00:21:59] That's a great way to show social proof, relevancy. Are you trying to use banner ads from 25 years ago? Or you're like, "Well, I'm still using email blasts." Okay. If I'm talking to a guy in real estate and he's telling me about email blasts, I know he's not relevant anymore. If I'm sitting there talking to stuff, if that's all he's talking about, right? [00:22:17] If he's sitting there being like, you know, he doesn't use Instagram, but he's got an SEO guy. I'm like, okay, he's not relevant anymore. He doesn't know. He hasn't changed things. But when I talked to a guy and he's like, "yeah, what I did was I started a podcast and in my podcast, I do 20 minute interviews with different people using restream. And then I have a guy come through and make clips and then I have, and then the best clips I end up promoting those clips on Instagram or using meta. Facebook Ad manager, meta ad manager, and in doing so, then I make the best ones and I turn them into advertisements and I put a CTA at the end." I'm like, okay, that guy's relevant, that guy gets it. [00:22:49] Jason: Then we're relevant here at DoorGrow.  [00:22:51] Michael: What you're doing is extremely relevant.  [00:22:52] Jason: If they have an AOL email address, they're like, "what's your email?" [00:22:56] Michael: That's exactly, it's not relevant.  [00:22:57] "It's aol.Com." [00:22:58] "I have a Facebook, but I don't have an Instagram." You're just not relevant. Like I can tell you're not relevant. When people are like, "well, my audience isn't on Instagram." It's like, it doesn't matter if your audience is on Instagram, you're trying to grow your audience. And by the way, the market will tell you what it wants. And every day, I'm sorry for those of you who don't want to hear this. Every day, each one of these platforms becomes slightly less relevant. Okay? [00:23:19] TikTok is on its uprise right now. Instagram is becoming less relevant because of TikTok, Rumble, YouTube, and Facebook to a certain audience is also already completely irrelevant. You'll see women below a certain age do not have a Facebook, but they do have an Instagram. [00:23:32] So the answer is to have all of them. All of you should have, you should be making 30 to 90 second content, the up and down type of content. Not landscape of profile content. You should be making that and it should be going on Snapchat. It should be going on X. It should be going on YouTube. It should be YouTube shorts, TikToks, and Facebook and Instagram reels. [00:23:50] It should be going at all those different places. You can use HubSpot or some other platform in order to post that content. And the content doesn't just have to be clips that go viral from podcasts. You can do man on the street videos. And here's a big one. All of you can do this. You can do reaction videos. [00:24:04] All of you can do reaction videos. They're so easy to do. And by the way, you don't even have to like, you're just like, "Michael, I don't know how to use OBS and I don't know how to do a reaction video." All you have to do is sit like I'm sitting right now. I'm in my den. You know, obviously I put some soundproofing behind me, but I'm in my den, I got a big ol ring light in front of me, and somebody comes up to me and goes, "Michael, what do you think about the Trump assassination attempt?" [00:24:23] Or "Michael, what do you think about, you know, Kamala Harris or whatever?" And I'm like, and I just turn my camera like this, like I'm talking, "Man, I'll tell you what I'm thinking. I'm thinking, blah, blah, blah, blah, blah, blah." And you just say, and as soon as people watch the video and they're like, "This guy's about to tell me what he's thinking." [00:24:35] Then everyone will watch. And then some of you are listening right now and you're like, "I'm just a property manager. I don't want to talk about politics. Really go watch Ryan Pineda. Go watch Bradley, go watch Codie Sanchez, go watch Tom Bill. You go watch any of these guys who are crushing it in their fields. [00:24:51] They give their opinions on everything. Did you guys hear Alex Hormozi now talks about dating? What? Yeah. You're building a brand. Status is status. Like nobody cares. This is the other thing, Jason, a lot of your clients, and this is something I've talked to you about, and everyone in my program hears me talk about this ad nauseum. [00:25:08] Is the concept of like, I'm afraid that I'm going to post the wrong thing and nobody holds you accountable for anything you have to say, like, I was just looking at a video of Kamala Harris at a P Diddy party, walking around with Montel Jordan. No one seems to care that ever happened. No one cares about Joe Biden talking about, "I don't want to send my kids to school with the monkeys." [00:25:26] Nobody cares about it. No one cares. Like you said, like Donald Trump had sex with a porn star while his wife was pregnant and they brought it up during the debates and no one cares. Literally one of the most popular movies of all time The wolf of wall street is a about a man who did 15 months in prison for securities fraud, punched his wife in the stomach, kidnapped his own kid, did quaaludes and slept with prostitutes, and then afterwards, he is one of the top sales trainers in the world today. But you guys think anyone cares. Caitlyn Jenner runs over someone, kills them, and then four months later is named woman of the year. But you're like, "Michael, I'm a property manager. What if I post the wrong thing?" Here's another thing, Jason, and this is a poor reflection on humanity, but it's absolutely true. [00:26:09] If you get popular enough, they will forgive you for anything. And if you don't believe me right before OJ died, I had a conversation with him and they had offered him millions of dollars to do a fantasy football podcast, and I was like, OJ, what about those people you stabbed 56 times? Nobody cares. So many of you are watching this right now and you're like, you have 400 followers on Instagram and you're like so worried about posting the wrong thing, bro. [00:26:32] You don't have 400 followers on Instagram. You have four followers on Instagram and one of them's your mom. No one cares what you're doing. Most of you on social media are irrelevant and because you're irrelevant on social media, in reality, you're invisible. Listening to this, when you ask me what the advice is, your job is to become visible. [00:26:49] Some of you will be offended by what I say and the rest of you will be successful. You've got to decide which one you want to be.  [00:26:54] Jason: So I'm going to play devil's advocate for a second here, right? A lot of property managers, they think "I'm going to go start posting about property management. And maybe I'll get some investors that want to like work with me." [00:27:06] And so they start posting property management with this false assumption that people really care about property management, right? And so the analogy I'll usually share with property managers is I'll say, "how many plumbers are you following on social media?" And they'll say, "none." [00:27:23] "Why?" I said, "they want your business. Why aren't you following them?" And so there's this false reality that these social media marketers will sell to property managers. They're like wasting their time. And some of them spend a lot of money and time with these social media companies, wasting time promoting their property management business on social media, when nobody gives a shit about property management, even their clients don't wake up in the morning and go, "man, I'm thinking about property management." [00:27:50] Jason, what should they be doing instead?  [00:27:52] Michael: Yes. Jason you saying that just got me. I want someone who's watching this to do this and then tag me in the video when you do it. Jason, as a property manager, do you ever have nightmare tenants?  [00:28:03] Jason: So to be clear for those listening...  [00:28:05] Michael: yeah,  [00:28:06] Jason: I'm not managing properties. I'm coaching property management business owners, but they would say, "yes," they have nightmare tenants. All the time.  [00:28:12] Michael: Do you ever have nightmare vendors? Like guys who come like when I say vendor, what I mean is the plumber, the carpenter, the guy who comes...  [00:28:18] Jason: Yes, they have problems with vendors constantly, they have nightmare owners. [00:28:21] They're managing properties.  [00:28:22] Michael: What about, well, I wouldn't do nightmare owners cause you're trying to get business. I wouldn't talk about nightmare owners. What I would talk about is. I would start off a clip just like this. "I had a nightmare tenant. This guy was destroying," and then it would just show pictures. [00:28:34] "This guy was destroying everything in the place. I swear. He didn't know how to, he couldn't aim and hit the toilet. He has just destroyed the place. And this is what I did to fix it. And here's three tips for you to deal with a nightmare tenant." Viral. Yeah. Viral. Not only are you viral. Everyone's coming to you. [00:28:52] It's like, "man, I don't want a nightmare tenant. I just bought this two bedroom, two bathroom. I don't want a nightmare tenant. I'm going to go do what he does."  [00:28:59] Jason: I don't want it to be a meth house eviction. Like, yeah.  [00:29:02] Michael: Yes. Yeah. You know what i'm saying? Like that's what I would do. I would go over like what are these and because what you're going to do is what are the biggest fears of the people who are hiring property owners, my nightmare tenant, my tenant who doesn't pay. Like those kind of things, and I would make content. What are the three steps that I did to do with the five tips that a lot of people's in this place don't do right? I would make content like that. And you could do opus there's these ai software apps that'll basically take the clip and then they'll just inject B roll that fits whatever the words you're saying. [00:29:33] You don't have to hardly do any work when you do it and then all of a sudden it's like, "it was a nightmare. This guy's made my place look like a roach house. Roach infested." And then it'll actually pull up an image like a whatever, a stock Shutterstock image of a roach infested home, whatever. [00:29:47] Jason: Now they're using ai. Even I'm seeing a lot of AI images Just flashing. Yeah. Yeah. Or, yeah. Correct.  [00:29:51] Michael: It could actually illustrate using artificial intelligence, illustrate the image for you. You could actually do that. So you don't have run into any copyright issues. Right. Or any permission issues. [00:30:00] There's just so many ways to do this. But what are you doing? You're showing relevancy and competency. You know how to use Instagram. You know how to create a clip using artificial intelligence. You have good audio. You have good lighting. You're showing relevancy. You're showing competency. You're showing high intelligence. [00:30:15] You're showing high social status. And then in the comments, you're like "LMAO." Like people are laughing my ass off. "This happened to me." "Oh my God, Jason, same shit." "100 percent true." And now I have social status. I have all these things. Why? Because I made some content that was engaging about something that is incredibly unsexy, which is property management. [00:30:35] That's how you do it. What are those ultimate fears that your prospective clients have? And I would just do nothing but make content about that. I have a friend of mine, FedEx fearless. His name's Bismarck. And this guy, he goes, "these are three reasons why you are ugly." And I'm like, "what?" [00:30:48] And like, he really goes after people. "This is the reason why your girlfriend is cheating on you right now." And everyone just, I'm like, "what?" And I don't want to watch, but I'm like, I need to watch this video.  [00:30:57] Jason: What's going on there? Yeah.  [00:30:59] Michael: It's so great. It's so great. " No, Michael, you need to be authentic with your social..." no, you don't. You don't need to be authentic. You need to capture people's attention. You need to be attractive. Your primary job is to be attractive on social media. Now what happens is now you got them with the hook, "Here are the top three things that I do to deal with this horrible tenant that I have" And then when they come in the hook now throughout there you give those three, explanations But you also throw in a little piece of advice that shows just a little humble brag that shows "In my 27 years of property management, this is the thing that I've learned." [00:31:30] Okay, little humble brag. And at the end, it goes, "if you want to learn more, comment, the word guide below," or if you're on YouTube, you'd be like, "go down into the description and click the link. And then blah, blah, blah." And it just ends up right down your sales funnel, maybe to a low ticket offer, maybe an ebook that you wrote something like that. [00:31:45] And the next thing, you've 10xed profits. You've 10x revenue. You're selling a course on property management while writing a book on property management, while having a podcast on property management, while being a property manager, all of it at the same time. And then you got to hire a new accountant because you got too many write offs. [00:31:59] Like you don't have enough time to pay your taxes. You got to get too much money. That's it. That's how this works. And that's about what I just explained to you. It's just the difference between getting it and not getting it, being relevant and not being relevant. And so a lot of people, what they're, they listen to me and they always make me out to be the bad guy because cause what I do is I tell people, no one cares about you. And no one likes to hear that. They like to think that the rest of the world cares about property managers. But like you said, no one's following plumbers. Right. But if I was a plumber, I would do the same thing, "man, I walked into this house and this toilet had exploded and just have an image of it." [00:32:30] And it'd be like, "okay, I need to hear what this is." "And then a monster crawled out of the toilet." I'm just kidding. And like, I would just, that's what I would do just to keep people's attention.  [00:32:37] Jason: So for those listening, can we qualify you a little bit related to social media, because you've got a good following? [00:32:43] You've got a sizable business because people listening if they don't know who you are, I want them to recognize you're very qualified to talk about this. Not so humble brag about yourself for a second.  [00:32:55] Michael: I have a men of action. We have 1600 clients that have gone through there. [00:32:58] 200 video testimonials if you go on the school server. And also we have a free community a free school server. What's about 43-4,500 guys in there. You're welcome to message. One of the things that I've told people is that if I join a group and they tell me not to talk to the other people in the group, I know this is a scam. [00:33:12] You'll notice sometimes with MLMs, you'll see that. I implore you to talk to anyone, any client that's ever gone through my program and they will tell you how incredibly satisfied they were. Also you, Jason, I'm sure you've seen my course is extremely comprehensive. It's about 65 hours long. That doesn't even include the live calls. [00:33:29] And then also there's a book, there's a required book list that you have to read in order to go through the course.  [00:33:33] Jason: I'll tell you right now, like an eight figure business for you.  [00:33:36] Michael: Just today, we've done eight figures in total, but as of this month, this is the first month we'll recross the mark. [00:33:42] It was what? 833 a month or something like that. We cross that this month. So that's about, yeah. So we're doing about a little bit under eight figures in revenue per year.  [00:33:50] Jason: This is more than any property managers probably listened to my show. So just for perspective. Okay. Yeah. Got it.  [00:33:57] Michael: Yeah. I mean, because coaching is scalable. [00:34:00] That's the reason why. And like the other thing I want you guys understand is a lot of people got into real estate because they were trying to find a scalable way of making income and they're using you to make their lives scalable. So if you guys read, buy back your time by Dan Martell, they're paying you to buy back their time as real estate owners. [00:34:15] That's what their job is. And essentially you're going to eventually do the same thing. You're going to pay someone to buy back your time from them. So the main difference, and I'm sure many of you entrepreneurs already know this, but. When you start off in the workforce, you are trading your time for money. [00:34:28] You're working at Chick fil A or McDonald's and you're being paying an hourly salary later on. You're trading your money for time. I pay one guy. He comes into my house. He turns on my computer, he turns on my camera, he turns on my lights, he sits me down, and then he just starts yelling at me to talk about certain subjects, and I have no idea, I'm just like, drinking coffee, and I'm like, what up, and he goes, "what do you think about this?" And I'm like, "oh man, let me tell you something, and then they record it," and then it's just a reaction video, and I do nothing. [00:34:53] I pay to get my time back. I have several editors that live in Romania and Nigeria and all these, because I don't want to edit videos anymore. I used to be a video editor and a videographer. I don't want to do it anymore. I pay one place to do the live editing for my podcast. I don't want to do that anymore. [00:35:07] I pay to get my time back. For those of you who are considering hiring a personal assistant, once again, highly recommend Dan Martell's book, Buy Back Your Time. In the book, he talks about taking your yearly salary and divided by 8, 000. And that's what you pay the guy hourly. Take your yearly salary, how much you make in a year, your yearly income divided by 8, 000. [00:35:24] That's it. They go over the reason why, but it ends up becoming like a 40 hour work week. You end up paying him one, you pay him half of what one hourly wage for years. So if your time is worth a thousand dollars an hour, you might pay him 500 an hour to get certain things done for your life. And one of my favorite sayings in that book is something done 80 percent right is 100 percent awesome. [00:35:43] And like, it was one of the hardest things to give up. The guy who does my timestamps, that was really hard. I love doing timestamps because timestamps were giving me clips and those clips would go viral and the virality would make me money, but I had to give that up. And eventually you're going to give up all these processes. [00:35:57] Another thing I'll explain for you guys who are entrepreneurs, one of the greatest tools you will ever find is an app called loom. Look up loom. What loom is allows you to make videos, but the video it's like, it's showing the screen on your phone or it's showing the screen on your computer while they're listening to your voice and you send it to your person. [00:36:12] So like, for instance, I do mass invites for certain events that I do. So I'll go on loom and I'll have a guy, maybe he speaks you know, Farsi or maybe this guy speaks like his English. Isn't that great? What I'll do is I'll go through my invite slowly and I'll do it like for 30 minutes, I'll just do invites and I'll show so he can see what it looks like. [00:36:28] And then I send it to him and then he looks at it and he has no questions. And my invites are done like that. Loom is one of the greatest way of passing along SOPs to people and then using them in order to buy back your time. So understanding all these concepts, it makes you more relevant, makes you more competent. [00:36:43] It gives you higher status. It gives you more access. And these are the things that you're looking for. In any walk of life, but especially in something like property management and you guys also understand as property managers Your job isn't sexy So what you have to do is you have to show the sexy parts of your job, right? [00:36:57] When I my favorite one are accountants and dentists. They're not my friend my friends who are dentists who know what they're doing, they show the fucking horror job teeth, You know car accident, messed up teeth, meth addict, whatever, and then they get the teeth back to 100%. And like me, as someone who doesn't care that much about dentistry, I'm just like staring like, "Oh my God, that was incredible." [00:37:17] Yeah. what you do is you figure out people's primary driver emotion and their biggest fear. And then from those things, from the primary driver emotion and their biggest fear and from those things then you make your content attacking those primary driver emotions and those biggest fears, okay. And when you do so it doesn't make any difference if you're an accountant It doesn't make any difference if you're a property manager doesn't make any difference what it is that you sell people will watch and they will be obsessed. [00:37:42] My brother, he watches videos of horseshoes. They basically, you know, they shave off the end of the horse's hoof and then they put the shoes on. He said it's like the most relaxing thing in the world to watch. And I wouldn't even think about that, but why is it? It's like something we don't even think about that much, but it's pretty amazing. [00:37:56] Like when you see, it's like very relaxing to watch stuff like that. You can do stuff like that.  [00:38:00] Jason: There's a guy that's viral for just, he finds distressed houses. And he just cleans up their lawn and the sidewalk. He's like, "Hey, could I mow your lawn? And it's like relaxing to watch the transformation." [00:38:12] Yeah.  [00:38:12] Michael: Another one that's great was if you guys watch the early Ryan Pineda stuff, what was he doing? He was flipping couches. He would find crappy couches, clean them up, and then he would sell them again. And he made a living from flipping couches. There's just all these different things. And like the concept of it sounds so boring, but I want to watch someone do it. [00:38:28] Right. It was the one where you'd buy those storage units and then you'd see whatever's in this. Oh, I forgot what that was. It was pawn shop, pawn stars or something where the people would buy storage units and open up in there. And there's like, sometimes there'd be nothing in the storage unit. Sometimes there'd be like a dead body in there or some crazy shit. [00:38:41] Like they find like a skull and like all of a sudden. Bag full of money. Yeah. Yeah. By the way, you guys know the producers were putting that bag of money in there, right? Like that wasn't real. That wasn't real.  [00:38:52] Jason: Reality TV isn't real either. You like to say social media isn't real and that's okay or something. [00:38:58] Michael: So rule number four in men of action is social media is fake and I'm okay with that because the money's real. And the world isn't fair. And I'm okay with that.  [00:39:05] Jason: Yeah.  [00:39:06] Michael: The world isn't fair and I'm okay with it. Rule number four in a, in social and of action is about acceptance. It's about accepting the world the way it is and never being a victim. [00:39:14] It's sure things are hard for you, but you're never a victim. You might be too short. English might not be your first language and you're having a hard time speaking it. You might be born poor. You might be born with some kind of ailment or disability that you feel like holds you back, but that's where you are. [00:39:27] You start from where you are. And then you create from there. Okay. You were saying something before about how you notice like all these books kind of converge in to the same place, three books that have nothing to do with each other, but it's the same concept. Ready? The power of now by Eckhart Tolle, the subtle art of not giving a fuck by Mark Manson and sapiens by Yuval Noah Harari. [00:39:45] You're like, wait a second. It's all the same thing. It's all the same. It's all this. I get to choose how react. I get to tell myself stories that change my behavior. It's all three of these books that have nothing to do with each other end up being the same book, not exactly the same book, but similar books. [00:40:00] Because once you get to the highest levels of enlightenment, transcendence, goal oriented communication ends up being the same thing for everyone.  [00:40:07] Jason: There's a one of my favorite books is by Byron Katie called Loving What Is. And basically, she takes you through this process of just asking yourself these four sort of questions to challenge your current view of reality. [00:40:21] And it takes you out of this victim sort of view. It's very much like cognitive behavioral therapy, maybe, or something like this, right? Yes. Or CBT or something. But yeah, so asking this question, is this belief that I have actually true? And a lot of our beliefs that we're holding on to that are holding us back. [00:40:36] And like, if we're not getting results in life, it's because we currently have beliefs that are not working for us. And so, if you see people that things are working well for them, even though you think, like, somebody might be watching right now going, "Michael is completely full of shit. He's throwing out all these crazy stuff and he's, he worked at a strip club" and somebody's like, so against that or whatever. [00:40:56] They're like their own stumbling block and they're in their way and they won't pay attention to the truth or the things that you're sharing that are good because they're so stuck on everything in the universe having to look a certain way that they are not even open to receiving more, they're not willing to challenge their own thinking. [00:41:13] They're not going to progress. They're going to stay stuck.  [00:41:16] Michael: They identify more with their identity than they identify with success.  [00:41:20] Jason: Yeah. Good way of saying it. And I love how you talked about kind of these currencies. One of my mentors in the past was Alex Charfen. And he's from here in the Austin area as well. [00:41:30] And he was talking about time, energy, focus, cash, and effort. He calls the five currencies. And Hormozi went through Alex Charfen's like coaching with me. I met Layla and Alex in this. And one of the things that I then saw Alex talk about these currencies. But what I thought was interesting is Alex said the most significant of those five currencies in order to scale and grow your business is focus. [00:41:52] It's the most important to scale, grow a company. And then Dan Martell, I once saw him teach this framework that was, it was like about the power of one. He's like, "the most effective business is a business has one sales funnel, one product, one..." it was like all ones, like, And I see property managers, a lot of times they'll try and like start five different businesses. [00:42:14] They're like, I'm going to start a cleaning company, a maintenance company, like all these other things.because they're complimentary real estate brokerage. And then they wonder why none of them are growing because they lack focus. And so all these things kind of converge, making sure that we have focus. [00:42:28] You also mentioned Dan Martell, who I think is a brilliant entrepreneur, he generally was coaching like software companies, SAS companies to help them grow and scale, but his stuff's applicable to coaching businesses. I've noticed it's applicable to anything because the principles are valid. [00:42:44] And one of the things I've had my clients do to get them to that next level, to basically get their time back is to have them do a time study to where they become accountable for their time, which things are positive and which things are negative, like plus or minus, which things give them energy in life and which things take it away in their own business. [00:43:00] And I have them do this like usually once a quarter. And when I did my first time study, I realized I was doing like four hours of podcast production in a week. It all added up and I was like, holy shit. So then I just hired a company to do it. It was a no brainer to let that go because it was stupid at that point for me to hold on to that once I could see that challenge. [00:43:20] And you mentioned loom, awesome tool for like one of my favorite tools, like it, which is next level. It's like loom, but it's Wistia's video recorder. It lets you actually record the screen and yourself. And then after the recordings made. You can then have it mid recording. You can switch which parts are showing and have segues between the two. [00:43:42] And it's super fast. It's like super cool. But we use tools like that.  [00:43:46] Michael: Productivity. Yeah, definitely.  [00:43:47] Jason: Yeah. So, I love all these ideas for collapsing time. Michael has dropped several awesome tools, knowledge bombs, ideas for those that are listening and also how to leverage content social media wise. [00:43:59] So what you know, if we were to bring this full circle what would you say is the most important thing that maybe business owners or property managers could be doing to scale and grow their business?  [00:44:13] Michael: Right now? Again, one more time. It is: understand, your ability to grow is based on your perceived status, your perceived trustworthiness, your perceived know how. Not your actual know how. Like, I can tell you so many guys that I know that are real estate experts on YouTube. And then I have my friends of mine that are real estate agents. And they're like, "that guy doesn't know shit." And I'm like, "no, he's coaching the white belts." That's the why, the reason why he says the things that he says. [00:44:39] And they have a hard time dealing with it. So, understanding that concept. And then. You have to leave yourself. You have to subvert your own ego, go on places like TikTok or Instagram places you'd never think to go to, and then look at who's going viral, who's in your exact industry, and you're going to need to take pieces from what you see. [00:44:56] Like, what are the kinds of videos that do really well? And you're going to be able to find those very quickly. You can literally right now would go on Tik Tok and look up property management and you'll find a bunch of videos, like just pick the ones that go the most viral or a real estate, a podcast, and then pick the topics that go the most viral and just blatantly steal them, steal, blatantly steal everything. [00:45:19] You in the beginning, no creativity necessary, just steal. Okay, and you do that for a while and then you start to sort of get your footing And then you start to realize wait a second, I've been running ads and my ROAS per dollar my ads is x 1. 2 or 2. 0 or whatever but in organic my cost per lead is like nothing because my organic traffic, it costs me so much less to get a lead. [00:45:44] It's incredible. Then I go on someone else's podcast because my content is getting better and better. And then all of a sudden now, you know, Rich Summers and Ryan Pineda want me to come on their show to talk about, you know, maybe I'm on ice coffee hour or whatever, talking about real estate. [00:45:58] And then I get on bigger and bigger shows and now my cost per lead decreases even more because I just had this simple understanding that the way it works is my perceived status my perceived know how and my perceived trustworthiness to other people are the reasons why people will buy my product. Now you may already obviously everyone who's listened to this if you have any success in property management You already have your funnel is probably dealing with either word of mouth shaking hands, or it's dealing with some sort of paid advertisement, but I implore you try organic. Try to use organic and then organic meaning using Instagram posts or Facebook posts. [00:46:33] And then once you do that, try to take your best content and turn your best content in an advertisement and promote those, promote that content. That's something we've also been doing. And if you want examples on everything I just said, a great book, a great place to start is the 100 million offer series by Alex Hormozi. He goes over every single thing that I just talked about. It's absolutely fantastic. It's really great stuff. The difference is with my program, MOA, we're a little bit more bespoke for what it is exactly that you're doing. But we're mostly talk about networking. And then the other thing is, When you actually meet that person in person that you want to work with, do you come off as a fan boy? [00:47:06] Do you come off as too eager? Do you, does your body language show signs of neediness or signs of low status? Are these things that you can watch? And then how do you figure that out? You watch yourself on camera. Do you watch yourself on other people's podcasts? Because that's one of the things is like as social media grows and more people are exposed to more people, just remember like if you consider in the plasticine, you know, we live in hunter gatherer societies of 150 people and now we can legitimately have a hundred thousand friends on social media in that kind of situation because we're exposed to more people, we are more attuned to status, physical appearance, et cetera. And so now what happens is humans essentially become more shallow. [00:47:46] They become more attuned to other people's status and rightly or wrongly. Is it a negative commentary on humans? Yes, it probably is, but it's the world you live on. And if you want to get rich, you need to listen to what I'm saying. And if what I'm saying, offends you, get ready to stay poor. Like, I'm sorry. [00:48:01] If you guys are listening to this right now, and you're like, "No, social media is going to go away and we're going to go back to walking up to doors and do an email blast and buying banner ads." If that's what you think, go back to your AOL. com email and just keep believing that's the case. [00:48:16] It's all about the handshake. It's like, if that's what you believe, that's fine. But for the rest of you who are ready to understand that if you think things are bad, I got news for you. They're only going to get worse. Meaning people aren't going to put their phones down at dinner. People aren't going to take fewer photos. [00:48:30] People. I was reading something. It was like, like in one day, now more photos are taken in like an hour than were taken during the entire year of 1985 or something like that. It was like the amount of photographic and video data that's uploaded in one hour exceeds the total photographs taken in an entire year back in the 1980s. [00:48:49] Some absurd number like that. If you think things are going in one direction, things are getting faster. They're more virtual. They're more digital. Digital, they're going to be controlled by artificial intelligence and they're going to be more scalable. You need to get on that train. The train is leaving. [00:49:05] You need to get on the train. Now, if you don't want to get on the train, that's fine, but notice as the world passes you by and the rate at which it passes you by only increases every year. If you want to learn about that, read Ray Kurzweil series called the singularity is near, and you can see how he talks about the rate of change is increasing, and then the rate of change is also increasing. [00:49:24] Jason: Okay, so this is awesome stuff. So Michael one thing I want to point out for those that are listening. Because I think you've sold your Men of Action short a little bit. So I'm gonna, I want to say something about it because what I think is in, what people think is in there probably based on what you're saying is it's a bunch of social media stuff and it's like how to, maybe how t

Have you ever considered how vulnerable your practice might be to a cyberattack? In this episode, Reuben and I delve into the alarming issue of cybersecurity threats targeting the dental industry. With recent warnings from the FBI about credible threats, it's clear that dental practices need to take cybersecurity seriously. We explore the potential consequences of these threats, the crucial need for comprehensive security awareness training for staff members, and essential steps to prevent email-based attacks.The conversation goes in-depth into why using Microsoft 365 for enhanced email security is a game-changer for dental offices. Reuben also discuss the importance of working with IT experts to set up robust cybersecurity measures. Whether you're a dental professional or someone concerned about the security of sensitive patient information, this episode offers loads of practical advice. Don't miss out on this vital information that could protect your practice from devastating cyber attacks.What You'll Learn in This Episode:What are the credible cybersecurity threats currently targeting dental practices?Why is security awareness training crucial for dental office staff?What steps you can take to prevent email-based threatsHow Microsoft 365 can enhance your dental practice's email securityWhy should dental practices consider consulting IT companies for cybersecurity solutions?Take action today to secure your dental practice's email communications and protect sensitive patient information!‍‍Sponsors:For DSO integrations, startup solutions, and all your dental IT needs, let our sponsors, Darkhorse Tech, help out so you can focus on providing the amazing care that you do. For 1 month of FREE service, visit their link today! https://thedentalmarketer.lpages.co/darkhorse-deal/‍You can reach out to Reuben Kamp here:Website: https://www.darkhorsetech.com/Email: sales@darkhorsetech.comPhone: 800-868-4504Facebook: https://www.facebook.com/DarkhorseTech‍Mentions and Links: Businesses/Services:Henry ScheinAspen Dental‍Organizations:HIPAAFBIChange HealthcareUnitedHealthcare‍Software/Tools:DentrixEaglesoftOpen DentalChatGPTOutlookMicrosoft 365G Suite‍People:Bill Gates‍If you want your questions answered on Monday Morning Episodes, ask me on these platforms:My Newsletter: https://thedentalmarketer.lpages.co/newsletter/The Dental Marketer Society Facebook Group: https://www.facebook.com/groups/2031814726927041‍Episode Transcript (Auto-Generated - Please Excuse Errors)‍Michael: Hey, Ruben. So talk to us. What's happening right now for this Monday morning episode, we're going to be talking about something specific when it comes to security, Michael: What's going on? Reuben: Emergency pod. First of all, emergency pod, Michael. Michael: All Reuben: right. You know, those, uh, Reuben: those sirens Instagram are overused, but in this case it Reuben: does apply. FBI warns of credible cybersecurity threats of the dental industry. that's why we're talking today. Michael: Okay. So what's happening. This happened. One of the articles we're looking at is on may 8th, so Michael: like not less than a week ago, less than a week, a couple of days ago, something's going on specifically with this cyber security threat. To all Michael: dental practices everywhere in the nation or Reuben: yeah, so it is morphed into that over the last few days. So basically, uh, the FBI was monitoring, uh, a hacking group, Reuben: connected to change healthcare, connected to United Healthcare, connected to Henry Schein, connected to Aspen. You know, all these groups have obviously made the Reuben: headlines in the last uh, year or so uh, change healthcare, obviously being uh, most recent, Reuben: they were actually investigating a threat because they were attacking the plastics. Surgery market. And Reuben: then they shifted their focus to Reuben: oral surgery. And that's kind of, that was the, the Reuben: splashy update from last week, right? Reuben: May 6th, May 8th. And now the FBI uh, FBI is Reuben: basically saying general dentistry is now being targeted as well. So, Reuben: See, it went from outside the dental industry to a dental, you know, specialty. And now to the majority of dental practices out there are you Uh, actively being targeted. Michael: So then a couple of things, I mean, we Michael: obviously want to know what to look out for, but what's the consequences here? Michael: If let's just say. We did end up accidentally doing something that we weren't supposed to do, like Michael: opening up an email or clicking specific Michael: link, you know, stuff we don't really know. Reuben: Yeah. Let's all the way to the end is you're bankrupting of practice, right? We Reuben: go back one step that is, you know, uh, the Reuben: overwhelming majority of practices that suffer a cybersecurity attack go out of business. All right. So we're starting at the end, we're working backwards. So that, that means. you, Or if you are a doctor or a staff member, you Reuben: clicked on a staff member, clicked on it. an email, a link that downloaded a payload to your office, right? Ransomware is, is most of what we're talking about here. Reuben: And that ransomware, let's say you're running Dentrix or Eagle software, open dental, one of these, uh, you know, server based practice management Reuben: softwares, that ransomware was able to embed itself into your practice management software, right? Patient health information, Reuben: uh, x rays, uh, social security numbers, medical history. You know, all the stuff that we call protected health information or EPHI electronic protected health and Reuben: they get that data and they exfiltrate it or take it out of the office, that is a Reuben: breach, which then feeds me into most practices that go through a breach, go out of business, and then you're, you're no longer an owner of a practice, you're an associated at another practice. I guess that is actually the last step. And that Reuben: is why this is so important is because Reuben: it's so darn easy to protect yourself from this Reuben: happening. But only 6 percent of the dental offices out there are HIPAA compliant. So hackers go, wow, we have a 94 percent Reuben: chance of getting into this office. Thank God. But, and that's why, Reuben: Honestly, it's like Dennis and the, the only really industry Reuben: less compliant the dentistry, Reuben: you guys can make fun of them is chiropractors. Reuben: So, Hey, those are the industries that, that are go after because of the lowest hanging fruit. if you Reuben: have dogs at your house, and Michael, you know, Reuben: I have, you know, 10, 000 dogs that live with me, Reuben: a robber does not want to come rob my house, because they're going to be attacked by a bunch of dogs. they want to attack the house. That the owners are on vacation, there's no animals, it's dark, you know, they Reuben: are opportunistic just like any other profession. So Reuben: that is why they're going after the dental industry specifically. Michael: Gotcha. Something you mentioned, man, where you said staff members click on it. I think the most common Michael: thing. I mean, one of the practices I worked at the actual doctor clicked on it and Michael: ended up paying. But like with, when it comes to the staff members. Do they need to receive specific training for this? Or Reuben: yeah, we call it security awareness training or SAT for short. Uh, not to be confused with the test Reuben: that is, it is coming back now. turns out it's a great predictor. If you're going to be okay at college, Reuben: um, I digress. So basically security awareness training trains your staff. who, You Reuben: know, you got to give to them. They're Reuben: busy. They're your phone calls. There's patients in front of them. They're scheduling, their billing, they're checking people out. There's Reuben: a lot going on. So you kind of have to, you know, if they do have an email come through Reuben: and it looks like it's from UPS, or it looks like it's, you know, from a Reuben: credible source and they don't, they don't have their guard up and they click Reuben: on it. It's Reuben: really hard to come down Reuben: on that person right? Reuben: You're expecting a lot out of them. And, and, and also, you know, be, have your, you know, your hat on your cyber Reuben: hat on and be vigilant at all times for through. So it's really important that you set up like. Let's not do a free Gmail account, right? That Reuben: has no security protection. Reuben: It's really important that you have an email system. I recommend Microsoft Reuben: 365 for all businesses that will stop those emails from coming in to begin with, because it never made it through Reuben: the spam filter. Right. Uh, the phishing filter. Reuben: So what's it worth that your staff. Doesn't even have to see that email that's worth a lot, right? Reuben: And then secondarily, let's say it is something that's more sophisticated, right? AI is obviously Reuben: playing a huge role in these emerging threats because it's no longer, you know, Prince of Nigeria Reuben: asking you for money who doesn't speak good English. It's like a perfectly crafted Reuben: email that's written by, uh, Beauty. so what security awareness training does is it, uh, it's a campaign. So like, if Reuben: I set this up, I'll randomly send out emails to your employees, right? If they click on a message that they Reuben: shouldn't have. have. Reuben: They are forced Reuben: down the training loop of, okay, Reuben: you have to go to school to realize like, what does a real email looks like? You know, is this Reuben: an external sender? Is it an internal sender? So it Reuben: really, it's just another, uh, training element, but you know, we're in the prevention business, right? I don't, I don't want Reuben: to clean stuff up. I want to play default. I want to block stuff from happening. And Reuben: of course the client wants that too. Michael: Gotcha. Okay. So then right now, what steps can we do or what to look out for? What can we look out for? What steps can we do when it comes to preventing this threat that's happening today? Absolutely. And Reuben: I'm going to focus on email because that is, the Reuben: FBI is, the warning is specifically tied to email. It's the easy, again, we talked about ease of Reuben: access is the easiest way to get into a Reuben: business is to send someone email. I can Reuben: send Bill Gates an email right now. Right. It Reuben: It doesn't matter. I have his email. I get sent to him. and so there's hundreds, thousands of practices out there that use Reuben: friendly smiles at gmail. com. So the Reuben: to action is sign up for a Microsoft account. It's Reuben: going to do two things. One, uh, it's going to give you that increased protection we talked about. Reuben: Two, It's more professional, right? It's more professional to receive an email, not from friendly smiles at gmail. com, Reuben: but office at friendly smiles. com, right? You're using your domain name. Reuben: tied to your website. It's professional. Maybe you have a signature. It just gives your, the people you're communicating with Reuben: patients, staff labs. an air that, you know, you are a professional Reuben: business. So, it Reuben: just have to be for cybersecurity. It can be to kind of raise your professionalism as Reuben: a business. Gotcha. So get that first. Microsoft three, six, five. Reuben: Microsoft 365. It's a, it's a suite of products, right? We use Microsoft 365 Reuben: for open dental cloud hosting, but we also use Microsoft 365 for email for Microsoft teams, for one drive. So Reuben: there's a lot to it, but we're really specifically talking about, email or some people refer to as outlook, which Reuben: is a specific email product that Microsoft offers. Okay. Michael: Okay. So we do that next steps. Would that be the only step or that's it? Reuben: We're only going to focus on. Protecting yourself from the credible threat Reuben: the FBI, we can have a hour long about all the other stuff you need to do, but please, the takeaway from this is really bolster your email security. Michael: Gotcha. Okay. So get that So if we have it already, we don't got to worry about Reuben: IT company check it your it company, check it out, Ask them a question. Hey, am I doing Reuben: I need to do? If you don't have an it company, I run one. I Reuben: can help you out, but there's a lot of companies out there. So, either, you know, if you have an incumbent IT company, just reach Reuben: out to them, say, Hey, Can you guys get me set up with this? Or hey, I'm running this. Is there anything better we can do? Cause Reuben: there are some nuances there that are a little technical, but you know, you as the, uh, you as the client really shouldn't really have to worry about setting that up. Gotcha. Michael: Awesome, man. Any other pieces of advice you wanted to mention in this episode? Reuben: The FBI got involved, so they don't just like, Reuben: uh, creep into the dental industry, Reuben: uh, just cause they get bored. Reuben: So this is, it's a credible threat and just, it's a great reminder to just do the, Reuben: honestly, I'm just asking you guys to do the bare minimum here. Reuben: it's just sign up for secure email, which is also a HIPAA Reuben: compliance requirement, just. Just for the record. Yeah. Michael: Is that the only option? Microsoft Office Michael: 365? Or we can go with another one? Reuben: I mean, G Suite is also an option. So there is free Gmail right at gmail. com. And G Suite is Google's business version. And Reuben: that, that does have a much higher level of security than the free Gmail. You Reuben: do have to add, uh, an encryption element to it to make it HIPAA compliant, but I Reuben: just bring up Microsoft 365 because it is the lowest expense, easiest way to do this. Oh, lowest expense. how Michael: much is it? Reuben: Four bucks an email. Man. Yeah. So it's Michael: pretty easy. It's Reuben: cheaper than G suite. Yeah. It's, it's just, and then you don't have to worry about the whole. Encryption piece, uh, like you do with G suite. So Reuben: that's why I mentioned Microsoft 365 and also most it companies have a relationship with Microsoft and they can set this up for you. Gotcha. Michael: Awesome. Ruben, thank you so much for this. We appreciate it. Anybody listening go take action right now. Michael: And if anyone has further questions, where can they reach out to you? Reuben: Hey, sales at dark horse tech. com. I'm all over Facebook. You can bother me Reuben: on there or 800 868 4504 be happy to help anybody out. Thanks Awesome. Michael: that's going to be in the show notes below and Ruben, thank you for being with me on this Monday morning episode. Reuben: Thanks Michael.

In this episode:Mike and Ed discuss the shocking loss of scientific skill among the country's top scientists. It clearly seems purposeful, but what is the purpose? Aliens trying to keep humanity from developing new technologies? A domestic test to take away targeted abilities from exceptional people? Will they be able to take away superpowers next? And if so, is it ethical? If we can't keep someone in prison, is the choice really between lobotomizing their abilities or capital punishment? What is the ethical choice? Ed and Mike disagree!Behind the issue:The after-effects of this issue result in Giant-Man unable to shrink smaller than a normal human for the remainder of his time in this title (which is ending soon and will be replaced with Namor. More on that when it happens!). Otherwise, nothing special here. In this issue:A guy is driving around town while being directed by a man in a hidden laboratory in a funny costume named the Supreme One. When the driver sees Giant-Man, he decides to zap him in a green ray, which causes Giant-Man to grow weak. This is because the ray is designed to steal power. The Supreme One becomes obsessed with stealing Giant-Man's power, as he was unable to do that the first time he had someone try. To that end, he has his minion drive around town bathing scientific geniuses in the green ray, stealing their next-level scientific abilities, i.e. a top physicists forgets everything he knows about physics, etc. Giant-Man and the Wasp investigate, eventually tracking down the Supreme One, who escapes in a spaceship (turns out he is an alien).In the second story in this issue, the Hulk fights the army in a foreign nation, and when he turns to Bruce Banner, he is captured by some locals. Major Talbot is sent in to rescue Bruce Banner, and the episode ends on a cliffhanger - will Talbot and Banner fall to their deaths as they escape? Tune in next week!Assumed before the next episode:People are wondering what is happening to all the smart people. They are getting … less smart? How does that make any sense?This episode takes place:After people learn of the de-smartening that is happening.Complete transcript:Edward: All right, Mike, we're gonna change it up this week. We're gonna change it up a little bit because I have a story I think we should be talking about that's not, well, maybe it is superhuman. The scientists around the world are losing their scientific abilitiesMichael: right?Edward: So these are top physicists who are losing the ability to do physics or top geneticists who can't do genetics anymore. Top chemists who can't do chemistry anymore. And their brains can still do everything else. They can still have conversations, they can still love their families, but they're losing their scientific abilities. And so I think this is a super thing. We don't know who's doing it or why, but it sounds superhuman.Michael: Okay, before we get to this superhuman, if they're superhuman. Not saying that what you're saying is thatEdward: No, I'm not saying human. It's a superhuman, some sort of superhuman thing. I don't think we know any scientific way to remove parts of knowledge from someone's brain like that feels like a superhuman thing.Michael: Right. So you're saying that there must be a purpose to it. This phenomena that's only targeting extremely intelligent and highly accomplished and specialized people like physicists. They're being targeted and their abilities are removed, which. Yeah, it doesn't sound normal.Edward: Um, well, it's never happened before, so therefore it is by definition, abnormal. Although it's abnormal, it's happening more and more now. So is it becoming normal? It's becoming normal. It was not normal, but now it is.Michael: It's normalized almost, and so normalized.So I guess the first question is, what's the purpose of it? So your first thing is that you're thinking that there's a super villain possibly, or an alien or something that is doing this for a reason. Right. In that it's making humanity weaker. It's making our ability to defend ourselves worse. Worse. Is that where you're kind of going on it,Edward: it sounds that way. Like, oh, you're right. Maybe it's a villain who's doing blackmail, but it seems purposeful. If it was a virus, That was just spreading around, right? And causing brain damage to people. First of all, that'd be terrifying, but secondly, it feels like that viruses don't work that way. The viruses wouldn't go and attack just the most intelligent top scientists in the world and just attack their scientific knowledge and leave everything else untouched. So you're right, it seems purposeful.Michael: And that's alarming because we know that in the last few years, in addition to what appears to be naturally occurring superhuman abilities and extraterrestrial or, paranormal, superhuman abilities, we have seen that there's been greater advances in technology, in science that have allowed humanity to reach new levels. So Iron, Man and other, you know, giant. Giant man have been able To create things that are just impossible they're fantastical. It's basically modern magic, the science that they've been able to wield so is this a preemptive attack, a taking away the ability of other people to create such modern miracles?Edward: Oh, you're right. Yeah, it could be stopping the creation of new superheroes. We know, if you look at the superheroes that are out there, a handful of them, like the X-Men seem to be that this people who are born with this weird gene that's being activated by something.But for most superheroes out there, or, super villain for that matter. It seems to be either, Some sort of science that science is doing it. That's right. Captain America is experimented on and turned into Captain America, like the Reed. Richards took fantastic four up into space and space stuff turned them into the Fantastic four. Sandman was like atomic research, whatever turned him into Sandman. So it feels, or to your point, Iron, Man and Giant Man was actually, or the porcupine, they're actually building technological wonders. And so if our top minds, the people who can like do the engineering, the people who can understand the atomic science are losing their ability to do that.Hey, maybe it is aliens. Maybe aliens are trying to put humans in their place and say, Hey, stay on the planet Earth. Stop leaving and stop developing powers.Michael: It's wild. It sounds paranoid, but at the same time it's starting to make a lot of sense. This will fundamentally weaken humanity. By taking our top scientists off the board. That's right. Quite frightening. That's right. But then the other part of it is leaving side the motivation which is alarming and I'm hopeful that say the Avengers or the various federal agencies are on top of this, you gotta wonder how they're doing it. Like how is it that they're doing almost micro lobotomies. Is it a technological basis for it or is it magical? How exactly are they doing it at all.Edward: You're right. Clearly, it's not something that anyone has done before, but someone has found a way to go and do, lobotomy is a good word. It's a very, it's like a targeted lobotomy. Because what's fascinating about this is it's not like these scientists are coming in with other brain damage. They're able to continue on their lives. Normally. They are still able to, whole jobs. Not even like they can't do normal stuff. They can do all the normal things. They just, it's like this piece of knowledge. They're cutting edge brain power and I don't even know if their intelligence was affected so much as their knowledge was affected. So if you're a scientist who's like really brilliant and spend 40 years of your life diving deep into physics, you're not gonna be able to spend another 40 years we just don't live long enough.Michael: It's quite a violation of their autonomy too. I don't want to discount that, but, however they're doing it, it's wild. And you gotta wonder if it's not some extraterrestrial kind of thing or some kind of super thing. What if it's actually a, just, it's something more domestic? We talked before about, What do you do with these super villains that you capture and have these amazing abilities? Like say, let's say Sue Storm turned into be a bad person and she has force fields and can turn Invisible. Like how do you deal with that and make, and IM prisoner if she was a villain, is this. Some technology that somehow got into the world where they've been experimenting on how to turn off abilities and it's got into the wrong hands and they're using it to turn off the abilities, for lack of a better term, of regular humans.Edward: If you're right, maybe it is just an experiment then, and they're testing to see if they can turn it on and off before they say, Hey, let's turn off the superpowers of. Sue Storm or Reed richards. Let's turn off the brain power of some physicists and you're right, if it doesn't work and they can't turn it back on again, that would be really bad. But not as bad as if we like turn off the superpowers of the Avengers because hey, that's irreplaceable.Michael: It does lead into to a consideration of like, how if this is like a deliberate thing that might be done by people on our side, say a government kind of project that got the wrong hands, that tells us I guess I've ever thought about the idea that turning off, say, superpowers is akin to a pure violation of a person's autonomy, right? It's more relatable in a way to basically make a very intelligent person, less intelligent in a particular area that is actually, it's so remarkably unethical, cuz it is effectively targeted Phlebotomy.Edward: Clearly whether it's just happening to Random intelligent people, it's unethical. But if we did this to get against the guy who was building the porcupine suit or the wizard who is like notoriously committing crimes and breaking outta prison and committing the frightful fore attacking the Fantastic four, if we just reduced his intelligence and stopped his ability to go and create these fantastic suits, I dunno, is that still unethical?Michael: I think so. Yeah. Yeah. It, definitely is it is a version of lobotomizing those intelligent people. We don't do that right now. There have been super intelligent people in history and if the choice is to build a better prison or to lobotomize somebody, you would choose you should choose to build a better prison.Edward: That's fair. And I guess I feel like we haven't really. On that route, far enough. We still are building these terrible prisons and allowing these criminals to escape again and again. But I guess let's go further. Remember there was the vanish. Do you remember the vanish, right?Yes, I did. So that's, yeah, so the vanger had the ability to teleport and, I'm not sure how he was dealt with, I assume, like we assumed at the time maybe that they just killed him. There was just a extra, judicial murder to take this guy out because otherwise what do you do?You can't put in prison someone who can teleport outta prison. He was teleport into the Oval Office. He was threatening the president. You, can't stop someone like that. And so if we had, if for the vanish or. Let's say what they had this ability to turn off his power. Or, and along the way it also turned off his ability to do complicated differential equations. It feels like that's a better alternative than allowing him to go free or a better alternative than murdering him.Michael: Yeah. But it's the same, you know, The Thing with ethics is that they're not relative. This goes to, the question I suppose, is the ability to have like a superhuman power, and you, if you remove that, is that the same as effectively doing a version of a targeted lobotomy? And I think the answer is yes. I mean, I think that the Vanger, even by basis of just looking at his name, He identifies, that's a core part of who he is.Edward: He enjoys vanishes, and if he stops vanishing, then who is he anymore?Michael: Well, exactly. And so to remove that from him,Edward: it's, I'm the talker. If you take away my, if you make me mute, who am I?I can't, I can't, I can't do The Thing that I do.Michael: But it, but it's the same thing, like, so it is the same thing removing an ability for somebody to solve differential equations as a top physicist is the same as taking away a person's ability to, in this case, do a unique thing, which is the ability to,Edward: so I'll grant you that, but the difference is, is that the guy doing the differential equations isn't trying to murder the president. It feels like that. Like that's the difference. You're right. I don't think we should go and find everybody who can teleport and then go and take away their abilities. That seems like a draconian a totalitarian government that would do something like that. But if there's somebody teleporting around murdering people, I think by all means we should stop that person. And if that means taking away their ability to teleport, I think so. Be it.Michael: I guess the question is, what is a worse and more abominable crime towards an individual or harm that you could cause them? Is it one to give them effectively a brain injury so that they are not the same person as they were before, because that's what you're doing if you turn up abilities. I think it's similar to making somebody less, less intelligent to like solve differential equations either argues the same as turning off their ability to do what they're born to do, which is teleport. So it's a better termEdward: to murder. I was born to murder precedents.Michael: Wait, so you either give them effectively a brain injury, so you actually violate what they are as a human at who they're as a person. Their core being or you killed them, is what you're saying. Or you build a better prison. Yeah. Yeah. And you're saying you handled a better prison. It's only two choices.Edward: That's right. That's right. So I think we are all agreed that if you can build a better prison, you build a better prison that feels like the right thing to do, I think. Mm-hmm. When you can't build a better prison, when you have someone like the vanish or the absorbing man who can, if you put him in a prison, whatever you. Put him in, he can absorb the strength of that thing and bust his way out. And so what do we do? The absorbing man, they set him into space to drift aimlessly for eternity. Like that seems worse. It feels like if you had a choice between, that's the worst one. Drifting through space for all eternity, or losing the ability to absorb the strength of materials around you. I think most of us would give up the ability to absorb, even if our name was the absorbing man. It feels like you can get a new name.Michael: Hey. They sit him down and say, listen, here are the two alternatives. We've been up all night thinking about the options here, and one is that we turn you into a race that'll float through the empty space forever, or we give you, effectively we change your brain chemistry. And I think that, historically, it's a pretty slippery slope when you start messing around with people's brains and changing who they are. I don't know what the right answer is, ed, but I have to say youEdward: really don't know the right answer. You really think that maybe the right answers to have 'em drift through space for all eternity.Michael: I don't know. You're forcing me to say that. I think it'd be better. I think it would probably be better to actually like, uh, And I'm against a death penalty. But that seems to be preferable to actually really lobotomize againstEdward: sin. Bomb the ball. No, no, no, no, no, no. Listen, imagine. So let's put you in that, those shoes. Okay? Now, Mike, you now have the ability to fly. You are flying, man, and you could fly around and so on. But you know what? You used that, you used that flying power for evil, and you started killing presidents. And so now they're like, Mikey, you need to go to jail. Unfortunately. This metaphor is falling apart because we could put a flying guy in jail. You,Michael: you put a, the ceiling solved the problem, ed.Edward: Okay, Mike, you have the ability, we're gonna use this vanish again. You can teleport Mike, you can now teleport everywhere and you're murdering people left, right, and center. Because you know what, maybe the teleporting also meant your brain go, went crazy, and the government comes to you and says, Hey Mike, we have two choices.We can take away your ability to teleport and you'll go back to being old Mike. Or we can murder you. Are you really, are you like, have you given that choice? Like you think the right choice is to murder you?Michael: Uh, it's, it's just such a hard It, it is. It's not hard. Murder. Murder is a problem. The slippery slope stuff is terrible.Eddie, you're actually,Edward: yeah. But one of them, one of them has a slippery slope. The other one is a giant hole of death.Michael: You know what I think because,Edward: you can recover from a slippery slope, you can't recover from a murder.Michael: Eddie, I'm a lawyer. I'm not a judge. I'm not making that call right now. But you're, but clearly I know where it goes with you. You'd be like, take away my ability. Give lobotomize me so that I don't go out and vanish anymore and I'll live the rest of my life.Having you having fundamentally changed what, who I am as a person? Yes. Yes. How is that any different than Lobotomizing people that. The state didn't, consider to be, desirable?Edward: Well, we've already, I think the difference is, is we've agreed that you are only doing this as a last ditch effort. We're not saying, Hey, you're a murderer, a normal murderer who like walks around with knives and guns. We'll just take the knives and guns away from you. Even though you call yourself gunman and you define yourself by using guns, we're gonna take away the guns. And then, and you're like, oh, but I can't be gunman without guns.Well, too bad you're no longer gunman. You are now just man, and we're gonna put you in a jail. And that jail is not gonna give you access to guns and that's the preferred choice. But if you can't, but if you can't put them in the jail, you need another choice. And the second choice should not be killing them indiscriminately.Michael: So I guess the problem and hear me out on the slippery slope, but like if the technology is developed and you can use it on these, in these extreme situations, my fear is that you use them. Even if you could rationalize that, you would use them in more mundane situations where all prisoners, all people convicted of violent crimes are now gonna get, effectively get a lobotomy because it's safer.Because you can't keep them in prison forever. Or if you do, the prisons are unsafe, et cetera. There's gonna be a rationalization for actually using this technology to effectively lobotomize them too. So it won't be limited, I'm afraid to this very unique situation that. The teleporters of the world. I wish we know there's one. And it could extend and it could, it would extend what I consider to be an abomination throughout. Oh, again, you're worried Our society.Edward: Well, maybe we just put in rules in place that the person needs to choose to have this. We just get to a certain point where it's like, Hey, you can choose to be lobotomized or murdered, and if you prefer murder, we can do that for you.The state's really good at murdering people.Michael: I think it's what, I think one of those, that's what they consider to be actually not a real choice. Ed, I thinkEdward: know that's the point is, but like, we're stuck at this point where we have to choose the choice. We don't give them three choices if it's not like we can take away your powers, murder you or put you in a jail that you can escape from in two seconds. Which do you choose now? Well, clearly the guy just escapes from jail and so that's not an acceptable choice for our society. We need to stop the vanger and people like him from murdering people. And so far it seems like what we're doing is we're just murdering. We murdered the vanger and we sent the absorbing man into space. And this molecule, man, we don't know what happened to him. These people who are extremely powerful. They seem to just be disappearing and we're not talking about it. That is the slippery slope. And so this is a way to reduce the murdering this against villains.Michael: Well, if I had to guess. I suppose the murder's been working out. At least that's what's been happening and I think it's unfortunate. I think it's horrific. And so what I hope will happen is that maybe if the government is secretly funding this research into this technology, maybe they should direct their attention. Towards better prisons that would solve the problem and avoid these thorny issues. That, that you're pushing on me.Edward: Teleportation proof prisons. That's the next scientific achievement. Read Richards. Go do it.Michael: Send them to Asgard Ed. We know that they must have their, they're superpowered.God's like Thor. They must have the technology up there to deal with strange, unique powers. Let's, let's, let's start talking about that.Edward: Vanisher, get off Earth. Go murder Odin. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.superserious616.com

In this episode, we welcome House Canary's Director of Research, Brandon Lwowski to look at what has been happening in the real estate market over the last years and where we are headed as an industry. We discuss the health of the real estate market, the residual effects of the response to COVID-19, and the main challenges facing investors today. Brandon Lwowski built his career after studying Computer Science Mathematics at The University of Texas at San Antonio. In his role at HouseCanary as Director of Research, Brandon distills what is happening in the real estate market through data analytics and machine learning to help investors make more informed decisions about their portfolios. Links: https://www.housecanary.com/ https://www.linkedin.com/in/brandon-lwowski/ --- Transcript Before we get into the episode, here's a quick disclaimer about our content. The SFR show is for informational purposes only, and is not intended as investment advice. The views, opinions, and strategies of the hosts and the guests are their own and should not be considered as guidance, from Roofstock. Make sure to run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to an episode of the SFR show, the place where you get all of your up to date SFR investing information. I'm Michael Albaum, and today my guest is Brandon Lwowski, the director of Research over HouseCanary and he's gonna be talking to us about all of the things that have been going on in the market over the last several years and months, and how we can use that information going forward. So let's get into it.   Hey, Brandon, what's going on? Thanks so much for taking the time to come jump in chat with me today. Appreciate it, man.   Brandon: No, of course, it's good to be here to get an opportunity to discuss the real estate market for sure.   Michael: Yeah, I'm super excited. So you're the director of Research at HouseCanary. Give us all just a quick little bit of insight background on who you are and what house canary is and what they do as a company.   Brandon: Yeah, definitely. So HouseCanary, you know, it's basically a national brokerage and so it's really known for its real estate valuation, technology and accuracy. This company has been around since 2013. It was founded by Jeremy Sicklick, our CEO and our Chief of Research, Chris Stroud, kind of off of the 2008 housing crisis, they did decide to form this company to kind of help speed up the transactions and speed up and really gain knowledge and just competence in the real estate market through using analytics machine learning to provide 100 and 14 million valuations on properties as well as 91 million rental valuations. So if you think of how scary it's built around the analytics and valuations of the United States real estate market.   Michael: It was at $114 million valuations that you said since it since inception.   Brandon: No, that's monthly, we produce 114 million property valuations. Of course, the 114 million is a subset of you know, every property in the United States and that repeated monthly, but we train this very complex machine learning model AI model to produce 114 million property valuations.   Michael: That's incredible. Well, I want to come back to HouseCanary as a company here in a minute. But I want to first start by asking you, Brandon, because it is so analytics and data driven, what is it that HouseCanary as a company and you as an as the director of research are seeing in the numbers in the data with regard to just where we are in the market, there's so much chatter about market cycles and ups and downs and bubbles, give us a little bit of insight to what are the numbers and facts supporting where we are right now, as we're recording this brand new into the new year 2023.   Brandon: I think kind of the one of the biggest headlines to kind of drive home right now, especially in the market, we have this unique combination of these elevated interest rates and you know, the slow buying season that we typically see during the winter months, this has really impacted across the board, our new inventory coming into the market, our new listings, listings going under contract, all of these metrics that we typically look at to understand the health of the market and the health of the real estate market, have really had significant declines year on a year over year basis, that's across the board inventory listings under contract, the Feds kind of you know, their fourth straight 75 basis point interest rate increase, you know, as the thing is, the fourth month straight or the fourth, fourth one straight, has really had that negative impact on net inventory. But this is just providing more evidence that you know, supply of homes is still squeezed and it's remaining negative over time, we've kind of seen this trend since August, right where our supply of affordable housing and actually all housing in the market has really continued to drop and this is basically you know, the biggest driving factor here is that interest rates shot really driving down these new listings volumes to like a multiyear low since pre you know, I don't use the word pre pandemic because you know, we're still in the pandemic, but that pre pandemic peaks we'll call them we're seeing you know, all its multi-year lows in terms of new listings, everything going on the real estate market. The biggest picture here is even as these interest rates come up, our supply just remains extremely negative and still going in a downward trajectory.   Michael: And when you say downward trajectory is that From 12 months prior, or is that from the prior month?   Brandon: We're looking at a year a year basis right now. If you think about the month over month basis, we are still seeing declines. But when we're talking about these multi year lows in terms of net new listings, on the purchase side of the market, we've reached those multi year lows. I think, you know, the reason why this supply crisis is also happening right now is, in this current real estate environment, it's really difficult to convert homeowners and current renters and convert them into future homebuyers, right. In this elevated interest, interest rate market, it just doesn't make sense financially for a lot of people to enter the market, you think of this large group of, of homebuyers that purchase homes at record low interest rates, they refinanced during the peak of a call it the peak of the refinance, boom, that happened during the pandemic and for them to reenter the market, it just doesn't make financial sense for them. So in order to move out of their current home and into a new loan, they're going to be paying a higher premium for the same quality of home. So they're available availability to spend money has definitely decreased and I really don't see this inventory shortage, kind of relieving itself or beginning to increase well into, you know, the first quarter, second half or first half of 2023, the supply just remains super squeezed.   Michael: Okay and so that, like the supply aspect is, I'm guessing one ingredient in the recipe, so to speak, what are some of the other things that you're looking at, and that you're seeing, to give you an indicator of where we're headed and where we are currently.   Brandon: Right. So I think so the supply is, has been squeezed, I think since COVID, there's been a really tight squeeze on the flat supply side of the market. But with those low interest rates that were happening, I mean, 1- 2% interest rates, people were getting their home loans that the demand for property shot up, which is why we really saw that two, three years of just record breaking price growth and the real estate market. Now we're looking at the demand side, and we're actually in the seventh consecutive month of double digit declines in on a year over year basis, we're looking at the listings that are coming under contract in the market. So if you look at inventory as a supply of new listings coming in, if we look at listings of those listings, and the existing market, this existing supply, existing supply, listings under contract is still seven consecutive months of double digit declines since November, are all of our data right now, it's kind of up to that first week of December 2, so we kind of think of it as, as of November. This is this kind of is the driving force behind this is, you know, we've never seen this kind of seventh consecutive month of double digit. So it's kind of driving a lot of fear into homebuyers and home owners and the way we kind of know that this is not normal, it's kind of beyond the typical seasonality we'd expect during the cold winter months to have seven consecutive months, this kind of uncertainty in the market around interest rates, economic downturn, the inflation, they just continue to force homeowners and would be buyers, you know, to play the waiting game, they're, they're gonna sit in the sidelines, they're gonna stay away from the market and so they're a little more competent in in where this kind of roller coaster is going.   Michael: As I'm thinking about such a visual thinker. I'm thinking about this as almost like a race to the bottom in a sense of like supply versus demand once because it sounds like they're almost moving in lockstep negatively, we were having a reduction in supply, but we also have a reduction in demand and once right is that is that the right way to think about it?   Brandon: The demand has definitely began to decrease or is decreasing at a faster rate than supply because supply has been squeezed since the pandemic whenever the shutdowns happened. People just stop selling houses. They stopped listing their home so the supply side of the market has been squeezed since the shutdown the pandemic. The demand side due to the interest rate hikes the economic uncertainty, that's where we're really seeing the decrease on the supply side where the decreases are coming from. So even though you know supply is always been net always been tight. We've been tight recently in recent years. A lot of the continued decrease on supply side is actually coming from net new listings so people aren't putting listings on the market right now. For the reason that we discussed earlier. It's hard to get homeowners back into the game. They're actually down around 25% on a year over year basis, in terms of like how many new listings are coming into the market, but even a bigger piece here is on the supply side is our removals of listings are up 65% on a year over year basis. So houses that were listed last month six are being removed from the market further impacting supply, while supply has been remained squeezed like very, very tight supply of properties over the years, there still is a decrease in net new listings, and also an increase in removal. So in that supply is being affected. But when it's so squeezed already, that that impact in the market will not be as significant as the impact of a decreasing demand side of the market.   Michael: Yeah and that makes total sense and so what are you seeing with regard to sale, as opposed to sale of percent of this price and then also days on market?   Brandon: Yeah. So I think some other key indicators, the market, you kind of just discussed, you know, we have days on market, I think price lists ratio is important, I think, the median price, right, the time series of how is price behaving in this environment, all important and understanding kind of the overall health of the market and I kinda like to go with the big one first, in my opinion, which is the median price, right? Where is the market going? I kind of macro at a national scale. The, if you look at the year over year basis, median price of all single family listings, right, so single family dwellings, that those are actually up 10%, on list prices, and actually up 2% in terms of actual close prices. So even though we're seeing the storyline of these prices really starting to decline and kind of freefall, we're still seeing as a year over year basis, because we hit such a huge peak in the middle of 2022. We're still up year over year, by those two percentage I meant mentioned. On a month over month basis that compared to last month, we are slightly down, but it's very, very small. We're down around one and a half percent on listings and down and less than half a percent on close prices. So we see a lot of the storylines and the headlines across the news, that these prices are falling drastically. We're in a deep decline. The roller coaster rails are off and we're down to 2008 again, but just looking at the data alone without any sort of human interjection or opinions. I'm not an economist, I'm a data scientist. But by heart, I'm just looking at the data because we had such a high peak in the middle of 2022, in terms of the median house prices were still up year over year and on a month over month basis, the declines in price are very, very miniscule, to what we're kind of hearing in the media. So that's one thing, right? The median price is definitely a driving factor. Everyone's concerned about like, what am I going to get for my property? Where's the trend of our nationwide real estate market heading and even though we're in a slight downtick month, over month, if you look at long term, we're still up 10% on listings and up, you know, 2% on closed prices.   Michael: It seems like there has been so much resiliency, if we're seeing such a miniscule price reduction month over month and year over year, there seems to be a lot of resiliency to interest rate increases for folks, and that they're still closing transactions, even at this much higher interest rates, and they're not saving a lot or really anything at all, in terms of the price that they're paying out the door.   Brandon: Right, I think what's causing these prices to, I don't wanna say remain elevated, but kind of not declining at the pace that we would expect is that tight supply. Now, we're still a few months probably away from seeing how this kind of mass layoff and technology could affect the real estate market. Because, in my opinion, what's really going to drive these prices down is when we see supply, increase at levels that the demand has decreased and that imbalance in the market is what will really drive those prices down and the reason why kind of refer to that technology, layoff if that same style, that same volume of layoffs, hits other sectors of employment, then we're going to see defaults and people need to give up their homes because they can't afford it anymore. So unless something in outside of the real estate market really drives the demand. I'm sorry the supply side of the market to escalate at a very fast rate, that safety net is there to kind of keep our prices from really crashing, like we saw in 2008. We don't have the same supply that we saw in 2008. So we're kind of have that safety net there. Unless like I said, something really drives that unemployment up and forces people to default and give up their homes or sell their homes because they can't afford the mortgage anymore.   Michael: But it's interesting, because from all the news that I've been hearing, and correct me if I'm wrong, maybe you've been hearing, the unemployment rate is super low. Like there just doesn't seem to be those mass layoffs that we saw in the tech industry, yet anyhow, affecting so much of the so many other industries. So it doesn't feel as imminent.   Brandon: 100% right, I'm hoping I mean, just for the health of our economy, I'm hoping that that mass layoff doesn't reach other sectors and I hope that we're done with majority of it. But we're probably a month or two away from really understanding did that actually have an impact on our median, price per square foot or median close price of a property and then we can track those defaults, and those the supply over the next few months to see if that really impacted the real estate market or not.   Michael: And that makes total sense. We'll talk this Brandon about those other two factors that you mentioned the price to list ratio, and then the days on market.   Brandon: The price to list ratio has actually been on a pretty big decline. I think back in May 2022, it may have been June or May, I think we're at a multiyear high of around 102%. So most properties, were selling 100 or 2% higher than the list price, which means that it's definitely a seller's market, right. If I if I can list my house for X amount of dollars, I know I'm gonna get 102% return, I mean, I happen to present a 2% return on that is definitely a seller's market. We actually for the first time in about mid-August of last year, we're now down below 100. So that's just an indicator that the markets kind of switched right now buyers kind of have that power and that ratio now stands around 98%, which is kind of the levels before COVID emerged, and actually the lowest number since the first half of 2020. So we're not we went from a high of 102 in May to now we're down to about 98 which is definitely a key indicator that buyers now have more power than the seller's because of you know, just multiple aspects that we've been talking about the high interest rates buyers be a little more choosy. Even though the supply is down sewer buyers, there's not enough buyers in the pool to compete with me anymore. So I have a little bit more pool, which is why we're seeing that sale to list price or price to list ratio, starting to decrease. That kind of in parallel, what we see with that is to kind of tell that same story that we're now entering that buyers' market, even though demand is low, if you look at the volume of price drops, right, think about how many times a listing comes on the market for 100k. It sits there for 30 days, they come back and they say hey, you know what, let's list it for 95 maybe we can get more buyers, those price drops in terms of volume are actually up 142% year over year since the last time. It's just more evidence that buyers now because demand is so is so squeezing this high interest rate environment, they get more power listings are staying on the market longer list to or sale to list price ratio is down and then but yet the because supply still squeezed, we're not really seeing a huge impact that we're kind of seeing in the news right now, on the actual median price of all listings.   Michael: Brandon, just out of curiosity, I think I remember if my memory serves me correctly, which it often doesn't, but like in the height of 2022, the max or the highest median home price in the country was like 395k. But do you happen to recall what that number was and maybe what it is now today?   Brandon: Yeah, so if you look at the peak of 2022. So kind of that halfway mark, I think it was right around the ending of H 122. The actual median price is actually higher, at least according to our data, right? The data that we have availability to our actual median price was actually above 400,000. We're sitting right around like 420,000 was kind of that median price for closed listings for active listings was actually even higher than that. So for closed listings were around that for 120,000 range, right now as of the first week of December is kind of our data cut off. Right now in terms of the data that I'm giving you, we're sitting right around $380,000 as the kind of median price per square foot, I'm sorry, median price of closed listings, it sounds dramatic, and we go from, you know, that 420 ish down to three, it's a pretty big drop. But as you look at the entire time series from, we'll call it the pandemic, the start of the closed downs, all the way to today, if you bought a house, during those pandemic years, you're still doing really well in terms of the amount of equity, it's still in your home prices haven't dropped that drastically to where you're now upside on your loan, you're still well above you know, what you bought the house in, during the bottom of the pandemic years, what's really going to cause kind of some worry, and headaches is these people who kind of bought later in the year, kind of towards the end, or middle of 2022. Now, they're beginning to worry the most because they didn't have that same amount of cushion that these homeowners bought when they don't worry about houses a year or two years ago. So that number does seem like a big decrease. But if you look at the longevity of the time series of the pandemic eight pandemic shutdowns to now, you're still up quite a bit in terms of percent and you have a large cushion before you even have to worry about being upside down in a mortgage or, you know, losing a large amount of equity in your property.   Michael: Does the data give us any indicators as to what's coming down the pike because obviously, data is rear looking. But how can we use that to be forward looking or is there a way to be?   Brandon: Yeah, so I think you're talking about forward looking, you know, the next 6,12,18 months. If you look back slightly, we hit this topic quite a bit. It's a big topic right now in real estate is these large interest rate hikes. If you look at the timeline, the time series of the real estate market in terms of medium price terms of you know, list to sale rate of sale to price ratio, you look at, you know, the days on market, it seems that with the large amount of growth that we experienced in two years, you know, record growth, that was actually able to absorb a lot of the impact that people would assume, continuing to month over month raise this interest rate to higher and higher levels, they assumed that it was going to impact the real estate market at much a much quicker, much faster way. So then they can stop, right, the goal of raising interest rates tend to raise them forever. They're just raising them until they kind of see the market growth kind of settled down and adjust and kind of normalize. But it's kind of shocking when you think about how much and how quickly that interest rate rose and until a few months back. I mean, most of 2022 there was very little impact from those rounds of interest rates. So it's one thing that we can we can learn as, as we saw record growth, even that dramatic increase really did not impact the real estate market as we thought it would. Secondly, what's really kind of driving any sort of kind of negative view of the real estate market right now around this interest rate, is you gotta think of like purchase power of our homebuyers, right?   We didn't see salaries raised at the same rate as the real estate market, we didn't see household income raise at the same rate as real estate. So the really big question here and the kind of the, you know, the driving force here is the purchase power of homebuyers. We actually seeing and this is from Freddie Mac, I believe a 32% decrease in purchase power, based on this 30 year, you know, FRM, that's given the same monthly payments for a loan made at the end of 2021. So we're really seeing a decrease in what homebuyers can afford and that combined with hopefully the Fed has definitely signaled smaller rate hikes in the future. We're hoping that housing fundamentals can hopefully come back to a quote unquote normal seasonality cycle and the expected returns, but into early 2023. I think we're still going to see you know, a real estate market that's just characterized by this continued tight squeeze on supply tight squeeze on demand. With the exception of what we discussed earlier, which was a major economic event causing mass layoffs or firings, then I'm thinking early 2023 is going to be characterized the same kind of, of patterns we're seeing now, which is tight supply, shrinking demand, days on market, increasing. median price is slowly decreasing month over month, until we see hopefully towards the second half of 2023, a market that's brought back to its normal seasonality and its normal housing market fundamentals.   Michael: Brandon, I want to be super respectful of your time and get you out of here, man. But before I do if people want to learn more about you and the research team HouseCanary has a whole services that y'all provide. Where's the best place for them to do that or get a hold of someone?   Brandon: Yeah, I would definitely just go to https://www.housecanary.com/ . From there, you can get a list of all the products services, there's probably people on our company that can explain the better business use cases and appear researcher, I'm all about the data. But if you go to https://www.housecanary.com/, there's plenty of people to contact through there and also, I'll attach my email. I'll pass it on to you, Michael after this. So you can share it with the listeners.   Michael: Thank you so much for taking the time. This was super informative and definitely again, curious to see how things all pan out.   Brandon: Yeah, stay up, same tune. I think next week, our new market pulse comes out as well. So if you're interested in different states and how the market is performing, and also at the national level, it's a free report and that report will be valid all the way up into the end of December. So it will have kind of our December numbers added to that report and you can see those trends going on there as well. So usually is dispersed on our website. Also LinkedIn, if you follow HouseCanary on LinkedIn, that report is shared monthly for free and you can see all those metrics that we talked about updated on a monthly cadence. So you can kind of have competence in your decision making process.   Michael: Love it, love it. We'll definitely check that out as well. Well, thanks again, Brandon. Appreciate you and we'll chat soon.   Brandon: Appreciate it, thanks, Michael.   Michael: All right, everyone. That was our show a big thank you to Brandon for coming on and dropping so much knowledge, facts, data and statistics on us to help us guide our investing through these kind of tumultuous times. As always, if you enjoyed the episode, we would love to hear from you all ratings and reviews are always appreciated as are comments with additional topic ideas that you are interested in learning about. We look forward to seeing on the next one. Happy investing…

Neal Bawa is a technologist who is universally known in real estate circles as the Mad Scientist of Multifamily. Besides being one of the most in-demand speakers in commercial real estate, Neal is a data guru, a process freak, and an outsourcing expert. Neal treats his $947 million-dollar portfolio as an ongoing experiment in efficiency and optimization. The Mad Scientist lives by two mantras. His first mantra is that "We can only manage what we can measure". His second mantra is that "Data beats gut feel by a million miles". These mantras and a dozen other disruptive beliefs drive profit for his 700+ investors. In today's episode, Neal gives his take on what is happening in the multi-family market today, the dynamics of the current economy, and what he sees coming over the next year. Episode Links: https://multifamilyu.com/ https://www.linkedin.com/in/neal-bawa/  --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today joining me again is Neal Bawa, who is the founder of MultifamilyU and a big time multifamily syndicator and Neal is gonna be putting his finger on the pulse of the multifamily market and sharing with us some pretty hard hitting facts. So let's strap in, and let's get into it.   Neal, welcome back to the show. Thank you so much for taking the time to hang out with me. I really appreciate you coming on.   Neal: It's great to be back, Michael. Great to be back.   Michael: Thank you, Neal. So last time, on our prior episode, we talked a lot about the single family space and what we saw going on with the market today. I'd love if we could focus our conversation on multifamily, since I know that you do quite a bit in that space as well.   Neal: That's right. I live and breathe multifamily. I started with single family like a lot of you know, the folks that are using your platform did, but multifamily is more scalable. So we currently have about a billion dollars of multifamily 31 projects about 4800 units that are either in construction or in lease up or you know, are stabilize, right. So, you know, a significant portion of them are already stabilized that we're holding, but we're also building a bunch of them, and working on the construction of some of them. So it's you know, what's happening today is so dramatic and so unusual. We you know, one could compare, maybe it's not as dramatic as the first three months of COVID. But otherwise, it's pretty crazy. It's pretty dramatic, dramatic. So it's, it's a great time to talk about multifamily.   Michael: Yeah. So a billion dollars and just turning back the clock a minute. I'm curious, how long did it take you to get to that point from when you started?   Neal: So I you know, ignoring a past company where I was a partner, this particular company has basically gotten to that billion dollars since February 2018. So, so about four and a half years, roughly.   Michael: Holy smoke, I was just interviewing a gentleman who's got a business he wants to scale to a billion dollars over a nine year period. So you mourn cut that in half, that's incredible growth. Neal: Well, keep in mind, I don't want to demean what we've done, because we're very proud of it. But with a when you're purchasing multifamily, the numbers get big, pretty, you know, quickly, right? So 100 unit multifamily today is $20 million. So you do get up there very fast. So I still consider myself to be a mid-level syndicator. There's dozens and dozens and dozens of companies that have bigger portfolios than I do and also, for reference, a billion dollar portfolio usually only equates to about 10 employees in a syndication business. Now, in my case, I have 30 employees, because I've 20 of them in the Philippines and that's helping me scale and so I have 20 full time employees in the Philippines in addition to those 10 people. But I think it's useful to have that frame of reference, I think that you're setting targets in multifamily, a billion is actually not a bad target the set.   Michael: Okay, I will definitely keep that in mind as I as I scale my portfolio. That's, that's really great to know. But Neal, let's transition and I would love to get your thoughts because you are a data scientist, you have so many great analytics to kind of backup your thoughts and opinions and viewpoints. Tell us what like what's going on in the multifamily space as we recording this today late, mid to late September.   Neal: Prices are falling and they will continue to fall. It's a bad time to buy any kind of multifamily in any market in the US and I rarely, I've never actually said that before, maybe with the exception of you know, first month COVID. It's currently right now, no one should be buying anything in the United States. But here's the good news. You don't have to wait very long. The market is now adjusting very rapidly. So I think that I think February March of next year would be a terrific time to buy you know whether it's the one to four units that get listed on Roofstock. By the way, I currently have a triplex listed on roof stock, check it out, it's on Brandon Avenue in Chicago. Whether it's those units or it's the you know, the larger unit we were also selling, you know, a 200 unit property at this point in time not on Roofstock but we're not buying anything. I mean, we've basically told our acquisition people to be pencils down stop looking, stop talking to brokers stop traveling to properties, because we are halfway through a correction. So and I'll explain why. Multifamily is a very different animal from single family. So let's say Michael is buying a single family property and it's next to another one that's identical to it. So there's two row houses and next to it. Well, if somebody last month paid a million dollars for the first one, Michael can get a loan that appraises for 1,000,000 value for his property, he can get that easily, regardless of what really happens in the market, he can get that, you know, and prices take so long to fall that even if the price actually falls, Michael can use a comp from half a mile away to still get that million dollars in value. So the banks on the single family side are really trusting you to do your, you know, to not to overpay, right. So if they're just looking at it, is there a comp that matches it and if it does, we'll just give this guy alone, right and if they feel like the times are hard, they might change their LTVs from 75 to 70 and but that's pretty much as far as the single family market goes. The multifamily market is radically different because a multi one multifamily property is a business. It's like you're buying a Tommy's carwash, or you're buying, you know you're buying a subway or a chain of subways, that's the best way to look at it. It's a business. So your underwriting really doesn't matter. It's the banks underwriting that matters, the bank that's giving you the funding and the moment that we start seeing interest rates go up in the market, the value of the property immediately decreases. Why? Because the bank's underwriting decreases the value of the property, because multifamily properties are based on just two things, something known as a cap rate, which is basically the market's estimate of what the property should be worth and then something else known as net operating income, which is basically rents minus expenses right? Now, the moment and you know, the moment your interest rates increase, and most multifamily today in the US is on floating rate debt. So what that means is, as interest rates go up, your mortgage is going up something a number called DSCR. I won't go into that into detail on that. But there's a number called DSCR, that basically starts to fall. So the higher your mortgage goes, the lower that number is. This means that, you know, let's say I'm a buyer and I'm selling two multi families and they're right next to each other, right. So they're same number of units, same occupancy, same design, so that their net operating income for both of these properties is exactly the same, like down to the last cent right. Now one, let's say one soft sell sold for $30 million. Okay, and I waited a month like 30 days, and the Fed raise interest rates by 100 bits right, but basically 1%. The second property now is worth less. It's worth less, even though there's another property that sold 30 days ago, that's identical with the same number of tenants with the same rents. It's now worth less so multifamily is on a sliding scale and that sliding scale is affected by interest rate hikes much sooner than single family.   Obviously, single family is also affected. We've seen there's 90 bond markets in the US where single family prices are coming down, but they're coming down really slowly, right. Like the I think the average decline in the last six weeks has been 2%, right and I mean, seasonal declines are bigger than 2%. So I don't even know what to make of that 2% yet, but on the multifamily side, depending upon the market, we've seen declines of six to 12% in multifamily prices already and in remember, the Fed only really started raising in May of this year that you know, we're doing this in the middle of September, right. So in five months, the Feds basically raised everything there was a tiny raise back in March, but it was it was so tiny that it really didn't make any difference. So in five months, the Fed has basically affected multifamily prices to the tune of six to 12%. Here's the bad news. That's not the end, because everybody including yours truly was thinking that when last week's inflation report came out, we would see a downward trend, and the Fed would give us some guidance that yeah, okay, well, instead of raising by 75 bits this week that there's a Fed meeting going on this week, we're gonna raise by 50 and then we'll see what happens in November, maybe we'll raise it by 25 and we were like, okay, if that happens, great. You know, where the Fed funds rate is at 2.25. They raised by 50 pips this week, then they raised about 25 pips in November at 3%. We're done with the Fed funds rate, and that means that multifamily doesn't have to drop any further. Well, it sucks but that didn't happen. Inflation didn't drop and so now the Fed this week is definitely going to raise interest rates by 75 bits, maybe they might even do it by 100 and that basically will spike up interest rates by 100 points immediately and then they'll have to do 75 points in November and maybe another 50 points or 25 points in December. So because of that bad news, we now know that we're midway through this drop in multifamily, right. So we think that there's another five or 6% drop coming by February or March. Is this bad? No. If you're not, you know, if you're not buying anything, just wait for five or six months and you get five or 6%. You know, you know benefits. What the heck is wrong about that because the market isn't bad. Rents haven't decreased, rents are continuing to increase nationwide for both single family and multifamily. So this isn't like 2008, where there's 5 million empty homes show me empty homes. I mean, there really aren't any, the market is an amazing occupancy levels. This is just one single factor, the cost of debt. So, if you can, in February, buy a property for 5%, cheaper, you will have had two advantages. Number one, the next six months, you're not paying for that high cost of debt, right? Number two, you would, you know, say 5%. So your property is cheaper, so your debts less right? Number three, you will be within six months of the Fed cutting interest rates. This is the part that most people don't understand. The Federal Reserve is not trying to kill us. They're just doing their job. and their job is to control inflation because if you don't control inflation, really bad shit happens really, really bad should happen. So it's much better to control inflation and obviously the industry that is most affected when you raise interest rates is real estate. No other industry in the US is affected as much as real estate by interest rate hikes. Here's the good news though. If you look at the last 61 years, the Fed raised interest rates nine times sharp up sharp down. So if you buy in Feb, by, I think July or August, the Fed should be dropping interest rates or at least talking about dropping interest rates.   Why is that important? Mortgage rates are guesses. So single family mortgage rates and multifamily mortgage rates in the US are just guesswork where the market tries to guess what the Fed will do next. So if the Fed starts talking about interest rate declines, the market starts to prices in., right and when the Fed says oh, well, we might hold, right the market reacts. So the interest rates basically adjust even before the Fed actually does anything. Perfect example of this: In December, the Fed started talking about interest rate hikes, but didn't actually raise anything. They didn't change anything until March. But in those four months, interest rates went up 100 basis points, they went up an entire 1% because the market was guessing what the Fed would do. So if you buy a multifamily in February and the Feds basically start to lower rates by June, July and August. Now you're in a better environment and as long as your rates are floating, they may float the other way, they may float down and give you a benefit. Where you start high and then you float downwards. That's why I think it makes sense to wait. I've seen a lot of my friends that have larger portfolios and me 2 billion 3 billion send emails to their investor saying we're pencils down. mean, what that means is we're not even underwriting a property we you know, we see 10 properties a day and normally we underwrite three or four of them. Pencils down means you just click the delete button 10 times and you're done with your job for the day.   Michael: Wow, I have so many questions. But I guess the first one is, why are mortgage rate guesses? Why doesn't, why don't banks look at actual data and what the actual borrowing rate is today and not worry about forecasting, but use hindsight. So it takes the guesswork out of it.   Neal: I'm not 100% sure on that. Just so you know, that's what the multifamily market does, right. So the multifamily market has two kinds of loans or I should say three kinds of loans. One of them is the guesswork kind where they try and guess what the Fed is going to do. The other one is one that's based on LIBOR or now called Sofer, these are basically and basically they're based on like treasury bonds and what those numbers are those loans. The moment the Fed hikes the they're going to hike this week, right so that they have a meeting on Wednesday, that we're probably going to hype it by 75 pips. Well, if I have that kind of loan, and I do at some of my properties, guess what, on Thursday, my debt is a lot more expensive. 75 basis points more expensive. So you can see that on the multifamily side. I have never, ever seen a single family loan do that. Every mortgage that I've seen 30 year 15 year five year ARM, they're all guesses forward looking guesses on the Feds rate. Why? I have no freaking clue.   Michael: Okay… We'll have to find someone out there that can give us a definitive answer as to why that is. But I'm also curious now, you mentioned at the beginning of our conversation that in the single family space, the banks are kind of depending on us as borrowers to look at the value of the home and determine hey, this is worth or not, which seems very counterintuitive because the majority of multifamily investors that I know, tend to be able to underwrite really, really well, oftentimes better than the bank and so why is the bank's taking the power away from a multifamily investor and really giving it to a single family owner it seems a little bit backwards now.   Neal: Single Family is considered to be a REIT in the United States and single family lending is encouraged by politicians. The overall banking system believes that even if they go a little it over on the single family side, it's not such a bad thing, obviously 2008 was 2007 was different because it was not a real estate failure. It was a failure of lending standards, you know, they were basically giving gardeners million dollar loans, right. So that's not going to end well. So obviously, I don't see any evidence of that kind of stupidity existing today. So there are lending standards, they're pretty tight on those lending standards, they're not going above them, you have to be, you know, a good, good buyer. But beyond that, they as long as there's an appraised property that similar your property will appraise. I am not in favor of this other countries do not do this. Banks underwrite single family loans in other countries, the way that we underwrite multifamily loans. But because of Americans believe that single family is a very key part of their life. We've seen this appraisal based system for the last 30 or 40 years and every once in a while it blows up a bubble just like it did in 2007. So this is a conscious decision that the people that run this company had a country have made, and it has lots and lots of good sides, because it tends to overall increase the prices of single family appraisal, you know, somebody buys for more, the your property is more than next was more next one's more. So generally, it has a beneficial effect on the real estate market. But it also tends to create more bubbles than other countries.   Michael: Interesting. Okay, that's really good insights. So knowing that this isn't the ideal time to buy multifamily. What should people be doing? Is this the time to get educated, is the time to go get capitals is the time you know, what should folks be doing right now?   Neal: Um, I think that I'll give you some ideas, right? So I'll give you kind of a sense of, Well, what would Neal Bawa be doing and what would maybe somebody that's newer than Neal Bawa, you know, doesn't have a lot of multifamily should be doing. So let's just focus on that piece first, right, because what I do is really different from what you should be doing, depending upon where you are in the process. So let's say you're early in the multifamily process, you should be educating your investors, that an extraordinary opportunity is going to present itself most likely in q2 of next year. So that's, you know, April, May, June and that opportunity is there for the first time since the Great Depression, that in the 2008, depression, we have an unusual thing happening, and that will be multifamily prices, not single family, but multifamily prices will be low in q2 next year, compared to let's say, now, or compared to, especially compared to a year ago, they will be low. But the economy will not be anywhere like 2008, it'll still it'll be weak, it will be in a recession. But this is what is known as an artificial recession. So recessions are of two kinds, they come in two flavors. Number one, a recession that is artificially created by the Fed to cool down inflation, and we're about to go into one of those recessions, those tend to be shallow, and the they don't damage the economy in the long term, they create short term damage, and the economy tends to recover fairly quickly from those unemployment doesn't tend to go down too much. You know, so, so go up too much, I should say, you know, so. So we're about to go into one of those and those are the kinds of recessions where you want to buy multifamily. Why because multifamily prices still decrease as interest rates go up, regardless of the strength of the underlying economy. So the underlying economy right now is amazingly strong, right. So with all the hand grenades that the Fed has thrown at us for over five months, they've managed to move the unemployment rate from a historic 3.5% to a historic 3.7%. In five months, they basically haven't managed to dent the unemployment market at all and even that point, 2% increase has largely been because of being because of more people joining the workforce. So post COVID, a lot of people took a year and two years off, a lot of those people are now returning to the to the workforce because they're running out of that stimulus money and that's really what that point to otherwise, when you see like you might see, you know, news about layoffs in the United States, Google it actually look at the statistics. Anytime at any point in the economy, there's layoffs, right. But there haven't been more layoffs than they were six months ago or 12 months ago. It's just the regular layoffs that happened in a normal economy. So there's the economy is extraordinarily strong, and it's going to get dragged into recession simply because the Fed is going to keep throwing hand grenades until the economy goes into recession. But because the underlying economy will stay pretty strong during this shallow recession, you've got a onetime opportunity to buy cheap multifamily because multifamily is just as affected in terms of price. Whether the economy underlying is weak or strong right and you have a quick chance to come out of it and make a lot of money. You should be educating your investors telling them about this opportunity, because I haven't seen that opportunity at all since 2013.   Michael: Interesting.   Neal: That's what you should be doing, telling every investor about this and telling them, I am not buying anything now. Well, you probably know me, you know, don't have the investor money to buy anything now. But what's the harm in saying it's still true?   Michael: Right, right, right. Do you think though, Neal, that at that time, q2, next year, that folks, sellers, owners are going to see that, hey, there's this dip in prices, and therefore, I'm not going to sell because I don't want to sell at a loss I bought 234 or five years ago, I'm going to hold on to my property and no, there will be an inventory shortage, or do you do not foresee that happening?   Neal: There is already an inventory shortage in multifamily prices have still dropped. So the if you look at the inventory available to sell in the multifamily market, it's half of what we had a year ago. But multifamily is different from single family in single family is shortage of inventory tends to drive prices up. With multifamily a shortage of inventory cannot drive prices up because banks are underwriting and they don't give a flying F about what the inventory is. They just care about your debt cost and your debt cost is going up. So when so the key thing is that the single family and multifamily markets are fundamentally different. One of them is just a business and the business is based on its debt cost, and its net operating income and nothing else right. Whereas single family is based on demand. If there's nothing available on your street to sell whatever appears is going to sell for more. That's not how multifamily works. So even right now, supply is pretty low. But that doesn't mean that people are over able to over bid, because if they over bid, guess what happens, Michael, they can't get a loan for that amount and now they have to raise lots of extra equity, which reduces their returns and so a lot of them are like this is painful, we're just going to sit back for three to four months for the market to adjust. Buyers have sellers have to understand that either they just keep their property off the marketplace, which you know, you can do infinite infinitely, you can do it for some amount of time or they will adjust their pricing as they already have. Remember, we've already seen a six to 12% delta in just six months. That's how quickly multifamily reacts and I think that's why I'm in the multifamily business because I liked the logic of that. If your costs are increasing and your profits are decreasing, you should get a lower price, right.   Michael: It's pretty black and white.   Neal: Yeah, yes and that's how it works in multifamily. With single family, you can very often see costs increasing, but because everyone's holding off, nobody's basically selling their property. Everyone's like I've got lots of equity in the property. Now there's no property in the marketplace and even with costs increasing, you can often see increase in pricing. To me that has no logic and so I don't play in in that in that field.   Michael: Yeah, yeah, no, it makes total sense. Neal, let's talk about multifamily loan products and some of the different ones that are out there. You mentioned there's three different loan types. There's the fix for five 710 years, there's the LIBOR, floating rates, what's the third one?   Neal: So the second one is tied to so I'll go back, right. So the first one straightforward, fixed, usually it's five years and 10 year fixed. The second one is tied to a number called LIBOR or LIBOR or so far, these days, it's called Silver. That's kind of the new version of LIBOR. So it's a number and the loans will be, you know, LIBOR plus something LIBOR plus 2.25, right and what that means is the moment the Fed changes, interest rates, that's gonna change, right? So your, the interest rate, you're paying changes the very next day, right, the bank's gonna send you a letter saying, hey, Sofer has changed, therefore your interest rate is now x, right and boom, you're paying more, the third one is available, that is basically a rate that you it's a floating rate. right, but it's not tied to LIBOR. It's not tied to Sofer. It's speculative in some sort of ways. Now, it does tend to go up as interest rates go up, it's really tied to treasuries. Now, US Treasury bonds are a speculative product, right? So today, something happens in China or something happens in Russia, something happens in Ukraine, and all of a sudden, treasury bonds will shoot up or shoot down and so that particular rate is tied to the treasury bonds. So it's speculative and so, you know, Fannie Mae and Freddie Mac, often these floating off of these floating rates. Now, in the end, the rate is going to end up more or less where the Sofer one is, but it's not immediate. It's not like you don't get that happening the next day after the Fed raises interest rates and I'll tell you why because it's tied to treasuries and treasuries move upward. Are downwards because of 100 different factors. Only one of those are interest rates. So geopolitical situations can often make treasuries move downwards. For example, if the Chinese economy collapses tomorrow and there's blood on the street, treasuries will go downwards, even if the Fed continues to raise interest rates. That makes sense? So, to these sorts of things, these movements can happen so that rates that are tied to the US Treasury bonds tend to move up and down with Treasury bonds. So those are the three kinds.   Michael: Okay, and who is do you think well suited or conversely, not well suited for each type of loan?   Neal: So in terms of who is the lender?   Michael: No, if I'm a buyer, and I'm going to buy … Yeah…   Neal: I think, yeah, yeah. So there's also something known as a bridge rate, when it bridge loans, which no one is getting, I don't know, if a single person that's gotten a bridge loan in the last 30 days, because there are simply very high there are 7%, or even higher in the last, you know, 30 days. So the vast majority of people today that should be buying, let's say you have to buy for whatever reason, you're not stopping you want to buy the key advisors, everyone should today should get a floating rate loan, because if you believe like I do, that the feds job is to raise rates and then drop them and that's what they've done nine times in the last 61 years, then you have to believe at some point in the future 6-12 18, 24 months rates will be lower, because right now, they're pretty darn high, right? So if you believe that locking in your rates doesn't make sense. So the market today, all we have is really Fannie Freddie floating lanes, rate rates, which are similar to what your local bank would provide. So maybe you have a smaller project, you want to go with local bank, those are the same kinds of rates that Fannie Freddie provides, they're probably charging you a quarter point more, but you've got a relationship with them, their points are lower. So lots of people go with local banks. But I think that's the only game in the market for multifamily today and the other thing that's happening in the multifamily market, which is driving prices down as you get multifamily, you might in a really boom time environment, you could get loans that are 75%, loan to value, right and then when the market starts to tighten up, they go to 70. Well, a few weeks ago, most lenders went to 65. So they're giving you a lot less loan to value for the same property forcing you to raise more equity. When you raise more equity, your returns go down, your underwriting suffers. So once again, people are like this not working. I'm not going to make any money. My investors have something known as pref or preferential treatment. So the property underperforms, they're going to make their pref I'm gonna make nothing. So a lot of people are stepping back, pencils down.   Michael: Yeah. Yeah, that makes total sense. That makes total sense.   Neal: And, and none of this has anything to do with a crash, you know, the 2008 scenario. If you believe that that is going to occur in the next 12 months, you're not data driven because the 2008 scenario, if you look at every if you list the top 10 factors that caused it, because it wasn't any one thing, right? None of those factors, not one of those factors exist today, right? What we do have is we pulled demand forward in 2021. In 2021, we basically helicoptered $10 trillion, worldwide, not 10 trillion in the US, luckily, 4 trillion in the US, but 10 trillion worldwide, we helicopter money to people for the first time in modern history. We've done a little bit of it before in 2009. But remember, we were bailing out banks, we were bailing out General Motors, the money wasn't going directly into people's pockets, right. So here we helicopter $10 trillion worldwide, and there's an inflationary effect. It pulled demand forward, everyone, all of a sudden had money, everyone spent money and so we pulled demand forward from let's say, 2023, next year, to 2021 and when we did that, we ended up creating massive amounts of inflation, nothing to do with the economy itself, but it created massive inflation and now we have no choice but to deal with it. I can tell you this if on the one side you said you know will you take 7% single Family interest rates right over the Fed stopping you know their program now just let him stop it I would say don't do that. Hyperinflation is so insanely dangerous, and so insanely destructive, that I would, even though it would really hurt me. I would take 7% interest rates any day, I will take 8% but I wouldn't tell the thread to stop doing what they're doing. 9% inflation if it gets entrenched if everyone believes that two years from now we're going to be at 9% It's astonishingly destructive.   Michael: Wow, wow. Okay and Neal, I'm just curious in based on your research the nine times over the last six to 10 years, the Fed has raised rates and then pretty succinctly thereafter dropped them. How far do you think we're gonna get, how low do you think inch rates are gonna go? I want the Neal Bawa prediction the crystal ball, if you will…   Neal: The federal funds rate, right, the Fed funds rate is what the Fed raises, they don't raise or lower mortgage rates. It's currently at 2.25% and in two days, it's going to go to 3%. We believe currently that the peak is going to be either 3.5 or 3.75% for the Fed funds rate and we think that on the downward path, they'll cut it all the way down to 1.75%. So from their peak, they'll go down 2%. So from the peak, whatever that peak interest rate is, it should go down 2%, right. Now, sometimes they have to go past that 1.75 on the downward leg, because they've hurt the economy so much when they were raising rates that they have to compensate. But we think that the Meet the perfect equilibrium rate for the Fed is around 1.75. Now, in their, in their public, in the public, they talk about it being 2.25. That's where they would like equilibrium to be. But they never seem to ever achieve that. It's always lower than that in a normal market. So they just like to talk it up a little bit to set expectations. So we think that whatever that top interest rate is that you're going to see the highest interest rate, the mortgage rate. Once the Fed is done and brings it down, you should see mortgage rates 2%, lower. So it there's a possibility that sometime in the next 180 days, you'll see a 7% mortgage rate, right. So it might touch that number, but I don't think it goes further beyond that. Okay, but I could be completely wrong, because if the Fed doesn't kill inflation, then all bets are off.   Michael: Right, right. Yeah, this is all under the guise of inflation getting tampered back because of the moves and so just to kind of put that in perspective for people as the end users, 2% reduction of the Fed funds rate will typically constitute a 2% drop on what a borrower is going to pay. So if rates get up to 7%, and then Fed Funds pullback to two by 2%, we would expect mortgage rates to hover on that 5% in the consumer market.   Neal: Yes, exactly four and a half to five and a half going up and down a little bit, you'd remember it's speculative, but you'll have plenty of opportunities to you know, lock something in under 5%. So I think the key message is this, never be afraid of 5%. It's really beyond 5%, that the single family economy starts to you know, it starts to miss heartbeats. That's where it starts to be problematic until five, I've really not seen much of an impact in the marketplace, there'll be a little slow down in price increases and right now a slowdown is healthy, they've gone way too much way too fast and so retrenchment is a very healthy thing.   Michael: Yeah. Okay and just for frame of reference for folks, during COVID, the Fed funds rate was zero, right?   Neal: They dropped it. It was zero, correct. So there were we've gone from zero to 2.25, in five and a half months, right and they were threatening to do it for about four months before that, but they wanted the market to adjust before they actually raise the rate. So we've gone up to 2.25. It was zero for two consecutive years. So two years, in two months, the Fed funds rate was zero.   Michael: And has that ever happened in American history that you know if?   Neal: No, I think that pandemic is very unique. We saw the Fed funds rate fall to about 1% in 2009 2010. But they didn't take it down to zero. So the only time they've ever taken it to zero is this time, I expect all future crisis will go beyond zero now that the eurozone has gone negative and Japan's gone negative. There's no stigma attached to going negative. So I think the next crisis will go below zero.   Michael: Wow and that'll be an interesting time to have a loan tied to LIBOR or Sofer?   Neal: It'll be is it's fantastically interesting. I think what we are, Michael, we're living in the middle of the greatest financial experiment in history and it's, it's an experiment that has no precedent, it doesn't have anything that you can look back to, right. We're doing some truly crazy stuff and we're hoping that it will work out even though we have about three years three or 3000 years of monetary history that says it's never worked out for anyone in the past. So we're just hoping that we are different so right it's all about you know, as long as the musical chairs are going people are you know, people are walking and that's how it's going to be and I don't know when the real challenges happen. I think we're getting closer and closer. I feel like China is just about ready to combust at this point. We'll see what happens.   Michael: Okay, well, I will definitely stay tuned, Neal. This was amazing as always, for people that want to pick your brain more, continue the conversation learn more about you. Where's the best place nice for them to do that,   Neal: Um, you can connect with me simply by typing in my name. I'm the only Neal Bawa on the worldwide web. So just NEAL BAWA, hit enter, there's a couple 100 podcasts that I've appeared on. There's webinars, conference recordings, where I'm on stage. If you'd like to chat with me on LinkedIn, once again, I'm the only Neal Bawa on LinkedIn. So go ahead and connect with me there or go to my website, multifamilyu.com. So that's multifamily, followed by the letter u.com. There's about 30,000 people that attend the webinars that are on that site, we have a new one coming up, which is the impact of interest rates on the economy, and the upcoming recession. So real estate at this point is officially in a recession. The housing market is now in a recession, because it's declining. But I think the rest of the economy is going to follow it and so we have a webinar on that and I think that's going to be in three weeks.   Michael; Okay, fantastic. Well, Neal, thank you. Again, really a pleasure to chat with you and have you on and I'm sure we'll stay in touch.   Neal: Awesome. Thanks for having me on.   Michael: You got it, take care.   All right, everyone. That was our episode a big thank you to Neal for coming on love his data driven approach to his conclusions, which I think we probably all could use another dose of that. As always, if you enjoyed the episode, feel free to leave us a rating or review wherever you get your podcasts and we look forward to seeing the next one. Happy investing…

Garrett Sutton is a corporate attorney, asset protection expert and best selling author who has sold more than a million books to guide entrepreneurs and investors. For more than 30 years, Garrett Sutton has run his practice assisting entrepreneurs and real estate investors in protecting their assets and maximizing their financial goals through sound management and asset protection strategies. The companies he founded, Corporate Direct and Sutton Law Center, currently help more than 13,000 clients protect their assets and incorporate their businesses. Garrett also serves as a member of the elite group of “Rich Dad Advisors” for bestselling author Robert Kiyosaki. A number of the books Garrett Sutton has authored are part of the bestselling Rich Dad, Poor Dad wealth-building book series. There are three types of entities most commonly used to own real estate: Limited Liability Company, S Corporation and Limited Partnership. Tune in for todays episode where Garrett provides a quick summary of the best entities for real estate investment. Episode Link: https://corporatedirect.com/contact/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by Garrett Sutton, who is an attorney, investor and author with over 1 million copies of his book sold and today Garrett is gonna be talking to us about all the different entity structures we should be aware of as real estate investors, as well as wherever we might want to think about forming those entities because it plays a big role. So let's get into it.   Garrett, thank you so much for joining me on the show today. I really appreciate you taking the time.   Garrett: Thanks, Michael. It's a pleasure to be with you today.   Michael: No, no, the pleasure is all mine ad I'm super excited to chat with you. I know a little bit about your background and what you do kind of on a day to day basis. But I would love if you could share with our listeners who you are, where you come from, and what is it that you're doing in real estate today?   Garrett: Well, I grew up in the San Francisco Bay Area like you and I moved to Reno in 1989 and Nevada is a great state for setting up LLCs and corporations along with Wyoming. So I practiced corporate law since 1978, and became associated with Robert Kiyosaki and have written a number of books in the rich dad advisor series and you know, have enjoyed talking to people around the country around the world about how to protect your assets. As you start investing in real estate, you need to think about how you're going to protect that real estate because we live in a very litigious society, people sue each other all the time and unfortunately, they don't teach this in school, you have to get this information on your own and so that's what we provide is the information you need and then we offer a service to help you protect your real estate and brokerage and other assets.   Michael: Love it and just right off the bat, I read one of your books for our Roofstock Academy book club, it was a great read, so I can definitely vouch for it. But what are the books that you've written and then what talk to us about your most recent book?   Garrett: Well, I've written a number of books in the rich dad advisor series, including start your own corporation, that's kind of a foundational one, and then run your own corporation, a lot of my clients and I set up a corporation now what do I do, and you have to run it properly. Then I also did loopholes of real estate, which is kind of the tax and legal strategies for investing in real estate and then the newest book is veil not failed and that deals with the corporate veil, you set up an LLC or a corporation to be protected and too many people do this themselves, Michael, they just set it up online, and they don't realize that there are additional steps you have to take to stay protected and so if you don't want your veil to be pierced where someone can sue the company, there are no assets there. They can go through the veil of the company and get it your personal assets, if you don't want that to happen and that's why you set up an LLC.   Michael: That's the point, yeah…   Garrett: It's that you don't want it to happen. You need to follow these corporate formalities and so that's what the book veil not fail is about kind of stories, horror stories of people who didn't follow the rules and then in the latter part of the book, it shows you how to follow the rules so you can stay protected.   Michael: Yeah, great. and where can people find out if they're interested in picking up a copy?   Garrett: Amazon has it the veil not fail. It was supposed to be out in April, but we have this thing called supply chain problems.   Michael: I've heard of that.   Garrett: Not enough paper out there. So it's not out until November but you can go ahead and preorder it.   Michael: Fantastic. Garrett, let's talk about I think a pretty hotly contested and debated topic in the real estate space and that's LLC versus no LLC, I think and it's tough because we're I'm California based. A lot of our listeners are California based and so to have an LLC in California, you're paying at minimum 800 bucks a year and with today's cash flow based on some real estate investments that can eat in to your investment pretty significantly and so I've heard folks say, you know, forget the LLC, go get umbrella policy, go get high liability limit insurance and call it a day. Don't worry about it. What are some risks pros cons associated with doing that, that you've seen folks run into?   Garrett: You know, there's a whole area of law called Bad Faith litigation, and that's when insurance companies collect the premiums and then find a way not to cover you. All right, the insurance companies have acted in bad faith over the years. errors in collecting the premiums and then having exclusions, that little tiny print that you never read and so, you know, the insurance companies, let's face it, they have an economic incentive to not cover every claim and so they're going to find reasons not to cover you and so I always recommend that people have insurance. That's the first line of defense but these LLCs are the second line of defense, in case the insurance company doesn't cover you, or what about a situation where your insurance is, say 2 million, but the judgment is 4 million, right? I mean, you're personally responsible for that extra 2 million. If the property is in an LLC, they can get what's inside the LLC. But if you've done it, right, if you if your veil is strong, they're not going to be able to reach your personal assets for that extra 2 million. So the idea that you're just going to rely on insurance is, in my opinion, quite naive.   Michael: Yeah. Okay, I love it. I'm of the same opinion. I always, I never like to play my hand, though but I love hearing that because I come from the insurance world. So I know how bad things can go and I also have seen how they're supposed to work. But I think you're totally right, there's totally an economic incentive to not pay claims and the insurance industry as a whole gets kind of wrapped in with the folks that are doing the latter, not the former. So I think it makes a ton of sense. But Garrett talked to me about I've heard this concept, and this idea that, okay, there's this, you can be over insured, there is such a point. Now, if I go get a $10 million umbrella, because I really want to be protected. Does that then put a target on my back for a claim or a plaintiff to say, well, hey, he's got a pretty a pretty massive insurance policy, you know, I was only going to sue him for a million, but let's go after the full 10.   Garrett: Well, I mean, there are a number of factors there. I mean, having enough insurance is not a bad thing. If the claim is a million, it doesn't give the attorney the right to try and collect 10 million, you know, I mean, the claim is a million. So you know, the fact that you have extra insurance isn't a bad thing. The attorneys, you know, what we like to do, what we tell our clients is you want to have enough insurance to cover any claim and so you want to have insurance on the property fire casualty, right? You want to have a personal umbrella policy of insurance covering your home and your autos because I think that's the biggest risk out there is a horrific car wreck, right. Do you need that umbrella policy, a commercial umbrella policy over your various rental properties, maybe I had a part such a policy for a while but here in Reno, it got pretty expensive and so I just have regular insurance on the properties. I have regular insurance for my home and autos and I have an umbrella policy for me personally and so you get in that horrific car wreck. There's enough insurance money for the attorneys to get at. They know how to get at insurance monies, they get a percentage of what they collect and then if everything else is held in LLCs you know you'll have a an LLC if you own a property in Oregon, you have an Oregon LLC on title, you own a property in Utah, you'll have a Utah LLC and tie on title and then those two LLCs are owned by one Wyoming LLC. That's how we like to structure things and the attorneys are going to have a tough time collecting from a Wyoming LLC and so they leave you alone on the LLC. Do you have enough insurance to pay the claim and they'll leave you alone on the LLC is that's how we recommend our clients structure things.   Michael: Okay, and why Wyoming LLC because I know you made a very deliberate point of saying where is formed, what's the point?   Garrett: There are three really good states out there and they compete against each other to be the best which is good for us. Instead of having one federal law that applies to every single state. After the American Revolution, each state wanted their own corporate law and so now we have each state with their own corporate law in Delaware, Wyoming and Nevada compete against each other to be the best. You know, the filing fees every year that come in are pretty good. It helps fund the government. So the reason I like Wyoming over Nevada and Delaware is all three protect the owner of the LLC the charging order is the exclusive remedy and all three, but in Nevada and Delaware the annual fee is $350 a year and in Nevada they list your name on the state website. In Wyoming the annual fee is $62 a year and your name does not show up on the State web site. So Wyoming offers lower cost, better privacy and equal protection. So a lot of our clients set up Wyoming LLCs.   Michael: Yeah, okay, well, I'm sold. So being a California guy, though, this is what I've heard and would love your insights. So I've been told that California they want their piece of the pie. So I've got to register any LLC that I own. In California, because I'm a resident here, I live here, even if it has not doing business, because the way California defines doing business is basically me living here. So if I do I own property in Oregon, I own it with an Oregon LLC, that LLC is owned by the Wyoming LLC, but then I gotta register both of those here in California?   Garrett: No, you raise a very good question. So in our example, we had an Oregon LLC and a Utah LLC and if those were owned by you, as a California resident, we'd have to pay 800, twice, once for Oregon, once for Utah, by having the Wyoming parent there, the Wyoming LLC, and we qualify that one to do business in the State of California. You don't have to pay the 800 for Utah, or Oregon. So that's a way to save the $800 for all the title holding LLCs yes, one of them has to pay right $800 to the state of California and you know, California has gotten a little bit looser, you don't have to pay the 800 the first year, that $800 is a credit on the first $50,000 in profits. So it's not like it's wasted. So, you know, I've had people move from California to Nevada, because of that $800 fee. It's just infuriates people. But there is if you love living in California, there's a way to work it so you have protection, and you don't have to pay $800 for every single LLC you own across the country.   Michael: Okay, fantastic and then in going back to that example, if I've got the I've got to register the Wyoming LLC here in California, do I lose out on any of the anonymity that Wyoming affords me because now it's registered here in California?   Garrett: Yeah, you'd have to list your name in California.   Michael: Okay, all right. Yeah, maybe I will think about moving, who knows? All right, Garrett, in your book, and I want to get really nice here for a minute, because I've got you. You talk about quitclaim deeds versus warranty deeds and I think a lot of our listeners out there have utilized this practice, or have heard about this practice because if you go get a conventional loan from a traditional bank, they won't lend to an LLC. So you go get the name the loan in your name, then transfer the property title to an LLC after the fact, right. In the book, you talk about quitclaim deeds versus a warranty deed, can you give us a little bit of insight into what the difference is and why someone should think about using one versus the other?   Garrett: Well, the warranty deed or the grant deed says, I warrant that I own this property and if I don't, if I transfer it to you, and I don't own it, for some reason, you can sue me. All right. So it's a more powerful deed. The grant deed, the quitclaim deed rather, says, I don't know what I own. But I'm transferring whatever I own to you and the title companies go, well, he quit claimed that property and so that severs the title insurance, right because he didn't know what he had and so we're not going to cover him on it on a quitclaim deed and so and too many people pronounce it quick claim.   Michael: I know, I know.   Garrett: You know, and it's the same deed with a couple of different words in it. But you really always want to use the grant deed or the warranty deed because in many cases, you sever the title insurance, when you use a quitclaim deed, okay, and that's….   Michael: Okay and that's even if you're going from yourself as an individual owner to an LLC that you own 100% of?   Garrett: Right, yeah, just ask for the grant deed. Also, if you're buying property from someone, you want to insist on a grant deed or a warranty deed, because if they don't deliver the title that they've promised they are going to deliver, you have the ability to sue them for failure to perform.   Michael: Okay, super good to know, super good to know, Garrett, as people who are just getting started on their investment journey, I mean, what's the appropriate time to set up an entity because I've heard people say, I'll do it later. I'm too small. It's too expensive. You know, what are your thoughts there?   Garrett: Right at the start, you know, it's just not that expensive. We do not charge a lot of money to set up LLCs for people. It's very affordable. It's a business expense, you get to write it off. But I'll give you an example Michael and I I've told this story 1000 times, but I was in San Francisco at an event and I gave a talk about asset protection and this lady comes up to me and she goes, Well, I'd like to transfer title. I just bought a duplex and I'd like to transfer title into the name of an LLC. I go, that's a great idea. I go in California, it's $800 per year per entity and she goes, oh, I can't afford that and so I'm giving a talk in San Francisco again and she comes up to me and says, I've been sued by a tenant, I'd like to set up that LLC now. Well, it's too late, right? You know, the tenant rented from you, in your individual name, UX, they have a claim against you as an individual, and they can reach all of your personal assets as a result and once you've been sued, or even threatened to be sued, it's too late to set up an LLC. I mean, you can't put a seatbelt on after the accident. Yeah, right. So you really want to set this up right at the start and I've heard CPAs say, oh, well, you know, just set it up when you can and that's bad advice. I mean, you know, the joke I tell is that CPA stands for can't protect assets. It's just, you need to set this stuff up right now.   Michael: Yeah, yeah. Okay. I think it makes a ton of sense and I love the seatbelt analogy. I think that really hits home for a lot of folks. So as someone that's getting more sophisticated with their investing strategy, what like tools or strategies should they be aware of as they're starting to scale up and they're investing?   Garrett: Well, I think having that Wyoming, LLC is the parent holding LLC is a good strategy. We talked about an Oregon LLC and a Utah LLC owned by one Wyoming LLC and that Wyoming LLC is passive. It's not going to hold real estate, it's not going to do business with anyone, because if someone sued the Wyoming LLC, they could get at Wyoming at the Oregon and the Utah LLC. That's what the Wyoming LLC owes. So that Wyoming LLC is passive, it doesn't do business with anyone because we don't ever want it to be sued. All right. So that's a key strategy in protection. Now, if your clients are holding brokerage accounts, right, bank accounts, gold and silver stock brokerage accounts, in their individual name, the same rules apply. If they get sued personally, and they have all these assets at a Charles Schwab account in their individual name, someone can very easily get those and so what we do is we set up an LLC for the paper assets for the bullion and if you get sued, and that horrific car wreck, they're in an LLC, it's much different, much more difficult for an attorney to get at those because the exclusive remedy in Nevada and Wyoming is what's called the charging order and that is a lien on distributions in the state of California if you own an LLC that owns a piece of real estate in California, the law in California is that the car wreck victim can go to court and the judge can say yes, you've been injured, you can set forth the sale of the duplex. All right, and that is not good asset protection. So we like Wyoming and Nevada where the court says, okay, you have a claim. But here's the remedy that we offer in our state, you are entitled to distributions that come through the LLC, you can't barge in and force the sale of the real estate, you have to wait for distributions to come and that's not a good use of the attorneys time. You know, monitoring if distributions are made there on a contingency fee, they get paid when they collect on the insurance monies. So their time is better spent going to the next case that has insurance. So that Wyoming LLC that offers the charging order remedy, not where they can barge in and force the sale of the real estate but where they have to wait and monitor distributions that go to you. It's a much better system for protection than choosing a weak state like California, Utah is a really weak state, New York is weak. So we have to understand which states are strong and weak and structure your plan accordingly.   Michael: Yeah, interesting and Garrett, talking through all this kind of makes me beg the question of in our Utah, Oregon, Wyoming, California LLC example where the Wyoming LLC owns the properties. There is a holding company rather, if the tenant in Oregon falls and Sue's sues the owner. I mean how far Is this go and where is the court date held, how does that all work?   Garrett: Well, if you, if the tenant has is renting from the Oregon LLC, that's or they're in contract with, so the claim would be tenant would sue the Oregon LLC, the lawsuit would take place in Oregon, right? That's where the property is. That's where the tenant fell. The action stays within the Oregon LLC, it doesn't give the tenant a right to go down to the Wyoming LLC, which is the parent, it doesn't give the tenant the right to go over to the Utah LLC. That's a separate business entity. So the key here is that if the tenant sues, you want to get notice of that lawsuit as soon as possible, right, you want to turn over this claim to your insurance company, so that they can assist in settling the case. Too many people, Michael have this idea that if they use a land trust, where no one will ever know who the owner is, and no one will ever serve you is just nonsense because you want to get notice of the lawsuit as soon as possible. In the Land Trust scenario, they say, well, geez, no one will ever find out who the owner is. Well, what happens is they go to court and they say, Look, we tried to sue the land trust, we couldn't find out who the owner was and the court says, okay, well published notice in the newspaper. So they published it little two point type in the newspaper that We're suing the Oregon LLC, or the Oregon Land Trust, rather and you don't get notice of that either. They go back to court and say we tried to serve them, we published notice in the newspaper, and no one ever showed up. The court says default judgment, meaning the tenant has won and then when they're trying to collect, you know, you find out that you've been sued, the insurance company can say, Well, look, you should have had notice of this lawsuit, we could have defended you, but we're not covering you now. You didn't give us the proper notice and so this whole idea of a land trust and privacy is just nonsense. You want to get notice of a lawsuit, so you can turn it over to your insurance company.   Michael: Yeah, that makes no sense. I guess it's kind of like the ostrich approach like if I stick my head in the ground, I don't see it. I don't hear about it. It's not a problem.   Garrett: Yeah, it is a problem.   Michael: Interesting, okay and Garrett talked to us about some of the different entity structures that are out there. Because there's the C Corp, the S Corp, the single member LLC, multi member LLC, like should we as real estate investors be thinking about utilizing some of these different corporate structures or is really the LLC that that kind of 45 of structures.   Garrett: Pretty much the LLC is the way to go, if you're going to hold real estate, you in some cases, the limited partnership can work. If you're syndicating real estate and you want to absolute control, the limited partnership can work, you're not going to hold title to real estate in a C Corp or an S Corp or any other kind of corporation, tax wise, it's just not the best way to go. So the LLC is pretty much I mean, 98% of our formations for real estate are LLCs. The other 2% would be LPS for syndication purposes, or, you know, for estate planning purposes where mom and dad with an LP, the general partners, which would be another LLC can own as little as 2% and have absolute control over the property. So mom and dad through their LLC have 2% ownership, the limited partnership has 98% ownership owned by the kids as limited partners, and the kids can't force mom and dad to sell the property. So there are cases where the limited partnership works but in the vast majority of cases, it's the LLC that is on title to the real estate.   Michael: Okay. Good to know, good to know. I had another question for it and it totally escaped my mind.   Garrett: Well, how about fail not fail the new book?   Michael: Yeah…   Garrett: You know, people have these promoters out there just say that most wrongheaded stuff about LLC. I mean, they say that you don't need an operating agreement- wrong. They say that you never have to issue stocks or timber membership interests certificates- wrong. So you you'd need to treat your LLC, like a corporation whereby you have to follow these formalities. You have to have the annual meeting, right and the idea that you never have to have a meeting is when you get into a court of law, you're in front of a judge or a jury. I want you to have a minute book with the minutes of every yearly meeting in it and these promoters say, well, you never have to have a meeting. I want you to walk into court and tell the jury, yeah, I ran this property for 12 years and never had a meeting. It just doesn't work.   Michael: It's not going to fly.   Garrett: It's not going to fly. So you know, the reality is, when you're in a courtroom, the reality is not when you're in office with a promoter telling you don't have to do anything to maintain your LLC. It's just not accurate. Yeah, so that's why I wrote the book, because there's so much misinformation out there about corporate formalities. So with a corporation, you need to follow the corporate formalities and with an LLC, you need to follow the corporate formalities because someone suing can pierce the corporate veil on a corporation, they can pierce the veil on an LLC. It's very, and the rules are not hard to follow. They're really easy. It's just if you don't follow them, they can go through the LLC and reach your personal assets.   Michael: Yeah no, that's such a great point and also, Garrett, I mean, to that point, if someone listening is thinking about reaching out to an attorney for help with forming for entities or restructuring entities, I mean, what are some questions they should be asking and things they should be looking for, with an attorney that they want to put on their team?   Garrett: Well, does the attorney invest in real estate? I mean, I think that's a good question to ask because, you know, I invest in real estate, I've been through the wars and so it just helps you appreciate what the client is going through to have done that yourself. You know, I think some attorneys specialize in personal injury. In contract cases. I mean, you want someone who really knows the ins and outs of LLCs, and appreciates that we have good states and weak states, and that you have to put the combination together to fully protect the client.   Michael: Yeah, that makes total sense and we're recording this, let's see September 2022, what is like the reasonable cost to form an LLC, and then what are any kind of maintenance fees associated with maintaining the LLC?   Garrett: Well, we charge a flat fee of $795, in that, and then the filing fees are on top of that. So Wyoming, for example, is $100. That 795 includes the registered agent for the first year. So you're not paying any extra for that. We also have a system whereby we keep all your documents and if you have lost your operating agreement, we give you a portal where you can go on and download your documents. So we kind of have this backup service for you and then so you pay the 795, the first year, and then the second year, it's already formed, so everything drops down, you only pay 125 to four, the registered agent. Now we give you a book that shows you how to do the minutes because you really should do the minutes every year and even though we give you the book with the forms in it, a lot of people don't do it. So we offer a service where for $150 a year, we'll make sure that your minutes are done and we want to keep you in good standing, we want you to have those annual meeting minutes in your file, just in case you don't want to be in a courtroom and say I never had a meeting.   Michael: Right, it's too late, then like you said, Garrett, this has been super informative and people want to reach out, continue the conversation, take advantage of your services, what's the best way for them to get in touch?   Garrett: Well, they can go to https://corporatedirect.com/schedule/ and set up a free 15 minute consultation with an incorporating specialist that you'll work with this person all the way through the process and they'll give you a quote for what our services entail and you know, just see if there's a fit, we're happy to talk to you and so we set up entities in all 50 states, maybe you're you set up your entity already, it's an LLC, you don't have an operating agreement, you haven't issued the membership certificates. Don't tell anyone but we can clean it up for you. We also offer a registered agent service in all 50 states. So if you've got one company here, one company there we can be your one company to serve as the registered agent in all 50 states. So we'd be happy to help your listeners Michael and you know, have them call corporate direct or go, go visit the website, corporatedirect.com and there's plenty of information and articles there and kind of tells you what we do.   Michael: Amazing. Well, Garrett, thank you so much for that. One final question before I let you out of here. We've said the term a couple times. But for anyone who maybe isn't familiar, can you bring them up to speed on what a Registered Agent is and what the importance is?   Garrett: Well, the Registered Agent is someone in the state where you set up the entity or where you're qualified to do business and the idea is that instead of having someone who's trying to sue you search all over the state of Texas for you, right? The Registered Agent is an address where someone suing, you can go and serve the registered agent with service of process. So it's just it's kind of an efficient way for the justice system to work. It's one place where you can serve an LLC or a corporation, and then they're responsible for forwarding that on to you and so you want to use a reputable registered agent service that knows the importance of a lawsuit, if we get a notice of a service, we're on the phone immediately to our client, because you've only got 30 days to get an attorney and answer that complaint. So you don't want a mom and pop that is going to go out of business or doesn't appreciate the consequences of being served with a lawsuit. So it's an important function and if you fail to pay the Registered Agent, they're going to refuse service a process and then they're, you know, the person suing us is going to go back to court and get, you know, authorization to publish notice in the newspaper, and again, you're not going to get noticed to this cert of the claim. So you want to have that registered agent on your team at all times.   Michael: Yeah, yeah, super great point and the Justice Department looking for efficiencies. That's not something I maybe I've ever heard before. So really exciting stuff.   Garrett: It's something that does exists, so…   Michael: Oh, Garrett, thank you. Again, this was super informative, and I definitely would love to have you back on once your book comes out in November.   Garrett: That sounds great. Thanks, Michael.   Michael: You got it, take care. We'll chat soon.   Garrett: All right.   Michael: All right, everyone, and that was our episode a big thank you to Garrett for coming on. Definitely take advantage of that. 15 minute free consult if you're interested. As always, if you liked the episode, feel free to leave us a rating or review. We'd love to hear from you all and we look forward to seeing on the next one. Happy investing…

How should I put myself out there as a screenwriter in 2022? If you follow me on social media, you know I constantly give people that advice, "just put yourself out there." Well, this week on Screenwriter's Need To Hear This, we discuss where "there" is and how to put yourself out "there."Show NotesMichael's Online Screenwriting Course - https://michaeljamin.com/courseFree Screenwriting Lesson - https://michaeljamin.com/freeJoin My Watchlist - https://michaeljamin.com/watchlistTranscriptions are Auto-GeneratedMichael's Online Screenwriting Course - https://michaeljamin.com/courseFree Screenwriting Lesson - https://michaeljamin.com/freeJoin My Watchlist - https://michaeljamin.com/watchlistTranscripts are auto-generatedMichael:You know, there's not a lot of demand. There's not a strong demand for, for poor to mediocre scripts. And I think some people think well, but that show on TV that show's terrible. Can I do that? Mine is just as bad. It's like, well, we, we can talk about why that's bad or you know how it's unfair that their bad show is on the air, but, and your a bad show, your equally bad show is not. We could talk about that, but I think your odds, it go up exponentially by doing something great. You're listening to screenwriters. Need to hear this with Michael jam.Michael:Hey everybody. This is Michael Jamin. And welcome back to screenwriters. Need to hear this, the podcast for screenwriters who need to hear this. And today we are talking about the title's episode is when put, when putting your work out there, where is there? Because I, I say that a lot. I say, Hey, just put your work out there. And people, one guy was like, Hey, well, we have a where's there. Where is there? Which is a fair thing to ask. And so my answer to that, Phil is anywhere, put your work out anywhere. So whatever you got going on, if you've got nothing going on, which is fine, then putting out your work out there means giving it to somebody else. You know, if you're only, if you only read person, who's read your script or you seen your project is your mom. Show it to one other person.Michael:Now you've doubled the number of people. And now you may think that, okay, but that's not enough. Okay. There are other things you can do. But so many people think like, you know, when you're putting your work out there, is there a website? Is there a contest? Is there someone's door stop? Is it me? I'm not the gatekeeper. The gatekeeper is not what you think it is. You know, when I first started in the business, I was just a dude who wanted to be a writer. And I teamed up with another dude who wanted to be a writer. There was nothing special about us. We didn't have connections. We were just two dudes and we were, we became friends. Right? And that's how a lot of partnerships or, you know, that's just a lot about how opportunities, not even just partnerships, it's people who are friends, just doing things together because they both have a similar goal.Michael:And so putting your work out there means finding people like you, because making it in Hollywood is climbing a mountain. And when you climb a mountain, you don't start at the top. You don't, you know, you don't show up to Netflix with your script. Hey, get, you know, it doesn't work that way. I mean, maybe it has for one person and, but don't kid yourself for everyone else. You have to climb your way up the mountain. That means starting at the bottom, not starting at the top. And so where do you start at the bottom? The bottom is anything more. But if you've got this going on in your life, which is nothing, then do something, which is a little more than what you have. If your neighbor's shooting something and their backyard, that's more than what you got going on. It just because they don't have the universal studios backing them doesn't mean it's not worthy of getting involved in them, you know, and whatever they're doing, because those people, people with similar interests tend to do things and they rise up and you wanna be part of that.Michael:A simple thing to do, a very simple thing to do is if you live in a city, go to your local film school, like how, you know, a lot of cities have, or towns have film schools. And every semester they have they usually have like film festivals, like to, to air the kids' work, their projects. And no one's going to those things be, who's gonna go to that. Like just their mom and their dad, and maybe the roommate go buy a ticket. It'll be $5. It's not gonna be much. If anything, maybe he's free. Go sit through these movies and go watch them. And at the end, mingle with the, these kids and find something nice to say, even if they're terrible, there's, I'm sure you can find something nice to say about something. Go up to the director. I love the way you lit that scene in the alley.Michael:Go up to the writer. I love the way you wrote that, that wonderful, the triplet, you know, in the bedroom scene. I love that. I love that. Go up to the actor. You play that so wonderful. Even if it's terrible, even if like the whole thing as a whole, isn't great. I know you can find things to like about it. And just go up to those people and say, Hey, I love what you just did. Consider myself a fan. I'm a fan of your work. Now, a young kid who hears that is gonna freak out because imagine a stranger saying that and that kid, maybe they can't collaborate with some on something now, cuz they're in film school, but they'll be at a film school in a year or two or whatever. And now you are part, you know, now you're hanging out with people who want the same thing and, and maybe you collaborate.Michael:Maybe you'll work together on something. Maybe you won't, maybe they'll have an opportunity to, you know, to hire you on something. But those people are gonna go up and you wanna build that base. You wanna build that circle. And that's honestly, you know, that's one of the advantages. So we have this, this, you know, screenwriting course. And one of the advantages is that we have a private Facebook group and I see the people in this FA the private Facebook group, they've gone to my course, they've learned all the lessons and now they start, they're ha they're collaborating. Some people are teamed up. Some people are they're doing table reads together. You know, they're socializing in the, and I think that's fantastic. I'm not doing, I'm not organizing any of that. They're organizing it on their own. They're having table reads. They're helping each other out, which is so smart because that tide rises, man. You, you know, they help each other out. People are already doing great things in that, in that group. Good for them. And they don't need me. I, I don't need to, you know, prod them. They're doing it on their own. These are the fact that they're doing it on their own. These are people who are, who want it, who want, who will make something happen, cuz they want it. You know? Yeah. I've always hanging out with those people.Phil:I've always described that group as a, as kind of, there's a barrier to entry there. And I think that, you know, you and I have talked about this too. There's a price on your course and there are a lot of people like, well, why are you charging for a course, if you, why are you giving this away? And I'm the one who pushed for the price on the course because I have experienced enough. And I've invested enough in myself in many ways in the business world and the marketing world. I continue to do this. I've paid for most screenwriting courses online because the people who will appreciate it the most are the ones who will pay for it and you're giving away important information. Yeah, but that also is important to those of us who are in that private Facebook group because all of us are showing we are committed to making this work. And that means when people are asking for notes, they're asking for help. They're asking for feedback. The value that is being shared in that group is, is extremely high. And I've been in a lot of free screenwriting groups. It's people who understand, they think about it the same way. And they're just as committed to the, to making this work and making crew out of this as I am. And as the Dave Crossman's are and the mic, everyone, everyone is,Michael:They got skin in the game. You gotta put skin in the game free. If it's Free's worthless and it's not worthless. So put skin in the game and that'll keep and, and, and that'll keep your, you know, motivated. , you're investing in yourself. You're gonna be motivated to make something happen. And, and yeah, so anyway, I would, that's one thing I would do. I'd go up to those film schools and start socializing with those kids. I would, if you're in a town in the middle of nowhere, I would go to your community theater, local theater, and you'll find people, actors, writers, directors, who wanna be involved, who want maybe they want to be involved in your next project that you write. They just wanna act in it. And so that's your little circle. I mean, and there's amazing things that can be done.Michael:Remember everyone who got like, who breaks into the business? We we're, no one's beforehand. There's nothing. It's not like we had signs over, had future success. It's, you know, we're just people. And so that's what I would do. And, and a couple of a couple weeks ago, maybe it was months ago, I don't remember, but some, some kid reached out to me from film school. He wa he was looking for an actor in his fifties to, to be in his, you know, student production. Now wasn't really interested in that. But if I were an aspiring actor, you better believe I would've said yes to that. I would've you know, yeah. I'll, I'll do that because those kids are going places and now you're building out your network. And so there's just no, like where is here? Here is anywhere. Just put it out anywhere, do whatever, you know, that that's, I mean, that's what opportunity looks like opportunity. Doesn't look like someone handing you a check opportunity, looks like you making things and doing things, you know? And, and they always, one thing leads to another. It just does, you know?Phil:Yeah, absolutely. I mean, you've put yourself out there over the last year on social media and you. Yeah. Right. And that platform, you know, we had a podcast recently talking about, like, if you were trying to break in, what would you do? And you would do this. You would be putting yourself out on social media. Mm-Hmm podcast. I think I look at that and I think, okay, I am not a produce screenwriter. Why would I write a podcast? Why would I have a podcast about screenwriting? I don't know that I would, if I weren't here with you, because I'm very aware that there are a lot of Charlas and snakes oil salesmen, trying to get ahold of people and make them think they're an expert. And they're pretending to be something right. If you're interviewing experts, that's a different story. If you're providing value in getting access for a different way, that's a different story. But that doesn't mean you need to be putting yourself on social media as a screenwriting expert, if you are not. I think what you're saying is you should be showing everyone what you have. You should be giving it away for free. You should be putting it out there so that people can easily get access to the special thing that makes you a talented person who can write act direct, produce, whatever it is you're doing.Michael:And you've had some opportunities just because of your you're doing this, or people know you and people, you know, come up to you just because of this, because you're putting yourself out there. You know? So, and you know, we talked about some things off all on the side. Things, opportunities have kind of come your way as a, just because of what, just because you're here now, you know, mm-hmm, and you're showing up, you know, even on the, even on the job you were currently working in, you're showing up. Yeah. So yeah, don't I guess don't be so literal in terms of like, people say, well, you know, how do I get my show on HBO? Well, you start at the bottom. That's how, yeah. You know it, you know, I don't, I, I, I certainly did. I certainly it's so odd that people, I don't know, I guess they getting its information on the internet, but like, like they're like, how do I sell a show on HBO or, or any network really?Michael:Right. And well, I'll tell you how I did it. I started at the bottom so I can go in and I can pitch them and it's not easy. And I certainly, it's not a guarantee I'll sell anything, but I can, I can get the session. I can, I can get the pitch, but it's because I've earned it. And they've, they trust me now with that I'll do a good job if they want it. And that, you know, I know how to make it, but so a stranger, they don't just come off the street. They're not, what do they, they're not gonna just trust someone who hasn't done anything before. Why would they, would you, I mean, would anybody, you know, you're not gonna hand over a check for a couple hundred thousand dollars to someone who hasn't done anything before, that would be nuts.Phil:That message is something that separates you from every other guru in the, in the world. Not that you call yourself a guru, but there are a lot of people who claim to claim to be, and there's selling the dream. And when we started putting the course together and we started putting this stuff out there, that was one thing you were adamant about. I cannot sell the dream. I can't be the guy who goes out and tells them you're gonna make it buy my course, rah, rah, you're gonna make it. And there was a lot of pushback on putting a price tag on the course. And I said, you need to, because they're gonna need to value it. And we have to figure out a way to not to not sell the dream and your way of doing that is being so real with people.Phil:That, that seems to be the thing that stands out for you. That's the thing, time and time again, people say ouch needed to hear this. Thank you so much for being real about this because you're taking people down from cloud nine, have done real expectations that I might have had of being an nickels fellowship winner. On my first script I put in, or an Oscar winner on the first thing that gets produced, whatever it is, whatever delusions of grand or that I had to have to give me to where I am today, that dose of reality is very important because it does two things. One, go ahead.Michael:Well, no, please go, please finish.Phil:Let's say it does two things. One, it makes you take a dose of reality to take a step back and say, Hey, how committed do I need to be to this? And do I have what it takes to actually commit to doing this with the belief that I will get better at the more at bats that I have, or right. The other option is, man, this is not for me. I think I'm gonna go back and I'm gonna be in tech sales. I'm gonna make a pretty good living there, enjoy my life and just enjoy film and television,Michael:Right? ThatPhil:Possible. It's a valuableMichael:When we talk about, you know, living the dream, we're selling the dream, like to me, the dream is, and this, but I made clear about the course is the dream is I will help you become a better writer. I will help you express yourself. And hopefully right at the level, that was, that is required for you to get work. But you know, that's, that's what I can do for you. I can help you cuz you know, there's not a lot of demand. There's not a strong demand for, for poor to mediocre scripts. And I think some people think well, but that show on TV that show's terrible. Can I do that? Mine is just as bad. It's like, well, we, we can talk about why that's bad or you know how it's unfair that their bad show is on the air, but in your a bad show, your equally bad show is not. We could talk about that, but I think your odds go up exponentially by doing something great. You know? And that's, you know, that's all I can help you with. You know, I can't promise you anything other than that. So,Phil:But, but what else do we want? Like what, what more could we ask of you, right? That no one's gonna make it in this world until they happen. Like, and unless you make it happen for yourself, you cannot rely on other people to give you anything. Self reliance is the term. We call that in any other aspect. And I think there's a level of self reliance we need to have. And what you're telling people is you need to do the work. You need to sit down, you need to write mm-hmm , you need to understand the craft. You need to have those practice at bats. You don't have to go out in front of a major league ballpark and try to hit a home run. You can put in the daily singles that we've talked about early on this podcast. What can I do today to get ahead? And that's it, that's all is required as daily singles.Michael:And I'd like to also add, you know, the, the barrier entries is actually quite different than it was when I broke in many years ago. I, I, I would describe myself and this is a weird thing to say, but I, I, at this point I'm calling, I'm kind of a Hollywood insider. I've been doing it for 26 years. So when I pitch a show, you know, I'm, the guy you'd think that would they, they would buy a show from, I have 26 years of experience. Who else do you think they're gonna buy a show from? If not someone like me, right? So I guess I'm kind of an insider, but the last three shows that I've worked on were from, that were created by Hollywood outsiders, Hollywood outsiders. And so that would be Maron, re link and Tacoma FD. These are people who didn't come in through the Hollywood system and they just created something special on their own and became success, made it so big and built up a big following and, and a fan base because they just did it themselves because they didn't ask permission. And then because of that, they got so big that they needed to hire people like me to help, to help them with their TV shows.Michael:Hey, it's Michael Jamin. If you like my videos and you want me to email them to for free join my watch list. Every Friday I send out my top three videos. These are for writers, actors, creative types. You can unsubscribe whenever you want. I'm not gonna spam you. And it's absolutely free. Just go to Michael jamin.com/watchlistMichael:There's room out there for people like there is create your stuff and make it great. I mean, you still have to be great that there's there's that little matter you have to get over, but but isn't that isn't not the way it should be. I mean, should shouldn't it have to be great. I mean, yeah, that seems reasonable.Phil:I think so tying this back to what we've been talking about across the board, you practice practice, like yeah, you don't go out and become an NFL player. And again, we've, we've talked about the statistic about slightly more NFL players than there are slightly more working writers than in the NFL. Is that right? Yeah. Right. So we've talked about that quite a bit. So the odds are not great for most of us to be professional writers, but I can tell you what improves your odds. Yeah. Working out every day, getting faster, getting stronger practice, throwing the ball, practicing and, and drilling tackles and, and learning the playbook. All of those things that you would do to be a professional athlete. You gotta do 'em as a writer too, you need to come, right? If you show up every day, you need to practice coming up with ideas.Phil:You need to sort through the wheat and the Shaf to find the good stuff you gotta, right? You gotta break stories. You need to figure out when you break a story, why it doesn't work, you need to do your outlines. You need to figure out why it doesn't work in the outline, but it did. It felt like it worked in the other one. You need to write the first draft. You need to finish the first draft, which is hard for most people to do. Then you gotta do the hard part, which is share that really bad draft and know that it's bad with people who are gonna give you good feedback on it. Then you have to take those notes and you have to dust off what works, figure out how to make it better, send it out. Then you gotta do it again and again and again and again and again.Phil:And then you, when you finally have something that's good enough, you gotta put it away or send it out. And then you gotta do that again. And you gotta show it again, this whole process over and over again. And most people do not have the fortitude to do that because it's hard work, but no one's gonna do it for you. No, one's gonna get up at an hour earlier to help you sit down and write for an hour every day. No one's gonna have no, one's gonna send that email to your friend. Who's a writer and say, Hey, can you read this and give me notes? No, one's gonna sit down and get the notes and then apply the notes. No one's gonna do it. You have to do that.Michael:So my partner and I, we have a, we have a project set up an animated project set up at, at peacock now, but we also just pitched a project that didn't sell a, it was a live action project. Didn't sell. We were willing, took out into a few networks and whatever they weren't interested, which is par for the course. So my partner texts me today goes, well, when do you wanna start on the new idea? So, alright, Tuesday. So on Tuesday we start this project, this process, again, of coming up with an idea and then going out and pitching it, knowing full well that the last time I did this, I didn't sell it. And this is par for the course. So I don't just stop. I don't just think, well, I don't just have this one idea and I don't beat it down every door and, and beg people, whoa, whoa. You know, when it didn't sell, I'm like, it's done. It's done well, can find somebody. No, it's done time. Something else come up with something else.Phil:So, so major league baseball, right? We talk about at bats and swinging, you can go to bating practice. You can take swings, you can practice, practice, practice, but look at the best batting average. And in, in, yeah, the major leagues. And I'm not, I'm not a, a huge baseball fan by any stretch. I love sports and I love watching a good game and I'll sit down and I'll go to a Dodgers game or wherever I am to enjoy a game. But it's like 303. Hundred's amazing. Yeah. ThatMichael:Means, yeah. If you get on, if you get a hit, once every three times you are and I go into the hall of fame, basically.Phil:Yeah. You literally imagine. Imagine if, imagine if babe Ruth or Mickey mantle or whoever went up, struck out and said, that's it guess this isn't for me. I better walk away, better hang up the, the cleats and hand the glove off to that kid. Cuz I am not gonna make it. No, it is striking out and striking out, striking out until you finally hit one. And that makes you amazing. So yeah, none of us are gonna be perfect the first time how we talked about like the fact that if you were to start over and try to break in, you would be digital. Like you would go digital and try to put this out there. I received an email from someone in the course. I received an email from someone who was like, I don't think they're in the course. They emailed the support email.Phil:And I said, Hey. And there was to me. So they obviously listen to the podcast. So if you're listening to this, hopefully my advice was helpful. But they said, I am looking to get a short film produced. And I was just wondering like, what are the distribution? How do I get that out there? What, what should I do to make this the best possible? And my advice to them was before you put a dime into producing a project, you need to make sure you have a good script because yeah. A mediocre script shot very well, does nothing. So I would help absolutely take the time to make sure that what you have is worth shooting before. You're gonna go through the time and expense of making that thing happen. Right? Because although it's good experience for everyone involved to get out and short sort through the sound issues that inevitably come up and check, test your lenses and realize that you didn't have the audio on in the cameras. You can't sync your audio, et cetera. All those things are valuable lessons. It's much cheaper to make that mistake on paper and in your final draft or whatever you're writing with before you get on the camera before you have the record for the red. Yeah.Michael:Because what if you, yeah. What if you shoot it? And it's just media. If like the script is no good. So who cares? How well lit it is and how, how it looks like a movie and look who cares about the special, if it, if the story's boring, who cares? No, one's gonna be impressed about you, the, how you framed his scene or how the camera flew in or you know the who no, no, they're just gonna be bored. No, one's gonna say, wow, look at that sweeping camera shot. No one's gonna be impressed by the drone footage you put up there. Everyone has drone footage who cares is the story good? You know, that's all the people wanna carePhil:About. So what I said was I would, I mean, first recommendation was to invest in the course because you're gonna learn how to tell a good story once you're done with that. Yeah. You have a group of people who you send it to get notes, give feedback. And they're gonna tell you from the lens of proper story structure, what's wrong with this. And then you can hone that in. I even offered to read the script. I said, send it to me. I'll read it. I'll tell you if it's good or bad from my limited perspective. But I can say that now with a little bit of pride and say I'm at a higher level than I was a year ago. I'm at a higher level than I was six years ago when I graduated film school. Yeah. So at least what I'm gonna give you is closer to what a Michael Jamin note was gonna be on this project.Phil:Yeah. But that's the, that's the value you get when you're interacting and you have this group of people who are putting in the work and the time and the effort and they're doing it. Yeah. This, this is like, to me, this is like golf, right. We recently just did the Tacoma cup. We all went out and golfed. And I Mike rep, who was one of the writers on the show and I placed dead last. We were the worst on the team, right? He had to play in 15 years. I hadn't played in five years, but we were out there in a foursome, all teeing off, all hitting, all, supporting each other. But it's an individual game. I can't blame Mike rep for his bad shot. I have to take accountability for knocking a tree limb down on a tree, which actually happened. I don't know if I told you that, right. That's funny. But, but that's an individual sport supported by the people in my, for. And we had a great time. They coached me when I made mistakes. This is the same thing. So a lot of sports references today, but ultimately you have to get out, you have to take that bats. You have to strike out and you have to do that over and over and over again until you get incrementally better every single day,Michael:Look at the people, how they broke in and how they started. And you know, I certainly was humble. I did a post and I talked about something and and someone said like, well, Quentin Tarantino doesn't have to. And I'm like, are you Quentin Tarantino? Do, when you show up to the, the Ivy in your Maserati, do they mistake you for Quentin Tarantino? You know? No. So the rules, even though he does it one way, you're you haven't earned that right. Yet may, maybe you will. But right now you're not. And so start a little lower, start a little lower, you know?Phil:Yeah. I think being very aware self-awareness goes right along with self-reliance. I need to understand the facts of my situation. And that's that takes some time alone to journal and ask the questions. Where am I? Mm-Hmm what are my skillsets? If qu Quent Tarantino is a 10 and I want to be Quent Tarantino, realistically on a spectrum, where am I like?Michael:Yeah.Phil:Take account accounting of where you're at with the skill sets you need recognize where you need to shore up and where you need to focus and improve. Because if you're a 10 in coming up with the idea and you're a one on the execution, your average here is still pretty bad, right? Yeah.Michael:And it's a long road. So if one step at a time know that it's going to take years. That's okay. Is you're getting closer and closer with every step you take. So yeah.Phil:When you, you pointed, when you said it's like climbing a mountain is step by step. It was like, Everest has base camp. You have to there'sMichael:Yeah. They start, they start. Yeah.Phil:You have to get, you gotta camp, you got rackMichael:For your start.Phil:Then you start,Michael:Then you start,Phil:Right. Where are you on the journey? Where do you need to improve? Put in the time, energy and effort. And either way you'll, as you always say, you get to be creative, you get to be yeah. Centered and focused. And that alone is worth the effort and energy you're gonna put out.Michael:Yeah. Yeah. Because right. You're spending your time doing something you love. And if you don't love it, then don't do it. And if you're only doing it for the money, there are other ways to make money,Phil:You know, go sell or easier ways to make it you'll make. Yeah. You'll make a lot more money selling stuff.Michael:Yeah.Phil:So, soMichael:Michael, you wanna be a creative, this is how to do it. Yeah.Phil:My, I think, I think a very powerful episode today. I know it's a pretty short episode.Michael:I, yeah. Do the work. Yeah. Don't get ahead of yourself. Just, just start doing the work. Yeah. Yeah. But you don't have to write your Oscar speech yet that time.Phil:Yeah. Hey, you guys all want my social medias at Phil Hudson hit me up. I run a digital marketing agency on the side. I help some pretty influential people. Get their message out there. Yeah. Happy to answer questions. Just message me. Yeah. We'll talk about it. Okay.Michael:Yep. Yep. And that's it. All right. Everyone. Couple announcements. So I'll be touring with my show, paper orchestra. If you wanna come see me to your city and you wanna know where I'm gonna be go to Michael jamin.com/live, and I'll let you know where, where I'm coming to next. We're going to Boston next is my next city. And then back in LA for two shows in December. But we'll be, we'll be going other places as well. All right, everyone. Thank you so much. And until the next time.Phil:ByeMichael:Bye.Phil:This has been an episode of screenwriters. Need to hear this with Michael Jamin and Phil Hudson. If you'd like to support this podcast, please consider subscribing leaving a review and sharing this podcast with someone who needs to hear today's subject for free daily screenwriting tips, follow Michael on Instagram, Facebook and TikTok at Michael Jamin writer. You can follow me on Instagram, Facebook and TikTok at Phil Hudson. This episode was produced by Phil Hudson and edited by Dallas crane until next time, keep riding. 

Pete Neubig has been investing in real estate since 2001. He has owned and managed 39, 52, and 100-unit apartment complexes. He currently owns single-family homes and a 52-unit apartment complex. Pete created a property management company based on the motto "by investors for investors". His property management company has clients from Houston and all over the world. His technology-based systems allow owners to see everything that is happening at their property without having to be involved. Pete leverages virtual assistants to do more than he can do on his own. A real estate virtual assistant (VA) is a business admin who essentially acts as your right hand. A real estate VA can offer a variety of business services in-person or remotely. The right VA can cover diverse tasks like lead gen and database management, or even finance and marketing. Tune in for today's episode where Pete talks about how he uses virtual assistants and what real estate investors should be aware of when they want to take this step in building a team. Episode Link: https://www.vpmsolutions.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and joining me again today for a recurring visit is Pete Neubig and he is the founder of VPM solutions. He's gonna be talking to us today about virtual assistants and what we as investors should be aware of and how we can utilize them to our advantage. So let's get into it.   Pete Neubig what's going on man, you are back for more didn't have enough the first time we had.   Pete: Man, Michael, thank you so much for bringing me back on. I had we had such a blast. You know, last time just talking about my investor jury and then right at the end, we got to talking about my new venture and so I'm glad, thank you so much for having me back to talking about my new venture.   Michael: Of course, no, super, super excited. So for those who didn't catch the tail end of our conversation from your prior episode, give us a quick and dirty who you are, and what you're doing in real estate and what your company is all about.   Pete: Sure. Well, my name is Pete Neubig. I'm out of Houston, Texas, I started buying properties in 2001. I bought so many that I failed miserably at it that I ended up creating a property management firm in 2012, sold that firm in 2019 and in 2020, I started VPM solutions and we went live with our product in 2021 and VPM solutions is think of it as a dating service. It's like it's an online marketplace that connects people in the United States and Canada, like employers, you know, people in real estate, with contractors in mainly Philippines and Mexico, but we're in about 60 different countries where we have different contractors and so that's you know, so we're like, like dating service, like match.   Michael: I love it, I love it, I love it. Okay, so who are your clients? Kind of on the investor side and then who are your contractors on the contractor side, just random, random people?   Pete: Yeah, that's a great question. So we really try to stick with the real estate industry. So because I'm a property manager by trade, we started with property management and so we targeted property managers in the United States and Canada, right, because in property management, as most of your clients know, especially if they self-manage, is a process oriented and is a people oriented business, right? It there's a lot of things you have to do manually and so you can't automate as you can automate a lot. But there's still a lot that has to be done manually. So we started there. So that's our main clients, we're now breaking into the real estate and brokerage side of things because there's a lot of work, there's a lot of help, they need like transaction coordination, and just generating leads and appointment setting, so we're there, as well and on the contractor side, what we're looking we advertise we do quite a bit of advertising in different countries, just letting people know, hey, you can work from home, you can pretty much make a little bit more money than what you can get, you know, in your environment and we actually build some, it's called LMS. But it's video training, that you can literally take video training for free to learn more about right now is property management. But we're going to be built, we're going to be throwing some other videos out there always well, we'll be adding more video training out there and so are our contractors, somebody who's bilingual, someone who's educated, and somebody who's looking to make a little bit more than what they what they make in their own in their own country, and that they want to get into real estate, mainly property management or in the real estate industry.   Michael: Okay, interesting. So I am like, the whole concept of a VA is I understand it, but it's totally foreign to me, I've never utilized one but I know people who have so give all of our listeners who are listening, a little bit of background or insight like why should someone consider a VA, like what benefits do they bring?   Pete: Yeah, another great question, man. It's like, so, here's the main thing, right. What happens is, you get so much work, that you need to hire somebody, right? Whether it's whether you're self-managing, and like me and Steve, what my business partner, we were self-managing properties and next thing, you know, we had all these maintenance requests, we had all these leases that had been renewed and we had all these resident questions and we have lease marketing, and it gets daunting and all of a sudden your conical passive job becomes very, very active very quickly and so now you have to either A) hire somebody or B) you know, hire a property manager or hire somebody internally, right and so when you start looking at assistants in the United States, what happened was, especially after the pen EMIC with inflation. So what's happening is those low level low enjoyment tasks that that you don't want to do as the you know, as the investor or as the self-manager you want to give to somebody else? Well, if you, you try to hire that person United States, typically what happens is that job role doesn't pay what people want.   So for example, it might be like the job role might only pay 30,000 a year, right? That's a full time, whatever, but the person wants 50,000 a year and if you pay that person, what they wanted, you would make you would be negative cashflow, you will make any money. This happens quite a bit when you're managing your own properties and you're kind of building your portfolio and adding more properties to your portfolio. It's like all of a sudden, you're overwhelmed overworked, to hire somebody, now you're cash negative and so and then what happens is with these folks, what I found in my personal job, my personal company, Empire industries, when we when we started, we manage over 1000 units. When I hire people in the US, they have like a GED, or that you're getting very, like you're getting very low, you know, schooled, low education type people, and what happens is one, they're not appreciative of the opportunity get, and then two, they always want more money, and then three, they always bring in their outside challenges into your business, the car doesn't work, they take more time off, you know, they have family drama, that kind of comes into your business and so in the past, what happened was, you have to be stressed out to make money in property management. So I have I have, I have, I have all these doors are managing, I have all this work that needs to be done, I have to hire somebody. But as soon as I hire somebody, now I'm not profitable. So now I have to go get more properties to manage, so that I can bring the income up and now everybody's stressed again and the reason why everybody's stress is because I'm hiring people in the States, which, you know, demand a much higher hourly rate, if you will and so what I realized is, if I, if I hire if I outsourced, in a second or third world country, I can get educated people, bilingual educated people, that will work for a lot cheaper than somebody in the US and it's not, I'm just going to pay them less because they're in the Philippines or they're in Mexico, it's that in Mexico, $10 an hour goes a lot further than $10 an hour in Houston, or $10 an hour in Northern California. So the way I tell people look at is like this, if I took if I was doing the same job in Northern California, as I do in Houston, Texas, I'd get paid a lot more for that job in Northern California, because the cost of living, right, and then I'd get less money doing the same job in Houston, because of the cost of living and I probably make, I probably even get paid less if I was in like Arkansas, because of the cost of living. The dollar still travels just as far. Well just think of Mexico, as you know, as the next level down of cost of living. Just because you're paying somebody $10 an hour doesn't mean you're taking advantage of them. Matter of fact, $10 an hour in Mexico is a very good hourly wage. It's actually a very good wage and then in Philippines, to give you an idea, Michael $4 an hour is a good wage in the Philippines.   Michael: Wow.   Pete: And you think you save yourself? There's no way we're gonna take advantage these people? No, I mean, $4 an hour is a good wage in the Philippines. So it's, you know, as a criminal getting paid very well here in the States and so, the reason why people are outsourcing is because I can get bilingual and by the way, most of these people are either their high school educated or greater. They have some type of education after high school, whether it be associate's or a college degree. So you're getting educated people that that are bilingual, for a fraction of the costs in the United States that you are in the United States and because these low level jobs can, you can only pay so much. Now you can actually pay what the job role requires, which means now you can make more money in the company, right and then I'll turn this around on how we actually helped our US people, because I had people in Empire that were that were making some money. The ones I hired the virtual team members like oh, Pete, you got rid of jobs. Actually, no, they got rid of themselves because I couldn't afford them anymore. They wouldn't work at the level I needed them for the company make money. But once I hired these other virtual team members in the company started making money, I was able to actually pay my US people more, I was actually able to get better benefits for my US people, right because these are contract workers in the Philippines and Mexico and you know, Costa Rica, wherever you're going to hire them from and so they're contract workers, so they work they get paid, that's great. But your team members in the US once a company starts making more money, you can treat your kids because their employees right so you can treat them better stock options or 401k, whatever it was. So for us, it was bonuses, it was higher salary and we started doing we started we started looking at it we start doing health insurance. So that's how we were able to benefit out team. So the next question is, well, what can a VA do that somebody in the US?   Michael: Yeah, that's exactly where I was gonna go with it.   Pete: What I'll tell people is the VA can do anything that the person in us can do except for two things. One, obviously, if they need to be physically at the property, right, right, they can't they can't do that and then we'll do if they need a license, if they need a license to do something, they can't do license act, right. So give you an example, though. We actually had one of our virtual team members do all of our lease renewals? Well, you say, well, P That's a licensee Act and the you know, you need to be licensed to do lease renewals and the answer is actually, you don't need to be licensed to just create the lease renewal, you need to be licensed to negotiate the lease renewal. So what we would do is 90% of our lease renewals were not negotiated, most people just sign the lease renewal, right, most of our owner clients, or our residents would just sign the lease renewal and the ones that would have questions, that would get escalated to our property manager and so what we did just that one, just that one job role, what we did is we literally took 90% of the work away from the property manager gave it to give it to the virtual team member and then a product manager took the escalations. Now, I'm a big proponent of it, the way you can save your company, so to speak, a lot of a lot of stress and noise is can you automate through policy and can you automate through, you know, computer technology, in this case, what we did in this, you have to look at it but in Houston, we know that the average rate, the average renewal rate would go up about 2% per year over time. Now, some years, it would go up more in other years, it wouldn't go up at all, it actually would go down. But over time we…   Michael: need in terms of like the rent, like how much rent, you're getting rent increase the renewal… Yeah, okay.   Pete: So we did is we just create a policy that our rent increases every 2% every year, and we put that in the lease. So there was no negotiating, right on the residence side...   Michael: It wasn't up for discussion…   Pete: Right, so but if people say, hey, I'm gonna leave unless we do XY and Z, well, that would get escalated but we were able to reduce the escalations because of the part because of the policy we were able to automate and then we on the on the owner side, we would send something 90 days out, hey, do you want to renew your release or not, right like, we didn't ask them what the amount was, we because we built the 2% and so we stopped doing CMAs. So it is a lot of grunt work that we can stop doing, which then allows your virtual team ever to actually do a lot more, we have one person for 1000, doors, doing lease renewals, and, and reviewing inspections.   Michael: one person for all 1000 doors…?   Pete: For lease renewals and inspections. Yeah…   Michael: Holy smokes.   Pete: But then I had one person that did all collections. So I'll kind of go through the whole thing, right. So like, you can have a virtual team member, their whole job literally could be making sure that your collections are being done, your notices are getting sent out and that they can if you have if you have a third party company like we did that handle the evictions, they can actually be the gatekeeper with that third with that third party company and do all that stuff. My property managers did nothing with evictions   Michael: What?   Pete: Yeah, yeah. So we again, we had policies in place, right. So if, if the resident owed less than 50%, we, we wouldn't file evictions, if they owed, you know, 50% or more, we'd file the eviction we like so we just put on a different policy. You teach the VA, what the policies are, and then they just follow the process and what's cool is they actually know the process better than you and they, hey, can I do this or this or this instead, and they tweak the process and you're like, yeah, that sounds so much better and then they own the process. So if you're like an investor listening to this, and you don't like magic companies, for whatever reason, by the way, obviously, I own a magic company, I highly recommend. But let's just say, let's just say that you don't like me had a bad experience, and you're gun shy. But what you're finding is your leases aren't being renewed, right? You're your maintenance is overtime, the phone rings you like, I don't want to deal with this. You hate when somebody moves out, because you want to deal with the turn, your books are a mess, because you don't have time to do the books because you're, you know, a high net worth individual working 70-80 hours a week as it is, then a VA could do all of that stuff for you. They can do everything, you got to train them, of course. So just step back, take two steps forward. But they can do your property accounting, they could be your QuickBooks, they could do your business accounting, they could do your maintenance coordination, they could do your turn coordination, they can do your collections or evictions. So they can do your utility turn on and turn offs, like so all that stuff that you like, oh my god, they could do your onboarding for you. So I was going to get a new property you got to enter all that stuff in the in the computer system. They can do all of that stuff for you.   Michael: If anyone's watching the video here, you see that my jaw is like on the floor. So for anyone listening I just want wanted to bring you up to speed. But okay, so peace on, let me just understand. So they could do, like they could do all of this stuff and literally anything I mean sky's the limit is and with regard to things that they can do other than the two things you mentioned the license act, and then anything that requires them to physically be there. But when it comes to accounting, I mean, one thing that I'm thinking about is, there's very sensitive information, there's banking information, there's pat, you know, credit card information, as part of the accounting process that I do personally. So am I going to need to divulge personal information and sensitive information to the VA or like, how does that work?   Pete: Yeah, so, you know, in most in most instances, like in your QuickBooks, and in any property management software, they have different levels of permissions and even in your banking, like I bank with Chase, and Chase has different levels of permissions. So I can give you all the rights to, to my, my, my VA team, right, which I did, I gave them all the rights, so they can see everything, they can reconcile the bank statements, they can, they can look at everything, they just couldn't make any payments, right, they couldn't make any transactions. So that's, that's what we did. Now, we also had two property accountants that they did probably accounts for our third party folks and so they had access to, you know, sensitive information. So what we did is we did a bet we did a thorough background screening, there's a third party company out there that can do background screening, and they came up, you know, pretty, they came out really good. So we went forward, and then we just had our cyber liability insurance policy just to make sure go again, because we're a property manager firm with over 1000 units that we manage. So we wanted to make sure that we you know, we took care of ourselves. But if you're an individual with a handful of properties, or a small property manager, then you can do all of this through the permissions that your banking and that your that your software allows you to do.   Michael: Okay and so as I'm hearing you, you talk about as a man, I'm getting really excited, I'm trying my the wheels are kind of turning on all of the things that I might be able to outsource. What are some things that you should definitely not have a VA do? I mean, have you seen some things go really sideways or go really south because someone said, oh, well, Pete said, they can only can't do these two things. So I'm gonna give my VA everything else. I mean, what should I be thinking about in terms of limitations?   Pete: Yeah, so I gotta be honest, you, Michael I, at first, I always thought like, okay, I'm just gonna give him a list of things to do. I'm going to scan it to him and we're going to just do this stuff off the list, like a checklist thing. I quickly realized he could do much more. Then I said, hey, I own the process and they own the process and they can and now I do believe that I actually had VA supervise people in the States. So I had somebody in Mexico supervising people in the United States. So I believe they can get to that that supervisory level, what I will say is, they can do everything. So I'm not saying they can't do anything. But the one thing is you need to put in place some escalation paths…   Michael: What do you mean?   Pete: So even though they own so let's say for example, they own maintenance, right? Well, they're going to be able to handle 99 out of 10 maintenance calls, no problem. But then there's that mold call that comes in, right where the resident says they have mold, well, right there, that should be a buzzword that gets escalated to the property manager because they don't like they don't have mold in other areas of the country of the world that were that worried about mold as much as much as we do in the US. So if there's like an emergency, that could that can cause you know, a resident can get sick, right, or anything like that we're property code. So each, each state has their own little different property code, right. So like, for example, in Texas, believe it or not heat, if they have no heat, that's, that's a, that's an emergency. But if they have if they don't have air non-emergency, well, we treat no AC as an emergency in our in our company we did and so there was like three or four things that those got escalated a property manager. Now the property manager, at that point would say, I'm going to take it from here, or here's what you should do. But then the property manager is kind of co-managing that ticket. So I believe that in any business that you run, whether you own a property management firm, or you're a you know, an individual landlord that manages your 10 units, there's got to be certain. I call them taps on the shoulder, there's got to be certain tabs that you realize this is a potential problem, right? So let me deal with it or I call them taps two by fours and then getting run over by a man, right? On over by a Mack truck means that you're in a lawsuit, right? The two by four means somebody moved out because you didn't handle a maintenance request in a certain way and the tap is the maintenance request is 10 days, 15 days old, whatever it is, and no one's looking at it. Right, so how can you run your business through tabs? Well, if you have these vas, the great thing is you're not doing the work anymore, right? You're not creating the lease renewal you're not you know, calling, you know roto rooter to get out to the property. You're not doing that but what you have to do is you have to take a step above, right so you have to instead of being at the ground level, you got to be 2000 feet up, right, not 15 30,000 feet up, but at least 2000 feet up and as report you have to review and so if you see a property that's vacant for over so many days, that's a tap, if you see a maintenance request that's open for so many days, or major quests that hasn't been responded to, in so many days, these are tabs. So if you can identify what the potential problems are, your job now becomes manager, right? So I'm not the doer anymore. So you're getting rid of the task or hat, you put it on your manager hat. So if you hire a VA for him to do everything, and then you don't put your manager hat on, I can tell you, you're gonna, you're gonna get in trouble. Especially if you, especially if you do terrible training, which most people do.   Michael: That was gonna be like my next question and so like, for everyone listening, what what's the expectation around training? How long is it before a VA is really up and running and so as people are thinking about, okay, forecasting, I don't need a VA today, but maybe in 369 12 months, I maybe need one. So what's the runway lead up time to get someone effective?   Pete: You're gonna hit the answer, but it depends.   Michael: That's my favorite answer.   Pete: It depends, okay, so the more like, even if I'm a smaller firm, and only got 20 properties, I'm managing, I'm doing everything, you have to teach that VA, every piece of managing that property, right, from onboarding, to, you know, to utilities, to lease ups to move into maintenance, to collections to eviction, to move out, and you have to teach them everything… Well, just because only one move out happens a month, it doesn't make anything any easier, you have to learn, they have to learn how to do that they have to understand basically, property management. So that's going to take a lot longer than say, like, with me, I had one person like all they do is collections. Well, I can teach collections in less than two weeks. Right, especially if you have processes in place. So the big thing depends. So if I wanted to hire somebody for collections, it'd be about two weeks. But if I want to hire someone to do maintenance, the more I call them, if they analysis, the more decision points there are in the job. In the process, the longer the training, right maintenance, so many things go could happen with lease renewals, it's like there's three things, like you teach them the three things, and then they know, okay, I do these three, if this happens, I do this and if this happens, property manager, right. So to my least your own person, it really was like two weeks of training. My maintenance people, it was about two months to three months of training.   Michael: Wow. Okay, so yeah, you weren't kidding. When you said it depends.   Pete: It depends, yeah.   Michael: And then I guess, like, the next question that comes to mind is, what is the turnover look like if I'm an investor, and I'm investing two months, three months into a person really getting them up to speed, and then doesn't work out or they don't like it or they move on, like, what have you seen in terms of turnover?   Pete: That's a great question as well. So what I saw at Empire, I had 23, virtual team members, 23 different roles that that my virtual team members handled, and I had them for about five years, you know, most of the jobs some jobs were newer, but I had people there for five years and in those five years, I had to get rid of I let go of two and one person left. So I had three people, my churn rate was much lower on the VA side of things than they were on the US side of things…   Michael: I was gonna ask… in the US:::   Pete: Now, I'll tell you why my churn rate was low, though, okay, because I treated these people like team members, not like virtual assistants, right? So the old mentality of a virtual assistant is, I'm just going to throw you here's the work, you go do the work, I'm going to make sure it's done and like, that's it right. My guys that we have day out there on our website, they had videos, they were they were part of all of our company meetings, they had, they had ownership of each of their job roles so that they can, they can modify and do things they had, they had more control over certain things. We went down, I went down there to go visit them, because most of my people were one city in Mexico, so I paid them PTO like I gave them like if they even though there were contractors, if they needed a day off Mike just put the time in, that's okay, I'm gonna give you a day. So we the more you treat people like we can we put them on a bonus structure. So if their key performance indicator was met, they got a pat on the back, but if they exceeded it, they got they got 50 bucks, or something small, but $50 to somebody in California that Michael they're going to take the $50 thing it's critical and throw in your face like this isn't even a gallon of gas. You know, and but in you know, Mexico you give somebody 50 bucks that's like a half a day's work, like so again, you so you can make people happier with a lot less with a lot less money, right? because sometimes it's like, oh, it's not the thought. It's like, wow, man, you only gave me $20 like that's like almost like an insult you know, in the US where it's not a over there. So if you treat the people, right, so what does that mean? It's not just like paying them and treating them, right, make it part of the team, but also manage them correctly. A lot of people think like, I'm just gonna hire this VA, but they have, like, they hire the VA and then you're, you're not ready for the VA, like, you hire them because you like you got excited, you heard this podcast, I'm gonna hire VA, right and then it's like, okay, you don't have a good job description, you're not really sure what they should do, you don't know how to manage if they're doing a good job or not and so you hire somebody, and they don't really know what to do, and then you don't know what to do and then it doesn't work out, right. So I recommend anybody do is make sure like you, you create a job description first. So you can go about it two ways:   One is I want them to take this, this process from end to end or two is like I want to be an executive assistant and I want to do the things that I hate doing. So identify the low level low enjoyment tasks that you don't like, create a job description from that, post it out there, say this is what I'm looking for or say, man, I really want to give somebody collections evictions, you know, like that process? So it depends if you're if you're smaller than you may say, hey, I want them to be a property manager and give me all the things I have to do just understand it's a lot more training. So once you have the once you have the job description, so that you know what they should do they know what they should do. The next thing is what are the key indicators that you know they're doing a good job and the rule of thumb is 123 key indicators they call key performance indicators and every job role in the organization should have at least one if somebody has 14, that's way too many, I know because I live this I had my property manager API's and it's not it was way, way too much. So like, for example, your executive assistant. If that's where they are, you know, maybe they have to answer calls, well, maybe a KPI is answering 94% plus call rate, right or response to any email is in less than one day. Now, you the KPIs, you can pull them out of a hat, but they have you have to have a report that can show that, that they can put the KPI and so they have to get the data, the data has to be available, right? So if I say hey, I want a 90% call rate, but my call, my call software doesn't have call answer rate, I'm not gonna be able to get that number. Does that make sense?   Michael: It makes total sense.   Pete: And so you have to be able to report on it. So just because you want a KPI, but there's no way to report on it, then you have to figure out a way to report it and get that KPI. If not, you have to move to a different KPI. So if I have the job description set up, they know what to do that we have the key indicators, so they know what the scorecard is if they're doing a good job or not, and so to you, because so many of you will say, yeah, I feel like that he's not doing a good job. What the hell is that me show you?   Michael: How do you know?   Pete: Especially if they're, you know, 20,000 miles away for you in the Philippines? Like, yeah, like, so how do you know the key indicators and then if you have good training, and you spend the time with them, and then you should once you have the train, So training is like every day, right? You do every day for two weeks, maybe three weeks, you have training every day, hour a day video so they can rewatch it and they can build, they build the process manual, not us. So they build a process manual. Why is that important because if I had 100 page process manual for maintenance, I did Michael I swear at Empire had 110 page process manual…   Michael: We talk in single space, or double space?   Pete: Single space, I think. Like legit, it was legit. Nobody read it. Nobody knew how to navigate it and nobody learned once I had them build their own manuals, guess what happened, they started retaining stuff and they knew how to navigate their manual. So don't be don't be upset if they like let them create their own manual so they can navigate it. So now you know what they what you want them to do. They know what they know what they're supposed to do. You can you can you can scorecard it with the metrics, you train them, and now you manage them and the way you do that is you have a weekly meeting. Now if you're smaller, you're going to have you're going to meet with them every day, right my IV pm or smaller firm was five of us, I mean, when my VAs every day, because we're just we're so small, we have to talk about what to talk every day when I was at Empire because I have 40 people working for me. I met them once a week and I would meet my maintenance team, separate from my accounting team separate from my resident services teams and for my own services team. But I would go over with them each week and we'd go over, we'd say what's a feel good? Tell me something that's good, right because as humans, we have this habit of going below the line instead of like above the line. So let's start off the meeting really good. Let's go over to metrics, right individual and then the group metrics, the department metrics, then let's go over tasks from last week did they get done? Then let's go over challenges and each one of those a five minutes and challenges like 20 minutes, 25 minutes. You don't you can't solve all them all the time. But you can solve you know, a couple of them and if you could solve a couple of challenges each week, you're doing really, really good and then and then one thing I added was what's your stress level from zero to 10. This was interesting because sometimes they'd be at a 10 and it was because somebody was on vacation or we just got 50 new houses that week, it's worth, you know, 10 yeah, okay. But when it's 10 all the time, and that's the standard, that means you haven't to do too much and if somebody's attend all the time, it means they're ready to punch out. Like anybody in your team, you should literally take the pulse of your team on a weekly or monthly basis, right and but here's sometimes the 10 was because they had something going on personally and then I'd get everybody off the off the phone, and then I would talk to them personally and that gives you an incredible opportunity to create relationships with people who you never met, that working with you that are, you know, 5-10 1000 miles away and that is why they didn't leave me because they knew I cared, right, it wasn't a bonus. It was it was I cared, I want them to grow the company, I want them to, you know, to, to feel like they're wanted, but I also cared about their personal lives, I really did and so if somebody had an issue, you know, Hey, man, you know, we talk about so you get to learn a lot about people when you do that. But I did that each week and if a KPI was read two weeks in a row, and went to the issues list, you know, things and so you, if you have a structure with your business, you're the person you hire, the chances at whether that's in the US, like sitting next to you in the US, that's, you know, a few states away, that's working virtually, or a virtual team member outside the borders of the US. If you have structure, the chances of you hiring somebody successfully becomes great becomes very, you know, most cause much greater. But if you don't have that structure, the chances of hiring anybody is not going to be it's not going to be very, very, very good. It's going to be much lower rate of success.   Michael: Yeah. That makes a ton of sense. Pete, have you ever had a VA hire and train another like another VA?   Pete: Oh, yeah, of course. That's the whole job, right? The whole goal, right? So monkey see monkey do, right? So when I forget Empire, the first round of vas, you're looking at the trainer. I was the guy I trained there. Okay but my maintenance team, once somebody would leave, and somebody would get hired, or they would hire a new person, I was out at a training business.   Michael: I love it.   Pete: They train them. So once you train that first batch, and by the way, here, Michael, here's the secret to at Empire, I was gonna hire two virtual team members. That was that's what was in the budget. I interviewed four people hired all four of them and here's the reason why one figure one person is going to wash out right? Can you figure that and then the second thing is, it's, I was hiring two to three people for one person United States.   Michael: Okay.   Pete: All right. So think about that hourly rate, I would get rid of one person us and I'd hire three people in Mexico and so do you think more stuff gets done with three people?   Michael: I would than one probably guessed.   Pete: So. Yeah. So then I'm like, okay, I'm gonna hire four people. So I was over budget, guess what happened within 30 days, I'm able to grow my business because more tasks are being done and so all of a sudden, it's like, yeah, and if one but I hired four, none of them washed out, I was one of them wasn't a good fit, they were a good fit for the organization, not a good fit for the role. So we moved on to a different role. So another important thing is when you hire and this is probably I mean, your team, your, your listeners probably know this. But every business has core values, that can be a sheet on the wall that you never look at, and they're not going to be any, they're not going to be worth anything for you. But you should have core values that you hire, fire, promote and demote on, and give raises to like, that's your core value. So who are the people you want on the bus with you, right and if you are, if you are an individual landlord, that you know has a bunch of house and you're looking to hire that first person. Well, that's a business, right Michael, would you teach that like, as soon as you're hired, as soon as you buy that first house, you are business…   Michael: Yeah, you are business…   Pete: You are business. So you need to have core values and if you don't, as a business, you should have them as an individual. So who are the people I called the fog. So who do people want to foxhole with you? That gets you the right person in the organization. But that doesn't mean they're the right person in the right seat, right because the right see, for example, like, if somebody's super outgoing, you want them in sales, if they're super outgoing, but not detail. You don't want them in accounting, right? I might have the right person. But if I put that outgoing person, and that's shipping and sales and accounting, he's going to do a terrible job. So I found the people through my core values, I then put them through a personality profile test. I like disk. It's super simple. I don't know what you would use. Do you have one that you use?   Michael: No, not personally, but I'm definitely going to be adopting one as I'm gonna get for virtual assistant, yeah…   Pete: There's, there's a lot of them out there. Disk is super easy. I know it very well. It's easy to learn. So I use disk. So that tells me I get the right person in the organization. I put them in the right seat and through my job description and my key performance indicators. I know they're going in the right direction. So if you do all of that, and then you do the training and then you do the managing the chances of you having somebody washed out or somebody leave, it goes down dramatically. It's not 100%. It's never 100.   Michel: Like anything… Yeah, that makes a ton of sense to me, Pete this has been, this has been super eye opening, really exciting, exciting stuff for people that want to learn more want to take advantage of the cam solutions, like how do they get in touch with you? Where should they be going?   Pete: Yeah, so you can go to https://www.vpmsolutions.com/ , and create a free profile. So that's the other thing, Michael, everything on the company side is free. So creating a profile posting a job, searching for people, finding them is all free. When you thought when you hire somebody, they we charge the virtual team member a percentage, and that's how we make our money. So, it's free to the company. So all you're paying is the hourly rate, and a small processing fee that we pass on from the stripes of the world onto the onto the dude the company, but that's what it should go and if you want to email me directly, it's pete@vpmolutions.com and we have over 14,000 virtual team members in 60 countries on our on our site right now looking for work and we have property management video training that your listeners can actually take for free as well. So we have like, I think we have like 12 courses, it's over about nine hours of content it goes from, it's basically the lifecycle of property management. So if you are a, you know, a self-manager, and you want to learn more about how I can manage my property a little bit more efficiently, I highly recommend taking those courses and then when you post the job, you can actually ask your VA, these are the recommended courses that we recommend that you take and then people would actually take those courses on their time and they're done. So you're getting a little bit of people trained before you actually are paying them.   Michael: That's really slick and it probably helps weed out a little bit more of who's serious versus who's not is who's gonna put in the time in advance.   Pete: Absolutely, 100%...   Michael: Oh, man, I love it. Pete This has been so great. Thank you for coming on with us a second time. Definitely, we'll be in touch man.   Pete: Yeah, Michael, thank you so much for having me. Really appreciate it.   Michael: You got it, take care. All right, everyone. That was our episode a big thank you to Pete for coming on. Super exciting. If you couldn't tell it was pretty giddy throughout the episode. It's something that I'm going to be very much looking into for my personal business. As always, if you enjoyed the episode, we love hearing from you reviews, comments, feedback questions are always welcome in the comment section, and we look forward to seeing on the next one. Happy investing…

Derek Dombeck, a Real Estate Expert hosts and runs the WiscoREIA based out of Wausau, WI. There he coaches and teaches other real estate investors his keys to success. He is currently hosting 3 national Mastermind groups called the R.E. Circle of Trust and puts on an Advanced training and Networking event each winter called The Generations of Wealth Voyage. In the last podcast episode, Derek talked about creative financing solutions for real estate investors. In today's episode he will be tackling the other side of the coin and will share some insights about private capital, lending and how that plays into real estate investing. Episode Link: https://gowvoyage.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today with me, I have Derek Dombeck again on the podcast and for those of you who missed his first episode, I highly recommend you going back and giving that a listen. But Derek is the owner of best REIA funding a private lender, he's also an investor. So today, we're gonna be talking about private lending, and also what we need to know as investors and how to utilize it. So let's get into it.   Derek, what's going on, man? Good to see you. Thanks for coming back on the pod.   Derek: Yeah, absolutely. Glad to be back.   Michael: I'm super excited to have you on. So last time, we talked about creative financing solutions for real estate investors. Now we're going to be tackling kind of the other side of the coin and so talk to us about private capital and lending and how that plays into real estate investing.   Derek: Well, I like to talk to our clients that are coming to us for loans in more along the lines of what how would they want to structure if they were the lender? So it makes more sense to them why are we asking for what we're asking for? We design our company, primarily because we were borrowers ourselves, and we want to do it in a way that would be probed by our borrower, but still safe for our investors. So a couple examples, we don't collect monthly payments, we don't collect interest payments, we let it accrue. Very, very few lenders do that. The methodology is that when you're when you're the lender, and a payment is missed or late, that gives you an indication of something could be going wrong with the loan and that's true. But we don't want to have to collect payments every month on 175 outstanding loans, which is typically what we're carrying at any given point in time. It's another staff member that we would have to have basically just to do that do collections. So as a borrower when I was borrowing the money, that's what I would have wanted, right? As a lender, it's different. So a lot of times I'm trying to have these conversations with our borrowers, as I mentioned, in a way that shows them that we're their ally, we're not just somebody sitting across the big fancy desk with a, you know, a suit and tie on looking down their noses at them. We want them to really realize that we are their business partner, in one way, shape, or form. Most interactions with borrowers if they've never met me before, it just starts out with a brief overview of our loan program and I often tell them, well, if you were going to be the lender, if it was your money, what would you want to see happen, especially if they're, you know, if your listeners are out there trying to apply for loans. There's three things two to three things that I think are super important. First one is whether they're going to a bank, a hard money lender, or a private lender, or their great uncle, have all of your documentation ready to go. At the I mean, at the drop of the phone, right? Like we get off the phone, bam, you can submit it. What drives every lender crazy is when they send stuff in piecemeal. You know, and we always have to ask for it and then we have to remind them and follow up that makes you look so foolish in the eyes of a lender. Okay, another thing for us, we don't require appraisals, but most people do. So, and we don't require appraisals in our loans, because I don't trust appraisers. They have no skin in the game, we have way more experience. But we're in a niche lending market of lending on rehabs and some appraisers may never have picked up a hammer in their life. How do they know what the after repair value is going to be based off of a scope of work? You know, if I get a scope of work that's submitted on an application and they claim they're gonna put a brand new kitchen in for $2,000 I'm gonna call bull ** because I know what it cost to put in a low end, middle end or high end kitchen. But again, as a borrower trying to help your listeners in that regard. If you're going to an appraiser or you're coming to us and we don't require appraisals, but having your data somewhere you had to come up with your numbers, right? When you made your offer to buy the property, I want to see, an appraiser may not want to because some of them don't necessarily like to help. But I want to see, because, you know, some of them are just arrogant. Let's be honest at it.   Michael: It's the ego play, yeah…   Derek: It's an ego play. But for me, it's not for me, it's required. I want to see those comps, or CMA, or a BPO, from a real estate broker, something to show me how did you come up with your valuations? If it's going to be a rental property, where's your cash flow analysis, you wouldn't believe it how many times we get applications in and they want to rent borrow money from our short term to fix the property, get a tenant in there and then refinance. But yet they have not talked to any long term lenders, typically banks to even know what their refinance terms would be or if they'd be able to get refinanced. They haven't done a cash flow analysis. Again, have everything ready for your lender as much as possible, right? Gosh, what else as a borrower, you know, coming in with a backup plan, a plan B, is so crucial. Our job as the lender is to expect you to fail and every question we ask is, is asked, because we want to know, if something goes wrong? Can we either take the property back or lien against the, you know, the borrower to get our money back? I mean, that's what it's all about. We are asset based lenders, banks are gonna look at the asset and their income, every lender is a little different.   But the bottom line is, can we protect our investors' money? Can we protect our money and if that borrower walked out of closing, sign the papers and got hit by a bus and died? Can we recoup our money, right? Borrowers don't think that way. Borrowers think sun shines, and sunshine and unicorns, right. Nothing's ever gonna go wrong, the project is going to be on time on budget, we're gonna get under budget. You know, it's total bul****. But that's, that's our jobs to explain that to them in a way that's, you know, we're not trying to drive them from our business, we want to do business with everybody, that's got to legit good deal. But they've also got to be realistic and the number one, two spots that most borrowers come in sunshine and unicorns, their budget is too low on their renovations, and their comps are too high. So they want to use the top comps and we don't, why don't we because the markets shift. Now, if they came in on evaluation, I'm going to use Wisconsin numbers, you know, because that's what I'm used to, if they come in with an after repair value of $200,000 and I look at the comps that they submitted to me and there was one house that sold for 200,000. But the majority of them sold for 175. Which one do you think is the lender want to use?   Michael: Yeah, the 175.   Derek: Right, so we're going to lend based on 175. Now, that means they're going to have to put some of their own or more of their own money into the deal. If they sell for 200 bonus for them. That's great, I hope they can. But as the lender, we can't live on hopes and dreams, we got to live on reality and what happens most of the time is they're trying to come in with as little money out of their pocket as possible by using the highest comps, the lender takes on all the risk, which is why we use the middle of the road comps and I don't go to the very low end either. But we're using the middle and again, if they have to put in 10 20,000 extra dollars, and they're confident in their numbers, they shouldn't have a problem putting in 10 to 20,000 extra because according to them, it's going to sell for 200 they should get their money back and then some but when you start changing that or having that conversation with them. Boy, it's amazing when they have to use their own money, how they start to sing a little bit different tune.   Michael: Yeah. Interesting. So it's almost like you have to protect them from themselves.   Derek: Absolutely and we will tell them that I mean, there's plenty of times where we have just flat out told people you should walk away from this deal. Like we want to do business with you in the future. We want to give you a loan, but you are setting yourself up for failure on this deal and most lenders wouldn't typically do that most lenders will just say, we're only comfortable lending up to x, go ahead and do the deal and then when they fail, the lender will take the property back and the lender is in good position depending on loan to value. But we don't, I don't really like that model. I mean, it's certainly not our model and at the end of the day, if I take care of that investor, and I save them from themselves this time, hopefully when they come back around, they're more educated, and they bring us a really great loan, they've got a really great project. That's what it's supposed to be all about.   Michael: Yeah, yeah. Well, let's talk about that for a minute, Derek. So it sounds like the things that you asked for, from your borrowers. It's really an opportunity for them to showcase their experience level that they've taught, crossed, the T's dotted the eyes and really thought about it and in very proactive in that, what if someone's just getting started? I mean, how much hand holding should someone expect from their lender or can they expect from their lender to help them get to a point where they're feeling confident or do you tell people hey, you know, go kind of skin, your knees somewhere else, and then come back to us when you're a little bit more polished?   Derek: So the answer is, it depends. There's, most lenders out there do not want to deal with brand new people. I mean, it's just a reality of life. We are different in that regard, too because we may say to the applicant, alright, we want you to partner with somebody, and that person has to have, you know, we'd like to see at least three deals worth of experience. Now, I don't care if they get mentored for free, or if they split the deal 50-50. I don't care what that partnership looks like. But we would like to see somebody with experience that is backing this deal and if they can't do that, or they don't want to do that, then we typically would say sorry, but we can't lend on this deal right now and if they don't know anyone else, which happens, we have an extensive network throughout the state. So we can pretty much in any market, we can line them up with somebody that would be willing to, to mentor them and get some feedback from them. So but I don't think there's a whole lot of lenders that would do that much hand holding… Yeah, you know.   Michael: And that makes sense to walk us through because you're a private money lender. So you are kind of this middle person where you take investor money, and then lend it out to other investors that are that buying real estate. So when the Fed talks about interest rate hikes are this sort of thing? Like, how do you set your pricing and what should listeners be expecting if they're going to private lenders in terms of rates, right now, we're recording this almost near early September and August 2022. What are you seeing an image of you'll be expecting.   Derek: So it's very volatile, depending on where you are in the country, and how much competition there is, we certainly have national, hard money lenders that are that are, you know, advertising, much cheaper rates than we offer. But they sell off their loans. Almost many before the ink was even dry. They're white labeling almost everything, which means that there's a hedge fund or another note buyer, that is fronting the cash to close the loan and at the closing table, that loan gets transferred and you know, the person that you signed the paperwork with may still be the servicer of the loan. So you may not even realize it's been sold off. But most of the national lending companies, that's what they do. The challenge with that is, when the borrower gets to any kind of a challenge, we'll call it with their loan, maybe they need an extension, or something's just going terribly bad. Those lenders are not going to be willing to work with them because they don't own the loan anymore. It's gone. It's in some hedge fund on Wall Street, and it's just a number. It's just a loan number, they don't care. They just okay, you failed, get out, we'll take your property. As private lenders, we don't currently we don't sell off any of our loans.   We are 100% privately backed, so I don't have any institutional money at all. That has their thumb on us telling us what we can and can't do and our investors are all individual people there, some are mom and pop. Some are, you know, a little bit higher net worth individuals, but we can have conversations with them. So for example, let's just assume that the markets crashed and 20% of our portfolio defaulted and we had to go take these properties back well, if the market isn't really viable, viable option to sell them off and be made whole, we can go to our investors and we've done this with all of our investors. Prior to them even getting started with us, we have this conversation, but we can go to them say, okay, you know, we still myself, my business partner still run a full time real estate acquisition company, we have rentals, we have everything in place. So we're gonna have to take these, you know, whatever it is 20, 30, 40 properties, and we're going to lease them out and we're going to just collect rents until the market comes back and our investors are, that's not their first choice, but they're okay with it, because they know it's a Plan B, I mentioned that before, you know, the, the borrower's don't want to come in with a plan B or Plan C, we've got that in place with all of our investors upfront and, you know, we pay our investors 9% currently, maybe they would have to agree to go down to 7% or 8%, it would have to look at the cash flow numbers. But that's still better than the alternative of losing money.   Michael: At zero, yeah, zero or negative.   Derek: As far as rates are concerned with us, what we pay our investors dictates what we charge and at 9%, we've got a three to four point spread on interest rate. So we charge 12%, throughout the bulk of the state of Wisconsin, and we charge 13%, currently in Milwaukee and it's really just to be 100% honest with you and your listeners, Milwaukee, we could probably charge more, because our competition is charging 15%. So we don't really have any intentions of increasing our rates, we don't have a lot of junk fees, that's another thing your listeners really should consider looking at when we're looking at any lender, the interest rates might be much, much better, but their junk fees, I know of a lender within my state, who charged something like $3,500 to get paid off. In order for you to pay the loan off, you had to pay a payoff fee, which is asinine. We see a lot of lenders that are charging several $100 to do a construction draw, or a loan or an escrow draw for your construction proceeds, that's your money as the borrower and you now have to pay three, four or $500 to get your money out of escrow. It's crazy, you know…   Michael: I've seen that.   Derek: All these fees are they're nuts. We do charge an extension fee if they go past our six month term and it's equal equals to what if we weren't able to redeploy that money and another 12% in three origination points. So for an extension fee, for us, it's a point per month, up to three more months. Why because we want that money back to redeploy it. So we could charge three more points, right? So but it's not some 10 points in some crazy, crazy astronomical numbers, it's really just trying to get our same level return on our money, whether it's extended or redeployed to a new loan.   Michael: Okay and people listening might be getting excited about using private money, because it sounds like so much more flexible, and just investor friendly. Other people might be a little bit scared hearing this and so I'm wondering if you can talk to if those people are listening, can they get involved on the investor side of things where they're funding other people's deals, and just clipping that 9% coupon or whatever the return is?   Derek: Yeah, absolutely. I mean, if whether it's with me or with somebody else, I'm more than happy to talk to anybody about it and if you invest with us, you do if you don't, I don't, that's fine. But I would say there's some very important things that everyone should know if you went and borrowed money from your family. Okay, so maybe they're talking about a private lender being an individual that they have relationship with, or they might be using somebody's retirement account. I've seen this happen so many times, it makes me cringe. There was a couple young couple, I mentored them years ago, now they're, they're super successful, but they were just getting into the business and they were, they bought a flip house and they said, We borrow the money from my uncle at 2% and we can pay it back when we sell the house. So that's fantastic. That you know, this was back before 2% was popular, right? Yeah and I said, okay, did you put a note and a mortgage in place to protect your uncle and they said, no, he didn't care. He just said, pay me back when you get it, you know, when you get the money? I said, okay, do you have the property insurance? You know, the listing them? In case the place burns to the ground? Nope. Did you get them title insurance? Nope. All these things like they did not protect their family at all. So picture them getting sued by a contractor or anybody. Here's a free and clear property without a recorded mortgage against it and not and they lose it. Let's say we lose a lawsuit property gets taken away from them. Now they still owe their uncle all this money, and he had nothing to protect himself or we go back to the they get hit by a bus walking out of the title company, right?   Property, the money's gone, the money went to whoever they bought the property from, how does that family member collect or get their money back, if they don't have a mortgage in place, they can't foreclose on the property... So I just caution, anybody that's, you know, on the borrower side, that's going to borrow money from friends or family, make sure you always get title insurance to protect your lender. You know, the property insurance, the lender should be listed as a lender, not as an additional insured, there's a big difference and, you know, go through a title company, go through a closing attorney, make sure everything's aboveboard note mortgage in place, or deed of trust, depending on your state because you're just, I mean, you're hurting your family if you don't do it the right way. So always, always, always protect your lender, no matter what and if you're going to take a loss on a property or a project, I don't care what it takes, you make sure your lender is made whole, because we've lent money to people that screwed up their deals, but they took care of us and next time around, we lent the money again but you got to take care of your lenders. On the other side of it, if you want to be a lender, there's a lot that you have to consider just the whole underwriting of the deal. Is it a good deal? Is it not a good deal and how are you going to make sure that you get paid back are you going to have third party that goes there and make sure that the property is being managed, right, or if it's rehab, or you're gonna have somebody that's checking on the project and releasing money on construction escrow drawers. If you do want to collect monthly payments, who's going to do that who's going to service the loan. So there's a lot of things that it don't get me wrong, it's a great business, but there's a lot of things that people don't necessarily think about and I've seen it happen enough times where, you know, somebody has 100 200 $300,000 sitting around, and they just do a handshake deal, and lend the money to somebody, again, not getting the proper documentation in place. We had one ***hole and I say that, because he really was an ***hole, he took money out of his disabled brothers, IRA, to fund a rehab project and he had three other lenders on that project and he never he told his lenders, he was going to record all their mortgages for them and he never recorded the mortgages and it turned into this in this really nasty lawsuit. But he lost his disabled brothers IRA in that transaction and he's just the snake, you know, and they're out there. But you got to protect yourself. You know, I still believe in taking somebody at their word and believing the handshake. But that doesn't mean you don't write down and memorialize what you just shook hands about.   Michael: Right and if someone wants to get involved in the lending side of things, but you know what, you just said, what you just shared kind of makes them a little bit gun shy, or they want to have someone else take care of the day to day operations. I mean, are there businesses that they can plug into it? So here, take my money, pay me a return, I don't want to hear about it or know about what you're doing with it.   Derek: I mean, there is there's a lot of crowdfunding companies that you know, that became very popular. It seems to have died off here lately. You know, I don't hear as much or see as much marketing about crowdfunding. I would say the best way to do it is either find somebody in your local market at a RIA meeting, or, you know, a meetup group or even online, Bigger Pockets or something like that. But you got to spend some time getting to know who you're doing business with and, you know, Google the hell out of them, do background checks, all that kind of stuff. I invite anybody to Google me I have nothing to hide. You know, I'm never I just, I never tried to screw anybody over you know, and I mean, yeah, and it shows. But at the end of the day, you've got to know, this is I don't think this will ever circle back around. But I was invited to be on somebody else's podcast and I won't say the name. But then that gentleman was having a four day online conference and he asked me to speak for 90 minutes on this conference and I said, yeah, absolutely, I'd love to do it. He was expecting, you know, four or 500 people and so I was gonna send it out to my email list and help advertise it for him and it wasn't out there for 30 minutes, and two of my closest friends, one being a really good attorney were emailing me saying, Have you lost your fricking marbles? Like this guy is the biggest con artist and scammer there is and he actually the attorney sent me case studies of actual cases that this guy lost, and how he's not in jail, I don't know and I was just, you know, took and took him at his word. He's got a reputable podcast, right? So I'll go and speak on his conference. Well, who will you associate with can reflect very horribly on you, especially on social media. So I didn't mark it to anybody at that point, I still, I still spoke because I said I would and I believe in you know, I gave my word and I and there was a lot of other speakers at that event that were good. But I would never do business with that man and so that's the same thing. If you're going to lend money, or you're going to borrow money. Do you want to borrow money from a lender that doesn't want to be flexible if you run into trouble? Yeah, for us, we've only had to foreclose on nine properties in the last 10 or 11 years of lending, which is, is very, very, very low as far as the default rate. That's not to say we haven't had other people that had problems because we have, we have borrowers that have problems every week. But we're there to help them work through it, versus the lender, that's lending money as a backdoor way of getting properties.   Michael: It's a much more adversarial relationship.   Derek: Right, so you got to vet your lender, no different than if you were vetting somebody that you're going to invest with, we have a very clear in writing no ***holes policy within our company. I swear to God! Michael: I love it.   Derek: If I have somebody that and this has happened, I've had people that had several million dollars that approached us and said, We want to invest in your company and after half an hour, 45 minutes of talking with them, we just knew they were going to be the biggest pain in our *** and we turned them down. Same thing with our borrowers. If our borrowers stopped communicating with us, and stop doing what we agreed for them to do, then the ***holes  policy kicks in and we will have to default we will have to foreclose or at least we're not going to give them a loan next time. But the life is a lot better when you wake up in the morning and enjoy doing what you're doing and dealing with people that are not fun to deal with takes away from that. Yeah, we just don't do it. You just avoid it entirely. So I'd love to work with any of your listeners, unless they're an  *hole. Don't call me.   Michael: Okay, fair enough. Fair enough. Derek, on that note for people that do want to reach out that do want to work with you that have more questions about private lending, what's the best way for them to do so?   Derek: My, my personal email address is Derek spelled DEREK, @ bestreifunding.com (Derek@bestreifunding.com)  and I keep an eye on my own emails, my if I miss something, my assistant will grab it. But I'd love to chat with anybody that's got questions and again, it's this isn't a sales pitch. I mean, if somebody just says legit questions about lending, and they have no intentions of wanting to work with me as an investor, whatever, that's totally fine. I don't it's not about that for me and then the other thing I'm writing a book right now about lending in from start to finish. What happens when an application comes in all the way through closing and servicing after the fact and that's going to be coming out towards the tail end of the year, November December it'll be published. So I'd love to give your listeners that for free the electronic version for free.   Michael: Awesome.   Derek: So they just send me an email that same email address (Derek@bestreifunding.com) , and say, hey, I heard you on this podcast and put you on the list when the books published we'll get it out to you.   Michael: Fantastic. Thank you so much and I just have an ask for all of our listeners that do reach out to Derek if you wouldn't mind please referencing that you heard him on the Remote Real Estate Investor in the subject line. So he knows where you're coming to him from. That would be super helpful.   Derek: Absolutely.   Michael: Well, Derek, this was great, man. Thank you again for coming on the show. Really appreciate it and I'm sure we'll be chatting soon. Can't wait, can't wait to read the book.   Derek: Yeah, I can't wait to finish the book because it's great when you're writing a book, except some weeks are more stressful than others trying to hit deadlines and stuff. So I'm looking forward to it, but I'm really looking forward to it being done, too.   Michael: I can imagine I can imagine. Well, hey, man, we'll definitely be in touch soon.   Derek: Awesome. Thanks so much for having me.   Michael: You got it, take care.   All right, everyone. That was our episode, a big thank you to Derek for coming on again and sharing his time and knowledge with us. As always, if you enjoyed the episode, feel free to give us a rating or review wherever it is eat your podcasts, and we look forward to seeing in the next one. Happy investing…

An international commercial airline pilot who, after the tragedies of 9/11, was forced to realize that his “Safe and Secure career” was nowhere near as safe and secure as he had thought. Steve Rozenberg chose real estate investing to be able to control his own destiny and create his own generational wealth. He created the fastest-growing property management company in the state of Texas. Managing over 1,000 properties across 3 major metropolitan cities. Steve built the business up and created maximum cash flow positioning his company for a very profitable exit.   He has been a guest and collaborated on countless panels, webinars, masterminds, conferences, and podcasts as well as being a published author. In today's episode, he shares his story, how he began real estate investing, and how important your mindset is to be successful in this business.   Episode Link: https://steverozenberg.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by Steve Rozenberg, who's an airline pilot and entrepreneur, and he's gonna be talking to us about the mental mind shifts we as investors need to make in order to scale and have successful businesses. So let's get into it.   Steve, what is going on, man? Thanks so much for taking the time to come hang out with me today. I appreciate it.   Steve: What's happening, fellas, good to see you.   Michael: Oh, super good to see you, Steve. I am super excited to share with our listeners a little bit about you and your background, because I know a little bit about it. But for anyone who doesn't know who Steve Rozenberg is, bring us up to speed quick and dirty. Who you are, where you come from, what is it you're doing in real estate today?   Steve: Sure. So I live in Houston, Texas, born and raised in Los Angeles, actually, my career brought me out here and that careers, what got me kind of involved in being a real estate and being an entrepreneur. I'm an airline pilot by trade and I got hired at 25 years old. I was the second youngest person ever hired by this particular major airline and hired at 25, I had the best job in the world is flying all over the globe. I was 25 years old and it was the most safe, most secure job that anyone could imagine having. Until a certain day in history. That day was 9/11 and that day changed my life, it changed a lot of people's lives. It changed my life because on 9/13, two days after 9/11 in the towers fell, I got delivered a furlough notice and I was basically told, hey, Steve, you know what that safe, secure job that you thought you had, it was never safe and it was really never secure and you're about to be on the street with 50,000 other pilots.   So to say that I got punched in the face very, very hard within about 48 hours would be an understatement and it was it was rough. You know I always I ever want to do as a kid is be an airline pilot. I didn't want to do anything else. I was fulfilling my dream and this something happened, which I realized it had nothing to do with me but it affected me. You know, I didn't I wasn't a part of 9/11 but I was a repercussion, a ripple effect, if you will and so I started to talk about what I could do, what could I do? What to survive to make a paycheck, right? All I knew was to be a pilot, but there was many, many other pilots out there probably better pilots than me to be honest with you that you know, we're also on the street and I looked and I saw that everyone that was tied to wealth somehow was tied to real estate. I didn't know anything about real estate, but I was like, okay, I mean, I knew some pilots who had rental properties, but I didn't know much about it. So this is 2001. So there was no YouTube or Facebook. So I had to go to the library. I had to get a library card.   Michael: A lot of our listeners are probably asking, like, what is that?   Steve: Yeah, yeah, exactly. It's a big house with a lot of books and so I had to start learning about real estate, I read a book a week and I just I read everything I could, because I thought that I was behind the curve of figuring out what I was going to do with this airline thing. If there was another terrorist attack or something happened, I was gonna be out of work and so I learned all the different things you know, now it's very cliche, you know, burrs and all this other stuff. But I just I learned how to buy I learned how to flip I learned how to wholesale properties. I got lied to, I got ripped off, I got cheated on. I mean, you name it, I just kept getting pushed down face down in the mud every time. But I kept getting back up because I had to I didn't I didn't have a choice. I had to figure out this combination and I, I saw people that were successful. So I was like, okay, there's a recipe. I just don't know it. But I can think like, I'm not the dumbest guy in the world. But I could figure this out and then I started getting better and I started winning a little bit more than I was losing and I started figuring out and what I realized was communicators are actually the ones that are the most successful, not the contractors.   It's four walls in a roof. It's relationship driven. It's not anything else and that relationship is driven by business models, and it's driven by systems and so I started realizing that the four walls and a roof and the dirt really had nothing to do with being a real estate investor. The successful people were good communicators, and they understood the value of leverage and team and then I started looking back at my real estate in my airline career and I started looking at how airlines run and I was like okay, systems, procedures structure and I kind of started melding the two and that led me into start learning to become successful as with my, my old business partner, Pete Newberg, who has been on your show, he and I built a very, very successful property management company, by understanding how to leverage those models and how to leverage systemization and then I've gone on to do a lot of other things, coaching people working with people, helping people understand the systemization of a business is very fundamental to be successful, is what I've learned and that's what I help people with.   Michael: I love that and we're gonna get into a little bit more of the systemization here in a minute. But for anyone listening, it's like, well, Steve, Michael, I'm not an extrovert. I'm more of an introvert, I'm more of an insert inside kind of person, like, Am I just doomed to never be a real estate investor like, what should I be doing if that's me?   Steve: So that's a good question because a lot of people you know, are a lot of people that go into real estate, what I've learned is they're running away from a life or job that they don't want you when you talk to real estate investors, and I coach a lot of real estate investors all over the world and when I talk to them, I'll ask them, why are you doing this, and a lot of them will tell me, I don't want this, I don't want that. They're running away from something and what they're running away from is a life that they don't want to have. Unfortunately, when you're running away from something you don't want, that's what you're focused on, and you run right back into it. I mean, that's the cycle, right because that's your filter. But what I've learned is, you don't have to be the best communicator, but you have to have good communicators on your team. There's things that I am really, really good at and there are things that I am horrible at. It's a matter of understanding, what are my strengths? What are my weaknesses, I don't think that I should become like, that's just my opinion. I don't think it makes sense to work on my weaknesses. I don't know anything about accounting, I would make a company go bankrupt if I started doing the accounting books for my business. So why should I go and take two year courses at a junior college to learn how to do books, or I just hire someone and that's what they do. So I've taken my weakness, and I've actually turned it into a strength because now I don't have to think about it, I don't have to focus on it. I have someone in place that is run by KPIs and metrics and accountability and I just, I just parceled, that whole piece of my life off.   So to answer your question, I don't think you have to be good at that. A business needs it like my business partner, Pete. He was the integrator and I was the visionary. I was the forward guy, I was the guy out in front. But I sucked at the operational side, he was like the mushroom in the in the back room and, you know, my job was to break his business all the time. It's like I wanted to have so much sales and marketing coming in, that he would go Steve, I can't take it anymore and that was like my victory lap of showing. That's the that's the sales and marketing tug of war that goes on, right and so I don't think that you have to be good at everything because the reality is, is you're not, you're probably good at one thing and you suck at everything else that you do. It's a matter of identifying what am I good at? What am I not good at leveraging out those other things and focusing on that one thing to be the very best that you can be and if you can do that, you will help the business, the organization and you'll be much happier too.   Michael: I think yeah, I think it makes a ton a ton a ton a ton of sense. So talk to Steve about like, you got three to five properties, you're looking at scaling up, you're realizing maybe a little bit more and more, you're self-managing, hey, this might be more of a job than I was anticipating I'm trying to get out of a job that people what are some systems people should be putting in place and how should they be thinking about systemization if that's a new term for them, that's never something they've done before?   Steve: Yeah, that's a great question and let, I'm going to back it up a little bit if it's okay, because a lot of people, if they have three to five properties, and I get a lot of people that will call me and ask me that question like, hey, Steve, you know, if I'm in front of them, they'll put a deal like three inches from my face and they're like, hey, is this a good deal like being closer makes it more sense? I don't know. But they'll put this right to my face and they're like, is this a good deal? Well, I don't know what a good deal is for you. So first question is, what's the goal, right? What is the date of that goal? So if they don't know the goal, and they don't have a date, and a timeline and a way to achieve that goal, I can't tell them what to do. I can't give them directions. It's kind of like if you said, hey, Steve, we're all gonna go to Disneyland and we got to be at the front gates at 8am on Friday morning and we're going to leave our house at 6am and we're going to take the 405 to the 91. Get off on Disney drive, and we're gonna go into the gates to be there ready to go. Well, if along that way, you get lost, you're gonna pull over and you're gonna go, hey, Steve, can I get directions? What's the first thing I'm going to ask you? Where are you? Where are you going? If you say, I don't know, I'm just driving around today, I'm gonna go with it. I can't help you, because I don't know where you're trying to get to. So if you take that same analogy, many people buy properties. They don't have a goal. So they say, should I buy more properties? My question is, is I don't know what's the goal? Because, you know, many people, you know, they think that owning rentals is the goal. That's just the strategy to achieve the goal. That's like saying, I'm going to get on the 405 freeway and you're going, where are you going? I don't know, I'm just gonna get on the freeway and drive and the reason I know that is when Pete and I first started buying properties, that's what we did. We were just buying properties and we're going the wrong way, in the wrong direction at a very, very fast pace and nobody stopped us to say, where are you guys going because we're just driving. We're like, we're making great time. Unfortunately, we're going in the wrong way. So to answer your question, to going back to what you're saying about systemization, every business normally has about eight to 11 systems in their business, it's a matter of looking at what you do and systemizing everything. So if you took a system and put it in a vertical, let's just say when you're going to rent a property, what is the system that it takes to rent that property, you've got to basically first thing you've got to do is maybe the first trigger of that system is when the Make ready is done. Now the property is in rent ready condition, it now triggers this system to happen. What's the first thing you got to do? Well, maybe you've got to go and take pictures and video of the property. Step one, what's the next thing you got to do? Well, then you've got to do some comps and check out the area and see what the property is renting for. That's step two. So you're going through and you're just basically talking to me, like I'm a three year old or third grader and you're explaining to me in very painstaking detail, what you're doing. These are all steps in the process of a systemization. Once you create the system all the way through to getting the property rented, once the property is rented, that system is complete. Maybe that system is 19 steps, right? Then you look at that system and go okay, is this the most efficient way to run this system, does or is there any redundancy? Is there any things that we don't even do or should not do? Are we missing some things? Now, let's say for example, this person, he, let's just say he grows and he gets an employee to do these tasks, right and or he subs it out to a company. This company needs to know very, very clearly what they're doing because the definition like look, I think we can all agree that when you own one business, or you own 50 businesses, which are rental properties, those are businesses, that you've got to treat it like a business, right? The challenge is, most people don't they don't have any systems that don't have any structure and it's chaos, which is why so many landlords get sued, because there's no systemization or standardization, meaning how you lease a property. When you're in the airlines, right, we'll go back to being an airline pilot, if I'm an airline pilot, and I came out and said, hey, everyone, this is gonna be a great day today. We're off to Hawaii. This is my first time ever doing this. So wish me luck. I'm just gonna wing it and hopefully we make it there. How would you feel?   Michael: Yeah, a little bit shaky.   Steve: Right but yeah, you'd probably be like, I'm not getting on this plane. Yeah, but that's what many people do with their rental properties and they're doing that with their financial lives, right? This is your real life, you're trusting me with your life but you don't do that with your financial life. So there's a disconnect as to the training and, and the way that you can scale because if you have to do everything in your business, you don't own a business, you own a job and a job is not scalable, because you have only so many hours in the day, and you have so much knowledge of what you're good at and what you're bad at. So I don't know if that answered the question but there's, that's a very hard thing to unpack.   Michael: No, it totally does. It totally does. Two things. First thing is I think you must be having been out of LA for a long time, because your analogy you're talking about getting on the 405 Dizzy land, you leave by six get there by eight. There's no world in which that happens today. Yeah, first and foremost. But secondly, so like, how does someone make that mindset shift because I think so many of us and specifically, it seems to be pretty pervasive in the real estate world, this DIY mentality, you know, I do it myself, do it myself, do it myself. How does, how do you make that mental leap of, okay, I'm going from doing it myself, small business owner to hiring someone or contracting it out or putting it to somebody else so I can get out of my own way?   Steve: Sure. Well, there's a couple things. Number one, you've got to you have to be willing to let go of your ego and pride, right? Because ego and pride are success inhibitors, they will kill your success quicker than anything. I should do it because I'm in charge, right and so let's go back to the goal, right? If I said, hey, what's your goal and you didn't, you didn't and this is what I use this example when I coach people, I'll tell them, okay, let's just use this as an example. I call it a 2020 2020 properties in 20 years, giving you $20,000 a month in passive income. It's a bait. It's a goal, right? Yeah, it's, it's got a time limit on it. It's something that we can attach an actual goal to and we know how we're going to achieve that goal because we have a scoreboard to see if we've made that. So that means that each property needs to be giving off $1,000 a month in passive income to get 20 properties give me $20,000 a month. Okay, that means, okay, so let we're gonna, I'm gonna, I'm gonna answer your question in a roundabout way, we've got to say, Okay, if we want to have 20 properties, that means by year 10, we have to have acquired all those properties so that from year 10, to your 20, we're going to pay those properties off, because we want them free and clear by your 20. That means between year one and year 10, we have to purchase 20 properties, which means we have to close on two properties a year, which is every six months, which means every three months, we have to be looking for deals.   My first question is, is do you have the finances to even make this happen? Do you have the do you have the financial means to achieve this goal? If they say I don't have a job, I'm gonna go well, then we're done talking because first thing you need is the financial means to make that happen. That's number one. Then we say okay, when you achieve the goal of 20 20 20, right, and we get to where we want to go, what I have learned and what many people I'm sure some people will learn, it's not a bad thing to learn. But a lot of people identify success by their accolades, meaning how much money they have in the bank, or how many properties they have, how many doors whatever they want to whatever they want to use as their gauge. That's how they quantify their success, or lack thereof. Now, I had Pete and I had a very successful property management company that we sold to a venture capital much larger firm and I can tell you that when you get that money in the bank, it is very, very, very anticlimactic. Like I mean, literally, like after we sold our company, and we sold it for well into seven figures, all of a sudden, I thought I'm done, like, oh, this is awesome. Now, mind you, I still am an airline pilot this whole time. So I'm okay financially but I thought, man, if I just if we sell this company, we're good. You don't happen Monday morning, after we sold the company?   Michael: You put on your uniform and go fly a plane.   Steve: My wife said, hey, don't forget, take the trash out the trash bin or come and I'm like, when I sold the company, like I sold my goods just like, don't give a shit. Take the trash out. So, but the point is, is like all of a sudden you think you're in some magic club like you think you break through this glass ceiling and the reality is, is nobody cares and the reason I'm saying the reason I'm going somewhere with this is that we think that once we achieve a mark or a goal that's going to make our lives complete and sadly, it doesn't, it actually makes it more hollow because you realize, like, wow, I've been doing this all these years, and nobody even cares. Like they're, you know, everyone's moving on. So what I always tell people when I talked to when I told you earlier that a lot of entrepreneurs, they buy real estate, and people want to get involved in real estate and I asked them why they say I want more freedom, right? I'm sure you've probably heard this, I want anytime freedom, do what I want, blah, blah, blah, they use this word freedom, like it means something special to them. I tell them okay, well, let me ask you this, why don't you just sell all your shit today, go live in your car at the park, and you'll have all the freedom you need. No one will bother you, you'll have your freedom. They think about that I'm like, but you know, what you won't have is you won't have the memories that you want associated with that freedom.   So we're really not buying freedom. What we're buying is memories. So when I sell a business, or I have rental properties, giving me cash flow, what am I doing with that cash flow, it's giving me the ability to have freedom to go buy the memories. It's the memories we want. So going back to your question, how does somebody step out of what they want? I would first ask them, what memories do you want to buy because at the end of the day, we're not leaving, we're not leaving this earth with anything except our memories, right? When we go when our when our expiration date happens. We're not going anywhere, except with memories in our brains. What memories do you want, right in the real estate, and the cash flow or whatever you're doing with that will give you the means to buy those memories. So buy the memories don't buy the time is you go to prison and have all the free time you want. You may not like the result, but you'll have free time by the memories, right? Go to you know, have dinner on the Mediterranean in Greece, right? Go to this African Safari, the Rolling Stones in Wembley Stadium. Those are the memories that you want and that's what real estate gives you. So going back to your question when someone says, hey, like, you know, how do I get out of it? I'm like, what memories do you want? Do you want to be an employee? That's trading time for money because that's what you're doing? I'll give you an example. So my son, he bought a rental property at 14 years old. Okay and everyone's like, oh, that's awesome. Yeah and he bought it with his money, you know and so everyone's like, man, that's awesome. That's great. Like, did you have him do the rehab and clean the house and I'm like, No. Why would I do that? They're like, so he can learn. I'm like, I don't do that. Why should I make him do that? That's being a hypocrite. I want him to be a business owner, not an employee. Don't get me wrong. There's nothing wrong with being an employee but that's that that is not the goal of one rental property like, hey, congratulations, you want a rental property? Now go learn how to cut wood lay tile, put it insulation but dad, you don't do that. I wouldn't even know how to do that. Like, again, working on strengths versus weaknesses, right? People seem like when they get a rental property that like, all of a sudden, I've got to learn how to put a toilet in and I gotta get up on the roof and inspect it. I'm like, have you ever done that before? No and I'm like, Well, then why in the heck would you get up on a roof? If you didn't know what you're doing like this is how you become a statistic. But we think we should because of ego and pride. So that's kind of a long answer but that's my answer.   Michael: I love it, I love it a great answer. Steve, great answer. Talk to us a little bit about, like, the qualities and what you see really successful people do who are able to implement systematization like what like, what skills should people be go out there and refining in order to be able to execute here really, really well?   Steve: Well, yeah, that's a great question and I've studied a lot of very successful people. I've been coached and mentored by some very successful people and I'm a constant student, I still a mentor to this day. Anyone who says that they don't need to be coached, and they don't need to be mentored, is missing out on a lot of opportunity. I look at Tiger Woods, Michael Jordan, these guys are at the top of their game, and they still have coaches and mentors. All professional athletes have coaches, you don't become a professional athlete, and then lose the coaches. They make you better.   Michael: So I'm done.   Steve: Yeah, it's like I'm done. Um, you know, even Kobe Bryant, I mean, everyone, they all have coaches. I mean, that's how it works, right? Right, it's brings the best thing out of you. So number one, I think you always have to have somebody holding you accountable and if you look at all successful people, they have accountability. They have somebody holding them accountable in somebody, you know, a three feet distance is a world of perspective, right? In the simulators. When we find the simulators and we're practicing engine failures and all these things. The simulator instructor is about three feet behind us the control panel, and we joke and he they know, they're like, yeah, I'm the smartest guy in here because I'm three feet behind you, I can see all the mistakes you guys are making. You don't see it, because you're in the heat of battle. He's like, I can see it coming a mile away. I'm the smartest guy in the room. So having somebody three feet away, is a world of perspective, having an organization help give you guidance to when you're looking to acquire a property that's giving you that three feet difference. That's a world of difference, right? So, there is a recipe for success and I'm a firm believer. If you look at all successful people, they follow a very simple recipe. It's not magic, people who are failures, they follow a recipe also and I think that every day that you wake up every day that we all wake up, we have a decision to make. It's very simple. Am I going to be better than yesterday or am I going to be worse than that, initially, is our decision that we make every day because you're not good, you're they're getting better. You're getting worse, we never stay the same ever and so when you wake up in the morning, what is the decision you're gonna make? Are you going to do any reading? Are you going to do any I'm statements? What are you going to do to focus on solution based questions slash trying to be better or are you going to be in blame excuse or denial? So going back to your question, I think that people that if you want to learn how to become better at systemization, then talk to someone who knows what they're doing and that can help you become a systems expert because, look, as an airline pilot, right? I've been I've been flying for almost 30 years, I've been trained by Boeing, I fly one of the most complicated aircraft out there a Boeing 787. I didn't, I wasn't born that way, I had to be trained and guess what, we still go back to training every six months, and we go back through all the initial stuff. So just because you reach the pinnacle, you don't stay up there and if you look at people that are successful, they're always trying to be better, just because you have three houses or five houses or 500 houses. Look, the crash to the bottom is much faster than the rise to the top, as we all know, and seen, you know, with banks crashing and other things. It's the people that are cognizant and follow that recipe and again, I don't think it's a very complicated recipe and if you look at people, you know, they do a lot of things in the one thing that I've learned, I'll give you a quick story. I was with one of my mentors one time, guys. 11 businesses, right. He's on the board of 11 businesses and he was my mentor, and we lunch and I was like, man, I don't know how you do it. Like you have 11 businesses. I'm like, how many days a week do you work? He's like, Tuesday, Thursday, and sometimes half a Friday. It was like this guy was talking Martian to me. I was like, like, how is that even possible and he goes, You know what, Steve, you know what the difference is? He says, I say No, way more than I say yes and I said, you know what, that's easy for you to say because you're this multimillionaire that has 11 businesses and he said, I would have never become this way. If I didn't start saying no and he said there's an opportunity cost that every time you say yes to something, you are saying no to something else, right.   So he goes every time you say yes to doing something that is not the most high income producing activity, you are saying no to something. He's like, it's again, he goes, it's your choice. So when I coach people, one of the things I do, and this will be a freebie for people watching is, I always have them do a two week time study, okay? So it's a very simple time study that they have to go and they have to write down for two weeks, every single thing that they do, right, you want to go on a diet, you start tracking your food, you want to see where your money's going, you go on a budget, you want to see where your time is going and start tracking it at the end of the day, they have to give me an executive summary. Tell me how your day went? I don't care. I don't care what you did. I just want to hear it from your words. Within one week, within one week, they will be like, I now know where my time is going and most people think they're so productive, like, oh, I work all day long. I'm like, bullshit, you don't work all day long. Yeah, study and we'll see. After they do the time set, he's like, man, I'm only working like three hours a day. I'm like, because everything else is reactionary. A five minute interruption, a five minute phone call is equal to 23 minutes of lost time. How many times as a as a real estate investor entrepreneur, do we get the sideways calls that interrupt our data, and they sidetrack us, if you get 10 calls a day, that's 230 minutes that you were never expecting to lose, you just lost that chunk of time. So now you're living what's called a reactive life and when you're living a reactive life, you're in chaos and when you're in chaos, you're not in control and when you're not in control, you're not making money. So the challenges is what people don't put a factor into this chaotic life, is the mental stress that it weighs on you. So once they do the first week, the second week, they have to go back in every day, they have to do this and I and just the type of coach I am, every day, they have to send me a picture of their time study and I tell them, the day you don't send this, to me is the last day you will hear from me, because I can't want it more than you like it's very simple. Like, even if you pay me all the money, you're done like that's just how it is I can't I don't have time to waste if you don't want to be better. So when they do this, the next day is they have to put an H or an L next to that high income activity, low income activity. And guess how many low income activities they do on a day?   Michael: Probably the majority…   Steve: Probably the majority. So then what we do at the end of that next week, we go, okay, these are the things that make you money. These are the things that don't we need to outsource systemize or automate the things that you don't make money on of these high income activities. Which ones do you like doing? Which ones are you good at? I like this, and this, okay, this is the focus, we need to find someone else to do these other high income activities. We don't ignore them and so my point is, is one of my mentors said that he goes TV goes understand saying no is not saying that. No, the way you think it. He goes when I say no, it just means I'm not doing it. He goes, I just make sure that other people are getting it done, but it's not through me. He goes things to have to get done in a business but he goes, it doesn't have to be you. That's your ego and pride, thinking that you have to be the one doing it all. So that was a very valuable lesson for me that I share with you, you in the listeners.   Michael: Yeah, thank you. I mean, as you're saying this, I'm just like, oh, my God, I have so many hours in my day, this is insane.   Steve: Yeah, we do. We all look, we all do. And it's a matter of stepping on the scale whenever I'm coaching someone, or someone gives me a call, like, man, I just feel like I'm losing it. I'm like, just do a time study. I mean, it sounds it sounds so simple, or whatever but I'm like just do the time study you will see very clearly, and then just fix it. Look at the pendulum swings. It's okay but you got to do something to take corrective action. Otherwise, it's going to keep swinging, it's never gonna go back on its own. You don't all of a sudden become more organized and more productive. It doesn't work that way, right? You're always gonna go back and you've got to start focusing on making that decision every day. What am I doing? You know, and it could be something simple. It could be reading for five minutes, could be writing your day could be whatever it is, but start creating habits and those habits become patterns and those patterns will change your life.   Michael: Mike drop exit stage left, Steve, that was amazing. Man, I want to be super respectful of your time. If people want to talk with you more, learn more about you reach out, have you as their coach, what's the best way for them to do so?   Steve: Yeah, they can find me on all social media handles. It's Rozenberg, Steve on Instagram, Steve Rozenberg on all the other stuff. They can also go to my website. My website is https://steverozenberg.com/ , it's ROZENBERG.com and you know, I do a lot of coaching. I do three day masterminds with very high level, people like Bradley, the iron cowboy, other people, I bring them in. It's all about mindset and it's all about, you know, the one thing I'll say real quick before we go and I want to be respectful of your time is don't be selfish, and to the people watching and what I mean by that is as entrepreneurs, we watch these shows, right? We buy real estate, we do all these things, and we do it for the people that we love but here's the thing, we never actually share the knowledge that we've learned with the people we're doing it for. To me, that's the definition of being selfish be selfless. Like I said, my son bought his first rental property and 14, create generational wealth, right? Bring them into the loop. Don't be selfish, because when you're selfish, you're isolating yourself, have an open mind and the ability to give abundance and share the knowledge that you learned from this podcast, show reading, bring the family that you're doing it for into the mix, and you will have a much, much more fulfilled life and you'll be much more successful not just financially, but personally relationship and all that stuff. So don't be selfish.   Michael: Yeah. I love that, Steve and one more final question before I let you go. You mentioned you're running a mastermind and I think a lot of our listeners maybe have been to how to coach or been to seminars or been in real estate trainings, and just whoever reason can't implement it. They take the classroom knowledge, but they can't execute a role. So what have you seen people do who are really successful at that and actually applying what they've learned and taking that excitement and went out and actually ran with it…   Steve: That's a good question. So and the reason I created my mastermind is that very reason, right? Everybody goes there, rah, rah, they leave in there, like two weeks later, they're like, it's in their car underneath their seats, all the dogs chewing on it and so what I do when I do my masterminds is once they're done, they get unlimited coaching from me, they get my phone, they get my text, they get my email, if they need me, they call me. So I'm there as accountability for them every single day. It's not that hey, I know you have a problem Monday morning with a tenant exploding your house but we're supposed talk Thursday at three so call me then that doesn't work in the real world. I don't think that that's a very successful model. I give unlimited so that they have me and they have me as accountability. I think the biggest challenge when you leave these events and coaching is the accountability part. If the coach if you have a coach and he's not accountable, find them accountability person, one of the things I do when I coach partners is I have a board of directors meeting, I create a board of directors for them going over the P&I statements going over balance sheets, going over the goals. This is what you need to do in any organization, all businesses do it. Most people don't. So if you can't make your coach be accountable, or you can't afford a coach or whatever the case may be find a friend, a family member or go to the bum on the corner. I don't care but make someone hold you accountable that you actually have to answer for what you're doing and I think if you're accountable, based on what you learned, that's why I do unlimited coaching, you're going to be much more successful with achieving the goals that you set out to achieve.   Michael: Makes total sense, Steve, this was a total, total blast, man, thank you so much for taking the time to hang out with me. I really, really appreciate it.   Steve: Thank you, man. It's good having you appreciate you having me on.   Michael: Hey, we'll definitely talk soon.   All right, when that was episode, a big thank you to Steve for coming on super, super, super great stuff. As he was talking. I was like, oh my God, I need to start doing a lot more of what Steve is talking about. As always, if you enjoyed the episode, feel free to leave us a rating or review wherever you get your podcasts and we look forward to seeing you on the next one. Happy investing…

Neal Bawa is a technologist who is universally known in the real estate circles as the Mad Scientist of Multifamily. Besides being one of the most in-demand speakers in commercial real estate, Neal is a data guru, a process freak, and an outsourcing expert. Neal treats his $947 million-dollar portfolio as an ongoing experiment in efficiency and optimization. The Mad Scientist lives by two mantras. His first mantra is that "We can only manage what we can measure". His second mantra is that, "Data beats gut feel by a million miles". These mantras and a dozen other disruptive beliefs drive profit for his 700+ investors. In today's episode, Neal shares insights about his strategy for multifamily investing, some interesting market statistics, and what he expects the future of the real estate market to look like. Episode Link: https://multifamilyu.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by my very special guest, Neal Bawa and he's talking to us about multifamily investing syndications and some really, really interesting market statistics about looking forward into what the real estate market future holds for all of us. So let's get into it.   Hey Neal, thanks so much for taking the time to come on the show with me today. I really appreciate you coming on and sharing some wisdom with me.   Neal: Well, it's exciting to be here, especially because I am a fan of your company and until five minutes ago, I didn't know that I was doing a podcast with Roofstock. So super excited to be here.   Michael: Awesome. Well, surprises always tend to keep people on their feet. So I'm really excited to chat with you today. So I know a little bit about your background and who you are but for anyone listening, who might not be familiar if you can give us the quick and dirty who you are, where you come from, and what is it you're doing in real estate today?   Neal: Absolutely. I'm a geek, a nerd, a maverick, I come from Silicon Valley. I live in Silicon Valley, I'm a data scientist by profession with a computer science degree. I've had a successful tech career, which, after 17 years ended in the sale of my technology company. I got into real estate because I live in Texas Fornia and I was paying 53.7% of my gross income in taxes and so you know, I looked around and looked at lots of different avenues to save money, looked at solar panels looked at oil, and came to the conclusion that none of those were anywhere close to real estate in terms of the incredible taxation benefits. I tell people, real estate is America's number one legitimate tax mafia. That's really what it is. I mean, no other area has the astonishing, the shocking tax benefits that real estate has. So I started doing real estate for that and started sharing a lot of my data science, you know, thought processes and ideas and it sort of just exploded from there. The first time I shared my insights on data science, I had four people in front of me. A week ago, I had 1100 listening.   Michael: Oh my gosh, that is really, really cool. So I love chatting with data scientists with geeks and nerds as the self-proclaimed title that you gave yourself, because I think it puts a process. They come from very process oriented backgrounds, and it allows them to apply the same processes to real estate, which I'm sure we're gonna get into in a little bit. But you're doing some pretty amazing things in the multifamily space if I'm wrong, mistaken, right.   Neal: I am, I am and I'm a huge fan by the way of the single family space and often direct people to single family, but multifamily is where I've been simply because of its amazing scale. So I started off in single family and I have now moved over to multifamily. So currently have about 750 million in construction and various multifamily spaces such as built around and apartments have about 250 million that I'm managing that I purchased that are existing buildings, and then I dabble in other areas as well as multifamily is kind of the core foundation of my business, but I dabble in self-storage, industrial townhomes for construction and student housing as well. So I love all kinds. I love all kinds of different asset classes at different times. But I always come back to the Foundation, which is which is multifamily.   Michael: Okay, now, you said a lot of amazing things with a lot of big numbers and I want to come back to that in just a minute. But I'm just curious on a personal note, can you share with our listeners, what's the best compliment you've ever received?   Neal: I think that the compliment had and I actually use it now you already heard it today was a person that walked in and said, This is the geekiest and nerdiest presentation I've ever heard that was still very entertaining. So that second part was like, okay, so I can I can get geeky I can get nerdy but I can still kind of get it down to the level where people enjoy it and are not snoring, you know, five minutes into the presentation. So I love that comment because it's hard to be a geek and be a nerd and still, you know have these aha moments for my audience. So I've worked really hard on that.   Michael: I love it and clearly you're doing it well because people 1100 people are coming to listen so my hat off to you. So let's talk about what excites you about multifamily because I think that there's an argument to be made that the fundamentals but you talking about going back to the basics is single family. So why do you think that it's multifamily? Why do you make that argument?   Neal: Because of single family? The short answer is this single family is why I'm excited about multifamily. Okay. So, you know, you hear a few numbers all over and over again, people say these numbers that don't quite explain the meaning of this, right. So we say in this home, the you hear this all the time, we have a shortage of single family homes in the US 5 million, the actual shortage is 5.1 4 million. You also hear we have a shortage of multifamily or apartments in this, you know, in the US and the actual shortage today is 600,000 units. So you notice most of the shortage is actually on the single family side, right? 5.2 million there 600,000 on the apartment side and for both of those, the vast majority of the shortage, not all of it, but the vast majority came from the fact that the US actually didn't really build anything single family or multifamily between 2011 in 2015. So we used to build, you know, I don't know, eight 700,000 800,000 a million units and then all of a sudden, 1112 1314 15, we built less than half of that creating this massive supply demand gap. It was enormous and that's why that has led to rental growth being you know, to AX what it used to be in the previous 30 years, we've also seen massive growth in prices on the multifamily side where, you know, we used to buy, you know, properties at, you know, $40,000 a door, and now we're buying the same properties at $250,000 adoor. So it's just an incredible, massive increase there in Parador prices, a lot of it really comes back down to the fact that we are absolutely unable and I haven't seen any evidence to the contrary, we are absolutely unable to build starter homes in the United States, we actually don't have a shortage of single family. It's a very common misconception. We don't have a shortage of single family, we have a shortage of starter homes and when I talk about starter homes, I mean anything that in a reasonably reasonable Metro, I'm not talking about San Francisco Bay area, but let's say something in Phoenix, right? Being able to build a nice three to four bedroom home that's brand new for about $275,000 that has become categorically impossible today. Okay, for I'll give you an example of this, as you know, multifamily scales a lot better because when you're building 100 units, you get all these economies of scale, blah, blah, blah, okay, my cost of construction in New Braunfels, which, by the way, is not a major metro, you've probably never even heard of it. It's in the corridor between Austin and San Antonio and so you one could say Austin and San Antonio are both, you know, secondary markets, not primary like San Francisco or Los Angeles and in so and this, so this market must be like a tertiary market because it's in between my cost of construction for townhomes, not single family is well over 300,000 units. That's what my cost as a builder is, right.   So you understand what's happened since March 2020. Construction costs in the US have gone up by 34%. That's basically about 27 or 28 months, they're up 34% and the problem was there before COVID. So before COVID, even in the face of outstanding and insane amounts of demand. We were only able to build enough single family enough multifamily housing just to keep up with demand. So remember what I said 11, 12, 13, 14,15 those five years, we under built massively, and then 1617 1819 20, those five years we built okay, we did find we stayed up with demand. But we didn't make any dent in the single family shortage. We didn't make any dent in the multifamily shortage, those numbers stayed the same, because we were just building enough. And that was before this once in a century 34% increase in construction cost. That was before that increase. Today, construction cost has gone up. So but people who think that home prices will drop 20% simply have no understanding of the fact that there is it's impossible to supply a product. If home prices dropped by to even 10 or 15%. Most builders will either go out of business or simply pivot to build the rent. So they'll stop building anything for the market and what that will do is make the shortage worse, which means that there's even worse it's going to make it much worse, right? Because we absolutely have to build 500,000 units a year just to keep up with this year's demand. Forget about the shortage from before, right, we still want to keep up with the demand for this particular year. So we can keep the shortage from getting worse.   You know, otherwise, that number that 5.2 million number will go to 5.5 million and 6 million and 7 million so we'll keep getting worse and every time it gets worse rents rise prices right? So there's a cushion under home prices and most people wonder mentally failed to understand the mathematics here. If your cost of construction goes up 34% how are you going to deal with prices going down and if developers don't make enough homes, the only homes available in the market are the existing homes, right? So will competition on them will increase and haven't you been reading already in the last three months that permits in the US have dropped to 30% because as the US economy goes closer into a recession, so it's inevitable at this point that we'll go into recession, builders are very skittish, their construction costs are at an all-time high and so they're backing off. They're saying, You know what, I'm not going to take the risk of building 10,000 homes, I'll build five. So if everybody drops their permits by 30, or 40%, you're digging now a new hole for the construction that would have afforded for the delivery that would have happened next year and the year after. So now we're digging a hole in 2023, deliveries and 2024 deliveries. How do you reconcile that with a 20% drop in prices? The mathematics, the fact that people actually keep saying this with a straight face is mind boggling to a data scientist.   Michael: Yeah, I love that because you like everything you just said, I don't know, if you're watching the video, you saw my jaw on the floor, I'm gonna have to pick it back up here. But it just people feel like it feels because prices are so high and toppling, then interest rates are so high, but everything you've just said, I mean, factually, and mathematically makes so much sense and so how should people be listening? How should our listeners be thinking and reconciling? Okay, well, interest rates have gone so high, so fast. So the purchasing power has been drastically reduced. How should you be thinking about like, what's going to happen next?   Neal: So the first thing you should do is study the past, because the past gives you some wonderful examples of what happens when these sorts of things happen, right? So I'm gonna give you some benchmarks that will really blow you away, right? So in 1982, the Federal Reserve raised interest rates so fast, and so many times that mortgage rates went to 18%. As we're recording this, mortgage rates are at 5.3%. So when I say this in front of a an audience, I was teaching in Seattle, there were 500 people listening. So just, you know, for shits and giggles, I basically went down to the stage and I stuck the mic in people's faces and I said, So if interest rates were at 18%, would you buy a single family home? No. Okay. Do you think anybody else bought a single family home? No. What do you think prices went down? Why the answers were 20 to 50%? Well, history tells us that in 1982, when interest rates to buy new homes were 18%. Home prices declined by 10% for one quarter, bounced up by 10%, the following quarter, and actually ended the 1982 recession higher than the beginning of the recession. study history. It tells you how sticky real estate is. Now, everyone, the biggest reason why people feel that prices are about to fall off a cliff is 2008. There's no other reason because if you look at the data from the last 61 years, all you notice is home prices are extraordinarily sticky when interest rates go up, because interest rates haven't gone up once or twice, or three times. Nine times in the last 61 years, the Federal Reserve has hiked rates to kill inflation, nine times, right? Eight times the economy went into a recession, how many times you'd be have real estate prices go down? Once 2008 because 2008 was not a recession. 2008 was the largest single evidence of large scale fraud in American history. Millions of brokers and 1000s of bank banks committed large scale fraud on about 20 million Americans. That's what caused those home prices to fall. I see no evidence of fraud at this point. If I if anything, underwriting standards are pretty darn robust. The people have trouble…   Michael: getting a mortgage is such a pain.   Neal: Right? So when you look at this, and you say, so every everything that you're doing is based on what you saw in 2008. But you're not comparing the US economy today to 2008, right. So let's go back to looking at 2007 and comparing it to today's economy. So you want home prices to drop by 20%? Okay, fine. Question is, have you looked at how many jobs the economy was creating in 2007 and have you compared that to today's jobs, right? So in the last three months, and people are saying we're in a recession, and maybe we can talk about that, in the last three months, the US created 500,000 400,400 1000 jobs. That's 1.3 million jobs in the last three months, we actually struggled to create that many jobs in most regular years. So in three months, we created 1.3 million jobs and of course, before you know anybody says, hey, the quality of the jobs is very low. They're part time no, they're not. Please go back and look at a a shockingly high percentage of those are full time jobs and then people are like, Yeah, but people are not getting paid enough.   These are standard objections, right because people are not studying the radar. No wage inflation is very high in the US right now in work have the upper hand. Wait, inflation is at 5.1%. Most years, it's one and a half percent. What that what does that mean? People are good people who have existing jobs are getting big raises and then there's 11 million open jobs in the United States. This is the first time in US history that we've been at 3.5% unemployment and still have 11 million jobs open. So the economy is producing jobs at two and a half times. It usually does in a normal marketplace. How do you factor that in with home prices falling 20%? It's the it's a highly desired asset that people want. Now, it's absolutely likely that home prices will fall. But the big question is, will they fall on a nationwide basis and the answer is that there is no data to support that. markets that are red, hot, white hot, some of those markets that I invest in Phoenix, Boise, Las Vegas, Austin, these are markets that are at risk of a 10% correction, maybe some markets might even get a 15% correction. But the US is combined of 330 markets. When you look at those 330 markets, the chances that we will see a 1% overall price reduction is still low and most people are talking about 10 to 20% based on what data?   Michael: Ah, I love it. I love it. Neal, this is this is super, super insightful. So kind of thinking about the feel part of the emotional part and the people talking about the 20% correction. There are those who have said that the Zillow or the kind of red fins that give estimates of value or rentability. It's almost a self-fulfilling prophecy if I'm an investor and I go on Zillow and see hey, this was only valued at 100k by Zillow, but it listed at 120 I just wanna be paying 100k. Is there some risk of that with public sentiment that prices should be falling with the Zillow effect that's not trademarked?   Neal: Let's call it the Zillow effect and actually, it's a very important thing to talk about because if you know, the question really is, is there a risk of that the there's a 100% chance that the Zillow effect will drag home prices down? Here's the catch, though. The Zillow effect is both ways, right? So we've also seen the Zillow effect when prices go up. So you're gonna see a short term curve downwards as the market adjusts and then when it adjusts, a whole bunch of people are like, home prices are 10% down, this is my chance to get in and it's not just, it's not just the individual investors anymore. America is fundamentally different in 2022, than it was in 2008. There one single company called BlackRock, I think is Blackrock or Blackstone, maybe I'm confused about that, it has now launched a $50 billion fund, just to buy homes during a dip and their definition of a dip is 7%. So the moment they see home prices falling 7%, they're gonna come in, and there aren't, it's not a billion dollar fund. It's not a $2 billion fund, it's $50 billion, just Google it, right. So just Google $50 billion home buying fund. Now, that's one company, but there's at least two dozen of them. So real estate now is an institutional asset class that rival stock markets, and people who invest at a big scale in the stock market, their dip is 5% 7% 10%. So you'll get that dip and they'll come in and they'll, you know, scoop up a bunch of these properties and then at some point, people will realize this market isn't going to crash 10%, they're going to be like, Yeah, but it's seven or 8%, or 12%, down in my area. Let me grab some properties and then you're going to see that correction and now all of a sudden, your backup as before you know it, this is normal, right? The market that we've had for the last 10 years where prices only go up. That's bizarre, that's abnormal. That's never happened before in US history. What we've seen before is prices go up. But they don't always go up in a straight line, they go up, they're just a little bit, they go down for three or four months, then they go back up, and the overall direction is upward. in markets like this. The Zillow effect is necessary, right?   I'm telling people number one, a dip in market prices is incredibly healthy. I've got my fingers and toes crossed that it happens. I've got my fingers and toes crossed that the US economy goes into a recession and most people would beat me up for that. It's like, why would you have your fingers and toes crossed for that? Short answer is when we have this much money floating around. If we do not occasionally adjust the economic cycle, we always end up in a bubble and bubbles when they burst of this size, create trillions of dollars in losses and can drag us into a 2008 type recession but if you look at the history, and again, I keep going back to this, the Fed has raised and income interest rates nine times and eight of those the US economy went into a recession, right? Only one of those eight was a destructive event 2008. All other seven events were in economic cycle, reset or adjustment and when you actually look at the effect of that recession over a three year timeframe, the net effect was zero, the cyclically adjusted, some of the bad companies fell out some of the bad developers fell out some of the bad money in the marketplace fell out and in the if you look at the long term trend, that that bumped down that six month recession had no real impact on the economy 2008 I can't say that, right. So once again, there's one time when we've seen total destruction happen, and that was because we perpetrated large scale fraud on American millions of Americans and using that as our benchmark to make all decisions in the future simply means we're ignoring 61 years of history.   Michael: Which seemingly is easy to do for a lot of people.   Neal: But for most people, it seems right. So I'm kind of looking at this going, this doesn't make any sense. Do you not realize that we just produced 1.3 million jobs in the last three months and isn't that the best way for company, companies are saying we're worried about recession, they're issuing earnings, you know, forward looking, and they're saying your earnings might reduce, and then they go off and hire 500,000 people in a month, right. So I mean, it's lip service for the stock market, it's lip service, for their for their, you know, phone calls with their investors. But they're not doing what they're saying they're going to do, which is reduce hiring, reduce hiring is half a million. Now normal months tend to be about 200,000 reduce hiring should be 100,000 new people being hired or 50,000, not 500,000.   Michael: Yeah, yeah. It's so interesting, Neal. So how do you take the data and use it when you're investing?   Neal: So one of the things that I do, and I'll kind of give you a little story on this on how I got started, so right, so I'm a data scientist. So right around 2009. I am, you know, looking at the real estate market, and everything looks incredible for me, of course, everyone else is telling me this is the worst real estate market of all time. So I go and tell my family, we should be buying all kinds of real estate today. Just buy everything in the marketplace, you know, with every last dime you have and then my family basically decides that I'm so stupid that they don't want me attending family events in case I infect other people with my horrible ideas. So I'm excommunicated from the family because, they like this guy is going to infect other people and we're going to lose millions dollars. So I'm like, okay, I'm gonna prove these people wrong. So I go and get gathered the best of my data science information and  I mined the Zillow website, I mined the Bureau of Labor Statistics website, along with a Ukrainian hacker was pretty good at mining. So we, you know, gather all this data together, we put it in a statistical software called R and we look at every city in America and up at the top is an unknown city, a town called Madera, California, mid era, it's 20 minutes from Fresno, right?   Nobody's ever heard of Madera, California. I know Madera, right and so Michael, what my data is telling me is, Madera, California is by far fallen way more than it should have, because from Peak 2005, it had already fallen in 2009 by 73%. So prices had fallen by 73%. But most markets fell by 30 and 40%. You know, some markets didn't even fall that much like Dallas only fell by 11%. So I'm looking at this falling 73%. I'm like, statistically speaking, this is the greatest market of all time. So I drive a jump into my car, I drive 144 miles to Madera, and I go there, and I see all these very beautiful Kaufman and Broad homes. They're like, gorgeous, like, they're brand new, right? Nobody's clearly nobody's ever lived in them. So I go to a broker in Madera, and I say, hey, what's happening here? I mean, these homes are gorgeous, right? Why doesn't anybody want to buy them and the answer is, well, Kaufman and Broad basically sold these two farmworkers, none of them had documented income. They've all left, so half the city's empty and I'm like, so. So what does it cost to make these beautiful five bedroom homes today? So it's like, yeah, if you were doing new construction would cost 250,000? So I'm like, but I'm, what are they available for? Oh, you can buy these for 90,000 any day, you know, they're all available for 90,000. You can buy as many as you like and I'm like, why in God's name? Would I not buy these for 90,000? He says, Neal only for one reason, one reason only one reason. You can't rent them. There's too many empty homes in Madera, so you can't rent them.   So you basically would have to buy these homes and then keep paying your mortgage in the hope that the market comes back someday. I'm like, I have to find a solution to this. There has to be a solution. So I jumped in my car again, I drive another 20 miles to Fresno, which is the big city, right and I go there, and I talked to a broker and I say, I want you to sell me an ugly property. He's like, Neal, no, no, no, no, I'll send you a brand new one. I've got plenty of them. None. I said no, I want a 30 year old ugly property in Fresno and he says, okay, well, these, you know, sells me a property. I buy it in cash. It's $110,000 on Summerfield, right? I take that property, I put pictures up on the web, and I go to my Ukrainian team and I say I want to In an avalanche of leads, rental leads for this one property and they're like, why? I mean, it's a pretty decent rental market in Fresno. Why do you want that many leads, I'm like, trust me, just give me like 5000 leads for this one property and they're like, okay, so the guy is sort of goes to back to his Hacking Team, and he hacks a bunch of sites, and he writes a bunch of scripts, and all of a sudden that property is like on the web 300 times in 26 different places and so is just listing it continuously using his engine and before I know it, the phone's just ringing off the hook, I'm, you know, my mailbox is filling up with leads. So I hired a person in the Philippines, this lady on a full time basis, and I say, call every one of these people and tell them this property is rented. But I have nine brand new properties 20 miles away in Madera and I will give you $50 amazon gift cards, if you just drive there and attend an open house $50, no questions asked. We'll just give you an Amazon or gas card and so she starts making phone calls. She was pretty good at her job. She'd been in a call center and you know, half the people swore at her because they would they were like, yeah, but this is not press No, this is Madera and it's like, well, this property is rented, I, you know, I've got these options and she would keep sending pictures to them by text, right, because people weren't reading, reading their emails, she would keep texting pictures of these beautiful properties and before I knew it, people were attending those open houses, I already had to deal with the banks where the moment I got a rent contract signed, I would pay cash for the property the next morning. Well, before I knew it, 11 properties were rented and then I turned around and repeated my success with my family and all of a sudden, I was making massive amounts of cash flow on these brand new homes, that now of course, they're all you know, $400,000 each.   But even back then, I was making so much money every single day on properties that I knew had to come back. It's all about the cost of construction. You don't hear about this on podcast, if it costs $250,000 to build something, and it's available for $100,000. Buy it because construction costs have never gone down in human history. They've only gone up and they've gone shockingly, up in the last two years. But even before that they've never really gone down. Nobody was able to reduce construction cost during the 2009 downturn. They simply didn't build anything, right. But did anybody get a reduction in construction costs? That's not possible. Most of our construction material doesn't even come from the US or I mean, our steel comes from places like China, right? You can't get a discount simply because your economy is in a recession. So it's all about construction costs. So once I had proven this algorithm, I decided I'm going to tell the world about it. But that's another story. So that's really how I got started in in single family and then I wrote algorithms, again and again, published them. As I said, the first time I had people that were for people listening to me last week, I had 1100 people listening to me, it's really about those algorithms. The only thing that's changed and this is the answer to your question, sorry, long winded but the answer to your question is, what I found was, when I spend this, use the same algorithm for single family that it has everything that I can possibly imagine except scale, I can never grow to a billion dollar portfolio, I can maybe grow to 10 million or 50 million, and a lot of people have. But if I apply the exact same data with multifamily, I have an 18 month crystal ball and I'll explain what that means and I was getting the same exact results. But because I was buying 200 units or building 300 units at a time, I was able to hit my goal of a billion dollar portfolio and I did it in I don't know that from 2014 to 2021, right. So seven years, I was able to hit a billion dollars. You just can't do that in the single family side. Otherwise, single family pretty awesome.   Michael: Neal, I love it. I absolutely love it. What happens and then I want to hear about your 18 month crystal ball. But what happens when things switch where the cost of new construction is cheaper than buying something that's existing?   Neal: My business is in trouble. We're all in trouble. But and so I obsess over that greatly. I go to all the conferences where I see new real estate technology coming out. I go to the modular conferences, I go to the 3d printing conferences. I look at what Amazon is selling online in terms of you know, kits I look at. I look at everything and I can tell you with complete confidence that in the next five to seven years, there is no technology that will drop cost of construction in the US. The first technology that I think will make an impact right around the 2030 timeframe is 3d printing. Modular is a laughable technology in the US. less than point 1% of homes in the US are made through modular and the total volume of modular factories in the US is under 5000 units. We need a million. So unless Congress decides to put $150 billion towards building ala carte factories, there's no volume and because of a company called KATERA, a very famous company K A T E R A going out and losing $2 billion of investor money. Nobody in the right white mind wants to build a modular factory modular completely, you know, not useful. 3d printing, yes. But remember, 3d printing only works in edge case scenarios, because the property looks odd because of all that concrete that you have to basically put on. So I think it'll work in subsidized housing for the first 10 years. So let's say 2030 to 2040. It'll be in subsidized housing by the end of 2040. I think 3d printing will completely change all math around construction and we'll do a full reset of real estate. So luckily, I'll be gone long before them.   Michael: I would say, well, hopefully this podcast is still in existence, we'll have to have you back on in 2040. To talk about it. Yep, so give us give us some insight into your 18 month crystal ball because that's something I've never heard before.   Neal: Yeah. So I love you know, again, going back to Statistics, right? So when we're crunching numbers or big data with our teams, one of the things we realized is when a market starts to see home prices going upwards. Okay, so it's home prices are screaming upwards, right in a certain market. What we noticed was between 12 and 18 months later rents in that market explode. Okay, between 12 and 18 months later, but not immediately and you might say, why not? Well, the short answer is, what happens is that there's a bunch of people in that market that are looking at home prices going up, and everybody wants to be on that train when it's going upwards. So they jump in, they buy these homes, and then that makes more people want to jump in and buy those homes, because they're friends, you know, their homes are worth a lot more and so you see this upward momentum and then finally, the market hits a critical point where most people that are looking to buy a new home in that marketplace, their income doesn't allow them to qualify, not most substantial portion of those people, right, so you get to maybe a quarter of all the people in market X can no longer qualify based on their income, right and the moment that happens, those people, they realize that their dream of homeownership is gone forever and then they don't want to go live in an apartment, what they'd want to do basically is they either wanted to go live in a class A apartments, so it's amenitized, with pools and gyms, and all those kinds of things or they want to go live in a built to rent community, which I'm building lots of, which essentially is the same as a single family home, but it's for rent.   But it's better than a single family home, because you've still got the pool and the jacuzzi and, and the dog park and the park, right, because it's 200 single family homes in one community, it's just that you're renting that home instead of buying it. So now you have a massive increase in demand for those kinds of assets because people realize I simply cannot buy any more unless I get a huge salary increase. I'm going to be renting, then those people they want to rent the best property they can find. At the very high end, they're going to be doing built around a single family rentals below that they're going to be doing built around. Below that they're going to be doing class a multifamily below that they're going to be doing Class B and Class C multifamily. So all of these rental markets see a massive boost. So this crystal ball works for every market, we've never actually found an exception to this rule with some weirdo exceptions in in rent control markets where rents simply can't rise. So as long as the market is not rent controlled, we have never seen an exception, the crystal ball works. The only part of it that is a little fuzzy is sometimes we see rents going up as soon as 12 months after the explosive growth of home prices and sometimes it takes 18 months.   So that crystal ball makes my life so much simpler because crystal balls are so hard to find actual crystal balls and reliably work are so hard to find. So I just look at these markets that are seeing these massive increases in home prices and I go buy a multifamily there, I have a business plan to rehab that multifamily and do value ads with it and do or maybe I'm doing new construction. So either way, I have a business plan. But that's my plan A but what I've found so far is in every instance that I've done this plan B has worked better, which is simply the market just went exp has explosive rent growth. So I didn't actually ended up implementing my business plan. I simply ended up selling my property in 18 to 24 months and making my investors a lot of money. I mean, I don't know of anybody else in the US that uses Core Data Science, not just numbers, but core data science to do what we do. We've had 37% IRR 47% annualized returns for our investors by simply using the crystal ball over and over again, over and over again. I mean, and I can tell you what those cities local like today, and I guarantee you've not heard of many of those cities.   Michael: Neal, I love it. What would you say have seen massive price appreciation? What is that mean because I think massive could mean different things to different people. So is there a percentage that you say, hey, you know what we crossed this threshold, that's the city that I want to invest in?   Neal: Oh, absolutely. The short answer is with multifamily. It's only about 25- 30% increase in prices. So one of the things that most people don't understand is, you don't need prices to double to double your profits, because you use leverage. So let's say somebody buys a $10 million building, and $3 million of that is equity, right or down payment, and 7 million of that is a loan. Now, let's say this building goes from $10 million to $13 million, right? So you've it's only gone up 30%. So if you sell it for 13%, and you return that $3 million in equity, right, there's $3 million in profit, plus all the rents you got for two years while you were holding it. So you've doubled people's money in two years or three years, right, even though the property's only gone up 30%. So that's very important to realize, 25 to 30% increase, usually doubled investor money in during the whole time and recently, those hold times have been very short, two years, two and a half years. So essentially, that means 45-50%, annualized returns. Now in normal times, it takes about five years to get to that point. So you're, you're doubling investor equity in five years, but that's still 20% annualized returns and I think that's pretty awesome because the investors are doing nothing, they attend a quarterly webinar, and they read a monthly update and if they, if they like you, they don't even do that. They just sort of delete your emails when they come to cash flow, right. As long as their cash flow checks are coming in. They're not reading anything you're sending them.   Michael: They're not complaining. That's it, that's it. Neal, this has been so much fun. Where can people learn more about you continue the conversation, and what's the best way for them to get in touch?   Neal: So I'm lucky enough that I'm the only Neal Bawa on the World Wide Web. So simply typing in any URL, and bawl and hitting enter into Google. There's a couple 100 podcasts that I've been on. They're geeky and nerdy, like this one too. But and if you're interested in my metrics, if you want to figure out what is that next unknown city that is going to have explosive growth, type in Neal space Bawa space, location, magic into the web, and you will see a 45 minute course that walks you through that process. So you can find those cities yourself. Or you can simply be lazy and go to my website multifamilyyou.com and find location magic they are sometimes we call it real estate secrets, same webinar, go in there and there's a list there's a list of those cities. You know, and I believe a lot of them are tertiary markets, but a lot of them are actually 35 minutes away from some kind of primary or secondary market, I find that the primary market secondary markets are really too expensive and are at much greater risk today of price drops. So like I wouldn't go out and in buy a property in Austin. But I've surrounded Austin with seven different properties because I find it to be the hottest city in America for the next 10 years. I'm just not interested in paying what I have to pay what I would have to pay in Austin. So I've literally surrounded Austin in all four directions with my portfolio.   Michael: Super clever. I can't wait to see how that works out. Neal, thank you so much for taking the time and coming on sharing with us. Really appreciate it and I'm sure we'll be chatting again soon.   Neal: Thanks for having me on the show.   Michael: Okay, everyone, that was our show a big thank you to Neal for coming on. Tons and tons and tons and tons and tons of meat and potatoes there to go digest and really think about because Neal kind of flipped the script on what a lot of people have been saying for a long time. So as always, if you enjoyed the episode, definitely we would love to hear ratings, feedbacks review from all of you, and we look forward to seeing the next one. Happy investing…

Mike Simmons, a real estate investor, author of the book Level Jumping (linked below), has shared the stage with some of the greats like Gary V. Has made over $1 million in profits in 12 months!! He knew he wanted to invest in 2003, and bought his first flip in 2008....why did it take so long? Like a lot of people starting out Mike was afraid to tell his spouse because of the difficult conversation. It wasn't until he finally decided he was tired of allowing fear to be his excuse that he dove in. Today, Mike shares his inspiring story of how he left his job, entered the real estate world professionally to begin wholesaling and flipping houses. Episode Links: https://www.mikesimmons.com/ Level Jumping   --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today with me, I'm joined by Mike Simmons, author, CEO, business coach speaker, and we're gonna be talking about Mike's business, wholesaling and flipping houses, and what we should be aware of if you're going to get into either of those businesses. So let's get into it.   Mike Simmons, what's going on, man? Welcome to the real estate investor.   Mike: Thanks for having me, I appreciate it.   Michael: Oh, my gosh, no, the pleasure is all mine. Super excited to have you on and really excited for our conversation today. So Mike, I know a little bit about your background and a little bit about what you do but for all of our listeners who are not familiar with you, give us a quick and dirty who you are, where you come from, and what is it that you do in real estate today?   Mike: Yeah, no problem. So, you know, I always say that my background is probably the least remarkable. I didn't sell baseball cards, I didn't go around the neighborhood looking for lawns to mow or things to do. I was a normal kid, probably on the lazy side. You know, and my parents were, we're in the automotive industry, and we're very blue collar Michigan, right. So the life that was displayed before me through example, and through explicit, you know, direction from my parents, and the Blueprint was, you got you finish high school, you go to college, or just as maybe even more preferable, you get into a union factory type of environment and it's very secure and you work there for 30 to 35 years, and you retire and you hopefully save some money and you scrimp buy and that's how you that's how life goes. That's just life. That's what people do, that's normal. Yeah, there wasn't one single person in my family or anybody on the horizon that was doing anything remotely entrepreneurial. So I did that I went to school, I went, I finished high school, I got a job with UPS, Teamsters, my parents could not have been happier with me being in the Teamsters and I went down that path, and I got married young, and I was working at UPS and like, unfortunately, UPS is a great company.   But there are injuries that happen because people you know, lift wrong and all that and at 25 years old, 24 years old, actually, I couldn't get out of bed in the morning without going to the chiropractor three times a week as a 24 year old, otherwise healthy man, oh my gosh and I knew I couldn't retire from there, because I was already almost too hurt and crippled to do the job I had to do at that time and I was in my early 20s and so I got another job in the automotive industry. It was a desk job and I started working there and this was, we were the mid to late 90s at this point and the automotive industry, like most industries, were starting to decline starting to have some problems. We were heading toward 2000 where a lot of bad things happen and in, you know, people think about tech and what happened if tech the big boom that happened. But the same thing happened in the automotive industry, essentially, we went from, you know, booming industry to many, many suppliers, going out of business struggling, it was really bad for a while and so I had to look around and ask myself, and I'm one thing I'm good about one thing I one of my superpowers is I'm a very honest, and I can I can very objective about myself and part of that is because it can be a tough thing to do. It's most people I don't think are, are objective about themselves and I'm not saying this to brag, I'm gonna tell you why I'm objective, and it's gonna kind of be like a poor, poor guy. My dad was a Marine, and, and he made it real clear what our shortcomings were on a daily basis as kids and so I have no problem. being real, honest, in a way that say, these this is what I'm not good at.   This is what's not great about me, like I'm very aware, I'm very easy for me to for me to figure that stuff out and so I asked myself at this point in the automotive industry, and things were declining, I didn't have a college education. I would I hire me if I were without a job and I was in the position of HR and I was, you know, somebody like me was across the table. What is there anything about me, that makes me more hirable than the 1000s of people who've been laid off over the last few years and it was easy. There was nothing about me that was remarkable. I had no college experience and I had very little practical experience. So why hire me when there's so many really, really talented people that were being laid off because of the industry. So went back to college, got a degree and I was working I'm kind of fast forwarding a lot, but I got my degree and I doubled my income. Like the minute I retire, graduated, the minute I graduated, I got a job, which literally was twice the annual salary and I was like, here we go, baby. There's no stopping and so just to kind of illustrate how that went, so I went into a company, it was automotive and I was working there for about six, seven years and at one point, it's seven o'clock at night and it's everyone had gone except my team. Everyone had gone home for the night, obviously, it was a five o'clock, most people were gone. It was seven 30 and I'm in at work and there are our client is there too, because there was something going wrong with our program that we are working on and he's there and in we're discussing the problem, and the guy gets really agitated the client, I'm not going to say which automotive company I'm talking about, but it rhymes with board.   Break company, I have an F 150. But he gets in my face and basically start screaming at me like dressing me down, like very much, really like when I was a kid like my dad did write down. Yeah and he was and it was seven o'clock at night. We're all working overtime. We're all clearly busting our butts to solve the problem and he gets in my face. They're screaming at me and he's the client, right? He's a big client and I can't really say anything back, except I'm really sorry. We're working on it and after he walked away, I went to my manager who was there too and I said, what are we doing here? What is happening right now? Why are we here? I'm getting screamed at we're doing our best, like there are issues I get it but nobody, nobody was negligent. We just have we have things that have happened, and we're working through but why are we still here? We should be at home and he said to me, I'll never forget, you need to get your priorities straight and I thought you are correct. I absolutely do, I have young children at home, I have a wife at home. I've been working overtime all week on this project. I didn't say this but in my mind, I'm thinking, you are correct, my priorities are wrong and from that point, I decided to take my side hustle that I was doing, which was real estate, flipping houses not doing a particularly great job at it, but just kind of stumbling through it and I said that is going to become my career priority. My priorities need to get dialed back to my family and make sure I'm at home and I'm spending the evening with them. I'm eating dinner, putting my kids to bed but from a career standpoint, that now becomes my focus and I will get my priorities straight and so he essentially put me on the right track. Inadvertently, he obviously was referring to work priorities but it worked the other way and so I from that day, I started making my side hustle, my main focus and I will say I a year later quit my job and the first year that I was in business and real estate full time that listen to this, this is true and I did this math, the first year that I was in business full time for myself as a real estate investor, my company's gross profits were equal to the total sum of my salary for the previous 25 years that I was working for somebody else, year one, which was a million dollars, I made over a million dollars in my real estate and over the years, like I'm talking going back to 18. When I started working right, I was making very little money and in the middle, I wasn't making a ton toward the end, I was making more but if you just take the average, which is about $40,000 for me, and you times that by 25 and is $1 million. My company grows that in in one year.   Michael: That's crazy, Mike! So where did you take it from there? I mean, are you still flipping houses today where you focus exclusively on that? Give us give us the insider scoop?   Mike: Yep… Yeah, good question. So I was flipping houses. When I was working full time, my wife and I were flipping houses and like I said, we weren't doing a particularly great job of it because she worked full time as a teacher, I was working full time plus as an automotive person and we were getting flips done. But we weren't particularly profitable, like we should have been. We didn't have any processes in place. My wife is extremely risk averse and so I kept trying to do more and do it faster. And she was slowing like brakes, brakes, brakes, right because she was nervous that we were getting ahead of ourselves and she probably saved me from really screwing up bad in the beginning. But at some point, she said, You know what? This is great and you clearly love it. I don't love it as much as you do. In fact, this is making it hard for me to sleep and it's making me hard for me to focus on my day job with the kids and I'm a teacher and that's what I do and I love you, I love the I love real estate but it's the roller coaster, the mental roller coaster is too much and I really would rather you go on without me and let me pull back and I'll just cheer for you from the sidelines and I totally support you and this isn't a negative this is actually a positive I just trust you to do it better without me and I did in and that's when things started taking off because I started doing way more activity like before we would get a house under contract. We would get it quoted out, you know, we would renovate it, we would put up for sale, we'd go through the wholesale process closed, check in the bank, before we started looking for the next day and that's not really a that's not how you scale anything, right?   So when she backed out, I was like, okay and I started putting offers in on multiple houses a day, like I was putting offers on everything and I started getting multiple deals at one time and so I had to learn how to raise money and I had to learn how to manage groups and what a forced me to do was, it forced me to come up with a process in a system that was repeatable and could handle scale. Before that, nothing we did was scalable, is all very manual, we'd go to Home Depot, we'd pick new colors for the walls, we'd pick out different cabinets, different flooring, like everything was custom to the house that we were working on and what I realized was really, really good house flippers who do it at scale, okay, and I'm not talking boutique flippers, who go into a town and they buy a $3 million, you know, historical home, and they like, put it back together with love. It's I'm not talking about that I'm talking about the people that are flipping 20-30 at 100 200 deals, they are not falling in love with every single house and going in there and making it the route, right, it's turning burn a little bit and so I learned how to turn and burn a little bit more in my business and scale it in a in a way that had systems and processes. But I still hadn't hired anybody. It was still just me, what changed the game for me and that changed the game for me in terms of, you know, a racing analogy, but, and again, this is not like I said all this in front of my wife as early as like the last month I've said all of this and she 100% agrees but she was like the governor in a race car, right? They put the restrictor on there. So you can only go so fast. Once that got pulled off. I pushed the gas all the way down to the floor, and I never stopped like, and so things just go faster when you're doing that much volume and back then, you know, now we're talking about 2014 ish timeframe. It was easier to get deals, I'll be honest, like, as someone who coaches people in real estate, I'm not gonna lie. It's harder now than it was back in 2014.   Still possible now, but it was easy back then. So I was getting deals off the MLS and it was going pretty fast. Fast forward another year or so and it started to get harder to get deals off the MLS and I was struggling a little bit and so I had to do some research and figure out and I was I was going to all the meetup groups and I was asking all the other house flippers like, where are you guys finding deals like what's happening? Where are you guys getting your volume from and they were all like, man, it's hard, like we're not getting deals like we're struggling and I'm like, Well, where are you looking? Where are you trying to find deals and everybody said the MLS everybody. I only knew one wholesaler in my market and I reached out to him. I'm like, Dude, I know you're not buying off the MLS. So where are you finding deals? He's like direct mail, I'm going direct to sellers and I'm like, what do you mean, go direct to sellers? How do you do that and so I took him out to lunch. He gave me the down and dirty playbook for how to do direct mail is what I was doing at the time and I started doing that and the deal flow started happening again and I started building and what I realized was and there's a whole story behind it that we don't necessarily have to get into but I changed my model from house flipping to wholesaling and it wasn't because of that guy. To finish in a nutshell, I was overly dependent and this is a huge mistake that new investors make all the time. I was overly dependent on one contractor and one realtor, they were everything the realtors, he found all the deals for me and they ran the numbers and they told me what was a good deal and my contractor was my only contractor and he basically made her are broke my rehab and on the same project as chance would have it. The realtor missed the numbers pretty badly and my contractor started flaking.   Now if you flip houses or renovate houses, or you have rentals, and I say my contractor flake, you probably don't need more information than that you go I'm with you, my contractors flaked too, right. But essentially, he stopped showing up he started charging me for things that he wasn't doing. He started making up half truths about stuff that he did do and so I was forced it and by the way, I was getting deal flow because I was direct mail, right. I had to let both these individuals off my team, to say the least and I had no backup plan and so as these deals were coming in, I reached back out to my wholesaling friend, I'm like, What do I do? I don't know how to wholesale. Can you just tell me what that even means? Like, what do you guys do and he again, gave me the down and dirty playbook and I called a house flipper friend of mine who I had recently talked to and he's like, I can't find anything and I said, Hey, man, I got this deal under contract. Do you want it for 110,000 at the time, that was the price 110,000 he's like, let me take let me look at let me look at the numbers coming back in 10 minutes. He's like I'll take it, I got it under contract for 95,000. I made $15,000 in like 10 minutes and In Michigan at that time, a normal flip 15 to 20,000 is a good flip number. Right, profit. Yeah and I was like I made almost the entire profit with a phone call. That was cool and probably a lot easier sold.   So much easier to do. No, by the way, no contract, right? No realtors. So I got another deal under contract. Ironically, it was also a contract for $95,000 and it was in a similar neighborhood. I called the exact same guy and I told him the exact same thing. I've got a deal for 110,000 It's yours. He said, give me five minutes. Call me back, he said, I'll take it. This all happened within four weeks to deal. I was like, I felt literally talked about love at first sight. I was in love with the model of wholesaling and so I switched my model over to wholesaling and I started, I started scaling it up and what really changed everything for me though, because although I was scaling up and I was starting to have some success, I still wasn't really running it like a true business I was I was a little bit scattered, I was a little bit unfocused and I joined a mastermind, a friend of mine at the time who lived in California, he had a podcast, and I knew him just through podcasting, and I was listening to his podcast one day, and at the end, he signed off, thanked his guest signed off, and I was doing dishes actually, at the time in my house and I saw I let it go, it was it's just kept going because I wasn't able to turn it off. My hands were wet and if it was over, he goes, Hey, if you're still there, I want to let you know about this very exclusive opportunity. I am pulling together some of the best real estate investors from around the country. We're going to form a mastermind, we're going to share ideas, we're going to help each other it's going to be awesome. If you want to get involved, you know, send me an email, whatever.   So I did $25,000 mastermind. Well, I $25,000 bazillion dollars to me at the time, but I was I was doing wholesale deals, right and at the time $25 was like two wholesale deals because I was averaging around 12 $13,000 per deal and I thought, I mean, if I surround myself with these people, will I do two more deals as a result of the relationships and the knowledge that will be exchanged. It seemed reasonable that I would and so I joined and I met someone their mentor, more than one person, but one person in particular, who laid out his company, he just laid it out. This is how I run my company is exactly what I do is what I did right and wrong over the last decade and he had the company I wanted and I said to him, his name's Andy, I said, if I if I see what you did, and I see what you're telling me, I should do and I totally agree with you. But you took you 10 years if I knew everything that you know now, and I apply it proactively. Couldn't I condense that timeframe? Like could I do any year and he said, I don't see why not? That's exactly what I did and I sort of came up with this term that, that I didn't think about a much until I've said it on podcast, and people resonate with it but I think the most powerful thing you can do in business is to use other people who are successful use their hindsight, which is 2020, as they say, right, as your foresight and so I used Andy's hindsight, all the things he did right and wrong, as my foresight going forward and I was able, that's what I was telling you that first year that I was doing the full time because I applied all of Andy's principals and I went from doing a couple of deals here and there to 10 to 15 deals per month and scaled up to a million dollars in that first year.   Michael: That is amazing and so right now your business is focused exclusively on wholesales, are you still doing flips?   Mike: Historically, it's always been wholesales but recently, and I have a business partner to its which is a whole story in itself kind of interesting about hiring and identifying talent. But so my partner and I have started strategically buying properties outright and then doing in Michigan, what we call them land contract, or we basically play the bank, we own the property, and we sell it to them and we hold the note as a company. So we started doing a lot of that. So we do like 100 deals a year, but half of those or more, but at least half would make fantastic land contract deals for us and so, and because of you know, COVID kind of showed us this a little bit and over the last several years that we've been in business, every business has ups and downs every industry has, you know, markets go up and down, right. So revenue kind of fluctuates and we thought how do we level that out a little bit? How do we make the valleys much higher, you know, so they don't go down and so we're doing a lot of this land contract stuff because it's every it's like you know, monthly recurring revenue and so we make the valleys much shallower and the peaks are still there. So we're probably wholesaling half of our deals and the other half we're buying inland contracting out…   Michael: Okay, let's dig into land contracts live because it's just not something I know very much about and we always joke on the podcast that we get to ask self-serving questions of our guests... So walk our listeners through asking for a friend walk us through like how land contract works and why it's so wide, so interesting.   Mike: Yeah, it's pretty straightforward but the concept and I'll kind of give you a peek, like a little bit behind the curtain here, right? The real like mechanics or the real like logic behind it. Me and my partner both as of a year ago, I had about 25 rentals, okay, which I have sold recently and I did it for a couple of reasons. Now, because rentals aren't great, they're great and actually, the rents are higher now than even when I sold them. So rent rents are going up, which is awesome. But for me, I bought them really, and I bought them like 2015, most of them and so the equity in them was very tempting to tap into and I recently have started doing lending on a grander scale, like I've scaled up my lending company, and I wanted to put that equity, that money into my lending company, it's just more of my focus now. But so what we're doing with land contracts, and why one of the reasons why we love them is unlike a rental, we are not responsible for any maintenance, any vacancies like we are, what the bank is to your mortgage, we get the mortgage payment, regardless of whether or not they have a leaky roof or whatever has to happen, right, we don't have to deal with any of that stuff and what we're able to do at least in Michigan, this doesn't work necessarily everywhere, the same way, because the rents aren't high enough in the house prices aren't low enough for to work in a lot of areas.   But for us, if you take someone who's living in a neighborhood, and they're renting, and let's just say they're paying for the sake of round numbers, they're paying $1,000 in rent, okay and they're renting a certain level house in that neighborhood, I can buy a house in that neighborhood that maybe is a little bit in distress that I can go in and buy it inexpensively and put some work into it and if someone were to buy that house with a traditional mortgage, especially a year or two ago, when rates were like high twos, low threes, they could buy that house and their mortgage payment might be $600, right, right. But they can't get approved for a mortgage for whatever reason, right? They have bad credit, or whatever it is, right? But I can buy that house, I can renovate it, and I can sell it to someone and really the pitch to them is listen, you want to own a home, and you're not currently in a position to get approved for a mortgage through a traditional mortgage company. But what if you could have homeownership, and you would pay no more than you were paying when you were renting, right still give me $1,000 give or take. But you own the home and you can build equity and in three to five years you can refinance out at a lower rate and you can own the home and probably drop your payments a little bit. Is it important enough to a person to own the home? If they're if all things being equal rent 1000 I have to pay this company 1000 for the house, but I own the house. That's what we do we buy the houses now, the reality is the interest rates are a lot higher than what you might get at a mortgage company, right. But we're also taking a bit of a risk. These are folks that have defaulted on things in the past and their interest and their credit scores are not great, but they have homeownership at this point and if so they if they have a down payment, and they want to own a home, we can get them into a home for no more than they would pay to rent a home in that neighborhood and three to five years, the goal for them is to fix things in their life and be able to refinance out at a lower rate and move on forever and then. So we're typically an average deal for us might be, you know, we buy it for 50. The ARV is 100, we put 20 into it. So now we're into it for 70 and we sell it for 85, right, we're still a little undervalued. So they're getting some instant equity, they have home ownership but when they go to refi in three, five years, we're getting a $15,000 check or whatever it is at that point, right. So in there's no calls from tenants, and there's no vacancies and none of that stuff. So that that's the that's the allure for US interest…   Michael: Interesting, I mean, isn't that similar, like rent to own or is it different?   Mike: It's similar, but they're not renting, right? a rent to own it, depending on how it's structured. Obviously, you can have some portion of the rent go toward whatever, but you still own the house, right? You still own the house as the person who's having that rent down. We don't own the house, necessarily. We own it, just the way the bank owns your house when you have a mortgage, right. But we're never getting calls from the city for law for Tallgrass. We're not getting calls about the maintenance issues or whatever. We don't have to worry that they didn't, you know, they left and they didn't finish their contract like it's a mortgage and if they if they don't pay their if they don't pay their mortgage, then we will foreclose we can foreclose on them.   Michael: Yep, interesting and so that like when you place these tenants into the home, there's a recorded sale that happens and so you're literally just playing bank, interesting…   Mike: Yep, just playing bank. Yeah, because we both had rentals, both of us and like I said, rental they're awesome but there's just a different level of responsibility for us playing the bank than then playing landlord and that's just what we're choosing to do. We both of us have rentals and it's, it's awesome. I rentals have been fantastic for me. It's just, it's not what we're doing now and we were just like, gonna get rid of the rentals and just wholesale. That's it but then this model presented itself, somebody we mutually knew in the industry is kind of like, hey, I'm doing this and they're doing it in Texas and it works down there too. I don't know that it would work in Los Angeles or San Diego or I don't know that it would probably not as well because the house prices but if you have house prices that you can get a house in a nice in these are like safe blue county collar neighborhoods, we're not talking about like war zones, but by any means I wouldn't buy a house there but in a nice blue collar brick ranch neighborhood, if you can get a house between 50 and 150,000. It could work when they start getting up to a half a quarter of a million, it just doesn't work as well anymore. You can't, the numbers don't work out.   Michael: Okay, okay. Good to know and just out of curiosity, I mean, how many folks end up refinancing out of your mortgage and then truly then own the house versus how many what percentage defaults or you have to go through that?   Mike: Really good question. We started doing this, like, eight months ago. So okay, I don't know, we don't have a loop. Yeah, but the friend of ours who kind of introduced this concept to us. He said about half of them refi out. Very few defaults, very few defaults because it's home, you know, people it's their home, right? They don't default, like they do necessarily on a lease, because it's not as transient. So according to him very few defaults. But we also screen people pretty well to like you would with a rental, like we're not just letting anybody in there, right? If they clearly have a pattern of defaulting on everything they've ever done, we could expect to default to we're not special but people have certain circumstances where their credit cut takes a pretty good hit but it's you know, it's something that is understandable, or it has a you know, story behind it. That makes sense. So I'm not expecting a lot of defaults, how many people will refi out? You know, our plan is to be a little bit more proactive with helping them with credit repair right now, we're not really getting involved in that but I suspect as we do get more involved with helping with that, that the number of people who actually refi out will probably go up, you know, so I don't really know right now how that's gonna go down. We'll see, we'll see how that goes. I don't know. Sure…   Michael: Okay, we'll have to have you back in 24 months to see. See what that looks like…   Mike: For sure, for sure.   Michael: Awesome. Well, Mike, let's shift gears here just for a moment and talk about wholesaling because, I mean, like you were mentioning a bit ago, it's no surprise that deals are a bit tougher to come by today. I think in the industry as a whole it's probably no surprise that wholesalers don't have the best reputation out there. Yeah, so I mean, I have I'm going to share kind of my thoughts on I think what makes you different but curious to get your thoughts and share with our listeners, me what makes you different as a wholesaling company and then what are some things that people can do to protect themselves from the not so great actors out there who are wholesalers?   Mike: The problem with wholesaling and the reason why it can get a bad name Is it is it is advertised and when I say advertised, I mean if you go out on the internet and say how do you become a wholesaler? Should I be a wholesaler? It's billed to people as this no money, no experience and that's how you get started in the industry…   Michael: And no risk…   Mike: Yeah, no risk. You get this, like, this mentality of this person who thinks they're just gonna roll out of bed open up their eyes, and money's gonna pour through the windows of their house if they're a wholesaler and it's not true, obviously. So you asked me what I do that makes me different. Here's what anyone can do to make their business different, but it doesn't it's not, you know, just for wholesaling but you have to run it like a business and a lot of wholesalers are very transactional in their thinking. They only care about the cheque they're getting next they don't care about future checks. They don't care about consistency, or predictability of their of their business and so they treat wholesaling, like this little dirty act they have to do before the real serious business comes along and in the reason why a lot of wholesalers get this bad reputation also is because there's something called daisy chaining in real estate, and most real, most wholesalers I'm doing air quotes if you guys aren't watching.   The reason most wholesalers or a lot of wholesalers have this reputation is they're not really wholesalers as much as they are what's called daisy chains and a daisy chain er is okay I'm a wholesaler I market to sellers I go into a seller's home. I create rapport and trust and in understanding of what's happening. I get a purchase agreement with them and I take that purchase agreement and I market it out to the other real estate investors in my community and some person who sees this takes the pictures, they take the text, and they mark up the price and then they send it out to a bunch of people, a lot of times a lot of the same people at a higher price and it's like called them and so you call them and you say, hey, I'll take it because you didn't see my marketing, you saw their marketing for whatever reason, you say, I'll take it. They don't even know me and I don't know them. But they're representing that they have this this deal under contract and meanwhile, I'm working with my buyers and I come to an agreement with a buyer and then this person calls me who's was also marketing up my contract and says, hey, I want to buy that house and I go, I've already sold it. Well, he's already told his buyer that they can have it for that price. But I already sold it because I have it under contract. Now he has to go back to the buyer and say, sorry, we have to back out of this deal, right and so it looks like a wholesaler is a really bad business person, bad guy, dishonest, whatever, misrepresenting himself, but he never had the deal and so that happens that's runs rampant. That's a real epidemic in the wholesaling world. So you also asked me, How do you tell the difference or how do you how do you avoid the bad ones?   The first question is that because I get people who send me deals, and frankly, I'll look at them if some other wholesaler finds a deal, and they were they offer it out at a price that my company might be able to land contract that house and we want to buy it, we'll do it. So the first question I asked them is, do you have this under contract yourself or are you representing somebody else and a lot of times they do and sometimes they don't? Sometimes they say they do and I say good. Then before I would buy this, I would need to see the agreement between you and the seller, your company in the seller, what's the name of your company, and I verify this stuff because if they don't have it under contract, I don't even care if they say, yeah, it's not me. But the guy who has under contracts a good friend of mine, and he gave me exclusive rights. I want to talk to who has entered a contract always deal with the person who has an order contract with the seller, with the seller, right? All right, that's, that's key. That's huge and we don't, we don't allow daisy chaining, we don't ever allow people to market out our deals, we only market them out and so all of our buyers know, we've told them several times, if someone if we're marketing a house and you see the same house being marketed by someone else, believe me when I tell you, they're not authorized to do that, they will never be able to sell it to you. So and as a wholesaler, I always make sure that I'm dealing with the end buyer, not a middle person, right? So if someone comes to us, though, and says, hey, I've got a buyer, and they're gonna, they'll pay you this much money and it makes sense for us. We'll give them a check like, well, we'll compensate them for bringing that buyer. But we're not going to we're not going to be what's going to be all transparent, we're going to let everyone know what's happening and so transparency in the wholesale process is important between us as the wholesalers and the buyers total transparency. Now, I'll say something that your audience may not love. There is not total transparency between us and the seller and does that mean that we're lying to them? No, it's not it doesn't. But here's what I always tell people to illustrate my point. Nobody loves or trusts me more than my mother, nobody.   My mom has heard me explain what I do as a wholesaler 1000 times and she has been all ears like she's could not be more dialed in to hurts her baby boy and what he does, and she's so proud and so happy and she's listening intently. But if you call my mom and put her on the air right now and said, Could you please explain to me what your son does? How he does it? She wouldn't know she might even tell you. I'm a realtor. She just doesn't know. It doesn't make sense to her. It's just it's too obscure. Right? So when we're in a seller's home, we don't say to them, Mr. Mrs. Seller, I know you're under a lot of duress. You have to move maybe there was a death or divorce or whatever there was right? Something happened in your life is spiraling. Here's the deal. I want to sign a contract, saying that I'm gonna buy your house, but I'm not buying it. I don't even know who's gonna buy it. I don't know where the money is coming from. I don't know who's gonna show up at closing. I'm not even sure if I'm gonna be able to close. Can we sign the deal now? It nobody would say yes. Okay and that's an a character characterization of what a wholesaler does. But on some level, it's facetious, but it's sort of true, right? I'm signing a contract. I don't exactly know who's going to buy it. In my case as a wholesaler and what I think makes what I do ethical is I have the financial backing to buy any house that I put under contract. If worst comes to worst, I can buy it right and that's not that doesn't come in the beginning. new investors don't always have that luxury. But what you can do as an investor and where you can be transparent and you should be transparent is do not sign a contract and imply or explicitly state that you will for sure be closing on the house without exception, you can't say that in most cases.   So what I say is some version of this, Mister seller, when I came here I was prepared to offer you $100,000 for your house, that was the highest number that I was authorized to offer you, you cannot go below 110,000 That is your lowest, that's the number. That's the gap, right… You want 110 minimum, and I was maximum allowed to offer you 100 but here's what I would like to suggest. Let's sign the contract for 110. Okay, I'm gonna go back to my investors and people who make decisions and help me buy these houses and I am going to see if there is interest at that price, I anticipate that there is not going to be but there very well could be but at the very least, if you can give me two weeks to talk to my investors and go to bat for you, and try to make them understand now that I'm here, I see this house is very nice. I didn't know is this nice but it is a very nice house. I think I can get this done but give me two weeks and I will come back to you in two weeks or less by the way and I'll tell you one of two things either, we can't pay 110 and so we need to rip this contract up and just part as friends, because we all knew that that was a possibility or we're going to move forward at this price and everything is good and I guarantee you will close. Okay, can if you couldn't give me two weeks. Now, if you don't want to do that, I totally get it. If you go to a realtor, they're going to want you to sign it like a three month contract where they get three months to market your house. I just want two weeks and if it takes me two days, I'll come back in two days. Either way, I'll be totally honest with you and it will be up to you what we do from that point we rip up the contract or not. It's totally up to you. Is that? Is that something that you can live with just for a week or two and nine times out of 10? They say yes. Now, when I when I go out now I am going out to my buyers and I'm saying hey, I got this this opportunity who's interested, right? If I get crickets and it's like, nope, nope, nope.   Then usually we'll try to figure out what our buyers would pay, right? That's the next question. Okay, you don't want it? It's fine. But what would you pay for this and we start getting that feedback and so we can go back to the seller and say, listen, I was right. 100,000 is the best we can do but I'm totally willing to rip up this contract because you want 110 or we can talk about a reduction or, or the or we get buyers that are like, yeah, I'll do it for that price. That's great, right and it's a little better than we thought and we go back and tell the seller, hey, if we go out to our buyers, and we find out that 110 is a really good price for us still, we'll still make the money we thought we were going to make we always go back and say we'll honor the 110 because I think that's the question I would be thinking in my mind if I'm listening to this interview? Well, what happens if they get really great offers? Do they still always go back and try to get that lower number? No, we don't. If we can make what we thought we would make or pretty close to it, we'll pay a higher price, right? We're, my goal here is to get to heaven not to make an extra $5,000, right. So I'm not trying to be a bad guy. But the key is the ethical wholesalers versus not the ethical ones, prepare the seller for the potential for a renegotiate or a cancellation up front and so when we go back, how often are they irate because we come back and say, hey, we can't do the 110. Almost never, because we very thoroughly explain what we're doing and we prepare them that we may have to come back and discuss the reduction or cancellation. The people honestly, they just want clarity.   They just want to know what's going to happen. What people get mad about are surprises. So when you say oh, great 110 done deal. I can't wait to close with you in a few weeks. This is so exciting and then you come back in three days and say we have to cancel the contract. They're mad 100% of the time, because they weren't you're not clear on what was happening. You surprise them with bad news and nobody likes being surprised with bad news but when you come back and say, hey, remember when we talked a week ago and I said this? Well, we can't do the 110. You know, we tried nine times out of 10 they're totally fine and honestly, seven times out of 10. They say well, what can you do and then we have that discussion. So, man, it's all about setting expectations.   Michael: Yes, 1000 times yes, as funny as you were going through kind of your pitch. I was like, Oh yeah, like that makes sense. That's such a different, like feeling that I got as you were giving as you were giving that Spiel than what I was expecting or than what I've experienced with wholesaler. So I mean, kudos to you and your team. It's clearly it's clearly working for you, so keep up keep up the great work.   Mike: Well, honestly, we have gotten deals, where and I know that sounds cliche, but I swear to you, this happens all the time and it we only know that when people tell us right so my guess is it happens more than we even know but we get deals where they got a higher offer from another wholesaler. But because we come in and we are professional, and we do address their concerns, but we wholesaling is not really about buying houses. It's about solving problems and again, sounds cliche, totally true. You can figure out what their pain point is and you can focus on that the sale of the house is secondary and I know that because we've had sellers tell us listen, we had somebody come along and offer us more than you guys, but we're not going to sell to them, we're going to sell to you because we believe you, we believe what you're saying and we like working with you. So professionalism matters and just to illustrate that point, underline it real quickly, one of our reps went into a house one time, and he was talking to a seller and they were going through the whole thing, it was like halfway through the meeting, and then knock on the door, and the seller says, oh, I forgot.   There's another investor or another, whatever. They call them coming in another person who wants to look at my house and my rep was like, oh, okay, and he kind of stood aside and a guy came in, my rep looked outside, and he saw the guy was driving a Mercedes, nothing wrong with that Mercedes fine but he left it running. He was wearing a suit, he came into the house, briefly said hello, and started walking around, pointing out all the flaws in the house, this is all this has to be replaced. That's no good. Nobody wants that and he shot a number at her with what he would pay and said, think about it and he got in his car and left. Like, everything that guy said, that wasn't verbal screamed, you are not that important to me. I'm way too big of a deal for you and I don't even have time to turn my car off. That's how little I think about what is your situation. I'm just telling you what I need and what I want and what I'll give you and I'm out of here, right and understandably, the seller was floored. She's like, that was the rudest thing I've ever seen, like, that was awful. I feel so like, offended by that. Yeah and of course, my rep was like, yeah, I would be offended too, right. Like, I agree with you. They're horrible. We're great. Let's get back to talking about how great we are. So it matters, like paying attention to their pain points, and not being all about the number. If you start talking about price right off the bat, you can almost guarantee you're not gonna buy the house. Yeah, if you start by listening, and addressing their problems, and let the sale be last. It'll work out for you much, much better.   Michael: I love it, I love it, I love it. Mike, we could go on, I think probably for days talking about this stuff but I want to be very respectful of your time and get you out here. For anyone that wants to learn more about you, your processes your business, where's the best place for them to do that?   Mike: Yeah, thank you for that by the way, I appreciate it. The best place to get a hold of me would be at my on my website, https://www.mikesimmons.com/ . If you go on mikesimmons.com, you can find anything about me and also my podcasts. I have a podcast called just out real estate. You can find the link to that on my on my website as well.   Michael: Right on…   Mike: Which you were on right, you were my guest.   Michael: We had a lot of fun.   Mike: Yeah, we did.   Michael: Well, Mike, thank you again for coming on and sharing so much wisdom with our listeners really appreciate it and I'm sure we'll chat soon, man. I look forward to it.   Mike: Absolutely. Thank you for having me. It was a pleasure.   Michael: Likewise, talk soon.   All right, everyone. That was our show a big thank you to Mike for coming on. Super, super insightful stuff. I learned a ton about the wholesaling business and wholesalers in general, and some really great questions that we as investors can be asking wholesalers to protect ourselves from the downside. So as always, if you liked the episode, feel free to leave us a rating or review wherever it is you get your episodes, and we look forward to seeing the next one. Happy investing…

Brandon Schwab is based in Chicago where he specializes in boutique assisted living. Brandon who is, founder, and CEO of Shepherd Premier Senior Living and Boutique Senior Living Fund had experienced first-hand the deficient care of his grandfather at a large, industrial-type senior living facility, he vowed to make improvements in the industry by starting his own senior living company that provides better, quality care to the elderly. It seems that parts of the US are significantly under-served with this class of product. To learn more or to connect with Brandon tune in to today's podcast and you can set up a time to speak with him directly. Brandon talks about his unique business model of syndicating small senior living assets. Episode Link: https://boutiqueseniorlivingfund.com/ wwww.shepherdpremierseriorliving.com www.brandonschwab.com   Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum, and today I'm joined by Brandon Schwab, who is going to be talking to us about how he's turning the senior living facility industry upside down. So let's get into it…   Brandon Schwab, what's going on, man? Thanks so much for taking the time to hang out with me today. I appreciate you coming on.   Brandon: Hey, man, this year is awesome, man. Thank you for having me.   Michael: Oh, of course and I think we're gonna have a lot of fun today, talking about senior living, which is I don't think we've ever covered this topic on the show before. So I'm super excited.   Brandon: Never…?   Michael: I don't think ever I don't think ever and shame. I know, I know, I know. Shame on us, that's our bad but give us the quick and dirty. We're gonna get into senior living in just a minute. Give us we can do it, who you are, where do you come from and what is it that you're doing in real estate today?   Brandon: Down and dirty… I've been in Crystal Lake Illinois. For 35 years, I am 40. I've got two kids I got in real estate in 2010. But back before that, I actually opened up our own company at the age of about 15 years old. I did that for 14 years, until I figured out quickly that I didn't actually own anything. I thought I owned something the whole time. But I found out at the end, I didn't actually own any assets. So therefore, I  didn't actually have anything to own to actually have up for sale. So I got into this industry in 2010. After I got crushed after 2008 happened. I at the age of 15. I was cleaning cars in RVs for 14 years and I thought I was crushing it doing there. I was taking home 200 220,000 per year but I was probably working 7080 hours per week. So like wholesaling back in 2010. Because I was like dude, I got paid like $200 for each car and probably about 500 for each RV. So like wholesaling in our first deal was like $1,000 I was like, do you know that would take me like 40 hours just to like, even come close to that and I said I have to get into that business. So that's it, man, it's awesome. Fast forward to today I am changing the industry for how the elderly are taking care of totally upside down.   Michael: That's wait. So you're putting elders on their head? I don't think is that is that good for them?   Brandon: We obtained we are changing the whole and we're changing the whole industry of how everyone thinks of it because typically, if you think of the older industry, right? You think of 100 to 200 type with a ton of elderly in there, right? Tons of them, right and they typically have a pretty terrible odor and the odor isn't very good. It's the odor because people don't get any help and then there's also the atmosphere of everyone asking for help because the average caregiver has to care for 20 to 30 people. I don't know on you, but we are in the top country in this whole entire and if that's how we care for the elderly, I feel like we didn't do things properly and they have to be totally turned upside down because how they're currently doing it isn't able to operate. I had a thing happen in our family back in 2004 where there was a person in our family who was 85 who ended up in a place for 200 beds and we pulled the pull cord to have people come in there to help them and it took them 10 minutes 15 minutes by 20 minutes like I'm getting like pretty irritated by 25 minutes like I just lose my shit and I go out to get a them to help them and I can't say I handled it all that well because I kind of exploded but like that's how I was first exposed and it turns out that's actually common to how the industry is able to operate and I said that's terrible. I hate this industry, hate it, hate it hate it.   They bought 10 years after that I was down in Florida and I got exposed to a five a home that had five people in it and I was like what is this? You know at the time I had 23 homes in our total I began build In our portfolio in 2012, and by the end of 12, I had 23 homes and I had, I thought I kind of had everything figured out. Well, at the end of 14, I'm in this house down in Florida and I'm doing each one of these like arms kind of crossed, because I'm just looking at the place and I go, What is this? I haven't ever seen a home before that is it was probably a 2800 foot house. There was houses on each side, probably 10 or 12 feet from the house and I was just like, What is this because typically as I would go down to Florida, Kelly's dad would play his piano in the old folks home 328 times per year for 35 bucks and I hated going because it was typically in these huge in the elderly in the odor was just terrible and I was just like, if we can get out of that, is there anything that I can do that I don't have to actually, and I would offer to like cook to clean all of that just so I didn't have to go? Thank God, I didn't I didn't have any option because I was ill put this house and I was like, What is this? This is cool. It's it didn't have any odor. It had this awesome atmosphere and I was just like, how have I been in?   How have I been investing in assets and I don't have any clue what this is and I asked the girl in charge, and I said, hey, how much do these people pay to be here and I threw out a figure of like 1500 or $2,000 in this girl did this hurt? Like her eyes came down here and like this girl's answer was like, and just kind of kept on walking and I was like, Kelly, what the hell was that answer? She didn't even answer me. So I ended up calling her and the girl goes, Brandon, I am sorry, I thought that you were only kidding because they begin at $5,200 a month, what times five people I'm like, that's $26,000 and every home that I had all 23 Our highest was like $2,200 per month and our average was like 18 and I said holy crap that one house with five people in it was outperforming every house that I had two times each month. And I was like, I'm in the I have to get into that business and by the time I was able to come home, I found a house in a town of 832 people and it was the house was 4880 feet on three acres. So like we bought it for 250 and put $550,000 into it right over the top. I got this house full by February of 17 and we were gross and 55,000 of income within a cost of the expenses of like 30 to 32,000 a month. So this house was jam on month, one month, one house, we were changing the industry to and offered this cool option that people have never heard of.   Michael: So you're netting like 20 grand a month on this place.   Brandon: Per house, yes and I have homes that are 1015 and 20 each home. So that's the that's the entry level for us, is 10, so…   Michael: I mean, okay, I've like speeches, I have so many questions. So I've got to imagine caring for the elderly. This is a very medically intensive, medically heavy industry and so talk to us a little bit about how do you how do you get into this industry because I think there's so many barriers to medical and then care and I could go on but tell us how you how you got started.   Brandon: So when I got going, I had everything in the to open up the house, right, I was able to open it. I even got the first two or three people in there, right and when I quickly got past like two or three people, I quickly figured out that I didn't really have the experience to operate them, right. So I was doing what I was trying to do to get the house full was I was calling on churches, in particularly wanting to talk to the head of each church. Now, I found out quickly that churches are hard to call on because they don't ever answer and they don't tend to call you back but I finally got one and I called in I was talking to the church pastor and honestly, I think he felt terrible for me because he's like, Brandon, you aren't so good at this like this is this isn't going to be your thing, right? So like he goes Brandon, hi god, their closest friend was in health care for 38 years. She just retired in in. She was getting kind of anxious to like go in to do things. So they introduced me and she was in health care industry for 38 years I ended up taking You're out to eat every Tuesday for about six months and I finally got her on our team, I got her to invest, but I had her in charge of operations and that was back in 2015. So I basically was able to open up homes, but I quickly figured out that I needed a team of experts to actually operate them. So after I had her in, it was in 2015, I kind of had her handle the ops and I focus on opening up homes.   Michael: That is wild. So at the beginning, before you brought her up, where I mean, were you there at the home, cooking, cleaning, doing all that kind of stuff yourself?   Brandon: No, I only had to go there when people didn't come in. So there was a handful of times where a person called in, and I had to go in there. That wasn't very fun and I quickly figured out I need to have things in place that that isn't going to ever happen over because I found out quickly that I am not very good when it comes to cleaning and taking care of people I quickly said, you know, I had to get out early. So I found people, I did have to cover a handful of shifts and I did call in for help because there were some things I just couldn't do.   Michael: I can imagine, I can imagine. So when you're looking at properties, I mean, this first property, what about it kind of jumped out at you and said, Hey, this, this is a good candidate or a good prospect to purchase, you know, for this type of business.   Brandon: So when I was down in Florida, I saw a five bed house in the five bed house was great. But the five bed house wasn't. It was geared for like an owner operator, a person that was in a health care field and I quickly figured out that that wasn't going to be us that I couldn't do that personally. So I decided to exercise. So I was looking for a first floor house, it was like 5000 feet, first floor 5000 feet. That's hard to find. So when I came back home, I thought that they'd be everywhere because down in Florida, there's 1800 of these homes. California has 2800 out there close to you, I think Arizona has 3000, Texas has 15,000 back by us. There's 55 by five, so I said…   Michael: And when you say when you say these homes, you mean like single family homes in neighborhoods that are being used for senior care facilities.   Brandon: So I am talking about homes that are caring for the elderly under 10 people. It is under 15 people per home.   Michael: Okay, All right. So you had 55 in your market…?   Brandon: 55 not in and there's 18 in all of Florida, and there was only 55 here, right and I said, that's bingo. Perfect I'm in, so that's how I first jumped in but a thing a thing that happened is when I first got in, there wasn't a ton of other people out there doing this. So I had to kind of go teach people this concept. So the healthcare part was definitely challenging but the houses that I was trying to find where four to 5000 feet, first floor only our first house, it was on three acres. It was a financial planner that I purchased that bought our debt built in office on to his house. So I had to open things up, I ended up putting 550,000 into the first house. So I had four private bedrooms, and I had three bedrooms for two people each. So for privates, and then I had three for two. So I had a total of 10. Did I go over, did I go overboard? Absolutely but I feel like if you're going to do anything, you have to do it how it ought to and I put three ADA A's on the inside for people to go to the psych bathroom, I only had to have only one and I had 380 access points to get into the house and out of the house and we just did everything over the top. So that's how I first got in and then beyond that house, it was harder to find that type of house over. So fast forward to today I've got five homes up and operating. I got two homes opening up in quarter three this year. And then in 2000 are in I also have 7.2 acres of land that I bought before COVID that I was going to put our own homes on.   Michael: This is incredible. So what is the financing look like for these homes? I mean, can you go to a bank and say hey, I want the purchase. I want to purchase it at 20 and I want you to give me a line of credit for the construction for the rehab. I mean who's financing this type of stuff…   Brandon: I had a chance, dude when I went in there to talk to these guys, they thought I had like, they couldn't get it. These guys are used to like, easy, typical type deals, when I told them that, that I was going to 10 people each paying 5000 to 5500. Each month, their heads literally exploded. They're like, Hey, man, why don't you come back after you do your first house? Then I'll talk to you and I was able to do that and they're like, hey, why don't you come back when you have two houses and then at that, at that part, I am like, you know, I don't think I'm going to actually go ask him for anything anymore. But like, that's how it happens. So a thing that I do for financing is I actually brought in private capital, from investors on a per L for each home and that's, that is how we did, I had to offer some pretty high IRR hours. But when you're first getting things going, that is your only option and a thing that I found that I was really good at is when I was buying properties, I was buying like oddball type properties, not the typical like three to 2200.   So I was buying houses that were on properties that the typical family at the time weren't trying to buy, right. So I was buying houses that were on the app on the MLS for 200 days, 400 days, 500 days and what I would do is I would give them an offer for them to carry back financing at the full asking price. Or I would give them an offer for cash but the cash offer was like so like 50% and a lot of times I was just using that cash offer to help prop up the other offer but I've had a handful of times where when I was putting in those two offers, they would take the other one. So I bought one house off the MLS one time that was on for 2.4 million. I bought that for 750 cash and other time I bought one in Connecticut that was on the MLS for 2.1 million. I bought that one for 700,000.   Michael: Okay, you are not kidding, those cash offers 30, that's incredible a budget you're solving for someone's like, that's…   Brandon: Yeah, those are offers that as I was able to have them in I thought no ways anyone can ever take this off or like they are going to be like, click just kiss but they took him because our other offer was 1.8 million owner carry back financing and they just didn't take but that was probably only 30% of our upfront portfolio. The other ones, I've had them take the owner offer carrying back financing. So that so that is how we did hazing.   Michael: And then you bring in investor capital to do the rehab, whatever upgrades you need. Yep, amazing.   Brandon: Yes, sir.   Michael: So like, when you're looking at properties, there's got to be at Imagine zoning limitations or requirements or local licensures that you need to get what, like, what should people be on the lookout for or how should someone be thinking about those?   Brandon: Well, anyone that's thinking of getting into this themselves and having people operate it themselves, I would tell you don't do it. It is something that I casually got into it thinking that I could just figure it out and it's been one of the most challenging things I've done, where it's taken me eight years, open up five houses and it's challenging. But as I would look for houses, I would look for houses in an area where the household income, the average was over 80,000 and then one of the things that I would do is I would go to the population and I would look for a population of in each town over 65 years of age, I would look for like 10 to 12% plus, anything that was up over hire, that was awesome. I did buy the 7.2 acres of land, all of our first five homes, they're in towns where it's like, you know, 10 to 20 or 10 to 18% over the age right. And then the town that I bought this dirt in for 7.2 acres, we paid 220,000 per acre but it is located directly next to a Dell property.   That's that is 5500 homes that are all 55 plus. So our percentage of over 65 in this town of 26,000 people is 32% Wow. Let's go. All of us purchase that. Before COVID. We were finishing that we got through entitlements, we were going to build six homes, 20 beds each and in office, it was gonna cost us $15.5 million. We had the all of that done, we even had a closing in place for a family office down in Florida, actually to give us a 10 $10.86 million at 12% and they were going to close March 13 2020. We were going to begin pushing dirt April 1, 2020. If you think back to the time, a little COVID pandemic entered into this plan, and the family office were two guys that were probably in their 70s or 80s themselves that earned a bulk of their family office capital from offices and they were in the class a office industry, right and they were trying to take cash out of that inputted into any other asset class and they ended up pulling out two days before closing. Yeah, because they were having tenants that GSA weren't paying. So it wasn't ideal, the overall timing of it, but our things have changed where we aren't building today because cost the build is just too high, where we are holding off until that cost comes back down and we are doing other things today that that fit what is going on.   Michael: Okay, you should have told those guys look, you'll get a free room and board. Just give me the money. I'll build you a spot.   Brandon: I was trying. It just wasn't great timing. I was like, what COVID? Come on. That's fine. It was just too early for us to have any clue. So yeah, unfortunately, they passed but I'm gearing things today now to try to build those connections up with those guys, because a ton of those guys have capital galore. So much dry powder that's just sitting, where if they can find an asset class that is out there that can help the elderly that can help give them awesome IRR that's going to top inflation and also help have a tangible asset. That's what they are looking for today. I think the days where people earn in 200% 300% Kryptos those days are kind of over for some time now, where people are looking for tangible assets today and I have this, so…   Michael: That is amazing and so these houses, I would imagine they serve three meals a day, and they've got all the medical care and there's like it's like a proper business like you would expect to see if you went to a traditional elder care facility, you would have all those same amenities and sounds like and then more, right…   Brandon: So a thing that's different for us for a for every home that has 10 Total people in it, I have a caregiver to every five to eight, five to eight total people compared to the other. The other competition has a caregiver every 1520 to 30 people. That's the thing that causes the old the overall odor. So in a home for 10 total people, I've got two caregivers in there from 7am till 10pm and then I've got a RN that comes in in the am and in the evening just to have eyes on everybody and then I have… that comes each week or as he has to write. So I offer everything in a home that is very cozy that other places have in 100 to 200 type building. Now, with that being said, it's actually harder for us to be as efficient as everyone else. As I only have 458 homes, I actually need like 1020 3040 80 homes to actually have things be efficient. So I'll tell you 10 Plus, under 10, it's hard to be efficient and that's a thing that keeps other people from being able to get into this overall industry or if they do get in there.   They're the owner operator that owns a home or to homes but they're in it every day going 80 hours per week probably profiting 250 to 400,000 per year, but they're busy and I said you know I can't do that I'm going to operate a company that I can expand, to have time to go do other things. You know, I've our oldest is 14 years old and I openness that I could have time to coach him, right and I have been able to coach him playing baseball just since he was eight years old and that's only possible because everything here so time free is…   Michael: That's amazing, Brandon. I think my last question for you. I mean, I have a million more, let's be honest but we gotta keep this within time. How do you insure the thing, is it like us traditional long term rental? Is it insured like a medical office? I mean, what does that look like?   Brandon: Yeah, so the insurance is going to, you're going to have insurance on the overall asset but then you also have to have extra, the extra insurance for operating it for E and O for if anything is able to happen, if anyone's able to get hurt all of that. That's typically about $800 Each house each month but a thing for us, though, is because I haven't had any issues. Over the past eight years, we haven't had any, any type claims, whereas you're in a home with only 10 people, if you offer on if you offer awesome care, they don't tend to have any issues and that's what's awesome on this because typically at the other places for 100 to 200. They have a they've got a caregiver to every 20 to 30 people because the owners are trying to get it to earn extra money. The only avenue to do that is either to push up your income or to cut your expenses. That's the only thing to change the actual NOI. So what they typically do is they cut the care giver item, which is going to an increase the NOI. However, when people are able to have issues and they are able to pass, then you have their families, a attorneys after you and they're pissed, telling everyone how terrible you are. I always feel that it is better to do things how they ought to be done upfront, even if it's harder, because everything that I'm able to do is harder. Like this isn't easy by any means I would tell you, it takes you getting to like home tend to like really cover the overhead. The overhead I found to truly operate this properly, is over 500,000 per year and in order to pay for that you need enough houses paying towards that, to don't have each house covered in too much expenses that they just can't cover, so…   Michael: That makes total sense. Big numbers…   Brandon: Big numbers.   Michael: Yeah, awesome Brandon, this was so much fun, man. If people want to learn more about you reach out with additional questions. What's the best way for them to do that?   Brandon: They can they can call me or text me. So on my phone, you can call me at 815-790-2330 or else you can call our office of 847-380-8624, yes, 847-380-8624.   Michael: Amazing and do you have a website that people can check out as well?   Brandon: I do for our fund but our fund isn't for everyone or funds only for a for investors that are a core they are qualified purchasers. So it's a tear a BB it's a 506 C they can check that out their shepherd, our operating company, I can get you the page to put in there. So it is well just for anyone to put eyeballs on our actual homes or our fund is https://boutiqueseniorlivingfund.com/   Michael: Awesome.   Brandon: That is that as well, man. Thanks for taking time to talk with us today, man. This has been awesome!   Michael: It has been a pleasure, I am sure we'll be in touch soon and take care.   Okay, everyone, that was our show a big thank you to Brandon for coming on super, super interesting topic that like I showed at the beginning of the show. I don't think we've ever had someone on the show talking about this topic, so really interesting. Definitely go check out Brandon's fund, and it's an interesting asset class. See where it goes from here. As always, thanks so much for watching or listening, and we look forward to seeing the next one. Happy investing…

Dana Dunford is the CEO of Hemlane Property Management and a real estate investor. In today's episode we discuss market conditions, interest rates, what is happening in the stock market, and what the current moment means for real estate investors. If you are wondering if it is the right time to purchase an investment property, you will want to listen to this episode. Links: Hemlane.com --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The remote real estate investor podcast is for informational purposes only and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum, and today I'm joined by Dana Dunford, co founder and CEO of Hemlane Property Management. And today Dana is gonna be talking to us about the state of the economy and some things that investors should be aware of and thinking about as we move forward in today's market. So let's get into it.   Dana Dunford, welcome back again to The Remote Real Estate Investor. Thanks for coming on and hanging out with me.   Dana: Great. Thanks for having me. Again, Michael.   Michael: Oh, my gosh, it is such a pleasure. You are great friend of the pod. Great friend of Roofstock. For those who might not be familiar with you give us the Quick, quick and dirty background of who you are. And background on yourself.   Dana: Yeah, so I'm Dana Dunford. I'm here in San Francisco. So just right across the bridge from rootstock. I have been in technology for gosh, now we're going on 18 years. So I'm a tech veteran, which we'll be talking about tonight, today, which I'm excited about. And on top of that, I'm in property management. So we're a tech platform for property management, and partner of Roofstock's. And we've seen what has been going on since q1, the market softening things changing in technology. So I think this is going to be a great call, because both Roofstock and Hemlane have seen it firsthand. And hopefully this gives some insight into what, what the upcoming year is going to look like for all real estate investors out there.   Michael: Totally. And just to give some people, some additional color, you are CEO, co founder of Hemlane, and you just did your series A, what was it q3 of 2021 or q4 of 2021?   Dana: Q4, so we raised at the perfect timing, those who are not in venture and the tech world of Silicon Valley. We couldn't have timed it better. You know, right now, and we'll talk about this today. Right now, the market is really softening. There's just less capital going into startups. We can't say this was people were already predicting this. So back in q3, and q4 venture capitalists were already saying, Ooh, there's a lot of money pouring into this valuations are really high. And some had already started pulling back. But it wasn't until what happened in the public markets, where you know, trillions of dollars were taken out of these Sass companies, valuations are overall the market cap, that suddenly the venture world that trickled down and people really started to pull back capital. So yeah, we raised back then roofstock, when was your guys's last raise? Because you guys are at a later stage. And so obviously, also impacted by this and quite, potentially, more significantly than us.   Michael: I think we got our term sheet squared away in in q4, as well. So right around that same perfect timing with money getting wired in coming in and in q1.   Dana: Yeah, perfect. So you guys will be able to weather the storm with that what we're going to be talking about soon here.   Michael: Yep, absolutely. I'm thinking so. Okay, so let's talk about how, like, how did we get here, because you're mentioning that trillions of dollars have been essentially taken off the table in terms of market cap. But for those people that aren't familiar with the space that haven't maybe been following along as closely, what like, where are we today? And can you give us some insight and background as to how you think we got here?   Dana: Yeah, so first of all, I believe most people on this podcast today listening are real estate investors. And so all of you hopefully got in when interest rates were super low, just artificially low, right? We never seen interest rates below 3% for so long. And one that was fantastic for real estate, right? You could get a rental properties at afford a higher price because your interest rate is much lower your loan. And then for startups and for companies money was much more free it was much more flowing. What we ended up seeing happen which most people predicted this would happen. But no one knew when or at least I haven't heard of any economists who knew this was going to happen exactly. We're in March, but we started seeing the inflation go through the roof, you know, 8.6%. And it's been consistent where we have seen the inflation rate really, really high.   And so the only way for the Fed to essentially combat that was obviously, to increase interest rates, which we are all seeing now are all seen in our real estate itself, doesn't mean there aren't great deals out there. So Mike, like, do you want us to talk about that, because I still think there's great deals out there that you guys have on the platform, and now could be a really good time to buy. So don't let that taint your decision of whether or not you should go into real estate.   But with that, as you know, when the Fed raises interest rates, consumer spending just goes down, that will probably people will spend less, and also things are more expensive. And so once you have that happen, the stock market's inversely correlated to interest rates. And so once interest rates went up, there was a correction in the stock market. Why it affects us on the private company side so much is Roofstock and Hemlane are both considered growth companies. And what happened was essentially, in the public markets, so any public company, there's basically two different types, there's growth, just like us, companies like Roofstock, that have gone public. And then there are value companies and the value companies are much more stable. They're based on their cash flow. They're typically larger, older companies, and their price is based on their sales. So their price is relatively low relative to sales, in companies like that, or like Bank of America, if you think about it, and RG like gas companies like very stable, steady businesses, where you're not going to see   Michael: Blue chip companies.   Dana: Yeah, your blue chip companies where you're not going to see, you know, 500% growth year over year. But what ends up happening is when the interest rates go up like that, and stocks go down, the ones that get devalued, the most are the growth stage companies. And the growth stage companies are companies like Roofstock, and heavily that are public. And so what we basically saw happen was this huge, huge cut in market cap in the public markets. And so for SAS company software as a service where you go, you pay a subscription every month to use a service, the market cap cap got cut by $1 trillion dollars from November of 2021. Until today, and so what that did was essentially, these companies thought they were worth a lot more.   And you know, some of them, like the stripes of the world, in the snowflakes had these really high revenue multiples, and suddenly, those just deteriorated. And the multiple based of what their valuation is versus their, their revenue went down. And that essentially trickled down to private companies like us as well. And so now when a company goes out to raise capital in q1, q2, primarily, now it's even, it's even worse. And what we're foreseeing in q3 is that you might have had a 10x, revenue multiple, so your valuation, it's 10x, what your revenue is, that's how it used to be.   Now you go out to a venture capitalist, and they're like, great, you're worth 3x, or 5x. So much lower valuation. And so what they're, they're expecting is a lot of down rounds, a lot of startup saying, If I can, let me just hold on to my cash, let me cut my bird, let me try to raise later and better times. And all of this impacts the economy, because it was the public markets that were hit. And now it's also the private companies where we are in Silicon Valley. And I do think this, this trickles a bit to real estate. It's it's a different type of market correction that we saw in 2008. In 2008, it was housing right and the mortgage crisis today, I think this is a lot more like the.com bubble. This is very similar to the.com bubble of these really high tech valuations that need to be corrected. And so when you think about purchasing real estate, I actually think that's why Roofstock is such a fantastic place to go. Because you're getting out of the tech scene, you're going to other markets and purchasing there.   Michael: It's so interesting. But then so I'm curious, we talk so often about in real estate that the price is only a factor, or it's only important if you're doing something with the property if you're buying selling refinancing, because otherwise you're just having a cash flow, and that often is independent of what the value is of the company, or excuse me, the property. So why does that matter? or for companies like the fact that there's the company is now worth less, unless they're trying to do something buy, sell, or refinance or raise, raise, raise capital, like, why does that matter?   Dana: So it doesn't matter for Roofstock. And it doesn't matter for Hemlane, because we just raised, we have enough capital to weather this storm. But imagine a company that raised and they had a, let's just give the case of like the stripes of the world 100x Multiple. And let's just say it's a private company, with 100x, multiple, and now they're going back out, and they're now getting a 10x. Multiple, they could have what we call a down round, where suddenly they are worth less than they were before. And that gives a lot less confidence. One the company itself, right? The amount that you're giving up as a founder, as an employee, as an existing investor, it's a lot more just to get in the same amount of capital you wanted to historically, in so what you're seeing is these companies really, really tighten the ship, and just say, Okay, we're going to stop hiring as many people, we're really going to look at our expenses. And that means there's not more money pouring into, you know, hiring 100 people every week, they're suddenly going back and thinking about who are the strategic hires, we really need? Should we be letting go? You've seen the massive tech layoffs where it's, you know, 20% of the workforce. And now suddenly, they're really tightening their books, because cash is king right? Now, you want to hold on to that cash? Because the last thing you want to do is go out and have a lower valuation.   Michael: Yeah. Okay. Well, that makes sense. And so talk to us a little bit about why this is affecting real estate investors or why real estate investors should even care about this that's going on?   Dana: Yeah. So I always think there's a huge opportunity when there's like the Warren Buffett, quote, right? be fearful when others are greedy and be greedy when others are fearful. I think right now everyone's scared. And there's a lot of real estate investors, like we actually just did a survey at Hemlane, where majority were saying we're not going to purchase in the next 12 months, because interest rates have gone up we should have gotten any year ago. Well, you know, the best time to get into real estate was 10 years ago, and the next best time is today, I think there's going to be a lot of great deals out there. I think that while others are tightening up, other investors are scared, this is a time for you to be really aggressive. I mean, still looking at your pro forma and and follow your numbers. But you'll be able to find some some great deals out there.   Michael: I've heard a lot of sentiment around, you can always change your interest rate, but you can never change your purchase price. So if someone is getting into a deal today, at an interest rate that's a little bit higher than they're comfortable with. But they anticipate interest rates to come down at some point down the road. What are your thoughts there?   Dana: Yeah, you can always refinance. I mean, don't do a deal hoping that interest rates go down, and you can refinance it or fudge the numbers on your spreadsheet. This is why   Michael: I was hoping that's what you were gonna say.   Dana: Yeah, like this is I mean, this is why I'm, I'm more conservative than most in every property purchases had a fixed rate. I don't do adjustable. But I can refinance, right? So I can always refinance. But I want to know what I'm getting into. So when you do your pro forma, do it with whatever the interest rate is now and consider it a huge advantage and just like increased cash flow, if you can refinance in the future, will interest rates go back to this like artificially low rate that we saw over the past five years, maybe not. But I don't think that is a reason not to purchase now. You do your numbers, and you look at it just because you might say property values are really high interest rates are going up, now's not a good time to buy. That's just laziness. Like, honestly, that's just you being lazy and not wanting to do the work.   There's always great deals out there. You just have to do the work, find them look at the numbers and say even with this increased interest rate, it's still a great deal. I'm still cash flowing and I've got a great cap rate, and you can go ahead and purchase. So I don't think of this as the time really to, to change your decisions on real estate. And part of that has to do with I think, you know, some markets will soften. Some markets may remain flat for a while but that doesn't mean that you're not getting the cash flow and having a great investment that by the way, with inflation where it is If it continues, having an asset where the value goes up with inflation, so I still think now's a great time to purchase real estate. And you might be able to get some fantastic deals as other investors are pulling out, you can really, really go in and get those great deals.   Michael; Love it. And Dana, I'm curious if because we've seen prices go through the roof, and interest rates have also gone up significantly, there might be a bit of a lead lag measure until we see prices come down. So in in terms of looking for different markets, I mean, are you targeting markets that are continuing to grow? Are you targeting markets that maybe are seeing some of that softening in terms of pricing?   Dana: So for us, we go where the real estate investors are. So if there's a real estate investor there, right, we're going to do the property management for them. I think when you're when you're thinking about the lag, that is definitely true. I've heard this with other real estate investors, I've seen it myself, where you see a price. And with interest rates up, the seller puts one price out there, because that's what it was two weeks ago. And suddenly, it's not worth that much. It's worth like 10% 20%. Last, but it's actually really good to put yourself into the position of the seller, and of the real estate agent, because you can actually get some really, really good deals off of that.   And what I mean by it is real estate investors have always told historically, have told their buyers in the past couple of years. If your mark, if your property is on market for over two weeks, people might think there's something wrong with that. And so, you know, we're going to ask for offers on X date, right, like X date and two weeks, or maybe we'll do one week, we're going to ask for offers. Well, if they've missed priced the property, you might be able to go in and you don't know this, but you might be the only offer because they priced it way too high, because we priced it from a purchase price from two weeks ago. And now that has suddenly changed like the market changes every two weeks, it really is. And you could go in and get a great deal. And so I think from from that perspective, there are still fantastic deals out there. But you have to be patient. And some of it will be that luck, where you get the right deal, though what else has gone into, and you can go ahead and purchase that.   So if you put yourself in the other shoes, you might see that you also see a lot of people you know why I don't think it's like 2008 and 2009 is people have a lot more equity in their properties because one value values have gone up. And then two, the interest rates were really low, people could afford more put more money in the market was booming. And so what we're seeing is that more people have equity in them. And at some point, it's emotional for someone, they're like, I just want to get rid of this asset, because I'm gonna go buy another one, or I just really want to move out of the city and move somewhere else. And, you know, to them, maybe 20 To 50 to $70,000 is not a lot depending on what it is. But that is a lot to you. And that changes, changes the numbers on your spreadsheet significantly.   And so I mean, with that purchase price, obviously that matters. But just because the price is out on the market for a property doesn't mean that the price is going to sell for. And so it would be a really good time to go out and experiment with that you will know your market better than anyone else, whatever market you're in, because it will take you bidding on like five properties. And maybe people will laugh at you like your first one, you go like 20% under and they laugh at you. But maybe you get lucky on the fifth one, and you'll get a great deal. But yeah, just follow the numbers in your spreadsheet don't have a purchase price, that doesn't make sense and you're not cash flowing. Or don't change the interest rate hoping that it will go down to that to that amount.   Michael: Yeah, that makes total sense. And speaking of spreadsheet numbers, are you seeing a lot of your investor clients that you work with adjusting their expectations around cash on cash returns? Now that prices and interest rates are up?   Dana: So not really I think most investors like most of the savvy ones we work with, we work with his sort of two different types of of customers, those who had properties just handed to them. And they actually never did the analysis like pan downs from parents and things like that. And then others   Michael: Accidental landlords.   Dana: Accidental Yes. And then others who are very strategic real estate investors and what we have found with them as they have the capital and they might not be they might be with inflation to your point Michael being like, Oh, maybe I should just go buy something because the dollar today is worth less On tomorrow, but no, I actually think most real estate investors are still saying, this is the deal that I got, historically, I want to get something like that. And so they're not changing those expectations on cash on cash return, but they might be going somewhere else. So they go to Roofstock, and they say, Okay, I, you know, couldn't find this property, you know, in my backyard, but on Roofstock, they do have the cash on cash return that I that I that I targeting. And so I do think they're not changing their expectations. But they are going out and finding alternative ways to get the numbers they need.   There's one case, Michael, where I find people change their expectations. And it's first time real estate investors to just get their foot in the door. And I'm actually okay with that. I think that there's too many people who, and for anyone who's listening to this, who doesn't have a real estate investment, you kind of sit there and you kind of fantasize about getting one and then you put so much like anxiety into getting your first property. And once you have your first you're like, oh, okay, that's what I got, here's what it is. And it makes it easier, where then you can go and purchase more properties and more properties. And you know, what you're looking for, and you know what the return was, and you have this process set up.   But the first one is really difficult to get into. So I find that those people today are changing their expectations, for certain metrics just to get into the market, before it's too late. Interest rates go up more, or you know, they're kind of kicking themselves that they didn't get in, you know, four years ago, five years ago. So I only think it's first time real estate investors where that's happening. And I'm actually okay with that. Because I think if you can get more people into real estate investing, and more people to just get their foot in the door, you're going to learn so much off of that first property, that then you're going to say, Okay, this was my cap rate for my first property. My next one, I have to at least have that or better and you kind of improve, you know, it's kind of like dating, you never like you don't date someone who's great. And then like the next person is like a downgrade, you kind of have the standard. And you're like, I can only go up from there. It's the same exact thing with real estate investing. So I really think it's only first time homebuyers where that happens are real estate investors for rental properties?   Michael: Yep, I think and I think that makes tons of sense. It's something that I hear all the time. It's Michael, I'm trying to get my first deal done and has to be amazing. And you know, it has to be a Grand Slam? Like? Don't worry about the grand slams, let's practice getting on base first. And then you'll know how to swing for   Dana: Exactly, exactly. And it makes it a lot easier when you have one property in that area. You know your market a bit more, and then you can kind of purchase some more around at.   Michael: Yep. Yeah, I think it makes him think that's totally right. And so Dana, we're kind of at this like crossroads where we're talking about, some investors are pressing pause on their acquisitions. And then this whole other cohort of investors are like, Oh, crap, I gotta get into the market before interest rates go up further before prices go up further. So it does feel like there's this pressure to buy or there's frenzy to buy, on the one hand, and then there's this whole other group, that's again, kind of taking a step back and saying, let's, let's wait and see what happens. How do you square those two?   Dana: Well, to me, I'm like a pretty unemotional real estate investor. And I feel like for anyone, whatever segment you fall into, you still have to go back to the numbers and see what makes sense. And so I mean, is there a right way to go? I think one people who are not going out, and they're using this as an excuse not to purchase properties, or just being lazy, honestly. And for those who are out there saying, I gotta get in and get my next deal. I think they're almost too emotional. Where they might go in and change the numbers to your point of saying, like, oh, it's not, you know, my last deal was was better than this, but I just need to get my foot in the door. Maybe that's not the right approach to have, it's, Hey, there's gonna be a deal out there. I might have to be a little bit more patient during this the for the next three to six months, I have to be patient, I have to understand what's going on.   But yeah, I just kind of go back to the numbers. I think in both cases, they're they're taking emotion and what's happening in the market and using that, like the macro for the micro. And instead of saying, You know what, I know what is a good deal, here's what it looks like on paper. Let me continue to go search until I find that and it might take you a little bit longer to find it. Or you might find a process like oh, wow, I can, you know, go 20% under and get lucky on a deal off of this, whatever the home price is, I could, you know, undercut them and give them an offer and maybe they'll take it to get that great deal.   Um, But I don't I think both categories are bad. I think someone who says I have to get my foot in the door. Before interest rates go up is emotional. I think someone who says there are no great deals out there are just lazy. And so I kind of fall somewhere in between of saying, yeah, just be financially prudent as you always should be with your real estate investment investments, know your market, know what numbers numbers you need, and make sure you're a little bit more conservative. Like, I know, a couple investors with adjustable rate mortgages that did them, you know, back when interest rates were really low. And I bet they feel pretty stupid right now. So   Michael: we won't name names,   Dana: Won't name names here.   Michael: Well, I'd be very interested to meet the the emotionally lazy person, because it sounds like those are two opposite ends of the spectrum. Yeah, I have to see. Okay. And last thing that I want to ask you about is around expectations. If someone is newer to the investment space, they may be looking to get their first deal done. Everyone around them, their sister, their brother, aunts, uncles in this market are making 10% cash on cash. Yeah, pick a number. Nice round number 10%. And they're like their expectation was was 15%. Right, for whatever reason, that's what makes them tick. That's what gets them excited about an investment. Everyone around them is making 10%. So how the how should investors be thinking about not looking at other people, and just focusing on what's good for them, but also not being blind and naive to what a market is really able to produce? In terms of In other words, like, they I want someone to be excited about the returns that they're getting, but I also want them to be realistic. How do you kind of how do you?   Dana: So the biggest thing I would say to throttle that is, most likely you've sort of selected a market because you've looked at, okay, where is and I mean, Roofstock does this for you, and you guys, I think have some great shows from like every single market of why why you guys are looking at a certain market. So that helps. But you as a real estate investor are gonna say worse population growth? And why like, is more industry going there? Like maybe an Amazon facility was just put into place? Does it have fed, ed's and meds? Like, is it stable, even recession proof, especially now? So you kind of go through and figure out why am I excited about this market? And you just start there? And like, don't forget about your, I mean, 15% cash on cash return? Like, let's just forget about all of that and just go through? What looking at macro, and now we're kind of going to micro to like city level?   Why do I think this is going to be a lot a good market in five to 10 years, because you're going to hold on to these properties and purchase more, right? Do that first, then you say, Okay, this is my market, then what you're going to do is for two to three months, you're going to look at all the deals there, go on Roofstock, I think you could set up alerts because I have those that go to my email that essentially like tell you here's a new property in that market, great purchase. Um, you're gonna go through and you might the first couple of properties, say you know what? Those, those don't really hit my cash on cash return expectations, but now you're starting to know your market and you're gonna see a trend, are they going up? Are they going down? And you can look at that over time to make an unemotional decision that is based on data.   I think that is the most important thing to do. When someone gets in this frenzy of I need this cash on cash return shoot, I'm not going to get it. So I'm just going to slash it. And I'm going to say now I need, you know, seven or 8% I and you're just becoming emotional. But if you go through look at the numbers and you say okay, great, I wanted 15% You know, my friends are getting 10% I'm and you're you change those expectations. And suddenly you say, Okay, I made this decision, and here's my cash on cash return. But I knew at that time, that was the best I could do. Because I looked at the data, then suddenly you never go back and wish you had done it differently. Because you have something that is non non emotional to back you up. And don't compare yourself to other real estate investors. I've seen real estate investors in the past four to five years who've been super successful, who are super stupid.   And the reason they were successful and I hate to say that but like there's so many people out there because basically it was free money like there was so much investment it was there was so much easy money from investors that I saw way too many people also going into real estate. A lot of actually on the fix and flip side that just got lucky because yeah, money was basically free to do a fix and flip and a The home prices were going up astronomically. And they feel like they're the smartest people in the room.   Well, maybe they were at that time, but like, give it two to three months, maybe six months, and the story might change. And so that's why I think it's hard at like one point in time, if you're just getting started to compare yourself to those around you, I don't think you should do that. I think you should just be financially prudent, and make sure that you're not overextending yourself. And you know, your market. And you know why you made the decision, you see you did, and it's all based off those numbers. And it's based off the numbers, but also you need to know the market, like you need to know you guys have neighborhood scores and ratings, that kind of stuff of like, here's why I only invest in neighborhoods that have three stars, or greater, or whatever it may be like it, write all of this stuff out, and take a really methodical approach to your assets, your real estate investing, and I don't think you'll regret it. Like, I don't think you're gonna go back and say, Oh, I really wish I would have gotten that 15% I targeted?   Michael; I think that is like spot on. Thank you so much. And if you missed it, if you missed any part of that, go back, rewind the last three minutes, and listen to that again, cuz I think that's a lot of gold in there. Then this was super fun. As always, if people want to reach out more, find out more about you or hemline. Where's the best place for them to do that?   Dana: Yeah, you can go on to Roofstock when you purchase a property, how many will be listed as a property manager? So go go ahead and do that. You can also go to Hemlane.com. And my email is dana@hemlane.com. So I love hearing from people.   Michael: Awesome. Well, thank you again, and very much looking forward to having you on. Again, I'm sure take care of we'll chat soon.   Dana: Great. Yeah, I'm excited in six months for us to see if we were if we stand corrected on what's going on in the market.   Michael: I know it'd be very interesting. Well keep close tabs on it.   Dana: Great. Thanks so much for having me.   Michael: You got it, take care.   Okay, everyone, and that was our episode A big thank you to Dana for coming on as always big friend of the pod as we were saying at the beginning of the show. As always, if you liked the episode, we'd love to hear from you all with a rating and review and we look forward to seeing the next one. Happy investing

Rich Fettke has a passion for helping people improve their businesses, grow their wealth, and live more fulfilling lives. He is the author of The Wise Investor, Extreme Success, and the audio program Momentum. Rich is also a co-founder of RealWealth®. Since 2003, the company has helped over 60,000 members improve their financial intelligence and acquire cash-flowing income properties — so they can live life on their own terms. As a licensed real estate broker and an active investor, Rich was selected as a Rich Dad Author for his expertise as a Wealth Mindset Expert.   The real estate industry is not easy for everyone to jump into. If you have just gotten your real estate license and feel you need extra support before getting your feet wet, or if you are an experienced agent looking to take it to the next level, you may decide to get a real estate coach. Rich who is a coaching mentor and investor will discuss the value of having a coach and mentor and what you can expect to find in his new book.   Episode Links: https://realwealth.com/ https://realwealth.com/the-wise-investor-book/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by Rich Fettke, who is an author, investor, coaching mentor, surfer, among many other things, and Rich is going to be talking to us today about some of the mistakes he seen investors make the value of having a coach and mentor as well as what you can expect to find in his book, which is soon to be released. So let's get into it.   Rich, what's going on, man? Welcome to the Remote Real Estate Investor. Thanks for hanging out with me.   Rich: Good to be here. Great hanging out with you.   Michael: Super excited. So before we hit record here, you and I were chatting a little bit about some sports where you both share in common, but I would love if you could give our listeners a little bit of insight into who you are, where you come from and what it is that you're doing in real estate today.   Rich: Sure, absolutely. My name is Rich Fettke and yeah, interesting. The way we got into real estate investing, I'm an I'm an investor and my wife and I also have a company that helps investors but that was what really got us into it was despair. It was about it was exactly 20 years ago, I was on top of my game, I had a book deal, just signed with Simon and Schuster. I was a business and personal coach had a thriving coaching practice, I was giving keynote speeches all over the country. It was like I was just crushing it and I felt so good. I was 37 years old and then I was diagnosed with melanoma, which is an advanced skin cancer but that's not the biggest deal is that they thought it spread to my liver.   So they had me do a CT scan and ultrasound and it kept showing these masses on my liver and so I met with an oncologist and he said, you know, it looks like you got about six months to live and we had a 10 year old daughter. Yeah, it just rocked my world, I had a 10 year old daughter, a three year old daughter. My wife is amazing but she was a stay at home mom and so she was freaking in the sense of what am I going to do financially if Rich dies and so she started to she had a as a coach, we were doing things together, she was also a trained coach and so she had this small radio station in San Francisco that she used to do a radio show on about all areas of life being your best self and personal development and all and she said I gotta figure this out. So she started to help people on that were financially successful, and was interviewing them about how do they create wealth and how do they create financial success and most of them turned out to be real estate investors. No surprise, so she came home all excited. One of them was a mortgage broker and he said, if you get your license, you can come become a mortgage broker. This is about 2003. So you know, things were still the mortgage world is pretty easy back then. So she went and did that. In the meantime, we figured out I had a PET scan, which is the most advanced scan for cancer, and it showed me cancer free. So it was just it was a false diagnosis. It was just hemangiomas little clusters of blood vessels on my liver but that was enough for me to go for those three months of not knowing if I was going to be alive, it was enough to give us the kick in the butt to get out and, and make things happen. So Kathy, and I see after that after I was healed, we started to invest together. We bought a bunch of properties in the Dallas, Texas area and it just took off from there and then Kathy started to help other investors with their mortgages. We had a bunch of friends and family saying, tell us how are you doing this? We you know, how are you doing this out of state investing and so we started we formed a group that we thought would be just a small group of family and friends and people that listen to the radio show. We thought it'd be a couple 100 people and today it's over 64,000 members now at real wealth that we're helping invest.   Michael: It's pretty amazing. Richard, good for you guys, so I I'm curious in your coaching business before you got diagnosed, did you ever come across real estate investors?   Rich: That I coached? Yes. Yeah and my mindset was, I want to invest in real estate someday when I have enough money and so and I was thinking I needed, you know, several $100,000 you know, to buy that first rental property or first investment, not realizing the power of leverage and how much banks love to lend money on real estate and so that was that was the eye opener for us.   Michael: Okay, I love it and what made you go remote? I mean, you're in California and your wife live in in San Francisco. Why did you pick to invest outside California?   Rich: Actually Robert Kiyosaki. It was she because Kathy was on the San Francisco radio station she was and it got bigger and bigger or she was able to attract some pretty big names and then this guy who had just written a book called Rich Dad, Poor Dad, not long before that, and he had this cashflow game that he was promoting and we had a friend who was his distributor for crypto cash flow game back in the day and so he was on the radio show, and he warned Kathy's listeners to sell their overpriced California properties and to invest in Texas and so we took his advice. Not we didn't sell all our expensive property, sadly, because 2008 crushed us with our California properties but it was, you know, he just saying for cash flow and what's going to happen, he was currently kind of calling out what was going to happen in 2008-2007. That's what sent us out of state.   Michael: Love it. So you also recently have written a book, haven't you?   Rich: Yeah, I just finished my second book. 20 years later, well, I have an audio program back then, too but yeah, it took me 20 years to write my second book and it's called the wise investor and it's a lot different than my first book that was mostly coaching focused. It was a nonfiction, basically a personal development book and this book is a modern parable. So it's story forum, and it tells a story of creating financial freedom and but also living your best life.   Michael: That's awesome and why did you decide to write it?   Rich: Interesting process, you know, I've had my own coach, to walk the talk to over the last 25 years now, I started coaching 25 years ago, and this coach that I that I still talk to every week, or every other week, now, he kept kind of he had read my first book, so he's always kind of knocking on me saying, when are you going to write your next book? When are you going to write your next book and I was like, I'm too busy running this company, you know, we have 27 employees and but then what we did is we applied story branding to our company. Are you familiar with that story branding?   It's a guy named Don Miller. He wrote a book called Building a story brand and it's all about basically telling the hero's journey, Joseph Campbell's work, using the hero's journey, just like great movies, do great books do weaving a story where your customer is the hero, and you are the guide. So the company is the guide, you help your customers and so we changed everything on our marketing around that, and how we served our members as being the heroes and I just got into this whole storytelling thing. I'm like, this is fascinating the structure of how to write a story, a compelling story that engages people that elicits an emotional change all that and so one day when in a coaching session, I said, you know, if I was going to write a book, I'd probably tell a story and then he heard that and you just like, What do you mean, tell me more and then that was the spark. So then then I get obsessed with it and I'm like, I could write a parable about what I've learned over the last 20 years as an investor, what I've learned in the last 25 years as a coach, yeah, and kind of weave them together into a story.   Michael: How cool and without giving away too much of the book. I mean, what could people what should people expect to find when they when they get a copy?   Rich: Basically, it's about this family, man, his name is Ryan Brooks and he's like a hard worker. He's got a wife, he's got a couple kids, and he's making a decent six figure income maxing out his 401k but he has no time for his wife or his kids or even his life and he's not investing. He's basically what we call today, Henry, right? A high earner, not rich yet. So he's…   Michael: I love it.   Rich: Yeah, they're out there does a lot of people you know, especially in California, where I'm based, and that make a lot of money, make a good income, but they're not rich, they're not wealthy, and they're not investing their money. They're spending it on things and so this guy is, is in that same trap. So he just starts to learn from he meets this new friend and mentor, who takes him out on adventures. Of course, it takes him out climbing takes him out mountain biking in in the sessions, when they're having fun together. He teaches him about investing about how wealthy people think, how rich people operate, and how and how poor people operate and think and he really goes over the difference between, you know, truly wealthy people, and people with a lot of money. He even says, you know, I know some people who are so poor, all they have is money and I see that in Malibu, you know, where I live there's a lot of has a lot of money and some of the people are really stoked and really happy and getting the most out of life and investing their money at some of the people are grumpy and miserable and, you know, that's rich in money but not in life.   So there's a lot of lessons about helping Ryan Brooks and his mentor walks them through this on how to invest how to how to really look at life through a different lens. One of my favorite things a mentor says to his mentor is about assets and he just kind of puts it in a different frame. He's like, you know, assets is are anything that will provide you income, or better health or happiness or two time and liability is anything that detracts from your income, or your health or your happiness or your time. So it's kind of a cool that type of perspective is this mentor is like, he's the me I hope to be in the future. He's that in that wise investor who's you know, he's got it all together, he's got this sage advice. He's very stoic, but he shares these lessons. So it covers the journey of five years of when they first met, and Ryan Brooks is struggling and just doesn't know what to do and it shows five years later, what happens and how he becomes wealthy in more ways than just money. I love it in money, too.   Michael: I love it. I love it enrich. Where can people find the book?   Rich: It's on Amazon, all major booksellers, published through Rich Dad advisors. So Robert Kiyosaki wrote the foreword for me, which I'm very grateful for… Come full, full circle, right.   Michael: Totally.   Rich: Yeah. So it's on Amazon. It's called the wise investor. Subtitle is a modern parable about creating financial freedom and living your best life. I got the cover right here. So it's out on eBook. This is what the cover looks like. Perfect. So it's out on eBook. But the printed version, the hardcover and the audio book won't be out until August and it's because of just like real estate supply chain issues. There's not enough paper at the printers, so it's a long wait six, seven months now to get a book printed.   Michael: Holy smokes…   Rich: Isn't it wild?   Michael: Yeah, okay. Well, I'm interested, get your order in now, because it might be a while.   Rich: Right, yeah. So hopefully it all comes out in August. Hopefully it comes out earlier in August but yeah, and the audio book was, that was a fun challenge for me. Big goal, because, you know, it's a story and there's 10 different characters, females, older people, young kids, so I had to become, I had to learn some voice acting skills over the period of a couple of months and really practice it. Oh, how can I think I pulled it off, we'll see how the reviews are.   Michael: Right on. That's great. Well, Rich, I'm curious to get your opinion on something because you're a coach, I will also work as a coach and there are folks out there that say you can take the horse to water, but you can't make him drink and so thinking about kind of the Henry's out there, and I think a lot of our listeners might find themselves in this boat, too. They have friends, family, folks around them that don't get real estate investing, right? I have a six figure job, I got a great job, why would I bother investing, I can make more money at my job. So what do you say to all those people and really, how do you position investing in general or real estate investing specifically to the people that think they haven't really good as things stand?   Rich: Yeah, I mean, first of all, you know, as a coach, I'm going to help point out what is good first, you know, this is the way I coach, the gratefulness piece and, you know, it's like, well, you know, be stoked on that six figure job, or whatever it is and it's about creating freedom and so many people don't have that freedom and that's what the Henry's don't have. If they have a short runway, if they stopped if they lost their job, which we've seen happen, they don't have many months left of cash flow, to be able to live their lifestyle, or any type of lifestyle. So that's the biggest thing would be that, do you want to create freedom for yourself, and not have the stress of losing your job, or wanting to move to a different job, if you're not loving what you're doing, a lot of people stay trapped, struggling, just trapped in their jobs, because it's like, this is my income, this is the way this is what I need to make ends meet. So that's the biggest thing, it's really about having your money, make money, so you can create freedom in the future freedom of time and everything. I think that's the biggest one and then so then flipping on the other side, there's something too about America, in the world that we are preprogrammed.   When we think invest, we think stock market and you know, I have nothing against it and Kathy and I are and my wife and I are invested in the stock market, but our major focus and the big aha, back through that story is, you know, we were doing that we were contributing to our IRAs and, you know, doing everything we were supposed to do investing in the stock market. But when we learned about leverage the power of leverage and how you can like 5x your money, just through the power of leverage. I mean, that's a standout and that's one of the lessons the mentor goes over in the book. He, he has Ryan compared to say, say you have $200,000 to invest and you invest 200,000, and gold, you put 200,000 and you buy, you buy maybe 400,000 in the stock market on that, you just leverage it and then you invest that same amount into real estate and then he kind of plays it out over five years, and over 10 years, sorry. So he's like 10 years later, and he said, so how much would the gold be worth at the same appreciation that's gold has been at and they look at that outcome and he said, oh, now let's look at your stocks and he looks at that. It's like good, he's got a decent return. Another investment, you know, he's got home and he's like, almost tripled his money but then the real estate, he looks at it, and he's 5x his money and more and then he's like, and that doesn't include the cash flow. It doesn't appreciate all the depreciation write offs and the tax benefits. So it's kind of like an eye opener to be like, oh, wait a minute. Now I see the, you know that the angels sing about investing in real estate and all those amazing, amazing benefits.   Michael: Totally, totally. Yeah, that makes that makes complete sense and curious, rich to get your thoughts on when looking for a coach because I think that that's something that some people have trouble wrapping their head around, it's like, oh, I you know, I don't have a coach in life and so I would never be inclined to go get a coach or pay for coaching and so if people are inclined to do so if people are okay, accepting that, what are some things they should be looking for when selecting a coach, or a mentor or whatever, you'd have someone to help walk them through their journey?   Rich: Yeah and that's a great question. It's like, I'd actually like to start step back a little bit, because you said what if they want to coach I would even go as far as there's a lot of people that I meet who say, Why do I need a coach, you know, I can hold myself accountable. I, I know how to set goals. I know how to go after what I want and everything in so why would I… Yeah, like you said, Why would I even pay someone or do anything like that and it's, you know, it's that age old metaphor or an analogy of an Olympic athlete, right? Did they get to the Olympics without a coach? No, you need someone to point things out. So for me, I know the power of coaching has been incredibly amazing because I have a coach to basically hold up the mirror to ask me the questions that I'm not asking myself, to help me look at myself and be like, you know, asking those tough questions. How are you operating? Are you being your best self? Are you, where are you getting in your own way? What's that inner Gremlin in your head saying to you? What's your limiting beliefs and what are you going to do here, what and look at new perspectives, new ideas. So there's a power in that, that it's called, I'm certified in CO active coaching, which is two people, you know, when you come together, you come up with ideas that you neither would have thought about their own? So that's another powerful piece of coaching. So that's, that's the first part of my answer and then the second part is, when you're looking for a coach, I think it's really what you're looking for.   So are you looking for a mentor, which is I think, different than a coach, a mentor has kind of been there, done that, just like the mentor, and in the book I wrote, he's been there and done that. So he can say, if you just do what I did, you will be where I am, which is awesome, and very valuable and that's a mentor and I think some people are looking for training and consulting, where they sign up for a coaching program. But it's more about teaching to learn a specific skill and that's very valuable to so and then the third one would be looking for a coach who's more like that coactive approach where it's someone who I first shared, and what I've gotten from coaching is someone to ask the most powerful questions, someone who's intuitive, someone who can really help you shift your mindset and be your best self and operate at your best self. So that would be a another type of coach or a peer coach in my eyes and sometimes it comes together, you know, I'll say to my clients, do you mind if I throw on my consulting hat right now or my mentoring hat? So they know that I'm stepping out of that coat peer coaching role and be like, you know, I've invested in real estate for a while I can give you some advice here, I'm not going to have you, you know, go and search it and try to learn it elsewhere when I've got it right here, and I can share it with you. So I think that's it, it's like looking for what is it that you want? What are you looking for and that would be the first thing and when I was interviewing for a coach and looking for I've had several coaches over the past 25 years, when I interview a coach, I'm always coming from the place of like, what's the vibe? What's it feel like to be coached by this person?   Do they? Do they ask powerful questions? Are they really hearing me and are they into my vision? You know, I think the biggest thing would be connecting with that coach, and really, really noticing, like, is this coach, really seeing my vision? Do they really get me who I am and what I want what's going to help me be fulfilled in my life, and in my career, and it's just a sense thing. So you can get that sometimes you you're talking to a coach, it's like, oh, this guy's or gals just coaching for the money, you know, just looking for another client. Sometimes you talk to a coach, it's like, wow, this person is really like, wants to coach me on their ideal client and so you can sense that   Michael: Interesting and how should people be thinking about it for themselves? If maybe they're not sure if someone is just getting started out in this journey, they know they want to invest in real estate, that's the goal but they don't know how to approach it to the to coaching and mentoring a consultant. I mean, what are some questions that they could be asking or things they could be thinking about, as they're starting?   Rich: That process gets great, I mean, experience, I would ask for experience and you know, I think it's great, you can find you can definitely find a coach, you know, or whatever they call themselves. They might call themselves a mentor, but it's like asking those questions. and talking to that person, just you know. So here are some of my goals. I know that you invest in real estate, can you tell me about your real estate background? What's your investment, investment philosophy? What have you invested in and I would even ask the coach, you know, what's been your biggest challenge your biggest failure as a real estate investor, you know, get see how vulnerable and real they are and if they're willing to, you know, to share that, and what's been your biggest, you know, what's been your biggest win as a real estate investor and what's your greatest strength? So I would ask some of those questions of a coach and then also like, what's, where do you I mean, real estate investing so broad, right and so it's like, what do you specialize in? What do you know best? When it comes to real estate investing?   Michael: Yeah, I love that. You mentioned tell me your biggest failure, biggest flop. I had a mentor back in the day, and he said, I don't trust anybody without a limp. Yeah, because like the people that have only had successes don't know how to do save no right to ship when things go sideways, and they will go sideways.   Rich: They will, they will. Yeah, I know that people who got into real estate in 2010-2015, who are just, you know, knock it out of the park, and they think they're, you know, superheroes. Sometimes I'm like, oh, careful, careful   Michael: We are all superheroes in this, you know, the last decade.   Rich: Exactly. Yeah, yeah.   Michael: So Rich, talk to us a little bit about what you've seen. Some of your coaching students or mentees get right and what have they gotten wrong because you really we have the beauty of hindsight now…   Rich: When it comes to investing, specifically?   Michael: When it comes to investing specifically…   Rich: Yeah, wrong and it's the same mistakes that Kathy and I made too. And it's that you try to talk people out of it and it's like buying an overpriced property in a non-landlord friendly state that is maybe slightly negative cashflow, or just breakeven, and they're looking at and say, but look at how this is appreciating in five years, it's going to be worth this much and it's like, no, so honestly, that's the biggest mistake I can see and I can see it in single family all the way up to multifamily. You know, just speaking at these conferences and meeting with a lot of people are doing multifamily. They think they're superheroes. They're doing this short term, short term lending short term loans, and bridge loans and really dangerous stuff at this time in the market because it's what's worked in the past and they think that they just like, Well, yeah, it's like, I know, this is a I know, it's only a you know, 2% cap rate, but that's okay because, yeah, just a one in three years… Yeah, exactly, so there's something there's something about, there's something about that. Yeah, it's just it's fundamentals, I think that's what it is, is comes down to investing fundamentals and that's what we preach at our company. It's how we help our investors, it's just really coming back to the fundamentals. Make sure you're doing it right.   Michael: Yeah, that makes sense and what about the other side of that coin for the folks that you've really just seen knock it out of the park? What are they doing and you can't say the fundamentals, you have to pick a different answer go?   Rich: That's great. I love that. Agreed, yeah, what value is that? Really, it's the people who, what I've seen, it's the people who take the long term game plan to the boring investors, the ones who are not trying to do this rapid growth, and trying to 10x their portfolio or 20, exit, or whatever it is. So it's keeping that long term perspective and just, you know, making sure that you can control the properties through any type of downturn and so the lessons learned that that, you know, being going through the whole recession, the Great Recession, and the whole mortgage meltdown, and all that big lessons came from that and so that it's the people who take out long term, continuously reinvesting to so it's like, you start this small, small portfolio, whether it's passive or active, and then you just start expanding and expanding and expanding it and I would say, it's the people who focus on the overall cash flow, not just I mean, brink weaving into appreciation, but looking at it, like five years from now, this is what my portfolio will most likely be doing based on everything, even if there's a recession, or whatever and then looking out 10 years and looking at it 15 years.   So it's that big picture and then reinvesting. The opposite of that would be someone who's I have some friends who were only flipping, so very transactional, and they had to find the properties either flip it and that's where their income was coming through into constantly flipping it and they adjusted the wise ones and the smart ones adjusted and switch to the bur stead strategy and so they started to find these properties, fix them up, but then they would hold them and rent them out and now they're the ones that have amassed a good amount of wealth, whereas the other people who are flipping are still in the transaction game.   Michael: Yeah. Ah, that makes sense, that makes sense. Okay. We've had a pretty good debate on the show over episodes about something called an alligator, which I don't know if you know Michael Zuber at all he's an author of one rental at a time. He's a good friend of the podcast, but in his definition alligators any property, that's negative cashflow, you have to feed it every month to keep continue owning it. So as you're talking about big picture, are you okay? If you say for instance, take out a cash out refinance a property to make that property a go negative, but to buy property B and now your global cumulative cash flow is greater than that a property a alone.   Rich: I'm in the camp of no, don't, do not no, no negative cashflow and negative cash flow and I'll be completely honest and transparent that the house at Kathy and I were in in Malibu before this, we bought it, we fix it up, we bought it for $747,000 in Malibu, which is rare, hard to find, it's like unheard of. Yeah, it was like it was a one bedroom, one bath built in 1927 and we had to completely gutted it and rehab and we put about 300,000 into it and then we didn't get permits. So we got busted in that process and now there's still a lien on title from LA county building department and so we can't sell that place and we can't even get a refi until we get those liens off title and get it all permanent everything which is a, that's a whole different stories…   Michael: Trying to get us to do an entire podcast series…     Rich: Coastal Commission and all that stuff. So oh my gosh, so we have a tenant in there and it's slightly cash negative cash flow. So that's like 150 to 200 a month negative cash flow.   So being completely honest, we do have a negative cash flow, it drives me crazy and that house has gone up probably $400,000 over the last couple of years in value. So we could look at it that way. But we can beyond that everything that we hold is positive cash flow, even if it's just like $100 a month positive. That's fine and if we're going to do a cash out refi we make sure that it's appreciated enough where we can do that cash out refi and not have the loan payment, PTI go over what we're gonna get for rental income.   Michael: Yeah, makes sense. Well, I appreciate you sharing the misstep and the vulnerability here on the show but it wasn't intentional, that was just a series of consequences. That hadn't be negative. You wouldn't you would intentionally do that.   Rich: Yeah, we did bring it on ourselves and but yeah, wasn't intentional. We didn't want to get caught.   Michael: I've played that game before, too. It's a risky one.   Rich: It is. Yeah, so you're always looking out the window and yeah…   Michael: Who is coming in, roday gonna be the day get caught o maybe tomorrow?   Rich: Exactly. When we were almost done. We were building the final deck in the back and all of a sudden, this building inspector shows I'm investigating you because one of your neighbors called…   Michael: I was gonna say but it's probably one of your neighbors.   Rich: Yeah, because it would make the cut and concrete and it was so loud or for the whole week. I think it just drove this neighbor crazy and so it is what it is.   Michael: As soon as a quick aside one of the other hosts on the show with me, Tom he, one of his neighbors called on him he was adding an offer a small prefab office in the backyard of his property. neighbor called he gets in trouble. Same thing didn't pull permits. So now he's going through that whole rigmarole. But the funny part is the neighbor that called Tom found out that their fence is on Tom's property, it's on the wrong side of the property. He's like, thanks for calling and alerting me to that little fact.   Michael: Unbelievable.   Rich: So he's, he's playing that game. How do I how do I want to you know, play my next hand?   Rich: The revenge game…   Michael: That's it, that's it, best served cold on ice. Okay, Rich. Let's wrap up here. I'm curious to get your thoughts. We are in this very unique time in our economy in our market in this country and I'm just curious to kind of get your thoughts on what are you doing, personally as an investor and what are you doing in your business and what are you telling your students to do, as well?   Rich: Absolutely, yeah. I have the benefit of being married to Kathy Fettke, who has been around for a while she's on the on the market podcast on Bigger Pockets and so she's constantly doing her market updates every year, she does predictions and has done that for the last 15 years and then at the every quarter, she doesn't investor update and at the end of the year, she puts herself on the line says okay, here's what I predicted back in January. Let's see how accurate I am and yeah, and she's been really good. She's like almost 95% on her predictions, which is awesome. So I just listened to her. You know, she's always interviewing experts and she's connected with like John Chang from Marcus and Millichap and so many just, you know, experts, as I said, with Kiyosaki and all that. So what she's saying I'll just speak, you know, because I get to hear through her office door when she's doing all her interviews and everything she think He said interest rates are not going to go up that much more, maybe even dip a tiny bit for mortgages, and then maybe level off.   But even though the Feds gonna keep raising the rate, the lender and great mortgage rates can't kind of withstand that going up too much. So she thinks mortgage rates are going to hold around where they are and then there's such a glut in such a need for properties and not enough inventory. It's like a whole different world than 2008-2009. So yeah, I think we're, it's estimates are between three and 5 million homes shy right now, for housing units. So inventory still low and also, there's that whole thing where people are locked into these amazing interest rates, so they don't want to sell. So they just, it doesn't make sense to sell something and when you got a 3% mortgage or lower and go into a higher mortgage, so the real estate is gonna hold strong is what she's predicting, it's even going to increase a little bit rents are even going to increase a little bit surprisingly, even with, with the economy and inflation, rents are still gonna go up a little bit, that's her prediction and then a recession will hit well, most likely, sometime around late 2023, early 2024 but it will be a mild one, just kind of more of a correction that that's needed.   Michael: Okay. Okay and does either her or you think that there will be any kind of pullback in demand as folks go back into the office or are we going to be seeing remote work kind of indefinitely, which I think was a big driver of that single family rental demand?   Rich: Yeah, that's a big one. Yeah and the cool thing is like, we have teams that are like the boots on the ground. So there's different 15 different property teams in our company that find properties and so and we just did a mastermind with them in Tampa, Florida and we spent two days and we really talked about all this exact same stuff. So it's, it's something around not like a big hit on it. There still will be some availability, but not much different than if you look at today's current market right now is not going to be a lot different than that over the next year and a half.   Michael: So for instance, we don't expect there to be much pullback in terms of demand. Dude, because we're expecting people to continue remote working basically…   Rich: There's definitely a return to the office. There's there are definitely companies that are saying no, it's time to come back now that we want to look over your shoulder, we want to hold you accountable and all that stuff. It's so funny, because it's like the surfing lineups are getting a little bit lighter thinning. So funny. Go Oh, it's like why are so many people surfing? Oh, they're supposed to be orange. They think they're working. Their bosses think they're at work right now. Yeah. So I'm seeing a pullback there. So that's my gauge.   Michael: So funny.   Rich: Yeah, but not as much. There's definitely, with so many people how they've learned to use Zoom and GoTo Meeting and being remote and all that stuff. It's we're in a new world, there's no doubt about it. So I think there's going to be a slight pullback on buyers and transactions and all that. As far as the rate, but it's still not going to it's not going to drop to like dismal levels.   Michael: Okay, sweet. Well, we will definitely have to stay in touch and see how you do how you and your wife do on those percentages. Rich, this has been so much fun, man. Thank you again, if people want to learn more about you want to learn more about real wealth, where can they do that?   Rich: For the book? Like I said, it's on Amazon or if people want to learn more, before they buy it, just go to https://realwealth.com/the-wise-investor-book/  and then our website is just simple, real wealth: https://realwealth.com/   Michael: Perfect. Alright, thank you again and I'm sure we'll be chatting soon.   Rich: All right, man. Thank you, it was fun.   Michael: All right, everyone a big thank you to Rich for coming on. Super, super insightful. I know I learned a ton as a coach myself in what to look for in a coach and mentor going forward as well. So as always, thank you so much for listening, and we look forward to seeing the next one. Happy investing…

Dana Dunford is the CEO of Hemlane Property Management and a real estate investor. In today's episode we discuss market conditions, interest rates, what is happening in the stock market, and what the current moment means for real estate investors. If you are wondering if it is the right time to purchase an investment property, you will want to listen to this episode. Links: Hemlane.com --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The remote real estate investor podcast is for informational purposes only and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum, and today I'm joined by Dana Dunford, co founder and CEO of Hemlane Property Management. And today Dana is gonna be talking to us about the state of the economy and some things that investors should be aware of and thinking about as we move forward in today's market. So let's get into it.   Dana Dunford, welcome back again to The Remote Real Estate Investor. Thanks for coming on and hanging out with me.   Dana: Great. Thanks for having me. Again, Michael.   Michael: Oh, my gosh, it is such a pleasure. You are great friend of the pod. Great friend of Roofstock. For those who might not be familiar with you give us the Quick, quick and dirty background of who you are. And background on yourself.   Dana: Yeah, so I'm Dana Dunford. I'm here in San Francisco. So just right across the bridge from rootstock. I have been in technology for gosh, now we're going on 18 years. So I'm a tech veteran, which we'll be talking about tonight, today, which I'm excited about. And on top of that, I'm in property management. So we're a tech platform for property management, and partner of Roofstock's. And we've seen what has been going on since q1, the market softening things changing in technology. So I think this is going to be a great call, because both Roofstock and Hemlane have seen it firsthand. And hopefully this gives some insight into what, what the upcoming year is going to look like for all real estate investors out there.   Michael: Totally. And just to give some people, some additional color, you are CEO, co founder of Hemlane, and you just did your series A, what was it q3 of 2021 or q4 of 2021?   Dana: Q4, so we raised at the perfect timing, those who are not in venture and the tech world of Silicon Valley. We couldn't have timed it better. You know, right now, and we'll talk about this today. Right now, the market is really softening. There's just less capital going into startups. We can't say this was people were already predicting this. So back in q3, and q4 venture capitalists were already saying, Ooh, there's a lot of money pouring into this valuations are really high. And some had already started pulling back. But it wasn't until what happened in the public markets, where you know, trillions of dollars were taken out of these Sass companies, valuations are overall the market cap, that suddenly the venture world that trickled down and people really started to pull back capital. So yeah, we raised back then roofstock, when was your guys's last raise? Because you guys are at a later stage. And so obviously, also impacted by this and quite, potentially, more significantly than us.   Michael: I think we got our term sheet squared away in in q4, as well. So right around that same perfect timing with money getting wired in coming in and in q1.   Dana: Yeah, perfect. So you guys will be able to weather the storm with that what we're going to be talking about soon here.   Michael: Yep, absolutely. I'm thinking so. Okay, so let's talk about how, like, how did we get here, because you're mentioning that trillions of dollars have been essentially taken off the table in terms of market cap. But for those people that aren't familiar with the space that haven't maybe been following along as closely, what like, where are we today? And can you give us some insight and background as to how you think we got here?   Dana: Yeah, so first of all, I believe most people on this podcast today listening are real estate investors. And so all of you hopefully got in when interest rates were super low, just artificially low, right? We never seen interest rates below 3% for so long. And one that was fantastic for real estate, right? You could get a rental properties at afford a higher price because your interest rate is much lower your loan. And then for startups and for companies money was much more free it was much more flowing. What we ended up seeing happen which most people predicted this would happen. But no one knew when or at least I haven't heard of any economists who knew this was going to happen exactly. We're in March, but we started seeing the inflation go through the roof, you know, 8.6%. And it's been consistent where we have seen the inflation rate really, really high.   And so the only way for the Fed to essentially combat that was obviously, to increase interest rates, which we are all seeing now are all seen in our real estate itself, doesn't mean there aren't great deals out there. So Mike, like, do you want us to talk about that, because I still think there's great deals out there that you guys have on the platform, and now could be a really good time to buy. So don't let that taint your decision of whether or not you should go into real estate.   But with that, as you know, when the Fed raises interest rates, consumer spending just goes down, that will probably people will spend less, and also things are more expensive. And so once you have that happen, the stock market's inversely correlated to interest rates. And so once interest rates went up, there was a correction in the stock market. Why it affects us on the private company side so much is Roofstock and Hemlane are both considered growth companies. And what happened was essentially, in the public markets, so any public company, there's basically two different types, there's growth, just like us, companies like Roofstock, that have gone public. And then there are value companies and the value companies are much more stable. They're based on their cash flow. They're typically larger, older companies, and their price is based on their sales. So their price is relatively low relative to sales, in companies like that, or like Bank of America, if you think about it, and RG like gas companies like very stable, steady businesses, where you're not going to see   Michael: Blue chip companies.   Dana: Yeah, your blue chip companies where you're not going to see, you know, 500% growth year over year. But what ends up happening is when the interest rates go up like that, and stocks go down, the ones that get devalued, the most are the growth stage companies. And the growth stage companies are companies like Roofstock, and heavily that are public. And so what we basically saw happen was this huge, huge cut in market cap in the public markets. And so for SAS company software as a service where you go, you pay a subscription every month to use a service, the market cap cap got cut by $1 trillion dollars from November of 2021. Until today, and so what that did was essentially, these companies thought they were worth a lot more.   And you know, some of them, like the stripes of the world, in the snowflakes had these really high revenue multiples, and suddenly, those just deteriorated. And the multiple based of what their valuation is versus their, their revenue went down. And that essentially trickled down to private companies like us as well. And so now when a company goes out to raise capital in q1, q2, primarily, now it's even, it's even worse. And what we're foreseeing in q3 is that you might have had a 10x, revenue multiple, so your valuation, it's 10x, what your revenue is, that's how it used to be.   Now you go out to a venture capitalist, and they're like, great, you're worth 3x, or 5x. So much lower valuation. And so what they're, they're expecting is a lot of down rounds, a lot of startup saying, If I can, let me just hold on to my cash, let me cut my bird, let me try to raise later and better times. And all of this impacts the economy, because it was the public markets that were hit. And now it's also the private companies where we are in Silicon Valley. And I do think this, this trickles a bit to real estate. It's it's a different type of market correction that we saw in 2008. In 2008, it was housing right and the mortgage crisis today, I think this is a lot more like the.com bubble. This is very similar to the.com bubble of these really high tech valuations that need to be corrected. And so when you think about purchasing real estate, I actually think that's why Roofstock is such a fantastic place to go. Because you're getting out of the tech scene, you're going to other markets and purchasing there.   Michael: It's so interesting. But then so I'm curious, we talk so often about in real estate that the price is only a factor, or it's only important if you're doing something with the property if you're buying selling refinancing, because otherwise you're just having a cash flow, and that often is independent of what the value is of the company, or excuse me, the property. So why does that matter? or for companies like the fact that there's the company is now worth less, unless they're trying to do something buy, sell, or refinance or raise, raise, raise capital, like, why does that matter?   Dana: So it doesn't matter for Roofstock. And it doesn't matter for Hemlane, because we just raised, we have enough capital to weather this storm. But imagine a company that raised and they had a, let's just give the case of like the stripes of the world 100x Multiple. And let's just say it's a private company, with 100x, multiple, and now they're going back out, and they're now getting a 10x. Multiple, they could have what we call a down round, where suddenly they are worth less than they were before. And that gives a lot less confidence. One the company itself, right? The amount that you're giving up as a founder, as an employee, as an existing investor, it's a lot more just to get in the same amount of capital you wanted to historically, in so what you're seeing is these companies really, really tighten the ship, and just say, Okay, we're going to stop hiring as many people, we're really going to look at our expenses. And that means there's not more money pouring into, you know, hiring 100 people every week, they're suddenly going back and thinking about who are the strategic hires, we really need? Should we be letting go? You've seen the massive tech layoffs where it's, you know, 20% of the workforce. And now suddenly, they're really tightening their books, because cash is king right? Now, you want to hold on to that cash? Because the last thing you want to do is go out and have a lower valuation.   Michael: Yeah. Okay. Well, that makes sense. And so talk to us a little bit about why this is affecting real estate investors or why real estate investors should even care about this that's going on?   Dana: Yeah. So I always think there's a huge opportunity when there's like the Warren Buffett, quote, right? be fearful when others are greedy and be greedy when others are fearful. I think right now everyone's scared. And there's a lot of real estate investors, like we actually just did a survey at Hemlane, where majority were saying we're not going to purchase in the next 12 months, because interest rates have gone up we should have gotten any year ago. Well, you know, the best time to get into real estate was 10 years ago, and the next best time is today, I think there's going to be a lot of great deals out there. I think that while others are tightening up, other investors are scared, this is a time for you to be really aggressive. I mean, still looking at your pro forma and and follow your numbers. But you'll be able to find some some great deals out there.   Michael: I've heard a lot of sentiment around, you can always change your interest rate, but you can never change your purchase price. So if someone is getting into a deal today, at an interest rate that's a little bit higher than they're comfortable with. But they anticipate interest rates to come down at some point down the road. What are your thoughts there?   Dana: Yeah, you can always refinance. I mean, don't do a deal hoping that interest rates go down, and you can refinance it or fudge the numbers on your spreadsheet. This is why   Michael: I was hoping that's what you were gonna say.   Dana: Yeah, like this is I mean, this is why I'm, I'm more conservative than most in every property purchases had a fixed rate. I don't do adjustable. But I can refinance, right? So I can always refinance. But I want to know what I'm getting into. So when you do your pro forma, do it with whatever the interest rate is now and consider it a huge advantage and just like increased cash flow, if you can refinance in the future, will interest rates go back to this like artificially low rate that we saw over the past five years, maybe not. But I don't think that is a reason not to purchase now. You do your numbers, and you look at it just because you might say property values are really high interest rates are going up, now's not a good time to buy. That's just laziness. Like, honestly, that's just you being lazy and not wanting to do the work.   There's always great deals out there. You just have to do the work, find them look at the numbers and say even with this increased interest rate, it's still a great deal. I'm still cash flowing and I've got a great cap rate, and you can go ahead and purchase. So I don't think of this as the time really to, to change your decisions on real estate. And part of that has to do with I think, you know, some markets will soften. Some markets may remain flat for a while but that doesn't mean that you're not getting the cash flow and having a great investment that by the way, with inflation where it is If it continues, having an asset where the value goes up with inflation, so I still think now's a great time to purchase real estate. And you might be able to get some fantastic deals as other investors are pulling out, you can really, really go in and get those great deals.   Michael; Love it. And Dana, I'm curious if because we've seen prices go through the roof, and interest rates have also gone up significantly, there might be a bit of a lead lag measure until we see prices come down. So in in terms of looking for different markets, I mean, are you targeting markets that are continuing to grow? Are you targeting markets that maybe are seeing some of that softening in terms of pricing?   Dana: So for us, we go where the real estate investors are. So if there's a real estate investor there, right, we're going to do the property management for them. I think when you're when you're thinking about the lag, that is definitely true. I've heard this with other real estate investors, I've seen it myself, where you see a price. And with interest rates up, the seller puts one price out there, because that's what it was two weeks ago. And suddenly, it's not worth that much. It's worth like 10% 20%. Last, but it's actually really good to put yourself into the position of the seller, and of the real estate agent, because you can actually get some really, really good deals off of that.   And what I mean by it is real estate investors have always told historically, have told their buyers in the past couple of years. If your mark, if your property is on market for over two weeks, people might think there's something wrong with that. And so, you know, we're going to ask for offers on X date, right, like X date and two weeks, or maybe we'll do one week, we're going to ask for offers. Well, if they've missed priced the property, you might be able to go in and you don't know this, but you might be the only offer because they priced it way too high, because we priced it from a purchase price from two weeks ago. And now that has suddenly changed like the market changes every two weeks, it really is. And you could go in and get a great deal. And so I think from from that perspective, there are still fantastic deals out there. But you have to be patient. And some of it will be that luck, where you get the right deal, though what else has gone into, and you can go ahead and purchase that.   So if you put yourself in the other shoes, you might see that you also see a lot of people you know why I don't think it's like 2008 and 2009 is people have a lot more equity in their properties because one value values have gone up. And then two, the interest rates were really low, people could afford more put more money in the market was booming. And so what we're seeing is that more people have equity in them. And at some point, it's emotional for someone, they're like, I just want to get rid of this asset, because I'm gonna go buy another one, or I just really want to move out of the city and move somewhere else. And, you know, to them, maybe 20 To 50 to $70,000 is not a lot depending on what it is. But that is a lot to you. And that changes, changes the numbers on your spreadsheet significantly.   And so I mean, with that purchase price, obviously that matters. But just because the price is out on the market for a property doesn't mean that the price is going to sell for. And so it would be a really good time to go out and experiment with that you will know your market better than anyone else, whatever market you're in, because it will take you bidding on like five properties. And maybe people will laugh at you like your first one, you go like 20% under and they laugh at you. But maybe you get lucky on the fifth one, and you'll get a great deal. But yeah, just follow the numbers in your spreadsheet don't have a purchase price, that doesn't make sense and you're not cash flowing. Or don't change the interest rate hoping that it will go down to that to that amount.   Michael: Yeah, that makes total sense. And speaking of spreadsheet numbers, are you seeing a lot of your investor clients that you work with adjusting their expectations around cash on cash returns? Now that prices and interest rates are up?   Dana: So not really I think most investors like most of the savvy ones we work with, we work with his sort of two different types of of customers, those who had properties just handed to them. And they actually never did the analysis like pan downs from parents and things like that. And then others   Michael: Accidental landlords.   Dana: Accidental Yes. And then others who are very strategic real estate investors and what we have found with them as they have the capital and they might not be they might be with inflation to your point Michael being like, Oh, maybe I should just go buy something because the dollar today is worth less On tomorrow, but no, I actually think most real estate investors are still saying, this is the deal that I got, historically, I want to get something like that. And so they're not changing those expectations on cash on cash return, but they might be going somewhere else. So they go to Roofstock, and they say, Okay, I, you know, couldn't find this property, you know, in my backyard, but on Roofstock, they do have the cash on cash return that I that I that I targeting. And so I do think they're not changing their expectations. But they are going out and finding alternative ways to get the numbers they need.   There's one case, Michael, where I find people change their expectations. And it's first time real estate investors to just get their foot in the door. And I'm actually okay with that. I think that there's too many people who, and for anyone who's listening to this, who doesn't have a real estate investment, you kind of sit there and you kind of fantasize about getting one and then you put so much like anxiety into getting your first property. And once you have your first you're like, oh, okay, that's what I got, here's what it is. And it makes it easier, where then you can go and purchase more properties and more properties. And you know, what you're looking for, and you know what the return was, and you have this process set up.   But the first one is really difficult to get into. So I find that those people today are changing their expectations, for certain metrics just to get into the market, before it's too late. Interest rates go up more, or you know, they're kind of kicking themselves that they didn't get in, you know, four years ago, five years ago. So I only think it's first time real estate investors where that's happening. And I'm actually okay with that. Because I think if you can get more people into real estate investing, and more people to just get their foot in the door, you're going to learn so much off of that first property, that then you're going to say, Okay, this was my cap rate for my first property. My next one, I have to at least have that or better and you kind of improve, you know, it's kind of like dating, you never like you don't date someone who's great. And then like the next person is like a downgrade, you kind of have the standard. And you're like, I can only go up from there. It's the same exact thing with real estate investing. So I really think it's only first time homebuyers where that happens are real estate investors for rental properties?   Michael: Yep, I think and I think that makes tons of sense. It's something that I hear all the time. It's Michael, I'm trying to get my first deal done and has to be amazing. And you know, it has to be a Grand Slam? Like? Don't worry about the grand slams, let's practice getting on base first. And then you'll know how to swing for   Dana: Exactly, exactly. And it makes it a lot easier when you have one property in that area. You know your market a bit more, and then you can kind of purchase some more around at.   Michael: Yep. Yeah, I think it makes him think that's totally right. And so Dana, we're kind of at this like crossroads where we're talking about, some investors are pressing pause on their acquisitions. And then this whole other cohort of investors are like, Oh, crap, I gotta get into the market before interest rates go up further before prices go up further. So it does feel like there's this pressure to buy or there's frenzy to buy, on the one hand, and then there's this whole other group, that's again, kind of taking a step back and saying, let's, let's wait and see what happens. How do you square those two?   Dana: Well, to me, I'm like a pretty unemotional real estate investor. And I feel like for anyone, whatever segment you fall into, you still have to go back to the numbers and see what makes sense. And so I mean, is there a right way to go? I think one people who are not going out, and they're using this as an excuse not to purchase properties, or just being lazy, honestly. And for those who are out there saying, I gotta get in and get my next deal. I think they're almost too emotional. Where they might go in and change the numbers to your point of saying, like, oh, it's not, you know, my last deal was was better than this, but I just need to get my foot in the door. Maybe that's not the right approach to have, it's, Hey, there's gonna be a deal out there. I might have to be a little bit more patient during this the for the next three to six months, I have to be patient, I have to understand what's going on.   But yeah, I just kind of go back to the numbers. I think in both cases, they're they're taking emotion and what's happening in the market and using that, like the macro for the micro. And instead of saying, You know what, I know what is a good deal, here's what it looks like on paper. Let me continue to go search until I find that and it might take you a little bit longer to find it. Or you might find a process like oh, wow, I can, you know, go 20% under and get lucky on a deal off of this, whatever the home price is, I could, you know, undercut them and give them an offer and maybe they'll take it to get that great deal.   Um, But I don't I think both categories are bad. I think someone who says I have to get my foot in the door. Before interest rates go up is emotional. I think someone who says there are no great deals out there are just lazy. And so I kind of fall somewhere in between of saying, yeah, just be financially prudent as you always should be with your real estate investment investments, know your market, know what numbers numbers you need, and make sure you're a little bit more conservative. Like, I know, a couple investors with adjustable rate mortgages that did them, you know, back when interest rates were really low. And I bet they feel pretty stupid right now. So   Michael: we won't name names,   Dana: Won't name names here.   Michael: Well, I'd be very interested to meet the the emotionally lazy person, because it sounds like those are two opposite ends of the spectrum. Yeah, I have to see. Okay. And last thing that I want to ask you about is around expectations. If someone is newer to the investment space, they may be looking to get their first deal done. Everyone around them, their sister, their brother, aunts, uncles in this market are making 10% cash on cash. Yeah, pick a number. Nice round number 10%. And they're like their expectation was was 15%. Right, for whatever reason, that's what makes them tick. That's what gets them excited about an investment. Everyone around them is making 10%. So how the how should investors be thinking about not looking at other people, and just focusing on what's good for them, but also not being blind and naive to what a market is really able to produce? In terms of In other words, like, they I want someone to be excited about the returns that they're getting, but I also want them to be realistic. How do you kind of how do you?   Dana: So the biggest thing I would say to throttle that is, most likely you've sort of selected a market because you've looked at, okay, where is and I mean, Roofstock does this for you, and you guys, I think have some great shows from like every single market of why why you guys are looking at a certain market. So that helps. But you as a real estate investor are gonna say worse population growth? And why like, is more industry going there? Like maybe an Amazon facility was just put into place? Does it have fed, ed's and meds? Like, is it stable, even recession proof, especially now? So you kind of go through and figure out why am I excited about this market? And you just start there? And like, don't forget about your, I mean, 15% cash on cash return? Like, let's just forget about all of that and just go through? What looking at macro, and now we're kind of going to micro to like city level?   Why do I think this is going to be a lot a good market in five to 10 years, because you're going to hold on to these properties and purchase more, right? Do that first, then you say, Okay, this is my market, then what you're going to do is for two to three months, you're going to look at all the deals there, go on Roofstock, I think you could set up alerts because I have those that go to my email that essentially like tell you here's a new property in that market, great purchase. Um, you're gonna go through and you might the first couple of properties, say you know what? Those, those don't really hit my cash on cash return expectations, but now you're starting to know your market and you're gonna see a trend, are they going up? Are they going down? And you can look at that over time to make an unemotional decision that is based on data.   I think that is the most important thing to do. When someone gets in this frenzy of I need this cash on cash return shoot, I'm not going to get it. So I'm just going to slash it. And I'm going to say now I need, you know, seven or 8% I and you're just becoming emotional. But if you go through look at the numbers and you say okay, great, I wanted 15% You know, my friends are getting 10% I'm and you're you change those expectations. And suddenly you say, Okay, I made this decision, and here's my cash on cash return. But I knew at that time, that was the best I could do. Because I looked at the data, then suddenly you never go back and wish you had done it differently. Because you have something that is non non emotional to back you up. And don't compare yourself to other real estate investors. I've seen real estate investors in the past four to five years who've been super successful, who are super stupid.   And the reason they were successful and I hate to say that but like there's so many people out there because basically it was free money like there was so much investment it was there was so much easy money from investors that I saw way too many people also going into real estate. A lot of actually on the fix and flip side that just got lucky because yeah, money was basically free to do a fix and flip and a The home prices were going up astronomically. And they feel like they're the smartest people in the room.   Well, maybe they were at that time, but like, give it two to three months, maybe six months, and the story might change. And so that's why I think it's hard at like one point in time, if you're just getting started to compare yourself to those around you, I don't think you should do that. I think you should just be financially prudent, and make sure that you're not overextending yourself. And you know, your market. And you know why you made the decision, you see you did, and it's all based off those numbers. And it's based off the numbers, but also you need to know the market, like you need to know you guys have neighborhood scores and ratings, that kind of stuff of like, here's why I only invest in neighborhoods that have three stars, or greater, or whatever it may be like it, write all of this stuff out, and take a really methodical approach to your assets, your real estate investing, and I don't think you'll regret it. Like, I don't think you're gonna go back and say, Oh, I really wish I would have gotten that 15% I targeted?   Michael; I think that is like spot on. Thank you so much. And if you missed it, if you missed any part of that, go back, rewind the last three minutes, and listen to that again, cuz I think that's a lot of gold in there. Then this was super fun. As always, if people want to reach out more, find out more about you or hemline. Where's the best place for them to do that?   Dana: Yeah, you can go on to Roofstock when you purchase a property, how many will be listed as a property manager? So go go ahead and do that. You can also go to Hemlane.com. And my email is dana@hemlane.com. So I love hearing from people.   Michael: Awesome. Well, thank you again, and very much looking forward to having you on. Again, I'm sure take care of we'll chat soon.   Dana: Great. Yeah, I'm excited in six months for us to see if we were if we stand corrected on what's going on in the market.   Michael: I know it'd be very interesting. Well keep close tabs on it.   Dana: Great. Thanks so much for having me.   Michael: You got it, take care.   Okay, everyone, and that was our episode A big thank you to Dana for coming on as always big friend of the pod as we were saying at the beginning of the show. As always, if you liked the episode, we'd love to hear from you all with a rating and review and we look forward to seeing the next one. Happy investing

Kori Covrigaru is the Co-Founder and CEO of PlanOmatic. PlanOmatic provides quality photos, floor plans, and 3D to the single-family rental industry with speed and at scale, nationwide. With an unwavering determination for client success, he has created a team that thrives on the core value of together we win. With a national network of 200+ contractors and more than 40 employees, Kori has met the moment with the unique value proposition PlanOmatic offers through technology combined with data to support their clients' goals. Today, Kori shares what he's doing as a remote investor in the single-family rental space with a fund that he started with some of his colleagues.  Episode Link: https://www.linkedin.com/in/koric/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by Kori Covrigaru with planOmatic and he's returning to the podcast not talking about planOmatic, but actually to talk about what he's doing as a remote investor in the single family rental space with his fund that he started with some buddies. So let's get into it.   Kori, what's going on, man? Welcome back to the podcast, thanks for taking the time to hang out with me.   Kori: Always, always excited, Michael.   Michael: This is gonna be a lot of fun. So the last time we had you on we were talking about your company planOmatic and for anyone who missed the episode, give us the quick and dirty, what is it that you all do and how you're disrupting the industry?   Kori: We helped at the beginning of this industry. So back in 2012, we started out with the SFR industry but we've been playing thematic creates professional photos for plans in 3D for the single family industry at speed and scale nationwide. So that's what we do plain and simple, we are the boots on the ground that go out, take professional photos, do 3D scans, export floor plans from that, and then deliver that media to our customers. We try to do it under two and a half days and we're pretty damn close to it. So that's what we've been doing, we help these REITs institutional investors in smaller companies scale from 5000 properties all the way up to hundreds of 1000s. That's our business, that's what we're here for.   Michael: Amazing and today, you and I are here to talk about something a little bit different kind of related. Yeah, but really, it's about your journey in the SFR space as a remote investor.   Kori: Yes, sir. So, you know, just being in this industry for so long. I'm surprised it took me so long to decide to get involved on a higher level. But yeah, I've been just watching, you know, myself and some people that I work with here and some family and friends outside of here have been watching this SFR industry grow to the level that it has and never really gotten involved on the investor side. I mean, I had rentals on my own. I've had a rental, you know, my first rental I bought with my business partners. I want to say it was 2006 I think it was October 2006 or 2005 and we bought a rental out in Grand Rapids, Michigan. Since then we exited that then I had a couple rentals here in Denver, but nothing remote and nothing to the level of what we're building right now with SFR Emo, that's the name of the partnership, the group that we've established with 13 partners, and we all threw in some cash and have been acquiring homes, single family homes, for, you know, residents to live in and Alabama, of all places Birmingham, Alabama. So that's what we've been doing, yeah.   Michael: Interesting. So you've done the local investing local with you in Colorado, so what I mean, what did you eat? What did you drink that decided, hey, I'm gonna go do this crazy thing and invest where I don't live.   Kori: I ate and drank reports for where our customers are buying real estate and where it made sense and just reading articles. I mean, there's so many great content distributors, you guys included in terms of what markets make the most sense what to look for in a market and so I had been immersed in all of this data and all of this information for so long, that I finally pulled the trigger and said, hey, time to form a partnership. You know, we started out with five partners, that was the deal was gonna be five partners no more and then, you know, I don't know if you've ever been involved swings. But what happens is you start getting phone calls from random people saying, hey, I want this thing going on, like I want and why didn't you invite me? It's like, well, hold on a second, like, first of all, I don't I don't know how you found out within second. Like, it's this really small thing we're doing and so it went from like five partners to 13 and we had to like, we had to cut the investor pool out at that point and build with what we've had what we have right now, because we still haven't, you know, deployed all the capital. So it started, I'm starting to understand why we see billions of dollars come into the industry committed to buying SFR is, but it's very slow to deploy and so we're experiencing that right now. I mean, we're not slow to deploy, but it takes some time and so that's kind of how the idea started. Yeah, just get involved eat your own dog food, as they say, I think right, that's the term.   Michael: That's it, that's it. So Kori, I mean, you just went through, I think what so many newer investors really struggle with, and that's picking a market and talk to us how I mean, what are these reports showing? What were they telling you and also like, how did you settle on Birmingham because I'm sure the reports show that there were really a lot of other great markets to invest in, too, yeah.   Kori: Yeah. I mean, we landed on a cut to the chase, then I'll kind of backtrack a little bit but we went with Birmingham because this is a small partnership, and we really didn't want to have to continue to put money in so we wanted to pick a market that could cash flow. We wanted to pick a market that was cashflow positive, had great cap rates, relatively speaking hearing coverage are being compressed everywhere right now as we know, cost of capital is going up, prices of homes are going up, that's actually going to reverse here pretty soon, in my opinion, we can get into that later. But so we picked Birmingham, there was a lot of economic opportunity being created there, jobs being created there but also, we knew we were going to be cashflow positive with the cap rates, and there was a room for appreciation. Plus, we found a really great property management company partner that we work with down there that can not only serve us in that market, but we can also expand to other markets, you know, with their with their support. So that those are the reasons the main reasons why I mean, we apply nomadic had the advantage, we have a critical mass of single family rentals that come in through our pipeline to shoot photos, create floor plans, you know, 3D and so we kind of have like this, this holistic view and indicator of what markets might pop off next and, you know, we use that data to make decisions for us farm on where to invest, it's a bit of an advantage that not most have, but I'll tell you what, all that data is public, I mean, we can go out there and see and look at county records and see where all the institutional landlords are the professionally managed properties are being bought and so if you dig data or like to, you know, you can always go on Upwork or Fiverr, and say, hey, please go find me this set of data, those are kind of hacks that you can do to figure out where companies are buying. Now, just because professionally managed companies are buying there doesn't necessarily mean it's a homerun, you have to do your own research, figure out what your goals are with your portfolio where you want to start. So that's kind of been our trajectory on the direction and where, where to own and operate for us.   Michael: Yeah and that makes a ton of sense and I love that you said that to like, go find someone else who can kind of help aggregate the data or figure out the data for you because like, you can, like you don't have to be the person to do all of the due diligence, you don't have to be the person to do all of like the research and also you can leverage other companies paid employees, like you were just mentioning, if an Amazon fulfillment center is going in there, or like Whole Foods is setting up a new headquarters there. They've done the research, so of course, don't reinvent yourself. The wheel, right… Yeah, it's, I love it.   Kori: It's out there.   Michael: Okay, so Birmingham was the target. Yeah. What did you all do next? I mean, how are you executing there? I know, you said you had a great property manager, but like, yeah, the, from the physical like property acquisition to due diligence. There's so much more involved before you even own the property. How did you get that accomplished?   Kori: Yeah, so we this idea came about at some point in 2020, when, you know, shit hit the fan and COVID was on the way and in my mind, and I've always been fairly wrong, when it comes to trying to predict the market. The only thing that's, that's, ya know, I mean, the only thing that's going to be successful is that there is no bad time to buy, that's just my mentality. Like, there is no bad time to buy, it's just a matter of how you go about finding those properties and what you do during negotiation, and due diligence. But um, you know, back in 2020, you said, oh, the real estate buyer is going to absolutely flop right now, everybody's, nobody's got jobs, unemployment is gonna be crazy, we're headed into this, you know, doom and gloom period, which is, of course, very wrong and we said, you know, it's a good time to buy single family rentals, rentals, they perform, regardless of economic conditions, typically, in recessionary periods, they still grow not as fast, but they do grow, that's a hedge against inflation, so on so forth and so we decided to form the entity again, went from five to 13 very quickly. But between, you know, between mid-2020, and mid-2021, I don't think we purchased a single property and so you know, we had to go through all kinds of processes, right, you have to have a good operating agreement, you have to establish a an EIN number, you have to select a property management company, you have to make sure you're finding the right tax forms, you need to find a broker, you need to do research and figure out where you want to go. I mean, that was a big chunk of our time was we didn't know in 2020, exactly where we wanted to go. So we had to do that research, we had to have, you know, make sure that everybody all the partners were kind of on board and then at some point in time, we decided to, hey, these three partners or five partners are actually gonna make the decisions. Okay, now we have to amend the operating agreement that requires lawyers again, I mean, we kind of did a lot of stuff makeshift but, but there's a there's a lot to do, and a lot of time to be had between the moment where you decide, hey, I'm gonna get into this, especially if you're remote and we just closed on our first property, right. So it's, you know, it's, it's more than you expect, but doing it right is the most important thing and I think we've done it right. So far we learned a lot along the way. But we're on the right track. I mean, we're almost at will be at 28 single family homes and that's only that's the course of a year right. So from 20, mid 2020 to 21. We didn't purchase a single home in the last 12 months we've purchased approximately 28-20 single family homes.   Michael: Wow, that's so killer. So Kori I mean, I'm curious to know too. Why did you not just do this alone, a lot of people would argue well, wow, 30 people like that's way too many cooks in the kitchen or five people making decisions like it can get very convoluted very quickly are very quickly. Wouldn't a single operator be more lean and be able to move quicker?   Kori: Yes, yes. I mean, well, so the short answer that is, I can't really do anything. I have a lot of really good ideas but I can't do much. So that's why I didn't go at it. Yeah, I'm the idea guy, right, and the people around me to do things. So, but no, I mean, you know, what, one big reason why we went with more just to have more capital, to be able to diversify more, you know, it's, it's risky as an individual to go out and buy one or two rentals. But if you go out with a group and buy, you know, our goal is to hit 60. That's a pretty diverse portfolio and minimizes risk and there are a lot of great minds in our partnership. I mean, we have a finance guy, right, we have a data guy, we have consultant who's seen many different organizations, we have myself, who's kind of like, overall, seeing the organization from a high level and helping with the financing part of things. So I think it helps to have different people plus, this is all you know, passive for us, right? Everybody's got a full time job and so, you know, if, if I were to do this alone, this would be a full time job, no doubt, but spreading it across having the right property management company, but this person doing, you know, diligence in this person negotiating offers in this person, making sure our bookkeeping and finances and taxes are all in line, it just helps kind of spread that out…. It's fun, man. It's more fun to succeed with partners, like I, you know, I have two business partners here at planOmatic and I couldn't imagine being a sole proprietor, it just doesn't seem as fun to me. Like, for us, it's always been the game in the chase and like winning the game, and it's, if you're by yourself winning and celebrating, that's not fun and the same goes with, you know, the lows. I mean, 2020 was a tough year right and so having a supportive business partners help. So I just think it's more fun.   Michael: Yeah, that makes a ton of sense. That makes a ton of sense. I'm curious, quite, how did you figure out like, who does what, and when you were picking your partners and picking your team? What was the process that you went through to do that because I think a lot of people like, oh, my best friend, we're so uh, like, we're so similar. We think the same, we should be partners, we should be business partners. Was that kind of the case for you?   Kori: You know, for me, I mean, I kind of surround myself with people that are like minded and sort of see things, you know, in a certain lens when it comes to opportunity, right? So it was actually it was pretty simple. It was more like who do we, who do we not tell, you know, and ask versus who, because a lot of people came to us a lot of really good friends. So it was just who's willing to take an opportunity who trust I think trust is the number one thing when it comes to partnerships is like, is there trust, we had to make sure there was trust there and then, and then different specialties from different people, again, like I said, like one guy is a full time controller, you know, big company, that's really helpful. Another guy is an operations guy who's operating, you know, we're shooting five to 700 listings a day, right. So like that, that really helps play into one of our guys, Tim Rose, he heads Planet Labs and we analyze and optimize workflows and analyze and optimize reports and data just based on what's coming in and so having him on board to help us decide which market to go with, or what cap rates to focus on, I mean, that was helpful. So it kind of this one all came together and then the people that wanted to be involved, they kind of like stepped forward said, hey, I'd like to be more involved those that didn't, are just passive for this particular partnership. I mean, one of the, I don't want to call them mistake, but it was a rookie move was like 13 partners all equally invested right and so that creates challenges for two things. One, every time we close a loan or refinance, we have to get 13 signatures and that's like, probably the biggest pain in the ass that we've got as a group. The other is like, we're putting in a lot of work on the side, especially, there's one person in particular in the partnership that puts a significant amount of work in, and his return is the same as everybody else's and so this was really like a search and destroy mission for us. Let's figure it out, figure this out, figure out a proof of concept, see if it can work and then in the next round, we're a little more educated, we'll structure the company a little bit differently, make things happen and move a little bit quicker. So yeah, that's kind of where we're at today.   Michael: Okay, like with regard to that signature, and then the equity piece where what else? What else would you do differently for anyone listening? It's like, I want to do this, like, what should they be thinking about?   Kori: When owning and operating and SFR funds, you want to separate out the management company from the fund that owns the properties and we didn't do that it's all one thing. So when you've got one entity that manage manages the portfolio, you know, that's where all the work is. Capital, putting in capital to buy homes is simple. You read a check and then there's typically somebody at the fund but the management company, you know, in today's world, and so far, they're helping acquire the properties on behalf of the fund and so creating an entity for the fun with limited partners, and then a property management company or management company that owns an app rates the portfolio separately, it just makes a whole lot more sense and that's really, you know, shame on me, like I've seen this, I know this, but we just wanted to get going and again, at first it was five, right. So we weren't going to separate those two out as simple as like, we can get five signatures. But when it grew with 13, it became challenging and so we'll look at that a little bit differently.   Michael: Okay and have a separate management company, even though you all are leveraging a local property manager.   Kori: Yeah, because there's much more that you have to communicate with the management company, you have to go through the process of buying the homes and through due diligence, and you have to make offers, and you have to make sure your books are in order, you have to file taxes, and you have to sometimes raise more capital, you have to open up a line of credit, so you can buy in cash and turn on refinance, we can talk about that, that as well. But there are a number of things hidden, hidden chores, let's call them that have to happen when you manage a portfolio, even if you have a property management coming up property management companies can help you place tenants and make sure your tenants are happy and having residents are having a positive experience. Outside of that, they're not doing a whole lot. They might help you find homes, they might help you negotiate, they might help you with renovation, but everything around organizing the company there, that's just you know, that's one vendor that you have as a part of the organization, you have your CPA, you have a bunch of different things that are you have your banker that you have to manage property manager company is not going to deal with your banker, it's not going to happen, they're not going to go find a line of credit for you like that doesn't work that way. So there are a lot of hidden chores that are in there that I strongly recommend, like thinking ahead, because it doesn't take very many homes, very many investments to need to put a significant amount of time even if it's distributed amongst partners into the operation. It doesn't it's not a set it and forget it. This is not George Foreman grill, this is like there's a lot there's a lot going on.   Michael: I don't think I've heard a George Foreman grill reference.   Kori: Now you have or maybe it wasn't George Foreman, maybe it was. What was that? No, it was a different one. It was an infomercial, set it and set it and forget it.   Michael: Oh, that's too funny. Well, Kori talk about like the strategy because you mentioned it just briefly about like line of credit, purchasing and cash and then going turning around and doing a cash out refi. So how are you purchasing properties and how are you structuring your deals?   Kori: So up until now, and oh, boy, are we headed for some news on Mays real estate market, like people aren't going to believe what they what they read in terms of percentage swings. But up until now, it's been a very competitive market for buyers. I mean, like, you know, you had to show up with cash you had to show up with, with no contingencies, waive the inspection, right. All of these things that everybody in a healthy market will tell you don't ever, ever do this you had to do over the last two years to buy real estate in some markets, you've had to do that since 2011, or 12. I mean, in Denver, for example, you know, and this is one of the reasons why we didn't we didn't come to Denver, but in 2012, we went my wife and I visited a home and we had to put an offer in same day and we thought we were crazy, right and we ended up closing about houses, it's now a rental above, you know, closing at 332 is it's probably worth 900,000 and there's a reason why because Denver has been nuts, right. So the markets been like that since then. So what we decided to do is utilize a lot of the cash that the partners put in to buy the homes in cash, make cash offers, you know, promise a quick close, because we had to win the properties and then we would turn around and take the portfolio, once it got to a certain size and refinance it with a bank, we have a great banking partner down in the southeast, and they've been fantastic. But we've always historically bought in cash and around refi pull the money out. Oftentimes, it'll appraise much higher than, you know, we initially bought it for and I'm scared to say this because it sounds so 2009. But the bank is paying us at this point to buy these homes because we're able to leverage 85% and so if they've appreciated more than 15%, right? They're like giving us cash to close on these homes that we bought in cash. Again, sort of scary to say but in terms of rentals, like we're not in danger, like they've performed fine and as long as you as long as you cash flow through ups and downs in the market and interest rates, ups and downs, it's you know, you'll end up on top, but like Denver is a crazy market.   I mean, I remember I was talking about getting a single family home to rent like separately outside of SFR I think it was like two months ago, maybe a month and a half ago and I took my kids to the open house and I showed up about 10 minutes early because I had to be like a birthday party or some bullshit like that and I get there 10 minutes before and there are already eight like, like a groups touring and I'm just like, still really like in in this neighborhood frankly, like, really and so I it took me one open house so you know, I'm out of this market. I mean, I know this right and a lot of the advantage that that people will have is they'll understand the local market and understand the neighborhoods understand where are they putting, you know, new light rail estate in where's their economic opportunity. But Denver was just too competitive, you know, to stick around for. So, yeah, yeah, it's been amazing. So we buying cash, turn around refi, pull cash out, rinse and repeat sort of deal and as long as properties are appreciating, you know, it's a, it's a pretty good model, especially when it comes to rentals, you know, fix and flip, I'm not a big fan, I think, you know, someone gets caught with their hand, that cookie jar at the end of the day of fixing flips, but as long as you're keeping in cash flowing, I think you're fine. And that's, that's kind of been that's been our model and we're able to now take out a line of credit. That's, that's, you know, securitized by our portfolio. So even better, we're able to use cash and a line of credit, make sure that there's good cash flow, turn around the bank, you know, refi it, pull the cash out, and rinse and repeat and that's, that's sort of what we've been up to and you can keep doing this, depending on how the market performs and how interest rates look. I mean, you can keep doing this for a while, right. Our goal, we're at 28. Now, our goal is 60. But depending if, if things continue to appreciate, then we could be even higher than 60, depending on how much the bank will pay us to buy these homes, basically, I'm afraid to say that, should I be saying that?   Michael: It sounds it sounds terrifying. But that's what I wanted to ask you. So you say they're financing 85% loan to value?   Kori: Yeah, yeah…   Michael: That's, like, unheard of in the investment property space it.   Kori: You know, usually, here's 7525, we find a bank, that's pretty aggressive. I mean, it's not like a small lender, it's a bank, it's a legitimate bank and they've been, they've been a great partner for us, and they see the opportunity, and they're a little bit of a risk taker. You know, they're keeping these loans or not, obviously, not selling them to Fannie and Freddie, I don't think, but we've also got so many partners to fall back on, like, it's, it's not risky for them, you know what I mean, when you have, yeah, that much that much wealth behind the partnership, and I'm not talking about the individual employment as a group, like you've got 13 households, where if something goes wrong, for some reason, with the majority of the portfolio, like, they'll be fine, you know. So I think that's also potentially why they're able to leverage so much. But they also are bullish on the rental market and SFR and they understand, you know, as far as you go to a bank, let's say up in upstate New York, they just haven't been around so far, very long. So they might not be as accommodating and as flexible. But boy in the Sunbelt, I mean, banks are trying to try to monetize this just like every other individual investor and so finding the right banking partner has been, you know, really great for us and strongly recommended. I mean, that's, you know, one of the most important things, we've gone through two banks. Now, we were with the credit union before, they didn't really see the vision that we had, but now with private bank, and it makes a lot more sense.   Michael: Okay. Well, that's great to know and I'm curious, when you started putting this all together on paper that was 2020-2021 and the interest rates were at three, four, maybe sometimes even in the twos. Now they're up in the five, six sevens. Has that changed your model much or really changed the performance of what you were expecting return wise?   Kori: Well, yes, of course, right. Cost of capital is it's real, it's real thing for individual investors who are buying their primary home, it's a real thing for smaller investors, family office all the way up to up to the REITs and the institutional landlords. So everybody's feeling a squeeze with those interest rates, cost of capital, obviously, going up, cap rates being compressed. I think what we'll see and what we've seen, historically, is that rents keep up with interest rates, right? So we'll see, you know, rents have gone up, I think, year over year 16%, I believe, and so far, we'll see those continued fact check that before you post it, but I think I saw it in the Wall Street Journal and so rents kind of keep up and so that's, you know, we have that to look forward to in terms of paying more for capital. But also, you know, the goal is to cash flow through the periods through the ups and downs, right through the different markets and so foreign investors, you'll see, you know, we borrow at five and seven year, seven year loans, right, so we're not in it for the 30 year fixed and so that should take us through any sort of period, right? We should be able to refinance within the next seven years, again, hearing things from 2008, kind of reverberate in my head. But that's the idea is that if as long as you can cash flow through interest rate periods, you should be fine and as long as rents hold up, which we don't see any reason why they shouldn't. I mean, we're again, four and a half million homes short of supply right now supply is not going away. Now, home values have gotten to a point now where buyers have said I've we've had enough, we're not we're not doing this anymore. Besides the fact that we can't afford it, right. Like between the interest rate hikes and the appreciation of home values over the last two years, we're seeing about a 43% increase in cost to pay a mortgage. Okay, like that's insane, so…   Michael: Compared to when?   Kori: Two years ago, that's compared to like beginning of 2020. I mean, between the appreciation and the interest rate increase, going from like three on average to five whatever and a half, one would be 43% more expensive to make mortgage payments today. Now, the good thing for SFR and for rentals is people are still there's a high demand for spacious, professionally managed homes, right single family rentals, and that demand isn't going away. So when people can't necessarily afford today to buy a home, or maybe say, hey, I'm going to sit on the sidelines for a couple of years, because this is batshit crazy, they're going to rent, right and so the demands keeps up, the rents keep up inflation continues to go up and hopefully we'll see that slow down here, due to the increase in interest rates. But you know, cash flow is important, I think it's been proven over time and history that rents will keep us cash flowing and that's why the industry is so attractive and so, you know, so new still, we're only a decade into this being professionally managed, right landlord has been around for before we can remember.   But there's an appetite for professionally managed properties, so that the experience that I'm gonna have, as a renter as a resident is on par with if I own my own home, and was able to do whatever I wanted to do to my home. Now I can have that luxury of having that home, but having it professionally managed. So if things go bad, I can just call someone, they'll be here soon to fix it right or if I want to move, it's not it's not that big of a deal on my lease ends, I go find another lease, right. So that demand isn't going away and that's what's keeping us so strong as an industry and I was just at the National rental home Council conference in DC and that's kind of the theme is that, you know, everybody's cautiously optimistic, because it's a weird time. There's a lot of uncertainty right now in the economy. But there isn't a whole lot when it comes to our industry and so I think, you know, again, when is it a good time to buy, in my opinion, always. So what's happening right now is interest rates are going up, prices are still like going up. We are seeing I think a Redfin report came out today that prices are starting to come down, actually and so there's a huge opportunity for investors to get into the market right now and buy, and investors don't have to buy at this price. Like it's been only a month, but the whole thing has been flipped upside down. So what I'm telling my acquisitions team, right, my expositions team, is, this is a time where, frankly, you go in and you offer 15 to 20%, less than what it's listed for, and you offer on volume all of a sudden, and then those that are willing to get out with a cash offer today, those are the deals to be had and yes, you are paying a higher interest rate right now for that. But you know, what, if you get the deals, and I'm not saying you'll get them at 20 or 15% discount, but you'll get them, you don't have to pay this price today, because the market just hasn't adjusted down to the interest rates that we're at. There are some steals out there and so it's a volume game, right? It's like, it's like going to a bar and meeting men or women, right. The more the more you ask, the better chance you're gonna have to succeed and it's the same with real estate today, like the more offers you throw out there that might be less than what they're wanting or hoping for a price. Some are in a situation where they need to exit or want to exit and so there are opportunities out there more right now than ever so far, which is crazy to think about.   Michael: That is crazy to think about and so you mentioned there's some big news coming out was that was that the Redfin report about where you think prices are going for the May report?   Kori: No, well, I mean, there was there was some information out but we're still they're still reporting on April, my mind, this is just, you know, my prediction is crystal ball, my crystal ball tells me based on very, you know, various different data points that may will be the biggest drop in transactions we've ever seen the biggest drop, the biggest drop in transactions month over month that we've ever seen, I'm predicting, I'm putting it for…   Michael: May 2020.   Kori: To May over April and may year over year, also that will be the biggest drop in in housing starts as a percentage and let's say close transactions will be in May, that'll continue into June because there's always a lag housing starts we get at the beginning contracts to buy new construction, we get the beginning. So that's always an indicator, a leading indicator of where the markets headed. But we'll see that as built, you know, are already built on existing home sales. They're just going to plummet right now and that's because there's pretty much gonna be a standoff between buyers and sellers right now. I mean, when do you remember seeing homes drop in price in Denver like, right, I don't remember when that happened. Yeah, you know, so I think that I think the buyers are fed up. I think that affordability has gone through the roof and I think that the Fed is going to succeed and installing the economy and stalling you know, the housing market, which has a trickledown effect to the rest of the economy, right. I mean, think about movers, Comcast, right, any sort of cable television, Home Depot and Lowe's, right, all these all these companies that we don't really think about. or Amazon people buy stuff for their new home like the Fed wants to slow the economy down, they're definitely going to succeed. We're going to see some job loss from it. But at the same point in time, this is an OK, adjustment to the overall market and the housing market. We know that this is not sustainable. We said that a year ago, a year into this crazy Rock chip ride. So we'll see a slowdown and it's healthy, it's okay and that also creates these deals that I think are definitely still out there. You know, there are still motivated people that need to sell for one reason or another. Maybe they have to move, maybe they are they're adjustable rate mortgages off, right, maybe they set it seven years ago, and all of a sudden, they're having to refinance and it doesn't make sense. Maybe they just feel like they want to cash out and it's time and so, you know, those who went under contract, let's say a month ago, kind of probably hit the top. But for the short term, but there's still a lot of opportunity out there to get some good deals right now.   Michael: You heard it here first, folks. That's awesome, that's awesome. All right. Well, Kori, we got to get you out of here, man. Thank you so much for coming on again. For people that want to reach out to you connect with you learn more about planOmatic where's the best place for them to do that?   Kori: LinkedIn is great. Although my name is hard to find K O R I C O V R I G A R U, I'm sure it's in the in the post, LinkedIn is great. My email kori@planomatic.com, I'm always fielding emails. So send me an email and otherwise I'm not I'm not really on Facebook or Instagram or any of those, so email and LinkedIn is probably best for me.   Michael: Right on that'll have to do. Well, Kori thanks so much, man. Appreciate you coming on again. We'll chat soon, all right.   Kori: Thanks, Michael. Great to be here.   Michael: All right, everyone. That was our episode, a big thank you to Kori for coming on and sharing with us what he's been doing in the space. As always, if you'd liked the episode, please feel free to leave us a rating or review wherever they as you get your podcasts, and we look forward to seeing on the next one. Happy investing…

Pam Hill is a Harvard and Dartmouth-educated entrepreneur and CEO of a multi-million dollar real estate company, a business and money expert, a former Fortune-500 executive, and the founder of My Smart Cousin.  Her main goal is to help people understand money, increase their accountability and build generational wealth. Today, Pam shares her story of how she became a professional real estate business owner, how she purchases homes for the price of a car and how you can start your real estate business. Episode Link: https://mysmartcousin.com/tag/pam-hill/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by a very special guest, Pam Hill, who's talking to us about my smart cousin, and how she purchases homes for the price of a car, or maybe sometimes even an expensive bike. So let's get into it.   Hey, Pam, thank you so much for taking the time to come hang out with me today. I really appreciate you coming on.   Pam: Thanks so much, Michael, really looking forward to engaging conversation.   Michael: Oh, my gosh, me too. So, Pam, so excited to have you here. If you could give us a quick intro bio about who are you? Where do you come from and what is it you're doing in real estate today?   Pam: Absolutely. So I'm Pam Hill with my smart cousin. The nifty name comes really from family coining that for me, because I am that smart cousin at family reunion to always follows up make sure that folks do what they say they're going to do on their finances on their real estate and that, of course, is now brought in to my clients as well. How I got into real estate was about 10 years ago. So during the Great Recession, my husband at the time we were dating, he was looking for his first home and he was looking in Wilmington, Delaware, and we were stupefied at just how cheap there's, there's not a better word inexpensive to the wrong word, cheap houses were in Wilmington, Delaware to the tune of 20,000-25,000. In perfectly rock solid working class neighborhoods. Once I saw it, I definitely could not unsee it and that's what led me down the real estate rabbit hole since then I've bought 21 houses totaling 25 houses totaling 31 units, and have loved every step of the journey.   Michael: That is so cool and so Pam, were you living in Wilmington, Delaware or was this something that you were doing from afar?   Pam: No, so I was living not too far from Wilmington, Delaware in a suburb and so I was used to six figures and not 100,000 as in six figures. But in fact, what the average price of real estate is in the United States, some 321,000, I think I've read is the average price of real estate across all 50 states. So I was used to seeing those kinds of numbers. I had already owned real estate before as a homeowner and I really couldn't believe that there was this whole other world and once I saw it, I became committed to helping others who are looking to start their real estate investment journey and feel like they just don't have enough coin to get there. Or those who are aspiring homeowners and thinking the same thing that it's got to be a generation, three decades, 30 years slog My goal is the number of fingers you've got on your hands, 10 fingers 10 years or less. That's when the house should be paid for and everything is cream after that.   Michael: I love it, I love it. So was it just a function of where the economy was at that point in time that you and your husband were able to find houses for that price point or were you doing something different or looking in a different way than everyone else?   Pam: Yeah, no, it's a great question, because it kind of begs whether that opportunity is still there and very much still is. There are hundreds of houses listed on any given day that are maybe not as cheap as what I got them for that takes a little bit of digging, although they are that cheap still to just not in Wilmington, Delaware. So my cheapest house was 2500 in Jersey that included the all four walls.   Michael: …a roof....   Pam: Yeah, absolutely. Goal number one is don't buy anything that is best addressed through the services of a wrecking ball company. So only things that maybe they're going to take a new furnace, okay, a new furnace, but not a new every single thing you can think of and my most expensive house was 35,000 and that includes I'm really kind of a an adherent of eating your own cooking. So that includes the house of my husband and I live in the house we bought in a suburb of Philly was $35,000. So and that was in 2016. So it's still there and there are many homes in states like certainly New York, Wisconsin, Michigan, quite a number of homes that are in that 60-50-40 neighborhood and even multi families and small commercial, that price point.   Michael: And so I mean, I've got to imagine at that price point the homes are in really rough areas or need tons of rehab. Are you finding that to be the case or is there something there's something that you know that that we don't?   Pam: Right, so the homes are in areas, how would I think about it. areas that aren't so rough that no one at all lives there, I've yet to find a neighborhood that that is on livable, I suppose everyone needs a home that it's just a flat out the truth and so there are really three things that any person who's renting is looking for one is the neighborhood. So they aren't going to be concerned if crime, for instance, is a big problem and where it is, for some of my houses I work closely, you know, first thing I do is find out who the police captain is, and introduce myself, I asked the tenant to let me know if there's any kind of roughness going on, so that they don't have to feel like they're the one making the call that I can be the person making the call. If there's a car that has sat abandoned in front of their house or near their house, I call the licensing and inspection agency, so they will tow it. So those are the things I do to make the neighborhood better than how I found it. Then the other things that a renter is going to look for, is going to be the landlord as well as the house itself, those two things I can absolutely control. So I control the neighborhood, only at the barest of margins, but the house and the landlord, absolutely within my scope. So that's what I do and to your question of where are these houses? I think that the I think that the issue is that most folks don't look from the bottom up, they look from the top down. In other words, they're used to asking themselves or allowing their bank to suggest to them that they start at what they have qualified for and what you have qualified for is probably far more than you have to pay. So if your salary and such qualifies you for that average price of a home in the three hundreds, first thing you should do is tell your real estate agent, only show me houses that are 60 to 100,000. In fact, don't even give them a range. I don't want to see anything. That's more than six figures. If I do if it's more than $99,999, you're fired and they will quickly show you the houses that meet that criteria and that way you accustom yourself to that to that look and you tell the realtor, just a look where the neighborhoods makes sense for you school district wise and so on.   Michael: Interesting. There, I've got so many questions. There's so much there to unpack, Pam but and Vicki about the price point, if someone goes to buy a $20,000 home, are they able to get financing on that home right?   Pam: Going to be difficult, that's the honest truth. The easiest source of financing, if they buy a house like that is going to be if they are also looking to be a home owner, and really a multifamily home owner. So for a person who tells me, they really don't have much, much in the way of savings, but they want to do something now and moreover, they're not too satisfied with where they are living as either a renter or possibly as a homeowner, then I would help them find homes, let's say in that lower price point of that 20 that you mentioned or 30,000 that are in the areas that they are okay with, we would look at the land banks listings, for instance, sometimes there are more than 200 land banks across the US. So sometimes a land bank will have a house that is in terrible, terrible shape, but it's in a good neighborhood, that house is going to qualify for some financing that can help the homeowner if it's not that kind of house, and instead, it's something owned by Fannie Mae, by Freddie Mac, by US Department of Agriculture by Veterans Administration, all these wonderful government agencies that you didn't know we're in the real estate business, well, then that's good news because they can now become your lender, in addition to selling you the home.   Michael: Interesting, okay, so someone can just google or your online search for the local land bank and whatever market they're interested in living or investing in, and it'll pop up with listings, just like the MLS.   Pam: That's exactly right. Just type in name of your state. If nothing comes up name of your county, if nothing comes up name of your city. So try it in that order and if nothing comes up in your county, then look at the surrounding counties. I would also just type in something like land banks, United States map sometimes, you know, some set of words like that and then that should uncover all of the line land banks and help you see For your state, for instance, if you're in New Jersey, what are the land banks in New Jersey and then find it that way.   Michael- Interesting. Wow, this is so cool, Pam and so you are you self-managing all of your properties that you own?   Pam: I am, so when I first got started with this, I was working in a really demanding job in corporate America as an exec and that was not feasible to be self-managing. So I worked with a property manager and perhaps someday I will go back that route except this go round, of course, creating my own property management company. But right now, I'm right in the thick of it. So all of the units are self-managed and that includes units that are two family, three family and even four family, again, all bought for 35,000 or less.   Michael: And what are the rents that you're seeing on these types of properties?   Pam: Yep. So for a house, that's a four family that well, that particular one is all studios. So of course, the rents there are going to be a lot less, so that's 850 each for a house…   Michael: Wait, wait, wait, wait, sorry, timeout back one second, 850 each on per unit on a four family that you bought for 30 35,000?   Pam: Yeah, for 26,000, yes, that particular one.   Michael: I've been thinking about people talking and saying there's you can't find properties that are the 1% that meet the 1% rule. This is like the 678 percent rule.   Pam: And that's why I encourage folks to come to come to my smart cousin.com where I will hold you by the hand and help you not only find these, but much more importantly than just like, hey, that one there? How about that one? But to really evaluate them and see, does it meet? What I hope is a set of criteria that you've given some thought to? So for instance, you asked me a really important question, which is do I self-manage? That's a question that anyone should think about, do they have the ability to self-manage and moreover, do they have any interest in self managing or do they think that's going to lead them to hate all of humanity and…   Michael: A one way ticket…   Pam: One way ticket straight to? Why am I already 30 years of my life before I was headed downstairs? So that's how they're built. Don't do it, don't do it, turn it over to someone else, pay someone else to 10% 12%, even 15% to do the property management. But if you're built for it, then go ahead and do it. So that's one. Second is are you looking at long term rentals, which is what I do? Are you looking at short term rentals, meaning the Airbnb ease of the world? If so, well, then we need to look at a different set of properties. Are you looking to have something have tenants essentially under your feet, in other words, a to family where they're next door to you or underneath, right underneath you? So those are the kinds of questions to think about before you just run in and buy the first thing that you say.   Michael: Yeah, that makes a ton of sense and such great tidbits and advice, but I'm so sorry, I interrupted you because I would just like my mind exploded. You have to forgive me. I hope it didn't get too much on the screen here.   Pam: Oh, no, no, not at all…   Michael: So, that was your for family lower rent at 850. A unit studio? Let's get that. Let's jump back to other side….   Pam: Yes, right. Okay, so probably the standard size is going to be your three bath, three bedroom, one bathroom, right and so that I have a lot of those and I suppose the lowest cost one is 1025 and there I just keep it there because it's, you know, a great family. They've lived there a long time and I'm not interested in changing anything for them. But I have another one where someone just moved in and that's 1500.   Michael: So that you bought for 28,000-30,000?   Pam: Right, that I bought for that one within a paper that one 345, 345. So yeah, it's a it's good pickings right now, but like anything, you just have to stay strongly tethered to the ground planning for other variabilities that could occur in the market for the two family that I have there. That's two beds, one bath, and that rent is 1000 for each. So I guess I just say that to say that in the north east. Generally the rents are going to be higher however, prices I mentioned a couple of states earlier, I mentioned Ohio and I think I mentioned Michigan and so certainly the Midwest is many, many more houses for the price of a car prices for rent are lower. But that said, Certainly you would target I think, the Midwest for a good solid multifamily, perhaps a three family that you might buy in that 40 $45,000 neighborhood. This is and then it won't hurt as much to have those lower rents.   Michael: Right, this is amazing. Pam, what are some of the risks or the downsides that either you've seen or learned about that folks should be aware of and hope to help mitigate?   Pam: Absolutely, so the risks, certainly one risk. You mentioned this earlier, when you asked about obtaining a loan and I would say more broadly, the risk is ensuring that you have sufficient cash to whether all of a sudden something is needed on that house, oops, I thought I could just put something to repair this roof and in fact, what do you know the roofer went up there, he said, it's like an eight layer cake made of asphalt shingles and so now I've actually have to replace that roof at a large cost or some other thing. So that's one risk is that you need to have the pocketbook, or access to a home equity line of credit or some other string to pull on. A second risk is how you start. I don't advise anyone to start in the deeper end of the pool, deeper and meaning, let's say auctions, auctions are site on scene, you are not able, at least not legally to go into the house and see it…   Michael: I think it might be a story there…   Pam: …And see it, it is Buyer beware. So I would never advise someone to do that as their very first house. Start instead with you mentioned MLS, lots listed on MLS, start their land banks, they will allow you most of them anyway, to go inside and bring someone with you to tour the home. I'd say another one, I suppose if I had this to do over again and so like a 2020 hindsight, it's think about when you're looking at homes, if something is in a much better neighborhood, or has some other vein of silver running through it, for instance, it is in a commercially zoned area. But maybe it costs a little bit more not a ton more. So for instance, it doesn't costs 55,000 Instead of cost 65. This thing that's a little better, I would have, I would say to young Pam Hill isn't worried. Those are what you should target the ones where you've got to spring for a little more and the reason why is even though that 10,000 or 15,000 will seem like a lot in the moment, the appreciation value is significantly higher. So that is something I would suggest to folks as well, to not just pick as many as you can dollar store style. But to instead look at where it makes sense to go a little bit higher, and that includes more multi families. 2-3-4 families are always going to be a little better than a single family because that is just one piece of infrastructure in the case of the roof. In the case of the sidewalk in front of the house versus two, I've also found that with multifamily is oftentimes the person who is living in unit one, as soon as unit two becomes empty, they refer you to a friend of family or someone else for unit two and that way you have a self-reinforcing mechanism for rent being paid by both parties because neither wants to see the other get into the terrible shape.   Michael: That is very interesting, that's very interesting. Pam on the property that you purchased, and I think I know the answer, but I'm going to ask it anyhow. What has the appreciation been like because as investors we talk about cash flow or appreciation, it tends to not be both or that's what kind of land somewhere in the middle. So what have you seen with your properties thus far?   Pam: That's a great question and it even gets back a little bit to the other question around the risks. So I would say First answering the question, the appreciation is not as high when you are buying for the price of a car and thus that is also the risk. If you are looking for a flip opportunity, you would do better to buy your standard $200,000 home, for instance, that is in a $400,000 neighborhood and needs $80,000 worth of work, you are going to be able to obtain, maybe not from a percentage perspective, you might not think, gee, that's returning as much, but absolute dollars are what matter in that example, not the percentage. So percentage wise, my houses have all appreciated quite a lot relative to others to the tune of two or three or even four times as much but think how low the base is. So those houses are really two things. Thing one is cashflow, thing two is lottery ticket for appreciation value. So as a for instance, the houses that I own in Wilmington, Delaware, I would imagine that when the Joseph R Biden library is built, I'm presuming that is going to happen in Wilmington, Delaware. Given President Biden's long experience there as a senator, that neighborhood is going to see some significant appreciation value. So that's where I see the upside, should there be a cash sale as it were of these houses. Something else that you can consider this is more of a risk. But it is something that you can consider when you buy a number of houses that have a common macroeconomic theme to them, like house for price of car, you can think about either a real estate investment trusts, so putting them under a REIT, or putting them under a hedge fund and for those investors who are interested in that higher level of return, you mentioned the 1% versus the six or seven, those investors kind of like low, low investment grade high yield bonds, might have some interest in that kind of portfolio and that can be another way to both obtain cash flow, or certainly to, to get out of the market as it were all together without selling them off one at a time.   Michael: Interesting and this has been so eye opening and so insightful. We chatted before we hit record last time we spoke about some of the things that you're doing to be an advocate for some of your tenants and people might hear that and think well, how can I be an advocate as a landlord and also have a tenant relationship? It seems almost counterintuitive, so can you speak to a little bit of the work you're doing?   Pam: I'd say first is that I do it, I do it because I feel driven to do it. In the same way that the community that I focus on mission wise is black and brown people, women, but certainly there's room under the tent for everyone. But I think about who has been disenfranchised, certainly by FHA and others, some many decades ago and still there's some of that rattling around in our system. So as I think about tenant rights, there are two in particular in Delaware that I'm passionate about. One of them says that you should not be able to discriminate against a tenant, because they receive a Housing Choice Voucher. In other words, because they receive section eight, it is legal to do that to advertise your home and say I do not accept section eight. That strikes me as a very strange, legal rule, since it is not legal to discriminate for other reasons, including economic source, I certainly couldn't tell a nurse your money doesn't spend here, missy, where are the firefighters? That's who I want. So it strikes me as the same with that and so I am advocating for that. A second one is a right to paid representation for very low income tenants who are facing eviction. This is a one year pilot of sorts that Delaware is looking to implement and that I approach from a perspective of fairness. It seems only fair, that folks who more than likely cannot afford not just a lawyer, but even a day off work to come to the eviction hearing in the first place. It seems only fair that some sort of representation for them just the same way that it's within my scope, should be available and second is from a landlord perspective, my hope is that with that representation, and usually it would not be a lawyer, it would be some sort of legal advocate. But the hope is that, that gives the tenant someone else to listen to, rather than thinking, Oh, Pam Hill, you're just talking your book, I do not want to listen to what you have to say, I'll just take my chances in front of the judge. But by hearing another person, look over their case and tell them, You owe the grant. It's just that simple. Let's work out an arrangement to make a payment. I think that that could help us both, so that's the reason that I am behind these.   Michael: It makes so much sense and it is so interesting, and frankly startling to hear that these laws exist, and it does seem so punitive to the tenant and so I really applaud you and thank you for being such an advocate for your tenants and I'm sure that they appreciate it as well. So keep up the good work.   Pam: Yes. Thank you, thank you.   Michael: Absolutely. Well, Pam, this as I've been saying it the whole show, the whole episode has been so interesting, so insightful. So much fun. Thank you again, for coming on. If people want to learn more about you want to learn more about my smart cousin, where's the best place for them to do so?   Pam: Come to my M Y, smart S M A R T cousin C O U S I N.com. Certainly follow me on instagram or twitter with the handle @mysmartcousin. If you go to my site, you'll be able to see a couple of things. One is a free eBook. Second are free webinars that I do and then third, paid courses. So look forward to seeing you there. Look forward to helping you on this journey. Please take action, even if you listen, and then tune out from any sort of hand holding from me or anyone else as quite alright. Just get going on your slice of this American Pie.   Michael: Love it. Pam, thank you again. I'm sure we'll be chatting soon. Take care, alright!   Pam: Thanks so much, Michael.   Michael: Okay, everyone. That was our show a big thank you to Pam super, super interesting story and pretty amazing what she's been able to accomplish at the price points that she has really amazing stuff and really cool work that she's doing being a Tenant Advocate where she invests locally. As always, we would love to hear feedback from you all on things that you'd like to hear future episodes on and the reviews are really helpful for us. We look forward to seeing our next one. Happy investing…

In a recent Roofstock Academy webinar, we got an interesting question that we were unable to address during the session. The audience member asked for words of wisdom on the topic of being a beginner and your first property is operating at a loss. When is enough enough, and when should you cut your losses?     --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by my co-hosts…   Tom: Tom Schneider…   Emil: and Emil Shour…   Michael: and today we're gonna be tackling one of the questions we got from a webinar we did recently, as part of the Roofstock Academy recently did an AMA, which is an ask me anything, and we kind of re labeled it and ask Michael anything webinar, it was a lot of fun. If you missed it, we missed you and look forward to seeing you on the next Roofstock Academy webinar. But a question we got that we didn't have time to answer during the webinar is words of wisdom to share for the first year or two, when your rental operates at a loss. How do you know when to cut your losses?   We saw the question, we're like, man, this is a killer question. So Emil, I am just going to farm it out to you. Because I know you got really excited about it. What do you say to folks out there that have this experience or are thinking about investing in a property and this is a concern that they have?   Emil: All right, so I got excited about this because it's basically what happened with the triplex, right, I bought it in November. So the first year, November, November of 2020, most of 2021 was spent rehabbing the property, because I knew rent was under market. So you know, it's kind of in the middle of COVID, a lot of vendor issues just took us a long time to get everything done. So 2021 major loss, but now we're, we're good, we've got good tenants in there, I had to get a new property manager and we're at rents that actually, I think a little bit higher than the pro forma I had when I bought the place. So my first year too, was operating at a loss and now I feel like is going to be the true test of does the property perform. So that's my long winded way of saying, I guess it depends on how you bought it, like if you bought it turnkey, and it's operating at a loss for the first couple years. Maybe that's not the greatest time but if you bought it knowing, maybe you're gonna have to update things, you know, you knew like the roof was gonna go out sooner, some something where you knew these expenses, were going to come along, and it's fine, you know, it's going to be a loss originally. But then, hey, you're not gonna have to pay for that thing for a long time, right? You replace it and now you got a brand new age back or roof or kitchen or whatever it may be, so my answer is it depends on those factors.   Michael: Love the clear cutness, the directness, Tom, your thoughts man jumping in.   Tom: I think in making decisions, like you should try, like as much as possible to like, have it like already kind of like set up in advance. So perhaps there's like thresholds, you can kind of set on expectations? I mean, this might be a little bit like unrealistic for this scenario. So I'm gonna change my answer, I'm gonna say, I think, like, strategy wise, like, are you planning for like a longer, longer term buy and hold? Like, if that's the case, you know, the initial kind of like, upfront expenses, perhaps it's stuff that we're going to happen anyways, like, it was kind of like aging, what not. So I think it's, you know, having that kind of like, plan upfront of like, what your ultimate strategy is, like, let that inform these kind of decisions in the moment. I like that I kind of got two different answers there.   Michael: Yeah, I guess. Okay, so as a challenge to that, Tom, if I'm someone I'm buying turnkey, like Emil mentioned, and I'm planning, I plan and identify as a long term, buy and hold investor, but the first two years, just don't go my way. Don't you know, I have a couple more expenses than anticipated, so I'm operating at a loss. What should I do?   Tom: I think there's like a little more context. So like, where, where are your where's your value relative to? Or where's your, like, buy price versus the current, like, where are the values that like, could kind of go into that, I'd say probably a mistake. You need to also factor in like transaction costs, like let's say you were to like, sell and then ribeye like that should go into the calculus of like, what you're going to pay, you know, on the agent side, and just the friction of selling. So I think like that should go and count, so it's like there's, it's sort of a a lot of different colors to this painting of a decision and as detailed as you can be like of these different considerations should go into the process of you know, do you sell it or do you buy it? I mean, this is is like a great answer, because it's like kind of like asking other questions. But I feel like a lot of times like the best answers for this kind of stuff are asking additional questions that you should be kind of unearth before making that decision.   Michael: Makes a ton of sense, makes a ton of sense. Emil, I love your point about like, oh, is it turnkey or is it known that there's expenses that are going to force you to operate at a loss? Even if all of the things went well, like, you'd look at the numbers, you still put more money into it, then you got out of it? So that by definition, like it's a loss.   Emil: It's like, what are you expecting, right? Like, you know, I almost don't look at it as a loss on the renovation, it's almost part of my upfront investment. So let's say I spent 20, I probably spent about 20- 25k, repairing it, I'm not really looking at last year as a 25k loss, even though that is how it is on the like, profit and loss, whatever you want to look at it. I'm more looking at it like okay, here was my purchase price. I had add 25k, now, what is my return on that going forward?   Michael: Yep, I think that makes a ton of sense. So how do you think about like, knowing when to cut your losses? If you anticipating, hey, I'm gonna get this thing up to the triplex is a perfect example, hey, I'm gonna get this thing up to market rent, I spent the 20 25k on the renovations. I'm having trouble leasing it, I'm not getting the market rent I thought I was, do you say, well, let's cut our losses and run, I mean, how long are you going to hold on to that for?   Emil: That is a very good question and I wish I had a really good answer for that very good question. It's hard. It's like, are you in an appreciating environment, right? Like, like Tom kind of mentioned, if your property values going up, you're making money in a indirect way to potentially be able to sell later? Are you in a environment where the value is going down? Do you bought I don't even know if you're, if you're, if it's going down? Do you sell it then like or do you say, you know, right, I think in 10 years, I guess it really just depends on like, you're at this, this sucks and real estate investing, but like your gut feeling on what you should do, like, do you have a bad property manager? Do you not feel really good about the market? If you have a good property manager, and you feel really good about the market long term? You know, maybe you have more conviction and just kind of weather the storm and hold on for longer and see, like, how does it perform in years, three to five, instead of just determining you know, one or two years? I don't know.   Michael: I appreciate like that concept and I agree you to an extent, but I'm going to push back a little bit. Because I'm afraid that too many people's gut feel when you're in the thick of it is all doom and gloom and so when your renovation went over budget, and your property manager sucks, and, you know, your your property has been in foreclosure because you didn't recognize that your loan didn't get auto paid, like all these things are bearing down on you. I think it's really difficult, even if you're an appreciating killer market to see that you're carrying all these all these things on your shoulders, or on your back or wherever you're going to carry them and it's so hard to hold your head up high and see the greater good and so trusting our gut, I think can oftentimes make us lead us down the to make incorrect decisions.   Emil: Yeah, yeah, that's a good point.   Tom: Yeah, I guess to my original point, like humans are notoriously kind of can be very bad at making decisions. So like, as much as you can bake sort of a decision tree like upfront. With regards of like expectations on what kind of ranges where we hold cut bait, like, I think that's like a really interesting exercise, just so kind of in the heat of the moment, you don't have to put yourself at risk of needing to make decisions that could be like potentially a little bit emotional.   Michael: Yeah, I have this buddy and this is kinda like a stock market analogy, he set a stop loss limit on his stock at like the super low price and because he didn't want to lose any many more than that. So for anyone who doesn't know, basically, a stop loss limit is at the stock hits a certain price drops a certain price, it'll automatically show sell either all the shares or the amount of shares that you determine or $1 value determined. So that way, you kind of hedge your downside. Well, he did that and the stock price dropped one cent below, sold all his shares, and then skyrocketed back up, like way above and beyond where it was starting at the day and he was like, oh, my God, like this sucks. I'm like, yeah, dude. Like, why would you do that? That's not a that's not a thesis that I believe in. That's not something that I would ever do. I'm like, man, I'm going all the way down, if it's gonna go down, down, down into the ground, and I've done that before I wrote stocks to zero, which someone could say that probably wasn't the best decision but that's how I invest the stock market.   In any case, I think that so often we have these kind of dips like these, these lows and these highs in real estate is no different. Like, things can seem like they're really down in the dumps and they're going terribly and, and just sometimes you have to write it out and if you have the wherewithal like the mental fortitude, the wherewithal, the financial backing to be able to do that great, because the one thing we don't want to do is sell out of necessity, or have a fire sale because now we're being forced to sell. If I could recommend that anyone sell at any given time, it would be when it's ideal for them, or when they've set the kind of, they're able to dictate the terms under which they are selling. I think that puts you in a much more powerful position. I'll share an example just for my personal like, portfolio, I bought a property back in the day, it was an eight unit in the Midwest, I bought it for 305,000. The rent in place rent at the time was like 4850. So on paper, just like killer property and the expenses were just through the roof, a lot of deferred maintenance that I wasn't aware of a lot of like death by 1000 cuts type of ordeal, or just one thing after another after another after another was going wrong and the repair dollar amounts were stacking up and I'm like man, should I sell this thing should just get rid of it, I kept it and today the in place rents are like 7500 7400 over like a four or five year period, the rents are going up $3,000 a month and so now there are still some of these kind of miscellaneous erroneous pain in the butt maintenance items. But the rents have gone up so much that it really takes care of itself and so I think, Tom to use an analogy that you often say, real estate so often is going up into the right, from a value standpoint, and from a rent standpoint and so I think if you can hang on, even if you are operating at a loss for a couple of years, and it doesn't change your lifestyle, like it's not a massive, massive, massive loss hanging on can often get you through the worst of it. Now that's not to say never sell that's not to say never cut your losses and run but oftentimes, I think it can make sense to really hang on, especially just getting started because you might not know how beneficial that real estate investment could be over time.   Tom: Yeah, conservative underwriting another yeah, good takeaway and yeah, I totally agree that that's like I think like a short story, I like yours a lot better. But you know, I had a friend who bought and he like had a few issues like with, you know, rent collection were just delayed or in some, like maintenance came up and he like, kind of like panic sold and I was like, man, like, why did you do that? Like yeah, anyways, but yeah, fortitude. I like I like that and be kind of prepared for the for that kind of stuff in your underwriting, yeah.   Michael: Yeah, I guess that reminds me of like my very first property I shared it on on prior podcast episodes, but I just got absolutely hammered with my very first tenant, exiting, like leaving the property that to evict them, they smear human feces on the wall, but small claims court, like it was just such a whole ordeal and I remember, like one of the guys asked me, well, why did you keep investing and when I was too stupid to know any differently, I was like, I didn't know that it could, like that isn't the norm that those kinds of things can happen. But that's not traditional and so I think if I had stopped investing, or I had sold that property, I would have been definitely bummed because I actually just sold that property recently in a temporary one exchange, and it had doubled in value over the course of I don't know, eight, eight years, nine years, something like that. So I'm super thankful I held on to it, I'm super thankful I was too dumb and too green to know that I should have sold and so I think Tom, you made the point to think about the selling costs associated with selling the property and you're gonna pay like 6% to an agent, probably if you go through so I'm gonna pay 3%, so just for the agent costs there are often other costs and fees associated with it. So even if the property has appreciated, you still might be selling at a loss because of those fees associated with selling so I think you got to think long and hard about it versus what the potential upside is and talk to other people like talk to other investors in the area what they're seeing because like we mentioned it can be really hard to see the benefits and the upside when you're down in the in the thick of it.   Emil: Way better to like feel good about a property it's been doing really well and then you're like I think I'm ready to sell this then like you've just been you know, you've hit the hard part and you're like selling into that right before it potentially is just like going to do well for you.   Tom: This is another kind of shout out for like mentorship is like another big thing because like you know you might have like subjective getting some like subjective outside stuff like I mean I love that I can bounce this stuff off of Michael and Emil. So like getting mentors you know is up there I'd say like you know, making sure you're underwriting conservatively and then getting a second pair of eyes is really helpful.   Michael: Totally! What was, was't it Gandalf who said like it's always darkest before the storm or like or before the day I don't know something like you're again before the storm, like I get off impression…   Emil: Yeah, really good.   Michael: With that, let's get out of here. All right, everyone that was our episode. Thanks so much for hanging in with us, especially towards the end there was kind of touch and go. If you liked the episode, please feel free to leave us a rating or review. We love answering ama type questions. So if there's something that you want to hear more about or get answered on the podcast, leave us a note in the comment section and we'll try to get to it on episode. As always, we look forward to seeing you on the next one. Happy investing. Tom: Happy investing!

A Florida Native and graduate of University of South Florida, Jeff Wills is an accomplished Tampa Bay Area agent who brings a strategic yet personable approach to the home buying and home selling process. Drawing from years of experience as an agent in the Tampa market, he has built a solid reputation for himself as an industry leader with a solid track record that specializes in attention to detail in commercial and residential transactions. Investors are buying homes in Tampa at a record rate. Between July and September 2021, one in four homes that sold had an investor as the buyer. According to a report from the Tampa Bay Times, Tampa Bay ranks as the 7th hottest metro area for investors nationwide. Today, Jeff talks about the Tampa Bay market: neighborhoods, price to rent ratios, economic drivers, geographic considerations, and more insights that investors will want to know before making moves there. Episode Links: https://sefair-inv.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and joining me today is Jeff Wills, our certified agent out in Tampa Bay, Florida and Jeff's gonna be talking to us today about all the things we as investors need to know and should be aware of, if we're investing in that market. So let's get into it.   Really quickly, before we get into the episode today, I want to encourage everyone to go check out roofstockacademy.com. Roofstock Academy is our one stop shop for real estate education, independent of whether you're just getting started or a seasoned investor looking to scale up or get involved in a different asset class. We've got lectures, we've got coaching, we've got one on one slack access forum and a plethora of other financial benefits, as well as money back on your marketplace fee credits. If you're transacting on Roofstock. So come check us out at rootstockacademy.com look forward to seeing you in there. Jeff wills thanks so much for taking the time to hang out with me today, man really appreciate you coming on.   Jeff: Absolutely, man. Love to do it and thank you for having me. Yeah, of course. So   Michael: Yeah, of course. So we're just gonna like jump right into it and we're talking today about Tampa Bay, Florida. I want you to give all of our listeners why Tampa why now.   Jeff: So why Tampa why now honestly, I've been hearing that a lot. However, it has been very, very popular as of late. A lot of the big things that people are hearing, actually, just yesterday, Goldman Sachs bought 305 units in downtown Tampa for 168 million, setting another record price per unit and a crazy valuation for cap rates right now and so there's just there's a lot of synergy. The biggest thing behind it has been Water Street water streets about halfway through its 10 year growth plan. They've got phase one out of the way, phase two starting, and that has really brought a lot of life and vibrance to Tampa that was kind of growing and burgeoning there prior to COVID prior to all the popularity we have now, but I think it's really hit its peak and honestly, it's probably got a good you know, 10-20 30.50 years stride to soon looking like Miami, although personally I hope not. I'd like there to be a little bit less people and, and keep the enjoyment that we have here and honestly, you know, Tampa is a big town, it's a big population. But it really does have an extremely small town feel with the micro communities inside the neighborhoods inside the certain you know, sectors and where we are on the map and near the water and so I think Tampa has a lot to offer, both from an investment standpoint, from a long term hold appreciation standpoint, and especially, especially a rent gross. I don't know what that's gonna look like now, just because you know, kind of has hit a very, very high mark. However, we're not seeing any vacancies. We're not seeing, you know, any kind of rent concessions. I was just talking to a very big property manager yesterday for a different reason. But they were saying, yeah, we're barely giving written concessions. We're hitting full market rent. Everything's at 95% occupancy or above and there's no signs of stopping. So I love it, I I've always thought Tampa was a hidden gem before COVID and before things got crazy, but you know, kind of very lucky to be here now and enjoying every minute of it.   Michael: Right on, Jeff, that is that's super interesting. So I'm wondering, what was that cap rate that they got for the Goldman Sachs purchase, do you recall?   Jeff: Honestly, I don't have that in front of me, I can almost guarantee it was probably sub four. Even after tax adjustment, it's crazy. I actually lived in that building. When it first opened, I got a I snuck in with some written concessions and realtor bonuses and stuff like that. So I kind of skated in a bit but I mean, it went through a lot of challenges. I mean, management was horrible. Two years, they had the same management then fired that one and then fired another one and they've had problems left, right and center what that building just knowing because I've got friends that live there and stuff still and it's still selling for that price given I mean there's a bar across the street that has so much drama tied to it. It's insane, that the publicity from that sale has anything to do and so backing up from that Goldman Sachs has long been rumored to be taking a very, very big piece of the pie in the Waterstreet office space and so while that hasn't been announced Goldman Sachs buying that building to me just sounds like corporate housing instead of them having to go and give all their employees stimulus, oh, we'll give you a 5000 monthly allowance. They'll say hey here, we've got a block of rooms, pick one enjoy yourself. It's paid for and I think that might be how they're skating that market rent because some of the stuff and water St. Tampa is going up. Actually, I just talked to my friend yesterday 966 square feet with a big balcony 5000 a month and it's it was exactly what I did you have 550 a square foot. Yeah, um, it's, it's insane and I mean, once you set that, once you set that standard, I mean, they do. I mean, okay, the Heron is the best multifamily building I've ever seen. But I mean, setting that precedent, all people have to do is just be nearby and just enjoy the overflows, people who can live there and by the way, they have zero vacancy, and they have a weightless for that unit. That's coming up down hole, it's crazy.   Michael: Holy smokes. So Jeff, you clearly an expert on the area, give people a little bit background, who you are, where is it that you come from and what is it you do in real estate today?   Jeff: Absolutely, so I grew up about an hour north of Tampa and a county called Pasco, a very small town and to me growing up, Tampa was a big city, a really big city, I had been there three, four times the aquarium a couple of times, and I just every time staring at the top of the skyscrapers and that was just the biggest thing to me and growing up, went to college, didn't really know what I was doing there. When for finance, I was like, yeah, let me kind of figure stuff out. My dad one day was like, hey, why don't you just, you know, pop into real estate, see what's going on? I'm like, yeah, sounds fun, should be pretty flexible. I like people, like, give it a go. Seven years later, here I am and it's just been, you know, from top to bottom, you get to help people with something that's extremely difficult, extremely stressful, and very nuanced and I mean, you know, from deal to deal, there's always something different. There's always a different backstory a different why and even growing up prior to all that I've always kind of felt that I was a good listener. You know, I, of course, I have my own, you know, opinions and desires and stuff. But I was always able to kind of peel back, what is somebody looking for? What does somebody want to do? You know, what they're, they're telling me one thing, but what do they actually mean and I've always, you know, of course, ask them, hey, you know, you're saying this, but what do you want this, and it's just been very enjoyable and, you know, the client feedback is the same, I've got a ton of referrals, a ton of repeat customers, and it's just, it's very, very enjoyable for me to be able to, you know, simmer it down to its the parts that they can control and make sense of, and then I just handle all the other legal mumbo jumbo stuff on the back end and it's just been very, very enjoyable.   The first three years, I was very retail focused, you know, end user not very investor friendly, and kind of got bored with that and I was like, you know, I, I've always enjoyed numbers always been pretty good at numbers, like, why can't I get to the investor side of things and that's when I joined my current brokerage see fair investments and from there, it just kind of skyrocketed. Our offices set up extremely streamlined and efficient, to the point where in the past 13 months, just me and my broker together have done about 137 million in business, and 98% of that was investors and we're just, we're just masterfully efficient, fine-tuned and, you know, we know how to strike valuations from, you know, Jacksonville down to Fort Myers, it's, you know, it's a few things we know how the appraisers operate, we know what a tenant is going to do to it as far as evaluation what people are paying, because we've got 30 under contract that we can look at and say, oh, you know, hey, a cap rate is this based on this or like, we just have a ton of insight and ability to help our investors and you know, even just last week, you know, we have, you know, I guess it's kind of our, our secret sauce, but it's very simple. Every Friday, all of our clients get an update, regardless of status did nothing happen, hey, nothing happened today, you know, that just wanted to let you know, have a great day and yet again, I had another client last week said, hey, you know, honestly, we haven't even spoke on the phone. Once. It's been all email. I just wanted to say thank you. You were exemplary and you know, he even brought up the Friday things like every Friday, I had an update, I didn't need an update. I didn't you know, I didn't ever had a question about what you were doing, how the property was going and so while those compliments don't always come, I mean, it's always 9 to 10 with that, we haven't had very many upset people at all and they always bring us their next listing or, hey, I'm trying to buy in here and buying has been very challenging right now. So a lot of the investors are on hold being patient, seeing what rates are doing. But all in all, it's been really, really great, especially on the sales side, and we're just, you know, happy to help people while we can while the market is doing great.   Michael: Right on. Well, it sounds like if you ever transition careers whenever you're done to be ready to be done with real estate, you'd be a great therapist. good listener.   Jeff: Oh my gosh, I joke about that all the time. I tell people sometimes like, man, I've done so much marriage counseling, I'm good to go. We need to like do one deal. You'll know you'll get one and I'm saying, oh, that's pretty, it's, it's a lot, but it's just very easy. You know, I mean, the end of the day, people want a couple of things. They want to be comforted, they want to be, you know, they want to know that you're honest, and they want someone reliable and if you can fit those buckets, while being a joy to talk to and to interact with, I think that's really all I needed to do.   Michael: Love it, love it, love it. Well, Jeff, let's dig into the kind of meat and potatoes of the Tampa market a little bit and give listeners some insights into other than this Goldman Sachs transaction, which set new record highs and the buying being a little bit difficult. Let's educate people about the Tampa market. So who are some of the major employers in the market and are you seeing people moving to the area or maybe moving out of Tampa?   Jeff: Definitely a massive influx, I'm not sure the exact daily rates, but I know Florida, pre COVID was about 1200 people per day. After COVID, we're at about 2400 to 2600 people per day from out of state moving to Florida and while that's not always Tampa, that really is the only place that has had affordable housing, affordable rents, especially compared to Miami. Compared to Orlando, Orlando is a relatively higher price than us just because it was more pocketed it was hard to find an actual community over there. While there are a handful. It's very spread out and sprawling, and Tampa is extremely concentrated. Some of the larger employers in Tampa are, I wouldn't say there's one or two, the majority are a lot of health care providers, hospitals, doctors, stuff of that nature, a very big presence with attorneys and then honestly Tampa is becoming a very, very big tech hub. Reliaquest is a very big cybersecurity firm, they signed in Waterstreet for the top of their class, a class A office tower and so it's been rumored I've seen a couple articles that Tampa is the next Austin as far as a tech hub and you know, we're tax friendly. We don't have any state income tax, we have homestead, there's a lot of things that were already here and then now as other states like California are being, you know, more tax even more stricter on a lot of things. It's just it's increased that flow and I don't think that stops for a long, long time. Because Florida has so much land, we have so much room for stuff and while you know, even though you might not be right in the heart of Tampa, a 3540 minute drive is no big deal and you are close to a million different things inside that span. So just you know all of those things and then one underlying factor too, that I like to tell that nearly no one knows that I mentioned is pre COVID. I haven't checked these numbers after the Port of Tampa. Probably Never heard of it does 3 billion in revenue every year, if not more and so that has been a very silent provider. Actually, one of the biggest companies in Tampa is mosaic. They own right over 400,000 acres, and they're a fertilizer company. So they are huge in Tampa, as you know, from ground all the way up to politics and everything else. So they are very big employer and advocate for the port and everything else that's going on there.   Michael: Right on and Jeff, you give folks a sense of like, what is a traditional typical three, two, single family home cost and what would the rent look like and maybe you can give people an idea of some of the different neighborhoods in which they could be considering?   Jeff: The median home price now is right around 335,000 today, and we have about less than two months of inventory, scroll back to 2019, we had about six and a half months of inventory. So we've reduced that by about 300% and days on market, three to five days max, if it's even close to move in ready and that that median price. I mean, I'm looking at the chart now it's almost it's very, very close to 350,000 as of today, and it's just it's very, very challenging, but some of the better neighborhoods. So if you're in Tampa, South Tampa is really where you want to be, but those price points are honestly million dollar homes for a three two and so those rents and cap rates just won't sweat. They won't crack the code for what we're looking for and what honestly any investors should be looking for. So that's not really where we want to be. But I would say that Brandon is a great area. It's just outside of Tampa. It's about 30 minutes east, very sprawling tons of land, tons of nature, tons of trees and that area is a great neighborhood. Same very roughly same median price per square foot, you'll probably be able to get rents around anywhere from 1900 to 2200 for that size home depending on the condition and that's honestly a pretty savory return. Of course, you're now seeing foreign 450 be the norm there too but the rents are following. You know, I mean rents for those are 26 to 2800, all day long and sometimes that makes the cap rate, it maybe the cap rates a little more compressed and the overall return, but the cash flow is higher, and you know, the appreciation is going to be there.   Another and it's really hard to find a great cap rate neighborhood right now, because it's just, it's getting nipped up so much. If you go west of Tampa, north to the west Chase Oldsmar area, that's a great little area to that has very, very, very, very quickly start to price up as everybody's moved there, to where they couldn't afford South Tampa to where they couldn't afford north of Kennedy and West Tampa and so that's an excellent little pocket there great schools, great golf courses, you've got all ages that enjoy that area, which is, in my mind, for somebody that's looking for a renter, always, that's a good market to be in and then if you go north of Tampa, you've got Carolwood up there and greater Northdale. So all that area, there is also a great pocket of Tampa, the price points are going to be pretty high on average as well. But you can still find that starter entry level home and if you can get it at a good cap rate buy it, the every growth that I've seen is coming north of Tampa, in waves and this cheval Lutz area all the way over to Keystone in an East Lake. This actually has the highest concentration of wealth in the Hillsborough County so it's actually not in South Tampa. It's not in downtown, it's not on Davis Islands, which is a phenomenal honestly the best part of Tampa but a home there's you know, 4 million for 1500 square feet so those prices are crazy, but this area is excellent very equestrian, tons of lakes, tons of lake homes, tons of golf courses, nature trails preserves, an excellent up and coming area to be in and then one last area I'd like to highlight is the Ybor City and Seminole Heights area.   So this area is directly north of downtown Tampa and if anybody on here is familiar with St. Pete and fourth Ave, fourth Ave, stretches out of downtown St. Pete and goes north and that stretch is probably a 10 mile stretch of the most golden real estate I've ever seen retail shopping centers, storage homes, but that's been there for 20-30 years and then north and east where you see that Columbia restaurant is Ybor City, historic Ybor ton of culture there a ton of background ton of history, an excellent place to be but it is very, very pocketed and very hard to find land there, but would be an absolute killer. The next best spot is going to be Tampa heights and Seminole heights. If we see the Hillsborough River here, that's kind of the cutoff point for Seminole heights and then everything south of the Hillsborough River to about 15 Street is both terminal, Tampa heights and Seminole heights. Those areas are fantastic. People love to be there. There's a whole bunch of you know, farmers markets and pop up shops and just cool boutique II stuff that is not you know, another McDonald's and Taco Bell that people are bored with. So this that's another great neighborhood, and that also sprawls out into a sea wells wood, and then West Ham over here by the airport.   Michael: That's a super great overview. Jeff, thank you so much.   Jeff: Absolutely.   Michael: I'm so curious if you can give people an idea of how property taxes work, because I think that can often be and I'm sure as you see, one of the biggest maker breaks of a real estate deal. So give folks a walkthrough in the Greater Tampa area. Of course, it varies county by county, but how should they be thinking about property taxes?   Jeff: Excellent questions. So obviously, we all know taxes based on a millage rate, every county, like you said is different county by county. But based on that, I mean, there's really not much else we can do to kind of guesstimate and or further understand it besides going to the Property Appraiser website. But plugging in the property and estimating the taxes. A good rule of thumb with that though, is that I found is anywhere between 85 and 90% of the purchase price, and then take the millage rate, then we can kind of skip the step of you know going in there and directly estimating it but that is that will get you within 99% accuracy of the taxes when they become reassessed after closing and so again, that's 8085 to 90% of the purchase price. So if it's 400 it's gonna be about you know, 375 380 and then take the millage and then that'll be your that'll be your new annual tax roll. And that is very, very, very, very important to take into account because I've seen a lot of investors in the past, go into a property and just pull the current taxes without any idea that they're gonna go. If that person's owned the home for 30 years tax you're going to have Got 1000 a month on a $400,000 home after you close, they're going to be closer to about, you know, five to 6000. So that that alone can easily skew a deal. So you always want to make sure that the taxes are, you know, properly at least estimated going in and then double checked while you're going through the process.   Michael: Jeff, you said 1000 a month for that 30 year old 30 year old hold, but I think he made 1000 a year, right?   Jeff: Correct. Yeah, absolutely, 1000 a year for sure.   Michael: Okay, okay. So is there like a good rule of thumb, if someone doesn't know the millage rate like 1% of the sale price, or one and a half percent of the sale price,   Jeff: I would I would inch to one and a half percent of the sales price because I'm seeing more and more than a $400,000 home is any anywhere between 5500 to 7500, depending on their tax district and while it is county by county, there are some overlays in some certain neighborhoods and CBDs that we'll have some effect on that. So I would I would definitely lean to one and a half percent and then if you want to be real conservative, just go 2% and then it'll always be below that.   Michael: Okay, right on. Now, anyone who's ever listened to the news ever, or who follows any kind of climate or weather has heard about that Florida has hurricanes. Talk to us a little bit about some of the weather and climate, things that are unique to Tampa that someone from California might not be aware of.   Jeff: Right, well, I will say anything that you've seen from not being in one, it's always way crazier, that are way less crazy than what they say it is obviously…   Michael: People hanging on the palm trees, you know, getting strung out.   Jeff: Oh, yeah. All, all extremely oversaturated. In my opinion, the biggest thing with Tampa Bay is flooding. And that really only happens in South Tampa and waterfront properties. So honestly, I would say any investor in Florida should really avoid waterfront properties because of hurricane insurance and flood insurance. They're just too high and they're gonna kill your returns not on not including any liability insurance you have. For the tenant that's there, I would say waterfront would work excellent in a short term rental, because that's kind of a hotel experience. But a long term tenant really is not going to do great there. I would certainly avoid it. Overall, if you're in the mainland and not in the low lying area, hurricanes aren't gonna do just about anything to you. As long as the home is up to code and you have a you know, Hurricane Preparedness step do you have the metal covers for the windows and just, you know, it's simple Google search will show you how to get hurricane ready, but it's really, it's really way more than they hype it up to be.   Michael: Okay, awesome and that's a really good point that you bring up. If the house is up to code, you expect it to withstand a hurricane or not became a drone? How should people be thinking about older housing stock or does Tampa even have older housing stock, like in California, we've got a lot of 1950s built ranch style homes. That's just a lot of the bulk of the inventory, what are you seeing there in Tampa?   Jeff: Exactly the same, the bulk of the inventory is probably going to fall in the 1970 range, a ton of homes and that 1950 to 1980 and then honestly, in Ybor you'll see a whole bunch of homes in 1912, 1915, where the area is very, very old, and has a ton of homes with crawl spaces. So what you want to avoid is homes on a crawlspace. If it doesn't have a slab Foundation, honestly, just avoid it. Can you get around it? Can you figure it out, can you have a foundation inspection? Absolutely but those are all things they're going to tack on to the cost and your whole period. If you're a five year holder, maybe it's not a big deal. But if you're at 1015 20, you are going to be dealing with foundation issues, at least at some point and it is not cheap. So that is one thing I would avoid with the age of the inventory and then one other special thing that kind of gets talked about a lot in Florida is sinkholes and so sinkholes are extremely common. They're not as bad as again, as you see on the news 99% of the time. But what happened back in, I would say 95 205 a couple people had a sinkhole that was relatively bad, you know, the home was falling in and unsafe living conditions and then insurance companies and engineers that were working with them came into the entire neighborhood and said, oh, you've got settlement cracks. This looks like a sinkhole and so you'll see 85% of homes maybe even higher than that that have had a sinkhole remediation done with no significant repairs or need for that at all and once the sinkhole home has been remediated with either a chemical grounding a underpinning or a another. They actually insert concrete under the home once you do either of those three things. Your risk for a sinkhole after that is slim to none because once you solidify all the Lime Rock and silt that's under the home you're done, there's nothing to worry about, just check for warranties, and make sure that engineering report gets to your insurance provider and I believe there's still only two insurance providers in the state of Florida, that will insure a single home. So it's going to be a little bit more expensive as well. So just keep that in mind.   Michael: Okay, good to know and, Jeff, I just want to go back to the foundation, you said that to avoid slabs or avoid crawl spaces?   Jeff: Avoid crawl spaces. I mean, you don't have to avoid them at all costs. But if the house looks a little wonky, even on the photos, just go on to the next one. I've seen 95% of every home that I've been that has a crawlspace has some sort of issue, you can drop a marble in the kitchen, and it ends up in the living room every time. It's just Florida. I mean, Florida with sinkholes, and still homes horrible mixture and there's not a ton of those. But you'll see him a lot in Ybor City a lot around some of the older areas of Tampa, but just stick to the easy stuff, you know, slab on frame or slab on block and you'll 9 times out of 10 you'll be good to go.   Michael: Okay, right on and from a kind of hurricane perspective, what are your thoughts and what should people be looking out for in terms of roofs?   Jeff: You want as long of a life expectancy on the roof as possible, um, shingle roofs are great, every roof made in the past, I think from 2010, or maybe even earlier, since we had that one bad hurricane that came through all of the code is updated. The majority of the roofs have roof strapping that straps the trusses down to the block and that helps tremendously during hurricanes and just about every home has that and when you get an inspection, you do your wind mitigation and that is a very, very, very big piece of the pie to save you money on insurance, especially if you're considering hurricane coverage. So I would say maybe one out of every 100 to 200 clients gets hurricane protection. But it's available and honestly, you really just want to make sure that it has up to code roofing and those standards and it'll be just fine.   Michael: Right on and kind of in the same vein as insurance. What are you seeing or do you have a good kind of ballpark estimate for clients and listeners about what insurance costs are in Florida?   Jeff: Absolutely, to keep it simple, like we did with the taxes, I would probably say that's very close to the 1% rule and probably even a little bit below that, a $400,000 home. I've seen quotes anywhere from 2800 to 3800. So if you use the 1%, it's going to be less but you know, as long as you're not in a flood zone and don't you know don't have any hazard or wind additional add ones, then that should be a perfect, perfect metric to keep track on.   Michael: Right on. Jeff, this has been super awesome, man. Any final thoughts, things tips tricks that folks should be aware of as they're investigating the Tampa market?   Jeff: Absolutely don't wait, don't sleep if you want something, get it now get it while it's hot, because it's only going up. I think we've been undervalued for a very long time. I think we're at market value now. But I think the you know, honestly, the 10 to 30 year window and long range gross of Tampa I think is going to pay massive dividends for whoever can get in there.   Michael: Right on and I guess my last question you, are you seeing stuff go over asking or are you still seeing things come under list price or how are you seeing that?   Jeff: The market right now is very weird. Only because I've been used to just stuff flying for 18 months now. With the rates kind of adjusting the way that they have been everything has slowed to a tolerable level instead of 20 offers on a home we have three to five, so it's still chaos, but it's controlled chaos and something we can all deal with a little bit. But yet if you're not offering asking, you're not getting the house, if you're not offering 10 grand 15-20 above the house, you're probably still not getting it if somebody else's cash. So it's, it's extremely competitive. You have to be willing to push that cap rate on your own and be ready for the appreciation and the rent growth next year to kind of float you to where you want to be.   Michael: Okay, so good to know, Jeff, our certified agent out in Tampa, and folks have questions for you want to get a hold up? Where's the best place for them to do that?   Jeff: Absolutely. Um, you can visit our website at any time https://sefair-inv.com or feel free to reach out to me directly. My cell phone and email will be left in the podcast notes and I'll be happy to do whatever you like.   Michael: Right on. Thanks so much Jeff, can't wait to hear from you to chat soon.   Jeff: Absolutely, buddy. Have a great day, thank you!   Michael: Thanks, take care. All right, everyone. That was our episode A big thank you to Jeff for coming on and hanging out with me. It was a lot of fun, super interesting and clearly he is jazz about the market. I think a lot of us should be too. As always, if you've liked the episode I would love, love, love to hear from you all check out some ratings or reviews from you all and just hear what you have to say about the show. We look forward to seeing on the next one and happy investing!

Tamar Hermes is a full-time real estate investor and educator. After building successful businesses in the retail and entertainment industries, she turned her attention to real estate with a mission to get more women to become investors and continue to build her portfolio. Tamar has been investing for over 20 years with a focus on appreciation with buy and hold single-family homes and duplexes in Los Angeles. In the past few years, she has expanded her portfolio to include passive multi-family investments across multiple states, private lending, and Airbnb properties. She bought her first duplex when she was 28. She always had a knack for saving money, but it took her years to discover there were other ways to earn income besides working a 9-5 job. Today, Tamar will talk about how financial freedom is possible through real estate and the importance of knowing how to allocate and invest your money and protect assets is a critical piece of sustaining financial independence and creating a legacy. Episode Links: https://www.themillionairessmentality.com/ https://wealthbuildingconcierge.com/ https://quiz.tryinteract.com/#/60bd0792decf1d00177af595 --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey everyone, welcome to the Remote Real Estate Investor. My name is Michael Albaum, and today I am joined by Tamar Hermes, who is an author, investor, coach, an all-around awesome person and she's gonna be talking to us today about what it's like to get started, as well as some of the different avenues that investors can take as they're going down their investment journey. So let's get into it.   Hey, everyone, just a quick note, before we get into the episode, today, I wanted to give a shout out to the Roofstock Academy, which can be found at roofstockacademy.com. It is a one stop shop for your real estate investing education, independent of where you're starting from whether you're just starting out trying to get that first deal done, or a seasoned investor with a sizable portfolio, looking to get involved some other asset classes, or maybe streamline your investing. We've got stuff for you. It's comprised of on demand lectures, so you go at your own pace. Some of our programs have one on one coaching access to private Slack channels, forums and group coaching sessions. So come check us out at roofstockacademy.com. Look forward to seeing you in there.   Tamar, thank you so much for taking the time and joining me on the podcast. Really appreciate you coming on.   Tamar: Thank you so much for having me.   Michael: Oh, my pleasure, so I know a little bit about your backstory. But I mean, you're an author, you're a coach, you're an investor, give us the little background of who you are, where you're come from, what it is you do in real estate.   Tamar: How long does this podcast? Okay, in a nutshell. So my background is similar story, as a lot of investors that start out in real estate, I was looking for a way to lower my expenses and so I bought a duplex over 20 years ago and the rest is history, I realized that I could get other people to pay my mortgage and it was very exciting and I went on and did more of it cut to I did grow up without anything. So I wanted other women to realize the opportunity in real estate and that's when I started wealth building concierge. I recently wrote a book, the millionaires mentality to teach women how and men too actually should say, how to invest in real estate and the many ways in which you can do it and the many ways to build wealth through real estate.     Michael: Oh my god, I love it. Well, there is a ton here to unpack, we'll see how much we get through in today's episode. But so the duplex that you bought, you obviously bought it locally because you were living in it, and your future investments and kind of proceeding investments after that were those local or those remote?   Tamar: So when I first started investing, many years ago, in Los Angeles, I was living in the duplex and so I bought there, and I continued to buy there because we didn't I didn't have the resources that we have now and I didn't realize the opportunities of investing out of state. Over the years, I have investments across the country now and I also invest in both passive and active meaning that passive that I give money to partners and they do all the work and I get a piece of the pie active where I do the work and I take advantage of the real estate professional status and get to enjoy all the perks of controlling my own asset.   Michael: Love it, so on the remote real estate investor podcast, we've often done showdowns between single family versus multifamily passive versus active investing and we try to take a stance and defend both positions having done both, which do you like better and why?   Tamar: I will say that I enjoy both for different reasons. I enjoy both passive and active. I ultimately like passive better because passive is where you're on the beach in Hawaii, drinking a Mai Tai while you are collecting checks, so that kind of trumps everything. Although active gives you tax advantages, it gives you more control over your investment and it is a way in which you can also learn a lot more about real estate investing because if you're passive, you need to learn a certain skill set in terms of looking at analyze a deal and how to vet a sponsor. However, you don't need to know all the ins and outs of how the property management works and the ins and outs of negotiating, finding the deal. Dealing with the tenants all of that those aspects. So there's a different, it depends on what you want to accomplish as part of my whole platform, where I feel like right now we're in a time where real estate investing is very popular, which I'm so grateful because there's enough for all of us, and we can all make a lot of money have owning real estate. What I do get concerned about is that there's not a lot of thought or strategy around what we're buying. So a lot of investors now they might say, okay, I want to buy Airbnbs and the goal is to cashflow 10,000 a month. Well, that's a great goal and that's wonderful. However, what is the big play in terms of the Airbnb and where are you really going with that and what then is the property appreciating or is it just in a market where it doesn't appreciate? What happens if the market changes and will that place still rent as well or do you have to turn it into a long term rent and can you can it? Can it take the that strategy? So there's a lot of pieces that I like to think about in terms of mitigating risk, and in terms of wealth building in terms of how do we build a portfolio where we have passive income, where we have certain assets, performing in certain ways and other assets performing in certain ways. And I'm also in private equity deals, I'm in crypto, I like a diversified portfolio.     Michael: Love it, love it, love it. So if someone is just getting started, they are trying to get their legs under them invest in their first deal and they're getting kind of overwhelmed with the amount of stuff that you have to learn and do to get involved into an active ownership deal. Do you think passive is a good place for someone to get started or do you like people to see, go the active route, get their teeth cut, get an education to understand what goes into the back end stuff around the passive deal?   Tamar: That's a great question. I think it really depends on one big factor, which is how much time do you have, if you are a busy professional, and you are working or running companies, and you're not really that interested in real estate, but you want to benefit from the profits that are available to you, then passive is certainly the way to go and then I would I would do is focus on that dive deep into meeting the right sponsors, finding out about how to look at the deals and learn about certain deal structure and the benefits and that is a great way to go. If you are someone who is young, you've got time you're interested in real estate you want to be in the game, get your hands dirty, then you want to be asking yourself, what is the most appealing aspect of real estate in terms of do you like and Airbnb, a lot of a lot of people don't like designing, they don't want to deal with all of the nuances and the expense sending up an Airbnb, Airbnb is expensive, there's not a lot of way around that if you're going to furnish a place, you're going to have to put money into it. So those are if you don't have that resource, then that might not be an option for you right now. Granted, if you're able to maybe do a get a property where you can get a low enough deal and get enough appreciation into it and do sort of the burr then you have the opportunity to do the option of Airbnb and because maybe you have enough money in the deal there or maybe you take a partner. So those are just examples. A very simple way to get started is even with Roofstock, you do a great job of providing turnkey properties where people can go on and figure out where they want to buy and then do a purchase and start learning that way. That's another great way, keep it simple.   Michael: Tamar, I think that's such great insight and I know that you've done all kinds of investing, you've implemented a ton of different strategies, kind of throughout the country. So I would love if you could give people just a taste of some of the things that you have done and then I'm curious to get your thoughts on what your favorite has been.   Tamar: My favorite investing strategy is passive investing and I'd say that as a general because any project that you can get in on where you are making mailbox money is a good project and especially when those projects exit, you get another bump and you're looking at interest returns of close to 20% generally annualized when it when it all shakes down when once a project exits. So granted, you have to remember it's it an investment, so it could vary and even if I'm making 14% annualized, I'm pretty happy. I think that's a pretty great return for doing no work and putting my money in. Now my favorite investment strategy for if you are just starting out is a little different. I would say right now my favorite investing strategy for starting out is probably the Airbnb model and I think I'm not alone and that's why it's become so popular because you can cash flow properties and buy in appreciating areas, which is sort of unheard of in the past, when you would buy in Los Angeles. Well, Los Angeles is a bad example because they have terrible laws for, for tenants. So that's not a good example.   But let's say Austin, where I live now, Austin is a great city. So it is possible in Austin or San Antonio to buy a place if you if you are savvy and you can buy it right and get a great opportunity, then you can move into an Airbnb structure. Now, I should say, though, in Austin, there are regulations, so you need to go outside of Austin, but certainly San Antonio, there's a lot of places where you can do it and you can actually buy in an appreciating area in Florida and Georgia, there's a lot of places and I just think that's a great strategy for a beginner, you do need some money, like I said, because you got to furnish the place and it is harder to buy in an appreciating area, because prices are higher. So if you don't have as much money, it makes it cost prohibitive. But there are a lot of labor areas that you can go in Texas, in Florida, in Georgia, in Idaho, where you can make money and do well.   Michael: Love it, so I think what's hard for so many beginning investors and curious to get your thoughts if you see the same is that there are so many different things, so many different rabbit holes, an investor can go down, oh, I want to learn about wholesaling and go through that I want to go learn about burr investing go to that I want to go into fixing, flipping, go do that and so it's can be really overwhelming. And so if someone is interested in buy and hold, or in Airbnb, I mean, how do someone stay focused when they're just learning and they're just getting started?   Tamar: So that's a great question, it can be very daunting and you can also get into analysis paralysis, where you want to buy the best deal and make sure that it's the best one and you make the most money and a lot of times getting a base hit is better than getting a home run on the first go around and sometimes you're a seasoned investor and you end up with a base hit. It's happened to me, and it happens to the best of us because we can't control all the variables. So there are a couple things you want to look at if you're just starting out one is where do you live and do you live in an area where you can actually invest and it makes sense and if you do, I always think don't go to another state. If you live in a perfectly good state. If you live in South Carolina, don't go to Texas to invest in South Carolina, it's a great market, you don't need to make your life harder. So the first thing is deciding on the area.   The other thing is, then you need to decide what strategy now strategy a lot of times comes down to how much money do you have and how much time do you have and how many partners can you get if you need money to Terez for a deal. So if you're just starting out, you don't have a lot of money. Wholesaling is a great option because you can get a deal and you can make a really quick profit, and you can start building some profit in there. Now you're not owning the property, so you haven't quite built your asset column. Although you're doing a great job in terms of bringing income in and building that that nest egg, well, not a nest egg, but an investor egg that you can turn into buying properties working capital, working capital, exactly, you have working capital and so you just look at where you are and I think you really the numbers are pretty basic. If you're not going for a huge deal multifamily aware, you have a lot more metrics that you need to be looking at. So if you're just a single family, it really isn't that complicated. You just need to look at how much it's how much the expenses are going to be. What can you rent it for? Are you in an area where people are moving? Or are you in an area where people are moving away? That's a consideration. What kind of markets are in the area or is there just one industry like it was in Detroit, that was a huge problem. When the industry fell apart, and then a lot of people were leaving their homes and there was no one to buy those homes. So those are the kinds of things that you want to ask yourself and don't get caught into wanting to retire from real estate investing next week, because unless you have millions of dollars that you're playing with, you've got to build that and chances are you're not going to build it on the first deal. Although if you keep moving you will ultimately get there you have to stay in it and you have to do the work and be diligent and just believe in yourself a little bit. You can look at other people who have done it and you know you can do it especially when I speak to women, which is who I coach and who I serve.   We are looking at what we can, what we're looking at what we can do, how we can get an action, how we can focus and diversify and create portfolios and with, with clarity and confidence so that you can actually get past that part of the of the gate where you're just looking and wanting to dive in and actually diving in and being on the other side of actually, oh, my gosh, I own property.   Michael: Yeah, no, I think that makes a ton of sense and kind of continuing in that thought vein, have you ever had a deal a bad deal or a deal go sideways that you could share? Because I think so often, especially on real estate podcast, we're talking about the wins the highs, the best of the best and people are like, I could never do that. I could never be where Tamar is I could never do what she's done. So give us a humbling experience that you had in real estate.   Tamar: Yeah, sure. So I can talk about a deal recently, that wasn't really a horrible deal. But definitely the numbers were not what I expected and I did, I never think that you actually I don't like to say you ever lose money in real estate, unless you sell at a loss, right? It's just like the stock market. It's the same principle. If you hang on to the property, and then the prices go up, and then you sell then you made money. But if you sell at a loss, then you that's the only time you lose money. So recently bought a property in Arkansas, and I had boots on the ground. That was the other thing I was going to talk about that if you want, let's say you don't live in a great area, like you live in Los Angeles, you might need somewhere where you have some people in place that can help you find the property and facilitate the, the rehab and manage the property for you. So those are things you think about. So in Arkansas, I had boots on the ground in this area and I purchased a little lake house that I wanted to Airbnb, and the margins were terrific and my boots on the ground were very seasoned and I had done other deals with her before and I kept asking, hey, is the Airbnb regulation an issue and she said she really didn't think it was and that other people were air being in the area and that we just had to go through a process with the with the city and with the with the gated community that I bought in, and that it would be fine and so I went through with the deal and we started buying furniture and I did it very hesitantly because it's, it's expensive to furnish an Airbnb and I kept thinking, well, I want that to go through the regulations to make sure we're not stuck and at the end of the day, we did get caught in some red tape, we were denied by the city, there was a big political issue. We're actually in this area, we're actually going to court now not just me, the whole community of Airbnb, Airbnb homeowners that are upset about the regulations and feel like it's not good for the community and that it's not, it isn't diplomatic at all and so what I ended up doing was I ended up renting it for six months to a guy that was actually building a lake house, and I am covering my mortgage, and I'm making a few $100. So it is cash flowing a bit. But it definitely wasn't the few 1000 that I thought I was going to make in the area. So that's a story where it wasn't like the worst thing in the world. But it certainly wasn't the best I use my resources, I expected a certain return and I didn't get it. But I just pivoted, and hopefully in six months in a year, if the regulations change, then I believe that my property will not only double in value, but I will also be able to start Airbnb being it. So sometimes it takes a little longer when you're doing an investment.   Michael: Yeah, okay. Oh, that's interesting. So maybe you didn't get to make lemonade today, but you made like lemony water, and next year, you'll be able to hopefully make the full fledge lemonade.   Tamar: This is part of the reason why I like a diversified portfolio because you can't control all the variables in real estate and that's part of the reason why people don't ever get into it, because they are uncomfortable with the fact that you can't control the variables. They think that when they invest with a financial advisor, and the financial advisor puts them in stock, somehow that financial advisor is protecting them and protecting their assets for the one and a half percent commission that they're making. The truth is they don't control the stock market. So it can go down just as easily. You're just as vulnerable. In fact, I think a lot more in the stock market than you are in real estate.   Michael: That is such a good point and I just want to kind of touch on that again, because I think it just I had an aha moment for myself. I think when people get involved with other people that can talk the talk or that have experienced doing whatever it is, they get this illusion of say see, and to your point, exactly, the person who's selling you the product or placing you in a product has zero control over the market or the company into the stock that placing you and so I think that's a really great point to hit home.   Tamar: I mean, they certainly have knowledge and they are certainly doing the best they can, although we know historically that it's volatile, and then ultimately, they don't control it.   Michael: Okay, Tamar. So getting back to kind of having a bad experience I showed on a prior podcast, I just got my lunch eaten on my very first deal, but I was too green, too naive to know to stop. So I just kept falling forward and I was like, well, this is progress. When people hear those types of stories, like whoa, like, I don't want that to happen to me, I'm gonna do my research, I'm gonna get educated, I'm going to do all the things I need to do in order to do this responsibly. How should someone think about being ready, because you could very easily say, and I'm guilty of it, too. Oh, one more podcast, one more conference, one more book, one more coaching session, whatever it is you're doing to prepare yourself if you're just getting started. So how do you take that leap and know that yeah, I'm doing it responsibly and I have enough information to proceed without getting without, you know, being overloaded with information?   Tamar: I think you need to be honest with yourself. And I think you need to look at what's really happening for you. So there is a point where you are educating yourself and you do feel like, okay, I want to have my ducks in a row, I want to be pre-qualified for a loan, I want to have a certain amount saved. So I can buy this property at this amount. Or I want to educate myself in a certain strategy and then there's also a certain point where you are just in analysis, paralysis, and one of the things you can do that really helps is one to set a deadline, just decide to say, okay, I have two months to do this and after two months, I'm going to do this and when you do that, one, you're making a commitment to yourself and also in your mind, you're making a commitment to that action, the other thing you can do is get an accountability partner and say in two months, hold me accountable. I said I was going to do this. Now, you mentioned coaching, I'm a huge fan of coaching, I have coaches, I pay a lot of money, for support for guidance for collaboration and I think that it's very important to look at yourself and see if you're the kind of person where you know what, I need somebody to take my hand and look at this with me and say this is okay. Now granted, you could have a mentor, and sometimes you could go to meetups, and you can meet mentors for free and a lot of people are super generous, and they will be able to support you. So you couldn't even get that support for note paying no money and I would also say there is a huge benefit in being in a group being in a private coaching, really looking at what you're doing, and having someone support you in that deliberate way. Because we do pay attention to what we pay for and it's just the truth. So sometimes when we get it for free, maybe somebody gives you some great advice, but you don't pay for it. But then as soon as you pay for it, you think, okay, I just gave that person money to tell me for the value of their knowledge and they told me to do this, this and this, I'm going to do it because I just pay money for that and I want to get the I want to get the benefit of that. So it does work pretty well and the trick is to really know yourself, and to make sure that you are moving forward and don't be afraid.   The other thing that happens is we have this attachment to money, we have this false attachment that if we hold on to our money, that we're safe, and that we are building wealth, and that we're secure and the truth is, is that we don't build wealth by keeping it in a bank account, where in fact right now with inflation, we are most certainly losing money. If you want to use the rule of 72 and seven years your savings is gone at this point with the inflation rate we're at. So the truth is that that money needs to be working. I can't tell you how many clients I've had where they have hundreds of 1000s in the bank, and they're just paralyzed. They just don't know exactly. I'm not sure what to do. I don't want to make the wrong decision. I don't want to lose money and I don't know exactly what direction to go in and they are so happy once the money starts moving. I had a client she ended up buying a house that really suited the next move for her. It's an Airbnb, but also her family can use it. So it kind of tied in really nicely with her desires, which is also important and then right after she did it, she made a big sale and some money came in. I mean, it was crazy. Once you start moving the money, money starts moving with you and it's amazing how that works and that's why I really think that the false attachment to money can really also hold us back from the real estate investing and we need to be careful about that because if you fall into that trap, you will just be hoarding your money and it just won't be working for you and you also won't be reaching your goals because you can't buy anything unless you're willing to give somebody some money to buy the property.   Michael: All right, that makes a ton of sense. For those that might not be familiar to mark, you just touched on what is the rule of 72.   Tamar: So the rule of 72 is you multiply how much percentage you're making, by the years that it will take to double your money. So in 10 years' time seven, that would be 72. So that would take you at 7% 10 years to make that money at 10% inflation, it would take you seven years to make that much money.   Michael: Perfect, perfect. Thank you for the clarification. Let's shift gears here and talk about your book. I know you said who it was for it and why you wrote it. But I'm just curious, how did you get the inspiration with so many real estate books out there? How did you want to set yourself apart?   Tamar: Yeah, that's a great question and I think this is really at the crux of everything that we do, because we can look also at all the people that are involved in real estate, wait, where's my space? How do I fit in? Is it is the market? Is it too late for me? Those kinds of questions. So for me, right, what I think is a great place to come from is to think about your why and think about why you're doing things. So for me, the book was about me sharing with the world. So I wasn't thinking about everybody else and how saturated the market was, and that there wasn't a space for my book, I was just thinking, You know what, I have this knowledge, I have an idea I want to share who I am and how I got to where I am, I feel like I have a message that I really want to share. I feel that I have knowledge that I want to share and so I just shared…   Michael: …and people were clearly receptive to it.   Tamar: Yeah, yeah, absolutely, a lot, a lot of women are and men are reading it too, and getting a lot of benefit out of it. So it was really about what it's really all about and everything that that the listeners are do is about what is it that you want and what do you want to put into the world and how do you want to live and if you want real estate, by golly, just figure out a way to get it, you know, other people are doing it, why not you? They're not you're gonna, we're all just humans, we're all just people. The only difference between me and you is that I've done it a lot. So I have amassed a certain amount of wealth and you might be at the beginning or at a middle stage, it doesn't matter. It just you're on your journey. I'm on my journey. But you can still find properties.   Michael: Yeah, yeah, not so good. Someone once told me and I forget if it's a famous person or a quote, but you know, you look at someone that's really accomplished. The only difference between them and you as they've made a ton more mistakes than you. It's like, oh, yeah, like they've gone, they've gone through the stuff, right? It's true.   Tamar: That's true and most of the people just so that, you know, that I ever speak to, and that in the circles that I'm around where we're a lot of us have accomplished a lot. We have come from nothing. We have worked really hard, we have made a lot of mistakes, we continue to make mistakes, we continue to put ourselves out there. It's just working that muscle and just be willing to be in the world and create the life that you want.   Michael: So good, Tamar, it's no secret that the world of real estate investing is like oversaturated with dudes, it's like it's ridiculous and we've really tried to make an effort here at rootstock to highlight the women voices that are out there that are doing it. So what can you share with women that are out there who are wanting to get invested, but are feeling overwhelmed or nervous? Because it is such a male dominated space?   Tamar: Yeah. So it's, I think we're still 30% women are investors and we're, we're making strides and I would say, embrace the men embrace the good men and don't feel like it's us in them, just because they've been in the game a lot longer. Historically, we couldn't even buy property, it sounds insane to even say that, because none of it makes sense. Although it's true and we haven't had as much time in this arena. I would say I think the women that struggle more or any woman that starts thinking, oh, those guys, they did this they did that they're hard to work with. I have tons of partners that are men, I adore them as much as I adore the woman and that I work with that I partner with and I believe that if we all embrace what we want, and as a woman understanding that we have skill sets that men do not have and that there's place for us in the real estate investing arena, then we will continue to flourish and to make strides.   Michael: Love it, love it, love it. Tamar, this has been so much fun. Where can people get a copy of the book and how can they get a hold of you if they want to learn more?   Tamar: Yeah, awesome. The book is called The Millionaire mentality of professional women's guide to building wealth through real estate and you can get it just by going to tamarbook.com. It's T A M A R book.com and then also, I'd love to share my real estate investing personality quiz, which is also at the beginning of my book to support beginners and learning. How do you decide what area of investing you want to go into and that you can tamarquiz.com.   Michael: Amazing. Thank you so much and if people want to reach out or learn more about you, is there a good place for them to do that?   Tamar: Yeah, absolutely. You can visit my website at wealthbuildingconcierge.com or you can also send an email to me and my team at hello@wealthbuildingconcierge.com.   Michael: Amazing and we will link to those in the show notes. Well, thank you so much for taking the time Tamar. I really appreciate you coming on and I'm sure we'll be chatting soon.   Tamar: Awesome, thanks for having me.   Michael: You're welcome. Take care.   Alright, everyone, that was our episode, a big thank you to Tamar for coming on. Really, really great insights. Love the piece about the financial advisor that she talked about. So if you missed that, definitely go back and give it another listen. As always, we love hearing from you all with episode ideas, comments and feedback. So feel free to leave us a rating or review wherever it is get your podcasts and we look forward to seeing on the next one. Happy investing…

Jaden Sterling is an award-winning, international Best-selling author of, “The Alchemy of True Success.” Creator of Wealth & Wisdom Daily Oracle Cards and founder of Sterling Stock Ed. Inc., an International stock investment program with hundreds of students worldwide. Sterling draws on 30 + years as a professional investor assisting people to become confident investors by simplifying the investment process. Prior to consulting, Sterling held title as Regional Vice President of Asset Management for Citigroup increasing sales from 100 Million to over 300 Million in two years. Sterling also worked as a financial consultant for Merrill Lynch and Smith Barney advising some of the wealthiest families in the United States. Sterling's passion and purpose is to assist people to take control of their finances and live life financially free. Sterling teaches via online platforms how to invest in stocks and how to buy and sell stocks via his software, “Sterling Stock Picker.” Join Jaden, as shares his story, his passion for teaching and helping people in real estate, what people need to be aware of going into their investment career, and an overview of his software, Sterling Stock Picker. Episode Links: https://sterlingstockpicker.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I have with me Jaden Sterling, who is going to be sharing his story about going from equity stock investor, to real estate investor to now equities teacher back in the markets which he left but with a purpose this time. So let's get into it.   Jaden, what is going on? Man, thank you so much for taking the time to hang out with me that I really appreciate it.   Jaden: Hey, my pleasure, Michael, happy to be here with you.   Michael: Awesome. Well, I think we're gonna have a lot of fun today and I know a little bit about your background. But I would love if you could share with our listeners who you are, where you come from, and what is it that you're doing in the financial sector today?   Jaden: Currently presently in British Columbia, Canada, absolutely beautiful up here and working in the financial realm. I've worked in this area for 33 years and finances and 11 years in real estate, and then the last 20 in the equity markets. So I'm super familiar with both and yeah, happy to be here with you and share some value with your audience.   Michael: Awesome and so you're living up in Canada. But did you always work up there? Are you doing equities in Canada or in the states talk to us a little bit about that?   Jaden: So I've been up here 11 years prior to that I was in St. Petersburg, Florida, where I built a portfolio of affordable housing units with the city of St. Pete partnered with them. We did 125 projects, and it worked out really well built a 12 and a half million dollar business in the real estate markets and this was even during the 0708 when it was really tough money was tight, super challenging, but got through it, thank goodness and but my background is steeped in the equity markets. My an initial training was in my 20s, I worked on Wall Street for Merrill Lynch and Citigroup and loved everything that I learned from my wealthy clients, not what I learned from the brokerage firms. That was actually kind of shocking in terms of what I learned about the equity markets and how the system is rigged and it's rigged to make the wealthy wealthier, and the firms are situated in a way to make money off of clients, not for clients. So when I recognize this, yeah, when I learned this truth, I was like, okay, I'm out of here and I'm going to help people also understand how this is set up, and then help people work through work around the situation there.   Michael: Interesting, so can you say more on that about how the system is rigged? Just curious to get, you know, an insider scoop on it, because you hear that being said, and but you also hear the opposition of no, we're here to make money for you and with you and grow with you. So talk to us about how you came to that conclusion.   Jaden: Yeah, a lot of professionals in the financial arena are great people, you know, they have great intentions to help their clients, they, they sincerely have some have a desire to really help people and make a difference and the challenge is the system is set up to steer clients in the direction that makes more money for the brokerage firm, not for the client. One aspect is you know, a lot of people think they need to diversify. We've heard that throughout the ages, right? Diversify for a safety. The challenge is it's like I love what Warren Buffett says diversification is the tax that people pay who don't know what they're doing.   Michael: That is a great quote.   Jaden: He's so right about that. You know, the key is to really focus folk focus your business when I was in real estate, I focused on one area affordable housing. Now, when the stock market, I have owned eight companies, shares of eight different companies. That's it not 100, not 200, not 300. So it really gives an investor leverage to get their money to finally work for them and not work against them. So the industry absolutely, it tracks the it's called velocity, it's still to this day, and I was in it 30 years ago, it tracks how much a portfolio turns over, meaning how much a broker or banker makes on that client's portfolio, not what they make for the client. So just in that understanding alone, you just kind of go yeah, I think I need to find another way than a banker broker to help me make money.   Michael: Yeah, yeah, that makes tons of sense and so just a curiosity. How did you end up in the affordable housing sector?   Jaden: Well, no, I got out of the brokerage business and when I was 31 and I looked around and I something very strong inside me said, start buying real estate and I didn't, I didn't really know I mean, I, you know, I didn't know what to do, I didn't have a mentor in that direction, I just knew that I had to do it. So I researched raw land, I researched apartment buildings, I researched trailer parks, I researched single family homes, commercial real estate and I landed in a, in a category that I felt comfortable with and that was like, from a personal level, doing good helping other people. I'm a big believer in that, the more the better we do for others, the more we help ourselves and it's a beautiful circle that way and so I liked the idea of affordable housing and I also felt like it gave me leverage, if I bought an apartment building that was you know, let's say 12 units, I could, I could renovate, you know, half of them in the beginning, and then still have income coming in. You know, there's only one roof on an apartment building, rather than if you buy 12 single family homes, you've got 12 roofs to deal with, and everything that comes with that. So I felt like the leverage was great and did you know with affordable housing, I didn't know this. But I learned back then that there's special financing for investors who get into that arena, you can get loans that are better rates, some of the money is forgivable in terms of the down payment, less down payment, like it had all these great attributes from an investor's standpoint and then once I bought my first affordable housing project, and made a lot of money, by the way, there's a lot of money to be made in affordable housing, it was always confirmation that when you do good by others and for others, that you'll be abundantly blessed.   Michael: Interesting. So you did that for quite a while and sounds like did quite well and then you moved back into the equities market.   Jaden: Yeah, I knew that my mission was to assist people to teach people how to become wealthy how to work with money, how to understand the principles of money that actually bring in money, rather than take someone's wealth and I wasn't teaching it. You know, I was in my office, I was running a big real estate company, I had 15 employees, we were busy, you know, so I wasn't I wasn't doing what I was intending to do, which was to teach others. So I wrapped up my entire portfolio all in one shot and stepped into my actually my twin brother got sick with cancer. He was diagnosed with stage four cancer.   Michael: I'm so sorry.   Jaden: And this is back in oh seven and he basically they told him look, you have two years to live and during that time, we had incredibly deep conversations and one at one point he said to me, you know, bro, I don't feel like I've lived my purpose and I said, What do you mean, you're doing great. You're a realtor, you're married, you got two great kids, like, what are you talking about? You know, I didn't really understand and he said, no, no, I just feel like, I didn't do what I came here to do and that really struck me because I knew at a very young age, what I was here to do, I had an epiphany at 14, you know, it's like something told me deep down inside, that I would be working with people assisting people to be empowered by money rather than enslaved by it. I just had this clear knowing and that's why I went into working in the equity markets and then ultimately real estate, you know, putting to practice what I had learned and, and I knew I had to start getting out and teaching so I made an about face right then and there. I told my brother I said, man, I'm going to do it for you and for me, I'm going to start getting out there living my purpose and start teaching.   So I did I sold my entire real estate portfolio right then I met my wife, she's up in Canada, we realize our relationship worked better and we lived in the same country. So I made the big leap and came up here and man, it's been amazing. It did bring me right back to my training and stocks and knowing because I I was able to build my real estate portfolio from what I had built from my stock investments over an eight year period. So one fed the other and you know, people ask me all the time, you know what, which do you like best right? Did you like stocks or real estate? I know this is the real estate show. I totally respect that and the thing that that I really draw from is real estate will give you a roof over your head. But stocks are a whole lot easier. There's no fixing toilets and dealing with tenants and you know that situation. So I think a balance of both is key. You can use one to support the other and one to actually buy hi there, I've, I bought an eight unit apartment building by putting my IRA up as collateral with a bank. So no money down. I just said here, take my IRA, and I'm going to do you know, X, Y and Z to this building. Once I get the rents raised and get it improved make these capital improvements, can I get my IRA back? And they said, sure. So I bought it, I got an appraisal done at that time. Six months later, after we made the capital improvements, raise the rents, I got another appraisal done. They issued they released my IRA back to me, so it was a no money down deal worked really well. But had I not had that IRA, it would have been a whole different situation.   Michael: That's unbelievable, Jaden, that's wild. So people, I think in your sphere, some of your coaching students know you as the spiritual money guy and I'm detecting a little bit of that as we converse here, but I would be loved. I'd love to hear from you. How did you come by that name?   Jaden: Two reasons. A lot of people know my background story, that epiphany that I had it 14 that I shared with you that understanding and really clear knowing I've always been a clear knower. So some people call it Claire cognizant, Claire means clear, and then Cognizant is knowing so I've had always had a super clear knowing in my life. But I live that way. You know, I just have, I have a very simple life and there's nothing complicated. I do my best by not lying, stealing, or anything like that and I think by having, having virtues like that, and paying attention to those virtues, and honoring them for yourself, you have a certain amount of clarity in life and things get a little simpler that way. So when I heard one day, it's actually a speaker in a podcast. I wish I could remember who it was because I would give her credit. But she said something really interesting. She said, look at the word prosperity, the Latin derivative of that word is pro spare, which means force spirit and she went on to say, you know, you honor your spirit when you're prosperous and that really spoke to me because I, I really, I believe that I believe she was absolutely correct in that and, you know, think about it, we're not here to worry about money, right? We're not here to let play life and in a small way to play a game that, you know, I look at life as a game. It's a big monopoly board, you know, you have so many houses that convert to hotels, and then apartment buildings, and yada, yada…   Michael: And you hope don't go to jail.   Jaden: That's right, yes right. That saves a lot of hassle when you say right, right.   Michael: Yeah. So let's get deep for just a minute if that's okay. So you I think, are a very lucky person in the sense that you've always been knowing and you've had this clear direction for your life. What do you say to folks that don't have that clarity or that are struggling to find that clarity? How do you how do you become how do you gain that clarity?   Jaden: Well, we know that purpose doesn't it's not like a billboard that drops out of the sky and says, this is your purpose. You know, it doesn't work that way. What I find for most people who asked me that question is what they're doing in that present moment is truly their purpose or else they wouldn't be doing it. So what someone is really asking is, how do I know if I need to be doing something different? That's really the question you're asking, right? Because if we start to acknowledge that where that person is, in that moment, is exactly where they're intended to be. If there's discomfort around that, if they say, you know, I know there's more for me, or there's something out there, but I'm not sure what it is, then it's, there's no way around it, my friend, it's a deep dive inside. It's, it's, you know, I, when I got out of corporate America, I took six months off and I did yoga, I worked with a shaman, I did a deep spiritual, inner work around what I was here to do and that really helped to give the clarity.   So I think people have to spend a little more time off screen and more inner work time. Push away from the, you know, these devices that we use these iPads and phones and computers, lower your brain function that your brain has to actually slowdown in order to connect in with this device to be able to take the information in. So what someone can do, I'm just thinking back then the practice that I did every morning, I'd wait before your eyes open, connect in with your higher self and just ask what do I need to know right now? So this is before the brain kicks in before your phone before any type of device phone or what have you that you turn on the that, that's the time when you're gonna get information, you're still kind of in a sleepy state you haven't fully woken up yet. Just sit with that at that time and you'll get information you'll get, you know, an idea will drop in or something inspiring or the thought of oh, yeah, I need to reach out to this person and then the universe aligns all of that for you. It happens in such an elegant way that a lot of people overlook it. Because they think oh, simple, is not powerful and actually, the truth is, peace is the new power, simplicity is the way to get there.   Michael: Oh, man, I love that I'm getting goosebumps just hearing you say that. I think my problem is I have that thought coming to me at 2am oh, I gotta call this person and then I can't go back to sleep. So I need to figure out a way to get around that.   Jaden: Yeah, super simple. Just either put a whiteboard in your room, and you get up and write that down on the whiteboard, or a pen and paper and so I just use a big fat marker, because I know I'm not gonna be able to read if I do a ballpoint, I can't read it in the morning, reach over, grab my piece of paper, write it down, and then in the morning, you'll have it.   Michael: Oh, that's great, too. I love it man, I'm getting way more than I bargained for here having you on. This is awesome, man. So okay, so let's fast forward now to what you're doing today. Because A, I think it's super interesting and B it's kind of controversial, I think from a traditional investment standpoint. So you are now picking individual stocks. Is it so I have that right?   Jaden: Yeah, so you know, like I say, I'm totally counter narrative, I anything that is out there in the narrative, generally, I'd like to turn on its head and look at it from a different perspective and we have to look at what's being pushed on people, mutual funds, packaged products, manage money, CDs, you know, all these things that are simply not going to give someone a successful retirement, a profitable retirement. And I realized, so back in 2017, I put a course together to teach people how to invest in stocks and what to look for, you know, how to read a chart what, how to interpret it and, and then one of my students said to me, you know, I love your course, could you create software around this and I was like, my brain just exploded, you know, like, oh, well, how would I do that and that's such a good idea and I'm not a techy guy, you know, and, and, and then the universe lined it all up and sure enough, I partnered with two gentlemen who are amazing IT guys, we spent three years developing software called Sterling stock picker, and it does exactly that I said to the guys, if we can create software that in three clicks, someone finds a winning stock, we could change the world and I believed, I believe it, I believe we can, and I believe we are.   So we did that we put the software together, it calculates the algorithm calculates all the metrics that someone needs to know so they don't have to worry about you know, it, about not knowing and it empowers people to find stocks aligned with their personal values, aligned with their risk tolerance level, it's a really comprehensive software that we've put together. And it worked out so well it became profitable right out of the gate that now I'm in the middle of a Regulation A offering where we've raised half a million dollars, I'm taking the company public in two years. So we've got two more years to go to increase the revenue for the for the software, and then our subscribers who get in at 50 cents. I'm going to just do a super low issuance and the float. So my goal is $8 a share to go public in 2024.   Michael: Holy crap, that's amazing. So how has someone not done this before? It seems it seems from the outside looking in so obvious, right?   Jaden: Like yeah, yeah. Oh, there's software out there man. But it's so convoluted it's so cuz I've paid 10s of 1000s of dollars to buy software to invest in the markets and I was confused and I'm like, if it's confusing for me, like this is my background. It's you breathe know what I did for a living for 11 years. If I was confused, there's no way that most people can understand it and it was so confusing. I couldn't put it to work. So we've made our super simple, so easy and I think that's our superpower is we've simplified the complicated with the software.   Michael: So Jaden, tell me why everyone like that is so different and counter to what you hear from everyday investors to the professional investors go get mutual funds, they're safer this and that. Why does this work?       Jaden: Well, it works because people are getting 30 4050 120% return on their investment. Like, first of all, you know, my biggest challenge, Michael, when someone comes into our platform is I have to, I have to teach them that 8% that average is not what they need to be shooting for. But everyone has been so conditioned to focus on, you know, just settle for average returns, right? Don't expect to outperform the markets. I mean, it is why it is so easy to outperform the markets, when you have the right information. That's, that's the key you got you got to have, you got to know when to invest. So our stock, where it tracks when to invest in certain sectors, it's been heavy and mining and oil and gas companies for the last 18 months. Those have been super profitable over the last 18 months, as we know, with the price and rising in oil, and hard assets, commodities, like gold, silver have been, you know, doing fairly well, I think they're still being suppressed in the prices. But that will change at some point, it has to. So yeah, I'm totally contrarian but you know, think about it as a if you're a business owner, entrepreneur and if you have 150, or 200 products to sell, right to manage in your company, you'd be like, I don't even know where to start, let alone how am I going to be profitable and successful, right. But if you have six to eight products that you're selling, you know, you're super focused in your business, you know, what you're doing, you know, your target audience, you know, your, your manufacturing costs, like you just have the six to eight products that you're selling, there's a really good chance your business is going to be really profitable. Wouldn't you agree?   Michael: Yeah, I mean, I'm thinking back to my prior career, and we sold one thing and one thing only, and killed it, as opposed to the other competitors that had multiple lines of similar business, so.   Jaden: Then you answered your question, my friend, it's exactly why we know a smaller, concentrated portfolio of stocks of these are the some of the largest companies in the world, mostly in North America that you know, buying into those shares, you can get rich, there's no question. I did it with one company, the decade in my 20s. It was the company that I worked for Citi Group, that the parent company at the time was travelers, and that stock tripled. So I turned literally $70,000 into over a million and that's why retired.   Michael: Holy smokes… That's incredible. All right, so talk to me a little bit about the software itself. I mean, it must be really expensive.   Jaden: You know, it's not, it's $33 US a month, we have a 14 day free trial. So someone can take it for a test drive for free for 14 days. We priced it in a way that everyone could take advantage of it, you know, we know it should be probably a few $100 a month. But we didn't want to do that. We want to just leave it at a price that people are comfortable paying. If you're paying 15 a month for Netflix, you might as well pay a little bit more.   Michael: That's such a that's such a reality slap in the face like yeah, I'm willing to pay 50 bucks for Netflix, don't even think twice about it. But for to help yourself get rich like well, 33 bucks.   Jaden: That's it, that's it my friend. Exactly, you know, it might as well invest in your future and learn a little bit. I'm in there. Every Monday I do a live stream every Monday at 12:30 and I  share what's going on in the markets from an a macro economic standpoint and then I get into the micro aspect of what I'm buying why I'm buying I tell I'm very, very transparent. I tell people what I'm buying the reasons behind it and why. You know, two weeks ago, I was gonna buy Tesla stock, it was $1,200 a share. I went on to the live stream and I said this these other reasons I'm not buying it here. I know it's going to pull back and I walk them through the software and show them. This is why the stock broke below their short term averages the MFI The Money Flow Index is too high, you know, we just go on and on. So I like to educate people through the platform. That's one of my big things in life is to teach people what to look for when they're buying the stock. So yeah, that's the that's the software.   Michael: That's awesome and so how well versed does someone have to be in the stock market in order to participate or really take advantage or utilize the software to its fullest intent or can someone literally just click a button and it'll spit out based on their inputs, stocks that they should buy?   Jaden: That's it right there, three, three clicks, and they're going to find a list of winning stocks that they can buy at the exact right time. We've already figured it out for them. We actually incorporated personal values as well because, you know, my belief is if you're if you're aligned in alignment with the companies that you're investing your money and then it'll work out far better than you know, let's say if you're a health nut, you probably don't want to own McDonald's. Well, did you know McDonald's is in most mutual funds and most equity funds in the US has holds McDonald's stock in there. So it just depends, right? If you want to steer clear of that you can with individual stocks. That's what's so cool.   I'll tell you a story and this is really this hits home as to why I do what I do. When, when I was a broker with Merrill Lynch, I was like 25 years old. I had a client named Dr. Walter Arnold, and he told me a story about a friend of his who was a back then we call them secretary, she was a an executive secretary and she, she invested $5, every single week in her stocks $5 back then and she did this for 40 years, while she retired with $1.2 million and her stocks grew like exponentially like she had 20% annualized growth year after year after year and he said, he said the fascinating thing was, was how she found these companies what she did back then, in the 40s, and 50s, it was very expensive to advertise in magazines in color. So she would flip through these magazines and any companies that advertised in color, you know, back then it would have been Kodak and just companies that were doing really, really well. IBM was advertising and color back then she said she bought shares of those companies. She had four different companies in our portfolio and she just kept investing in them week after week after week, $5 a week, her portfolio grew. She didn't touch it, she didn't take any dividends out until she retired with $1.2 million.   Michael: That's incredible.   Jaden: Isn't it simple?   Michael: It sounds totally the KISS principle.   Jaden: That's it, yeah…   Michael: My gosh. So it's funny, because you took the question before I can even ask it and I was gonna say, one of the things I think that's so powerful about real estate is leverage that you can take $20,000 and go control $100,000 worth of asset where you cannot do that, with lesser buying margin sort of thing in the stock space. So is it worth it for someone to take a little bit of money and invest it or does it need to be something a larger amount to really become impactful? And it sounds like I got the answer to that question. But curious to hear your thoughts.   Jaden: Yeah, well, you got to start somewhere and with how the equity markets are set up, you know, if you're in the US, you can buy stocks for free, it doesn't cost I my US accounts with TD Ameritrade zero commissions, right. Robin Hood, same situation. So yeah, all of that money goes to work for you were when I was a broker at 25, we were charging several $100 to buy stock. I mean, in one transaction, right? It was it was a lot of money back then. Now it's just that barrier is gone. So more now than ever. It works with starting to invest someone can dollar cost average into the equity markets. That's what that's what Ann did $5 a week. So she didn't try to time the market, she didn't try to figure out you know, what's the best price for a stock she just said, hey, I've got five bucks a week I can invest, put away and not touch and so that might be someone can start with $100 or but we got to start somewhere and like you said, margin is another aspect that can increase their purchasing power.   But you know, we're seeing something very interesting happen in these markets, real estate as well. There's, there's a construction happening, right? The Federal Reserve Fed is starting to raise interest rates on mortgages and I lived through like I said, oh seven and oh eight where it was a scary time. You know, it was a totally the market was contracting lines of credit were being reduced. It was hard to get access to cash. So I would say for an investor today you know, look at it from a multi approach standpoint, have some money in equities, stocks, companies, four to six different stocks. Consider real estate, but also hard assets like gold and silver coins. The actual physicality of gold and silver, I think, I think if you look at you know, there's talk about a central bank digital currency coming in. That has to be reset in the previous 500 years, whenever a currency went bust, it was reset against gold, the gold standard. So when that happens again, which it will at some point, it's probably sooner than later at this point. They're going to have to mark to market gold at a fair price. So that may be instead of 2700, or $2,000 announced it might it might be 20,000 an ounce. It could be 30,000. We don't know what that number is going to be. But if someone starts investing that way, thinking that way, you know, how am I going to maintain my wealth? How am I going to preserve my wealth and grow my wealth during this time? Because this is a tricky time we have we have inflation, probably hyperinflation, you know, on the horizon. We've got interest rates going up, which to me sounds totally counterintuitive. I don't know why they're raising interest rates as inflation starts to run rampid. But the printing presses printed and minted way too much money. So now they're trying to make up for that that's at least that's the narrative that they're telling us. So we have to plan for that and prepare for that.   Michael: Okay and one last question for you Jaden. As so many people, you hear talking about how frothy and how top heavy the equities market is, the stock market is so high, it's never been higher. You know, what do you say to that in terms of people who are just getting started?   Jaden: Yeah, so there's so much new money going into the equity markets right now. It's on an it's an add a net 15 billion, that's what the be a month net buying. So there's more 15 billion more month being purchased equities purchased on the exchanges than being sold. Because frankly, it's one of the best investments out there. So there's tons of money going into the equity markets that will continue to drive then the markets did pull back early this year 15% decline and just two years ago, remember, it was down 35% in a six week period once this COVID pandemic kicked in. So there's, it's pulled back. But what drives the market is buyers, not sellers, and we see the buyers continuing.   Michael: So okay, I like to have one follow up question for you. When Warren Buffett says I think it was Warren Buffett who said be greedy when others are fearful and fearful when others are greedy. To your point of there's all this money going into the market, I mean, is that people being greedy and so therefore should we be fearful or should we be kind of jumping on that bandwagon thinking, Well, hey, if these people that make a lot of money are investing, maybe I should to, you know, hitch my horse, my horse hits my car to their horse, so to speak?   Jaden: Yeah, it's that's such a good point. Because there are so many great companies out there right now that are thriving during this time, and you can make a lot of money in stocks. So I think I think you have to have a balanced portfolio in terms of some money in real estate, right? That's, that's important. People always have to have a place to live and equities and then like I mentioned hard assets, the golden silver coins and then once you have that perfect trifecta of investments, you can really sleep better at night because you're not worried about, you know, what the markets are going to do. You know, you have a study plan. If the market does pull back, well, you get to buy more shares, which is pretty good.   Michael: Now they're on sale.   Jaden: That's right now they're on sale, exactly, right.   Michael: Awesome. Jaden, this was so much fun, super, super informative, and interesting. Where can people learn more about you or take advantage of your software if they'd like to?   Jaden: Sure, https://sterlingstockpicker.com/ is where you can find me reach out to me, we have a clear, great website that shows how to get started in the stock picker software, and how to connect with me if you'd like, I always return emails. It may take me a while because I get a lot each and every day but I promise you I'll certainly get back to you.   Michael: Right on. Well, thank you again for taking the time to chat with me really appreciate you coming on and I'm sure we'll be chatting soon.   Jaden: My pleasure, Michael, I look forward to chatting again. Thank you!   Michael: Awesome, you got it take care. Alright everyone that was our show a big thank you to Jaden for coming on super, super cool software he's developed I will definitely be checking it out and I thought he shared some really interesting perspectives about how to balance a portfolio. So if you liked the episode, please feel free to leave us a rating or review wherever it is you're listening to this podcast and as always, we look forward to seeing the next one. Happy investing…

John Burns co-authored Big Shifts Ahead: Demographic Clarity for Businesses, a book written to help make demographic trends easier to understand, quantify, and anticipate. Before founding John Burns Real Estate Consulting in 2001, John worked for 10 years at KPMG Peat Marwick—2 as a CPA and 8 in their Real Estate Consulting practice. John Burns founded the company to help business executives make informed housing industry investment decisions. The company's research subscribers receive the most accurate analysis possible to inform their macro investment decisions, the company's consulting clients receive specific property and portfolio investment advice designed to maximize profits. Gary Beasley is CEO and Co-Founder of Roofstock, the leading online marketplace for buying, selling and owning single-family rental investment homes. Recognized as a leader in the future of real estate, Roofstock was featured on Forbes' 2019 Fintech 50 list. Gary has spent most of his career building businesses in the real estate, hospitality and tech sectors. After earning his BA in economics from Northwestern, Gary ventured west to earn his MBA from Stanford, where he caught the entrepreneurial bug and still serves as a regular guest lecturer. Immediately before starting Roofstock, Gary led one of the largest single-family rental platforms in the U.S. through its IPO as co-CEO of Starwood Waypoint Residential Trust, now part of Colony Starwood Homes. In this episode, we discuss the current state of the real estate market and the economy more broadly. Gary and John share their thoughts on what has been happening year over year in the housing market; what 40-year highs of inflation, rising interest rates, and geopolitical unrest mean for real estate investors; and highlight some of the risks that investors are faced with today.    Episode Links: https://www.realestateconsulting.com/ https://www.linkedin.com/company/john-burns-real-estate-consulting/ https://www.linkedin.com/in/gary-beasley-956647/ https://www.roofstock.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today with me I have two very heavy hitters in the real estate space. John Burns, CEO of John Burn's real estate consulting, and Gary Beasley, co-founder and CEO of Roofstock. So without further ado, let's jump into hearing their thoughts and opinions around what's been going on in today's real estate market.   John Burns and Gary Beasley so happy and excited to have you both back on the podcast. Thank you for taking the time to hang out with me today.   John: You bet.   Gary: Hey, Michael, great to see you.   Michael: So I of course, know a little bit about both of your backgrounds and who you are. But for those of our listeners that might not be familiar with who you both are, if you could give us a quick two minute, two second intro of who you are, where you come from, and what it is you're doing in real estate and John, if you want to go ahead and start, that'd be great.   John: Okay, I'm the CEO of John Burn's real estate consulting, I founded it back in 2001, to figure out what's going on the housing market for a lot of people, mostly big companies and that's what we do.   Michael: Love it and Gary?   Gary: Sure, I am Gary Beasley, I'm the co-founder and CEO of Roofstock and we've been at this for about six and a half years now. Building out really the complete ecosystem for single family rental investors and I've known John now, I think, John, since about when you started the company, it feels like we've known each other for a while we when we I think when we met we we both had dark hair. Remember that?   John: It's been a very long time.   Michael: That's great. Well, I wanted to chat with you both around a lot of things that I've been getting questions about, and I'm sure that the two of you have as well and that's just kind of what's been going on with the housing, market and economy over the last couple years since the pandemic started. So I would love to just jump into things get into the meat and potatoes and get both of your thoughts on really year over year, what's been going on at the macro level in the housing market.   John: Well, I guess I go first, if you let me go back maybe three years, so but pre the pandemic because I think it's relevant. The housing market was extremely hot. We have a different view than a lot of people on on how undersupplied the market was, we don't think it was I just applied at all actually until about 2019, then it started to be under supplied and with interest rates. So damn low everywhere in the world, people had figured out that single family rental housing was a great investment just to get some yield and we were seeing a lot of investors come in to the market, then COVID hit so you know investors are very volatile. They stopped for a few months, and then they came back very strong and probably the biggest difference in the last year is the fear of inflation has piled in on top of the need for yield and it's double the reason to invest in rental homes. So we're seeing money from all over the world focused on housing in America.   Gary: I would agree that clearly the residential market has been booming and I would say despite a number of factors that you would have thought might have slowed it down. We went through a global pandemic, and housing chugged right on through and we could talk later perhaps about why some of those things happen. But the reality is really kind of across price points and geographies. You've seen robust demand for housing and if you look at price increases year over year, John, I know you track the SFR space really closely and it kind of mirrors what's been going on even if you look at owner occupied sales, but home prices have been going up call it 15 plus percent, year over year, pretty consistently. That's a big number, when you think about historically, it's been about 4%. If you go back 40 years on a compounded basis. That's how it had been up until fairly recently.   So a lot of you know in rents have lagged that a bit but you've seen high single digit to low double digit rent increases as well in a lot of these markets and so in oftentimes, I feel rents are a little bit of a lagging metric because especially a lot of the mom and pop owners don't raise rents every year don't raise them, really even to market so we're seeing a lot of homes come to market today that have rents that are 10 or 20%, below where the markets are today. So, so you've got just a lot of demand for the product and, you know, we're at an interesting time now, and I'm sure we'll talk about, you know, some of the current dynamics in the market, interest rates have moved up quite a bit in the last, you know, month to six weeks, we've got a lot of interesting things going on geopolitically, we're not yet seeing that impact, demand or pricing. One would think that those factors should that have an impact over time. But for now, I think just the supply demand dynamics very, very much in the favor of demand over supply.   Michael: Okay. Interesting and I'm curious to get both of your opinions on this, I mean, we are at such a unique time, kind of in history and curious to know your guys's thoughts on do you think that real estate investing fundamentals have it all shifted because of where we find ourselves today? John, I'll let you go first on this one.   John: I don't know if the fundamentals have shifted, because I've seen this game before. But what is different is that by investing in rental homes has become a very easy thing to do, thanks to Roofstock and others. I mean, prior to 2012, you couldn't get on your computer and figure out exactly how much a home was worth and how much it could rent it for in about five minutes, you can now there's all sorts of vehicles where you can invest in funds and completely passively invest in housing and I think it's become an asset class that really was very illiquid, and pretty lumpy before that now has become more liquid and I think that is a permanent change in the market, doesn't mean things can't go down. But I think it's actually had a permanent positive increase permanently on home prices.   Gary: I would agree with John, I don't think the fundamentals, I don't think the fundamentals of real estate investing have changed. But I would say perhaps some of our maybe preconceptions or assumptions about how it would perform is I kind of mentioned earlier, or maybe a little bit challenged, and that there's just so much demand for the product and in the pandemic. You know, it was almost counterintuitive that home prices would go up and rents would go up. But when you think about the fact that people really demanded shelter, safe shelter, and there was an exodus of from a lot of the coastal cities to secondary and tertiary markets drove a lot of that demand. So but I think still, the fundamentals of real estate are very much about location and supply and demand. Those things, those fundamentals I think are true. I think one of the things we're seeing though is perhaps there are different things get that can drive, demand and pricing for different types of real estate assets. So if you look at for example, housing, and industrial, which have done quite well, throughout the throughout the pandemic and the aftermath, and then you had some real estate asset classes that really suffered, because you look at office and retail and and REIT in hotels, things like that. So it's it. I think real estate broadly can be influenced by different things. The fundamentals of each have to be examined, but certainly for housing. It's been it's been very strong, despite what might you might have considered some some headwinds.   Michael: Okay, interesting and you both touched on inflation in the conversation thus far and so I'm curious to know, how much of the demand do you think is being really driven by inflation? And do you think that folks are right or wrong to be considering real estate investing as a hedge or as a defense against inflation?   John: People's expenses are going up and your investments should beat inflation and nothing in the treasury market does it in fact, nothing in the high yield bond market pretty much does it now too, I don't know how you earn returns. But this was going on pre COVID and that's why I mean that there was a surge of money coming into the market pre COVID. We at our conference at the end of 2019, we had Bruce flat, the CEO of Brookfield asset management, who at the time manage more than $500 billion was fundraising all over the world and he literally said that this is the most significant thing he seen in the last 15 years, is everything that produces cash is gonna go up in value, and that was pre COVID and so that this this has just got even more accelerated because inflation wasn't even part of the equation. Now if you're now if you need to beat inflation in your return and inflation is right now the latest print is seven 8% where you're going to get seven or 8%? And so housing, if wages go up which they are, you can raise rents, if the cost of the structure going up is going up, which it definitely is, every single component in the house has gone up, their cost of construction has gone up at least 10% in the last year. That's an inflation hedge too, because nobody's gonna replicate what you own for the same amount of money. It's very much an inflation hedge.   Gary: Everything points toward continued inflation, in my view in the housing market. Now, that being said, interest rates going up, you would think should moderate that. That's an offsetting influence, but the cost of the inputs, the labor and the materials, clearly upward pressure, everything that's going on in the world, disrupting the global supply chain, and the cost of transport and all that putting upward pressure, Pete wage inflation to keep people in their seats, and to hire people. That's allowing people to have more and more money to spend on housing that's also pulling pricing up. It's hard to see how much that's going to, in an absolute basis reduce the price of housing, I do think that we will see some moderating of the rate of inflation of homes over the upcoming quarters and years, I think that 15% is gonna come down naturally. But I don't see, I don't see it coming down to the point where it actually reverses and you see absolute price declines, like we saw in that really unusual time in the Great Recession, which was, arguably a once in a generation adjustment to housing prices there. I think, a lot of fundamental differences between what we're seeing today and and what we saw back then this is not a credit bubble.   John: So I agree with everything you said until this is not a credit bubble. I mean, maybe you meant a credit bubble on housing, because I agree with you.   Gary: That's what I mean, I mean that there's a lot of embedded equity, as opposed to people, you know, having 3% or less equity in their homes, they've got 20 plus percent equity. Now, you can talk about the I wasn't speaking to the global kind of free money, credit bubble, but…   John: Well, that's a I think there's a credit bubble going on in the world on pretty much everything else. I mean, Dodd Frank, made it impossible to do it on a mortgage going through a bank. But people are lending against crypto, it's the highest borrowing and stock prices ever. We're seeing deals even in single family rental that well, I would say are being done with pretty much no due diligence, because it's a mess piece. So there's a little bit of equity in front of me and what I worry about is a recession caused by a credit bubble outside of the housing market, which impacts housing demand and you know, that's when housing was struggle, but I think everything else in the world would struggle at the same time, maybe even more, so. So I'm not, I'm not saying get into stocks or bonds, because it's just that, that that's what caused the great financial crisis, and it was housing last time. I think it's other stuff this time. We were seeing flip flipper loans are being securitized on Wall Street. I mean, there's, you know, I see that in my business, one of my clients is lending against crypto balances. You know, I think another famous person just came out and said, if you've got if you can put up crypto, I'll give you the value of your crypto to make a down payment for a house, that there's some different stuff going on. That concerns me but not on buying rental homes or Roofstock more concerning on the economy.   Michael: Okay and so curious, John, just, you know, personal thoughts. What's a good defense?   John: You know, normally it would be cash, but holding on to cash it goes down 7% in a year. So I think Howard Marks who's a famous investors calls this an everything bubble. We're in an everything bubble right now and how do you invest in an everything bubble? I have no idea. That's why I run it…   Gary: Maybe maybe negative interest rate German bonds don't seem so crazy.   Michael: Yeah.   John: Well, no, exactly. So, so if you're, if you know, in the coming world, losing 3% is probably a good deal relative to everybody else if that's if that's how that plays out.   Michael: All right, well, keep both you keeping your eyes and ears peeled and let me know if you hear something great for hedge against the everything bubble, I'd appreciate it.   John: Well, it's it's still specific. I mean, that that's what the smart people aren't doing. They're just, they aren't going to do just a sector. They're looking at everything carefully and in this industry, if you don't have a lot of competition going around where you're making investments, that's a far safer place to be if there's some great job growth in your conference. In a job growth because those employers are profitable and making money and going to be there all the time, that's a different story than the job growth being in a sector that's currently losing money, for example.   Michael: That makes total sense, that makes total sense. I'm curious if we could take a step back and understanding that neither of you work for the Federal Reserve, but I'm curious to know your thoughts and kind of get some insight into? I mean, you talked about the wage growth going up, and then the cost of goods and services going up? How do we not get into this upward death spiral? And I know, Gary, you mentioned, you know, raising interest rates could curtail that, but it seems like there's just so much money out there how to, how do we kind of ease down from this?   Gary: Yeah, well, I think there's it I don't know, if there's been a tougher, it's never easy being involved with setting Fed policy, but you have a lot of things to balance here. This is a tightrope act. So you want to slow the economy here, enough to curtail inflation, yet, not necessarily throw it into a big recession, you've got a lot of things going on overseas, that should you could argue are already going to cause things maybe to slow a bit because of what's going on over there. So do they need to pump the brakes as much here. So maybe that means that the Fed doesn't raise as aggressively here and what that may mean is, you know, rates grow a little bit more slowly and maybe the economy tends to overheat despite the global weakness. So it's a really, really challenging balancing act, I think that the Fed is under enormous pressure to curtail inflation and so I think, despite that, we'll probably err on the side of pumping the brakes a little bit heavier, even though that may mean we're risking recession. That would be I'd be curious, John, if you have a view. But if I had to, like on the continuum of what they're more worried about right now, normally, they're, you know, I would say that they've been historically more worried about not wanting to put us in the recession. But we've never, in a long time had these sort of inflationary pressures and in particular, where I think people feel it, it seems to be at the gas pump, right? We're always talking about fuel prices people feel that very deeply and there's a lot of political pressure, even though the feds, in theory, a political, political pressures tend to work their way into those decisions.   John: Yeah and my 30 plus years of paying attention to this, I've never seen the Fed more politically tied than they are right now. They frankly, they seem to me to be puppets of elected officials. I mean, the fact that Powell had to announce for months and months and months, they were going to raise rates, but never raised them once until he got reappointed will tell you something. So I mean, I always honestly think it seems to me like elected officials are calling the shots right now and I think the ultimate fear is a recession or we want to get inflation down, because inflation isn't good either and then, you know, the way I think about this, too, is there's, if you really talk about people's true costs, there's a huge variation in inflation. So if you're a homeowner who owns your car, you know, your your housing costs haven't gone up at all, maybe you got a little bit of a property tax reassessment, you haven't had to go back and purchase a car or release a car and if you are close to work or working from home, frankly, your cost of living might be down over the last year or two.   If you're somebody who's commuting to work, Rance had to you know, really your lease was up had to get another car. I mean, your cost of living can be up to 15 to 20% and the Fed seems to be focused on those people, rightly or wrongly. But that that's how I'm thinking about this is it's a huge difference in what's actually happening depending on what you are, and then the wage growth. You know, if you're in the hospitality sector, you haven't seen anything. But if you're a construction worker or a truck driver, your wages are up dramatically. So and those are the ones I that we're seeing that are buying homes, renting homes, people that are affluent, able to work from home, hey, I can I can now go out to the suburbs and rent a really nice house and my housing costs are gonna go down, not up because my boss says I only need to come into work twice a week. So it's it's very complicated story on picture painting here, but that's exactly I think how the Fed is looking at it.   Gary: Yeah. And then you also have, obviously those who own assets versus not I mean, this is similar to what John was talking about, but not only can you have the cost of living impacted a lot, a lot less if you own your assets. But in fact, John, you may know this figure I read it, I think last week, some fairly sizable percentage of the US population made more off of their homes this year than they did from their jobs. The power, the power in an inflationary environment of owning assets, it's kind of hard to overstate it. That I think one of the reasons, I think we're seeing more and more kind of first timers wanting to own their first investment property, even if they aren't in a position to own the home they're living in right now. Going to some of these lower price markets, and getting on the ownership bandwagon and just writing that asset appreciation. It's, you know, it's a powerful force.   Michael: Yeah, absolutely.   John: I think you were going to say, it's a powerful drug.   Gary: Well, some people do become addicted to it…   John: We're starting to see that. So people are taking the $200,000 in price appreciation of their house with a refi out of their investment, and then using it to buy three or four more homes, right, that that's what's going on right now. So it is it is addictive.   Michael: Yeah. That makes total sense.   Gary: Yeah. Well, it's been it's been a, a tried and true, a tried and true way for real estate investors to make money, right is to buy that first property, refinance it, take that money, buy more properties and build. But I think, John, to your point, what's happening is, a lot of people are doing that with their primary home equity to get started, as opposed to being more of the intentional investor who just started to do that, I think more and more people are doing it with, you know, equity in their homes, which I think in many ways makes a lot of sense from a diversification standpoint, rather than having so much of your wealth, personally tied up in a single property address, where you happen to live, where you're really subject to the vagaries of your local real estate market, local job market, all that kind of stuff, because that's where you tend to work to diversify into other markets and other assets, I think does make a lot of sense.   Michael: John, would you agree?   John: Yeah, no, diversification makes a lot of sense. I just, I also think it makes a lot of sense to watch how much leverage you've got and to make sure you've got the cash flow, you know, just in case something bad goes wrong. And I think people that are investing like that, and doing exactly what you're saying, are going to be great. But last time, what we saw was, people just were ignoring that and then you lose your job, and then you lose your tenant, and you're your host. So you got you got to be careful here and I think the more I'm a generalized a little bit here, but the more mature people that have seen this before doing that, and I'm sensing the younger people only think home prices only go up and I are more willing to take more risk than I would recommend.   Michael: John, kind of to that point. I'm curious to get both your guys' thoughts if someone is taking out equity their home, because interest rates are so low, and they've seen the value go through the roof and they're going to go buy investment properties. What's the harm? What's the risk there? I mean, and how does someone know if they are over leveraged? If their cash flow is covering their mortgage payments? I mean, if the value dips, nothing really changes for them from a payment standpoint. So how should people think be thinking about being over leveraged or how much risk is too much?   John: I mean, that's a very personal decision for folks. You know, confidence in your employment situation is probably the most important thing and depends on what you do.   Gary: Yeah, I think, Michael, I mean, to your point, as long as they think it is an important point, in a rental home portfolio. Yeah, even if prices drop of that home and you've got a fixed mortgage, your payments don't change, right and unless rents come down, which they traditionally have not, they tend to be more sticky in single family rentals than say in apartments. We followed a lot of that data over time. So you should be okay. Even if on paper, the value of your home, your rental home has gone down. But I think in the primary residence, which is where John I think was going is if you let's say you have you know, 60% equity in your home and you lever it up to 90 through various means, then all of a sudden, you may be at a point where if you lose your job, and you don't have the reserves, you may be in a little bit of a tougher spot because you don't have that home equity to tap, which historically has just been a really nice thing to have as as a safety net and so when that if that were to happen you might have to sell some of your other properties or you have your equity elsewhere and it's not like you can't necessarily get at it.   But I do think in times where you do have some uncertainty, some global uncertainty and some things like that, having some reserves, make sense, not being over levered, make sense, play the long game, I think that's one of the things that we talk to people a lot about is, this is not a, you know, get rich, quick fix and flip, you know, strategy when you're buying investment properties?   Michael: Are you serious?     Gary: So over the long run, Michael, you're going to do just fine. But you have to be patient. So no, but there's plenty of there's plenty of ways you could make bats to win quickly win or lose quickly. But that's generally not what people are doing with us and I think there's times when people are more risk on is a lot of confidence to maybe lever up and things like that, I think this is a time to be more a little bit more thoughtful about all about leverage ratios and so yes, you give up some levered return, potentially. But if you're in a, I would argue if you're in a place where home prices are going up at such an extraordinary rate, you don't need as much leverage to get a phenomenal return. Even if you're only 50% levered, and your home's going up seven or 8% a year, that asset level, you know, obviously, you're doing much better than that, and the return on equity level, so I would say just don't get greedy. It's a long game and you know, make sure you're, you're around to, you know, fight another day, in case there's any sort of corrections.   Michael: To play the end of the game.   John: I mean, that that's the perfect, that's how I see it, too, is cut the long game. And that's how everybody who's been doing this for decades will all tell you that that's exactly the way to play it. I am I am seeing and hearing and running into 20 somethings who aren't listening to Gary's advice and I have no idea if that's 1% of the market or 40. But they're out there and fortunately, they're not getting loans from banks that 90% LTV, at least that I can find, so that's, that's good.   Gary: I mean, Michael, you talk to a lot of people all the time, what is what is your assessment are people do you think people are thoughtful about this? Do you think that is? Do you agree with John, that people who might not have seen a down cycle might be overly optimistic or do you think that they're better informed?   Michael: Yeah, you know, I think it's really a mix of the two, I think that there are two big camps. One camp says this is going to go on forever and that tends to be the folks that haven't seen a recession before and then there's the folks that say, you know, we're it's got to come down at some point and so let's just kind of see what happens and those tend to be the more seasoned folks. So I'm curious, I'm curious to get your guys's thoughts on for those two camps and someone who's just trying to get started trying to get their foot in the door? How should they be thinking about that, is this something that they can kind of catch on the upswing or is do they really need to be a bit more timid and reserved and say things are maybe a little bit too hot right, now let me let me just take a seat on the sidelines and see how this all plays out?   John: So we've been calling this the high risk high reward the part of the cycle now for 13 months. So I would have told you 13 months ago to be cautious and the person who would have taken a lot of risk what I made far more money than the person who listened to me so but that's how these things play out at the end at the end of the cycle. When you take a lot of risk you should make a lot of reward right? But you know, you also need to know when to take some chips off the table you know, unless you believe we're never going to have a recession again which I don't believe that and then also what Gary said has been very true for single family rental rents. The rents have been very stable over time compared to apartments because there's basically been very little construction of rental homes forever and there's always been a ton of construction in apartments and that's when you get hurt killed is when you know three huge apartment complexes open up down the store down the street totally empty and have to lease up 500 units you're done that even though billed for rent is growing pretty significantly in Phoenix right now it's still a lot smaller level of supply than apartments. So this is a more stable investment than comparative some other rental classes for sure.   Gary: Yeah, it's it's really we like to say it's a lot easier to go up then sideways because if you could you go vertical with apartments and it takes a lot more land and it's typically much more difficult to add the single family rental supply and then over time, you also have more than one on exit on the on the rental homes because you could you could exit to a yield investor or ultimately, an owner occupant. So that's I think one of the things that I've always liked about single family rentals is you've got built in optionality. It's very rare in a real estate investment, to have two very distinct buyer sets on the back end, right. You have an office building, you're going to sell it to an office investor. Same with a hotel, they would, but so this is, you know, I think a unique aspect of single family rentals, which gives, you know, it kind of gives investors a bit of a of a hedge.   Michael: Yeah, that makes total sense. Curious, what do you tell investors who come to you and say, John, Gary, you know, I can't seem to break in, all my offers are getting outbid by all cash offers that are 10 to 15% above asking, I can't go that hi, how can I get my foot in the door? What should I be doing? What tactics should I be using?   John: I mean, I might be the wrong person to ask because my clients tend to be very large companies, and this is for their capital partners, this is less than 10%, or maybe of what they're investing in the spectrum of certainly less than 20%. So they may be all in in this industry. But it's it's not, what you're alluding to, is maybe somebody with 100% of their net worth or 80% of their net worth getting in. That's, I don't advise on that, I mean, people are building rental homes, with the appropriate amount of leverage in good locations. That's where we're coaching people to go, there's also people building rental homes, with a lot of leverage in tertiary locations, right, where there's a lot of other construction going on and that that would be to me a higher risk scenario. I think I think there's room for 100 unit rental community, brand new built in every city in America of size, because you can pull it there's 1000s of people that rent ratty old homes with lousy landlords, and there's a percentage of them that would really love to rent something new. Well, and what's your biggest fear is the tenant that said, they're going to sell the house you live in it, you're gonna have to move out? Well, you know, if you're in a rental community that's owned by a public REIT, they're not selling the house, you know that that fear is gone. They may charge you a little more, because it comes with better service and other things. But I think that's a tremendous long term opportunities to build rental homes.   Michael: Interesting perspective, Gary?   Gary: Yeah, well, I would say, people should do their research, and be patient, be opportunistic, but but not be afraid to act with conviction when they find things that make sense for them and so I think, what we find is, on Roofstock, a lot of times people will come and they will look at properties for months and months and months and talk to people and kind of develop their strategy and eventually, something is going to hit your radar, that's going to check most of the boxes and in this market when that happens, as long as you've done enough work to kind of know this, then be ready to act, you know, I wouldn't recommend somebody come and buy the first home they see because then you're not you just don't have enough data. But when you see where these things are trading and all that, and so that's why I say you know, be disciplined, but also act with conviction, when you find something that does work if you do want to get exposure.   Otherwise, you could sit back and just sort of watch things. But you can also wait a lot of times with stock market, also people want to buy on a dip and just wait, maybe there is a little bit of a correction and that could be a time for people to want to wade back in. The challenge with waiting for a dip is, as John pointed out, there just hasn't been even throughout COVID there's been no dip, it's just, you know, been up into the right and, and so, you know, I don't recommend people just, you just buy because of the momentum, right? You want to, again, you want to feel good about the markets you're buying in and the home that you're buying. But also, it's really hard to time a market. It's just it's almost impossible. So heard that that's why overtime, we recommend people not, you know, even if you're only in a position to buy a home now once but, you know, have a design to own a portfolio of them over time and buy them at different points in the cycle and over time you get that market exposure. It's just, it's hard to time your ins and outs perfectly.   Michael: Yeah, yeah. Okay, cool. Well, I'm curious now to get your guys' thoughts and opinions looking forward, which I know is always a dangerous thing to do, but I'm going to ask you both take out your crystal ball and in talking, John, you mentioned about new newly built homes built to rent communities and so I'm curious to hear your opinions around, if the housing starts that we're seeing, since COVID, are going to have an impact, you know, several years down the road 8-10, you know, 5-10, eight years down the road, kind of like we're seeing now, as a result from the 2008, lack of home starts.   John: Yeah, we've done more research on that than anybody else. There's a couple people with some very simple analysis that says we're short, about five to 6 million homes. I think we're short about 1,000,007, which is still a lot of homes and that's not the same shortage in Buffalo as it is in Dallas. So you know, this is we've got the numbers by market. But at a high level, if we're short, 1,000,007 homes, there's 1,000,007 homes that have brand new homes that have paid for our permit that haven't been finished yet. So we've got all of that under construction and it's taking about nine weeks longer to build a house for the best production builders in the country. So this is taking a very long time, so it's going to be at least a year before we satisfy that, because there will be some growth along the way, too. So I'm not what is different about this cycle is the lack of construction. But what I want to point out is there's this notion that the low level of supply just means that this is almost a sure thing and I think the most important thing for housing has always been job growth always, even rates can go up dramatically. But if everybody's got their job, okay, we're, you know, maybe prices will be flat for a while, but we'll be fine. It's when you see massive job losses that we cycle down hard.   So that's why I was I was bringing up earlier the whole credit cycle issues. You know, know, if we if we knew exactly how much debt every company had in every industry had and how much they could cover their cash flow, I think I'd have more certainty. Some analysis I've seen is there's quite a few publicly traded companies that aren't currently generating enough cash to pay their debt service. That makes me concern they're not in the housing industry. In fact, the homebuilders have never been better capitalized like, they're amazing. They have the lowest debt levels ever and the bonds that oh, yeah, and the bonds they borrowed, they don't mature for like four or five or six years. So I mean, the homebuilt talk about a safe play, in terms of going through the cycle, I think it's the builders. I'm not recommending stocks, because I don't do that for a living, because I think all of this is priced in. But I'm telling you, publicly traded home builders are very, very strong, right now.   Gary: Yeah. You know, it's interesting, because John does such good research. So I have no reason to doubt the million seven. But I have seen, you know, estimates between four and 6 million homes deficit in in. So I don't know what the right number is and I'm sure that the method, there's methodologies that but but it's still, it's a couple of at least a couple million homes. The question is what, you know, what does that mean, going forward? Do we catch up as quickly? Can we catch up in a year or two?   That's, I think, optimistic. I think it'll be interesting to see if we do. One of the things that John mentioned was job growth, and that historically has been a real driver. What I think is so interesting now is jobs are so distributed and because companies are adding jobs doesn't mean the jobs are going to be where the companies are located and that kind of makes everyone's head explode. If you're trying to forecast, what's the impact of job growth, it really comes down, arguably, more to population growth. So local jobs are one thing and some things have to be localized, right? If you're going to work at a hotel, the hotel is in a particular place, if you're going to be a software engineer, working for Apple, you know, maybe you could be anywhere or any of these other places and so it's a it's a different calculus than I think it was 10 years ago of treatment, trying to forecast job growth from companies and then okay, well, people are going to need to live within a 30 minute commute or 45 minute commute it that's all upside down. So I think it does bode well for some of these secondary and tertiary places that have seen disproportionate growth. But then you also have these places like in Austin that continue to explode and arguably housings no longer very affordable but they keep building more houses and people keep buying them and keep renting them and there's plenty of land in a place like Austin and so I think almost looking at where taxes are low, and people can still get relatively affordable housing almost seems to be more powerful than local job growth. But I'd be curious about, you know, John's view of that.     John: No, he's right. There's a there's a large sector of the economy where you can live wherever you want and I mean, we, we've been doing this since before COVID, as I was never, never believed that all the best people to hire on the world, we're always within commuting distance in my office. So we've been hiring in good locations, and but you got to get the right person who can do that and companies have figured that out now. So your it is about a great location, it is about where I can get a lot of house for my money if I'm a tenant, or if I'm a homebuyer or I can pay lower income taxes, or I can have better weather. So it's really the same place as people were moving pre COVID. It's just more people have been given the permission to move. So you're right, the job growth. It's pretty correlated to the metro area. But I would say the more outlying areas should see more price appreciation, and they are seeing more price appreciation right now, because more people are being allowed to go there.   Michael: Okay.   Gary: Yeah and it's almost interesting. It's a little bit like the job, the jobs are almost coming with the people. So you think of a place like Boise, Idaho, where people move there not for jobs, necessarily, but because they could bring their jobs with them and they all had all this embedded equity in their homes for more expensive markets. So now you have all these people moving into a market like Boise, and you get incredible growth in the prices of homes in Boise. But now people are working from Boise. So are those jobs created in Boise are there jobs that now exist in Boise because it was inexpensive, and it's a nice place to live?   Michael: Yeah, I was gonna ask John, does that make it kind of squirrely to nail down that job growth metric because of this new phenomenon?   John: Yes and no, so there's two jobs surveys, there's one where they call the employer and said, how many people did you hire this month? That's based on where the employer is located. But the one where they call people and say, are you looking for work or not, that comes up with the unemployment number, that's where you live. So actually, we always triangulate the two. So I'll use my example. So we perfect example, I'm in Orange County, California, we hired somebody in Boise, but she could live anywhere. She's showing up on my here in Orange County on one survey, and she's showing up in Boise and the other, so you just you need to look at both the sample size on where the company's located is higher and better and the unemployment number at the Metro levels more volatile. So you got to look at a trend over time and not just overreact to a month or two.   Michael: That's super interesting. Okay, and great to know, too. So, the last question I have for you both, and I think I already know the answer. But for everyone listening, I'm gonna ask on their behalf and your guys' opinions, have there been asset classes that have become more valuable and less valuable as a result of the pandemic and if so, what, in your opinion, are they?   John: You can handle crypto, Gary. I am not going to touch that one.   Gary: Why don't you start then?   John: As I as I said earlier, I think new technology which was not around prior to 2012, has allowed the single family rental business to just blossom permanently And it's, it's now gonna be a permanent part of people's portfolio passively investing in real estate And that has already pushed up prices more than it would have been going forward. Whatever price appreciation would have been otherwise, it'll probably push it up a little bit more. The only thing you have to concern to certain yourself where there is, you know, the government doesn't like that And they tend to be pro homeownership. So you gotta watch regulation. I am seeing a lot of our clients tend to avoid California because they're afraid of rent control. So and there was just a Bloomberg article that 12 Different states have had rent control proposed because of all of this. So you just got to keep your antenna up on on that side. But the rent control is being proposed seems to be more reasonable. It's at the rate of inflation or maybe 1% higher than that, that you can raise rents. It's not, you know, zero or something ridiculous.   Michael: Okay and what in your opinion has been devalued or become less valuable, if anything?   John: Um, I can't think of anything that's become a …Cash!   Gary: It's it makes sense, right? I mean, you're you're losing. I mean, John, John mentioned, if you're literally if you have money sitting in your checking account, right now it's point 001% and we've got 678 percent inflation, that's how much you're losing by sitting in cash and so that does create a risk incentive to put it somewhere. And you know, I would say, Michael, I mentioned this earlier, but I think housing and industrial, which is driven a lot by distribution for E commerce, a lot of those have been really darlings of, of, for investors, they've become very much in favor and I do think you're still seeing some challenges with in some questions about office space demand and you know, not that there aren't always office investors, and there are always going to be people in offices, but there's probably structurally some percentage of less space that companies are going to utilize and so that puts maybe some uncertainty into the minds of investors, if there's another I think, I think a lens people investors are looking at today is okay, there's going to be another pandemic someday, what are the likely implications of this and, you know, office, retail, traditional retail was hurt by the pandemic, but it was also being crushed just by Amazon, right, and so you, so that's, I think, got its own challenges. And then hospitalities is very cyclical anyway, if people stopped traveling, you know, they didn't travel for a while.   So those those I think are, you know, maybe a little slightly more challenged than housing, which is, which has proven to be much more resilient than, than I think most people thought and, as a consequence, you have a lot of a lot of investors, not just, you know, traditional or not just individual investors or institutions from here. But yet people from all over the world saying, well, US housing looks pretty interesting, relative to other places that they could invest.   Michael: Yeah.   John: There's something we take for granted here called Title laws that don't exist in other countries. I mean, people in other countries don't want to buy real estate there, because the government could take it away from them. You know, and I hear that from foreign investors. That's one of the things that they love about investing in America.   Michael: Pretty scary notion if you had to be overseas   John: …Or get I should have mentioned everything that Gary said to I mean, there's a lot of huge funds, pension funds, who like to put a percentage of their assets a 10% in real estate all the time, and it would traditionally go into retail and office and hotel. Do you think they're ever going to go back to the same percentage of retail hotel and office? Probably not, it's going to be far more in this business. Because retail is now industrial. I mean, it's a warehouse and in line, you know, the best retail centers are all going to be fine in the best locations, but they're in line space is dead. So, so you're right, that's gonna push more money into our business.   Michael: Okay, well, guys, this was super informative. I know I had a lot of fun. Hopefully our listeners did, too. If people want to learn a little bit more about each of you, where's the best place for them to do that?   John: Oh, we've got a website https://www.realestateconsulting.com/ I post pretty regularly on LinkedIn. So you can look up John Burns on LinkedIn and get some free stuff every day.   Gary: I love the free hoodie that you got right there, Michael. John, I know you've got a Roofstock hoodie as well. I don't know if you ever wear it.   John: I do, I should have bought it today, I'm sorry about that I should.       Gary: So yeah, I think I would just encourage people, if they want to learn more about what we're doing at Roofstock just come to https://www.roofstock.com/ you could also follow me or hit me up on LinkedIn, I post pretty regularly there as well. But yeah, and keep checking out the podcast I know Michael's been doing a great job along with Pierre and the rest of the team here trying to get they couldn't get any interesting guests this this time so they got John and me but I know they've been otherwise doing getting some pretty interesting folks and doing a great job.   John: Well I saw that you're then the one of the top 1% of podcasters in the world. Hopefully we didn't push it down to 2%.   Michael: A filler episode though this this was great you guys. Thank you so much for taking the time and I very much looking forward to chatting again as we continue along this crazy trajectory that we're on.   Alright, everyone that was our episode, a big thank you to John and Gary for taking the time out of their extremely busy schedules to hang out with me and chat about what's been going on in the real estate market and where we might be headed going forward. As always, if you liked the episode, feel free to leave us a rating or review wherever it is you get your podcast, and we look forward to seeing on the next one. Happy investing…

At age 27, former financial advisor Rachel Richards quit her job and retired. She now lives off $15,000 per month in passive income. Rachel Richards is the best-selling author of “Money Honey: A Simple 7-Step Guide for Getting Your Financial $h*t Together.” She is an entrepreneur, professional speaker, and investor. In her newest book, "Passive Income, Aggressive Retirement," Rachel dives deep into the topic of passive income and financial independence. She explains why building self-sustaining income streams is so brilliant. She outlines 28 different passive income models and how to start creating them. For most of us, retiring at 27 sounds like a dream, and while it may seem unattainable, it's certainly not impossible, as we learn from Rachel. In today's episode, she sheds light on how real estate played a key role in achieving financial freedom. We learn about her real estate journey so far, the metrics she focuses on, and how she ensures that a property will ultimately be a worthwhile investment. Although the rental income she makes from properties is now passive, Rachel does not sugar coat the effort it took to get her into this position. Episode Links: https://theshorttermshop.com/ https://www.instagram.com/moneyhoneyrachel/ https://www.moneyhoneyrachel.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals. Michael: Hey everyone, coach Michael here from the Roofstock Academy just wanted to let everyone know we had Avery Carl on our show a while back and she was talking to us about short term rentals and she was actually kind enough to host me on her show as well. Theshorttermshop.com you can find that anywhere you get your podcasts, and I did an episode with her and it's titled dig your well before you're thirsty. We're talking a little bit about my story and some of my coaching background. So definitely go check that out. We want to support her show as well. You'll find the link in the description right below. Let's get back to the episode Michael: What's going on everyone? Welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today with me I have a very special returning guest Rachel Richards of money, honey and today Rachel's talking to us about syndications and also her thoughts, predictions, and where we are in today's market. So let's get into it.   Rachel Richards, thanks so much for coming back with me and hanging out. I really appreciate you taking the time.   Rachel: Yeah. Thanks for having me again. This is so fun.   Michael: Oh, my pleasure. You're one of the really fun one. So we're happy to have you back and so excited to hear and chat with you today, because we're talking about syndications and the current market conditions. So definitely, definitely excited to hear from you. For maybe our listeners that aren't familiar with what syndications are, can you just give us a quick two second definition? What is it, how do they work?   Rachel: Absolutely! Real Estate syndications are one of my favorite things to talk about right now. So let's say there is a $10 million apartment complex, and an investor wants to buy it but she can't afford it, she can form something called a syndication. This allows her to raise money from private investors, people like you and me. So we can pool our money together to buy this large piece of real estate that otherwise we all might not be able to buy. So we can pull our money together, buy this piece of real estate, the cool thing is we are not lending our money to this syndication or to the syndicator. So we're not earning interest, we're actually part equity owners in this syndication, which means we are entitled to a share of the profits. So and the other cool thing is we're limited partners, we are very passive investors. Once we do the due diligence, and we find this indication, and we analyze it and we send in our money. That's all we do. We're not managing tenants, we're not overseeing renovations or day to day operations, you just sit back and you collect a monthly or quarterly cash flow distribution and if the property's ever refinanced or sold, you get to share profits at that point as well, in addition to all the tax benefits you would normally get by owning real estate. So I'm super excited about them. It's one of my favorite ways to invest in real estate and one of the most passive ways I have found to own rental property.       Michael: Yeah, really sounds like it and so it sounds like you kind of meets all the definition of criteria of true mailbox money.   Rachel: Absolutely. It's definitely actual mailbox money.   Michael: That's awesome. All right, so let's dive a little bit deeper and talk about, you know, what are the mechanics involved behind actually getting involved in one of these syndications? Because I think a lot of people when they hear the word syndication, or they hear 10 million or $100 million apartment complex, they think, well, not for me only for somebody else. So how does somebody get involved with participating in syndication?   Rachel: The first thing to be aware of is, you really need to find a good syndicator and people refer to syndicators as different things, sponsors, operators, general partners, GPS. So all those terms mean the same thing. I've heard way a lot of horror stories about people sending in $50,000, to a syndicator. And then the syndicator running off with that money and it's truly scary. Yeah, it's very easy to get scammed and the thing is the syndicator eventually gets caught and gets thrown in jail, but investors typically can't recoup their money. So it's very scary, I don't know anyone that's personally happened to you, I've just heard about this happening online, and, and whatever. So you really need to find a trustworthy syndicator. This is a lot of money that you're sending to somebody, and you need to find an experienced and qualified professional. So let me put it this way, if you're going to spend five hours doing due diligence, make sure you spend one or two hours analyzing the deal itself, and you spend three or four hours doing the due diligence on the syndicator the person you're sending your money to.   Michael: Okay. That's a great way to say it. So really, we're evaluating the person or the operator of the company much more so than the deal itself.   Rachel: Absolutely. Because they're the ones who are ultimately in control of this asset. They're going to be overseeing the renovations managing the tenants. They did all the underwriting there anyone who found this deal negotiated this deal and they're going to be managing it the entire way through until you sell the property. You don't have control as a passive investor, you're not making decisions. So you need to trust that they know what they're doing. They're knowledgeable and they're going to get you the returns that they promised you.   Michael: Okay and you bring up such a great point that they are the ones kind of steering the ship and they should hopefully be the one ones who are experienced, I think of myself as a semi experienced person on the spectrum definitely on the on the ladder on the lower half of the rung when compared to operators and syndicators. But if I'm evaluating a deal, and I'm seeing numbers that really don't make sense to me, or I would underwrite it differently, I mean, how scrupulous should I be underwriting their deal, if they're the operators, they're the really experienced ones doing a massive deal.   Rachel: I would be very scrupulous, especially if it's your first deal that you're doing with that syndicator. So I'm the phrase verify her trust, verify, trust, but verify definitely applies here, I'm always looking at their assumptions, and then double checking. So when you are first looking at investing in a syndication, you will get a deal from a syndicator and they'll send you something called an investor deck, and it's normally a 30 or 50, page PDF presentation and shows you the property and not the pictures, the pictures, the financials and the comps and all this data and that's kind of what you have to review and to make your decision based off of, I'm going through all this data and I am asking myself, do I agree with that? Do I think that's right, do I think that's reasonable?   So there's a few, there's a ton of things I look for. But here's an example: A lot of syndicators who are not as experienced might put in a really large year one rent increase, whereas more experienced syndicators will gradually increase the rents over the three or five years of the hold up the investment term. So if you see, all of a sudden they're going from, you know, they acquired it in year zero, and they're increasing the rents up to the full max amount that they are projecting right away in year one. That's not a very reasonable projection, or a reasonable assumption. So that's something to look out for. Another thing is to just double check the comps in the area, they will have their own comps of you know, here are some of the other, for example, apartment complexes in the area. Here's what they're renting for. Based on these, here's what we think ours can rent for, I would just double check those, make sure the data is accurate. Make sure it's up to date, and they're not pulling comps that are from a year ago, or they're not pulling comps that are 20 miles away, you know, just again, trust but verify.   Michael: Okay, that's so good. That's so so good and I've seen a lot of the syndication, offering memorandums or pitch decks that that I've personally seen, we'll have like a deal track record, showing some of the other deals that they've done and what the returns have been and compared to what they were projecting. Is that something to expect from a syndicator? Is that something that you should have to go get on your own?   Rachel: I think it's something to expect and if it's not shown, I would certainly ask for it. I am very hesitant to invest with a syndicator, who hasn't already exited multiple deals, because then it's really hard to see what has his returns actually been that he's gotten for his investors or for her investors. So what that means if somebody has exited a deal is that they've purchased the asset through the syndication, and then three or five or 10 years later, they've already sold the asset. So all their investors' money have been returned. They know for sure what the actual return was compared to the projected return. The numbers are there, it's it's very black and white and when a syndicator send you those exit deals, it's very clear how the syndicator is doing. Now, here's the thing you want to ask them, though, is hey, are these are you showing all of your exited deals? Or are you just showing the best ones, right? Because they have a good one, they might only just show you the good ones. So one of the best questions I ask any syndicator when I'm sort of interviewing them or screening them is hey, what's the worst deal to date that you've ever done? And how did the returns compared to what you projected? What happened? What did you learn and what are you going to change going forward?   Michael: Oh, that's so good. That's so good and when you're interviewing and screening these folks, are you actually getting the main operational team? Are you getting their sales kind of inbound leads person that's going to tell you what you want to hear? I mean, how far up the food chain so to speak can you get with these some of these folks.   Rachel: You get the main syndicator you get the head honcho, so I'm not I'm never I'm never delegated or relegated to somebody, that's the sales person or the investor relations person. I'm talking to the main syndicator the main sponsors putting together the deal, and that's always who you should expect to talk to.   So basically, I go in anytime that you are introduced to a syndicator or you meet a syndicator, they should always be asking to have a call with you or to have a zoom with you have some type of initial 15 to 20 minute conversation. I feel like it's a red flag if they don't, first of all, a lot of them are required to have some type of preexisting relationship with you before advertising their deals to you. That's an SEC regulation for a lot of not all the time but most of the time, so keep that in mind. If they're not requesting an initial phone consultation, I think it's a red flag and even if they're not required to, it's nice to know that somebody wants to get to know you. They want to get to know your goals and they're giving you an opportunity to get to know them as well and to get to ask them about their experience and their history and what kind of syndications they do. So I think that's a really positive thing when they make the effort to set up a phone consultation with you.   Michael: Oh, that sounds so good as well to keep an eye out for all these great like red herrings kind of gotcha. things to look out for, I think is great.   Rachel: Yeah, it's lot of them.   Michael: It's, it sounds like there's a lot of them. Yeah and so what types of because I've seen that there are syndications for all kinds of different deals multifamily, industrial, self-storage, what kind of syndications are you investing in, it gets you excited.   Rachel: There's so many there are multifamily mobile homes, self-storage, industrial, office, you could kind of syndicate anything, I think, I don't think anything's off limits. The ones that I personally invest in or multifamily, because I'm very familiar with him having on so many multiple multifamily rentals myself, I had a portfolio of 38 doors at one point, by the time I was 26. So being able to analyze those and trust but verify those, it comes very naturally to me. Also, mobile home parks, I think are such a great opportunity right now. It's a supply and demand thing. There's a limited amount of mobile home parks in the US and they're not allowing anyone to create more mobile home parks. But affordable housing is very much needed. So I think mobile home parks is a really great opportunity and then self-storage, I think is a great place to be in because it's another supply and demand issue where there is not enough self-storage for people and people just continue to need a place to store their stuff. I have a self-storage unit, so   Michael: I do too.   Rachel: Yeah, it's like oh, my gosh, we've just been on the road and traveling since May. So it's killing us. They raised our rates by $30 a month and it's like, what what can we do, you know…   Michael: You don't really have much of a choice.   Rachel: You can literally just raise rates on you. So anyways, I think it's a really awesome investment opportunity. So I'm looking to get into that and one of my more unique syndication investments that I'm in is a laundromat in California, which is totally random. But I love that because when you don't have tenants, same thing with self-storage, there's no evictions that you have to go through. So there's no you know, landlord tenant rights issues and that's probably one of the only ways that I would want to invest in California is knowing that I'm not going to have landlord rights being restricted. So with a laundromat, there's no tenants, and it's actually been one of the best performing syndications I've invested in so far.   Michael: Really?   Rachel: Yeah.   Michael: Yeah, that's wild. So are you participating in like so the syndication owns the land or the physical building and the business are or they're leasing to a business?   Rachel: Yeah, they own the property on the business.   Michael: Okay. Oh, interesting.     Rachel: Yeah, it's super interesting. So my cash on cash return. I just looked actually this morning. My cash on cash return on that one so far has been 22%. Yeah.   Michael: Holy smokes!   Rachel: I know.   Michael: And what about rejecting?   Rachel: I think about the same, so.   Michael: But wow. I guess I've heard are like big businesses.   Rachel: Yeah, it's crazy. That one, I was started in November 2020. So so far, it's been amazing.   Michael: Nicely done. That's awesome. Good for you. But yeah, I'm talking back to the self-storage thing. I remember walking in, like, looking around thinking, there's no people here. But there, everyone's paying rent, like all of these units with locks in them are paying rent. It's incredible. No pipes to fix No tenant repair calls to worry about. So I'm like, I think it's a really interesting opportunity. So we were talking about at the beginning of the show how syndications really are the definition and embody so much of what people are searching for in terms of passive income or mailbox money. So it's passive investment, we get a lot of the tax benefits. We get a lot of the upside potential on the exit whenever that happens. But one of the things that we have with direct ownership, as you're very familiar, is loan pay down or leverage and so is there a way to really utilize leverage in a these types of syndication? Can I go to a bank and say, hey, I'm going to go invest in this deal can you give me a loan for it? How does that work?   Rachel: You know, that's a good question. I have never tried to do that. So my answer is that I'm not sure. I would have to get back to you on that.   Michael: Totally.       Rachel: Um, yeah, I don't know. I mean, I think it depends on the bank, you might be able to do with the hard money lender. That's a that's an interesting concept to look at. But, you know, one thing I do want to say about syndications, we've talked about a lot of the positives and I don't want to make it sound like it's this amazing thing.   Michael: The silver bullet.   Rachel: Yeah, like, oh, everything's perfect. There's a lot of cons as well, there's a lot of drawbacks to syndications and I'll list a couple of them. But just like with any investment, there is risk involved, right? Anytime you invest in something, whether it's the stock market or your own rental property or, or anything, you could lose your money. So it's the same thing with this, you could lose your money. And I also think it's a little riskier to because you're trusting another person, right?   It's not like you're relying on yourself, you're relying on another person. So, so there's risk. Also, another con is, I don't really think it's for beginners, this when you invest in a syndication as a limited partner, this isn't something that's for beginners, you really need to have a lot of knowledge and it's better if you have experience to it's better if you've already invested in your own rental properties, because you'll be able to do better due diligence, and you'll be able to do better analysis. Another con that we've already talked about, you have less control, you're not making decisions, which is both a pro and a con, right. You want to be a passive investor, but you have less control over how things are going. If things start to go downhill, there's not much you can do about it. If you notice the management is sliding and people aren't doing a good job, there's not much you can personally do about it.   And then the last con for investing in syndications as a limited partner, is that you have to be eligible to do so. So a lot of these syndications require you to be an accredited investor and a lot of them have minimums of 25 or 50, or $100,000, to invest. Now, when I was starting out as an investor, I was not an accredited investor and I by no means had that amount of money I started off basically broke, I had $10,000 that I scraped and scraped together, not an accredited investor. So there's no way I could have done syndication starting out. But later on in my journey, this is something I've been able to enjoy doing now that I have more money. So I think it's a strategy that you can be intentional about and think about when in my journey, can I start implementing this as a really passive stream of income.   Michael: Love it, love it, you know, I'm just about getting there myself. I'm, I'm gotten to the point where okay, my portfolio size, I'm kind of done with the whole buying and managing and owning thing. I'm ready to let someone else do it now and it sounds like this is the next logical progression.   Rachel: So exciting.     Michael: Thrilled. So Rachel, what's been your worst syndication that you've invested in?   Rachel: Um, I think I haven't looked at all of the numbers on all of them. But I'm pretty sure it's this one multifamily property in Louisville, Kentucky, which I'm so I'm so upset about I know cuz it's my hometown. It's my hometown and so I felt like I should have done, I should have known and I should have been able to do the due diligence. So here's what I think went wrong is that this was my second syndication I invested in and even though I have background in multifamily, I still wasn't, yeah, in Louisville, Kentucky, right. So embarrassing. That that didn't matter so much, because I still wasn't as well versed in what questions to ask the syndicator you know, what should I be looking for? How do I fact check that they know what they're doing and this was a new syndicator.   And I also just wasn't aware of how do I check that they're experienced? How do I check that, you know, I wasn't asking things like I've already talked about in the interview. So I was just kind of going with it. Even though I thought maybe the deal looked good. I wasn't doing the due diligence on the sponsor. So and then it quickly became apparent that things were like the closing, I think was delayed, and I wasn't getting communication from them for a while and I was like, What's going on, and then their reporting was, was not up to par. So when you get reports from your syndicator, it should be detailed financial reports, right? They should be like, here's what we projected, all these different numbers. Here's what you're getting, here's your distribution, here's how it compares. So you should clearly be able to see, are they giving me what they told me that they would get me in terms of a cash flow number. The reports from the sponsor were like, hey, we were able to trim the landscaping back and we repainted the outside, and it was kind of like, I don't need to know the operational stuff you all are doing, I want to know my results as an investor. So it was that kind of stuff and I was like this is kind of weird. But again, it came back to me just being a little bit inexperienced as a investor into syndications and not knowing the right questions to ask. So and I'm not losing money, I haven't lost money. I think so far the cash on cash return has been about 8%. So by no means is it performing badly. I mean, that's that's the worst one return. Yeah, that's that's not including any potential profits for from a refinance or sale. That's just the cash flow. So I'm in good shape. But yeah, I mean, there was definitely some things that I learned from doing that deal.   Michael: Okay. Okay. Well, that's great. Thanks for sharing and it sounds like on that one. I mean, if you had had a different operator, I mean, it doesn't sound like it's an asset issue. It sounds like maybe it's a more of an operator issue.   Rachel: Yeah. And he is experienced as a real estate investor, just not a syndicator, so…   Michael: So one doesn't necessarily translate well into the other.     Rachel: Exactly, exactly and I'm not gonna like bad mouth him, I think he's been, you know, really trying to make this work and really trying to do a good job, he just doesn't have the experience as a syndicator and that's not always a red flag. But what he should have probably done is partnered with a much more experienced syndicator that could have really partnered and teamed up with him on this deal and showing them the ropes. That's what I've seen other new syndicators do at least for their first few deals, so…   Michael: Okay, okay, awesome. Well, this has been super helpful and informative. But I want to switch gears here and I want to get what's going on inside your brain in terms of market insights. Where do you think we're going? How long it's going to take us to get there and what are you doing in the current market cycle and conditions where we find ourselves today?   Rachel: This is my favorite question, Michael. Because everyone's asking me this and, you know, a lot of people are really hesitant and really afraid to buy real estate in this market. So the reason I love getting asked this question is because I love this market.   Michael: What?   Rachel: Yeah, I love this market. I think it's one of the best markets to invest in real estate and there's a lot of reasons why and I'm personally investing in real estate right now as well and buying property in Denver, Colorado, which I personally think is one of the toughest markets. Everyone's using Colorado, the I mean, I know the housing market is just crazy everywhere. But the appreciation and the competitive. The competition here is just through the roof. So I say that because I'm putting my money where my mouth is, I guess, and I'm doing it. I'm doing it. So yeah, I get the uncertainty though I get the hesitation, I get that times are a little bit volatile.   So but I appreciate being asked this question. So I think there's four things that the market has going for it right now that makes it a great time to invest. So first of all, there's a lot of confusion about whether we're in a bubble and I, what I want to say, what I want to preface this with saying is that I'm not an economist, please take this with a grain of salt. I'm not going to just pretend like I know, I have a crystal ball and I know everything because I don't. But I don't think we're in a bubble, I think bubbles are driven by greed and fear and nothing. Bubbles are just driven by a lot of nothingness and they don't make sense, right? And that's why they pop and then prices fall. What we're in right now, I believe to be a supply and demand issue. So there's a lot of graphs out there, if you look at the US housing starts by decade over the past few decades, like the number of construction, the new houses being built. It's shocking. I've done some Instagram posts about it. But the houses being built, like if there were this is a silly number. But if there were 100 house 100,000 houses being built per decade, for the 80s 90s 2000s. Then in 2010, it dropped down to like 50,000, which that number is not right. But it went down to half basically. Michael: Yeah, yeah.   Rachel: I have no idea why I don't know why and what happened. But the fact that our housing construction dropped down to half in the last decade is alarming and because of that, that explains the entire housing crisis right now, that explains why the market is so high. There's not enough houses, it's a seller's market, this explains our entire problem and the thing is, that's not going to go away anytime soon. It's going to take years to catch up and to build enough houses where people finally have enough homes again, population is still increasing, maybe like very, very, very slowly. It's almost flatlining now, but it is still increasing and it's just a supply and demand problem. There's not enough houses to meet to meet up with demand. So that's what I think now. Could we have a market correction? Absolutely. But I don't think we're in a bubble. So that's my thoughts on that. I think that 2022 is going to be another year of real a lot of housing growth, maybe not as much as last year, but I just don't think this is going to stop. So, so that's reason number one.   Michael: I love that insight in that take.   Rachel: Yeah, um, reason number two, that I think it's a great year to invest is because inflation is creeping up. More it was slowly at first and now it's more quickly and erases slightly alarming. Yeah. I think the last report from December was 7%, that's 7%. I don't remember the last time it was that high.   Michael: I heard this is the the biggest, the most severe, it's been in over 40 years.   Rachel: Well, that explains it. I'm 29. So this is the highest inflation has been in my lifetime. Yeah, but that's a weird thing to say and with inflation, the best place to keep your money is in real assets, things like land and real estate. So that one that's easy to explain, I think, real estate's a great place to put your money right now, certainly not cash, I have too much in cash, I'm trying to figure out where, where to put it. So that's why I want to get more invested in real estate this year. So inflation is another reason. Also interest rates, interest rates were so low for so long, they don't have anywhere to go but up and as we are now seeing interest rates are starting to rise. My husband and I are under contract on an investment property in Denver, Colorado and it was like every week, our lender kept telling us you need to get your loan application in, we need to lock these interest rates because they're literally going up every single week and we'd already missed out on a couple percentage points because we couldn't get stuff in or we couldn't get stuff done, like within a week or two, you're like, oh, my gosh, interest rates are just rising really fast. So you know, it's a really great time to invest. So you can get that little interest rate locked in.   It's your we're not in the times of refinancing anymore, like we were in the last few years where you could refinance into a lower rate going forward, now's the time to buy real estate and lock in a low interest rate and get that low mortgage payment. So that's the third thing and then the final reason, I think it's a great time to invest in real estate is because this is my personal strategy. I do not invest for appreciation, I invest for cash flow and if you invest for cash flow, it does not matter if the market goes up or down. If the market goes down, and your property's already cash flowing, it will continue to cash flow. However, if you invest for appreciation, and the market goes down, you are you're going to lose money, you have lost money and I'm scared for a lot of investors who are trying to ride the high of the market going up and they're just investing for appreciation, because that's really risky, I think that.   We all saw what happened in 2007 and 2008, investors were doing the exact same thing. And then the market crashed, people lost money. They were foreclosed on landlords lost money. It was a disaster. But if you invest for cash flow, that's never going to happen. So there's that saying, you know, you you buy, you make money when you buy, not when you sell and there's another quote that I'll share, which is don't and this goes for all the reasons why now's a great time to invest. Don't wait to buy real estate, buy real estate and wait.   Michael: Ah, that's a good one.   Rachel: There we go, mic drop.   Michael: Rachel. Oh, that is really good, that is really good. Well, I love so much of what you just shared. But I have a follow up question for you. If you're investing for cash flow, how the hell are you doing that in Denver, Colorado?   Rachel: Good question, okay. If you are in a market like Denver, or California or an expensive market or a competitive market, my advice to you is you have to be creative. You have to look at a potential property very creatively, you're likely not going to meet the 1% rule. If you're just going to look at a property and rent it out to a long term tenant, which the 1% rule states that the monthly rent should be 1% of the list price. So a $500,000 property should bring in $5,000 a month in rent. Okay, now that's just a guideline that I use to determine if a property is overpriced or underpriced. It's not a black and white roll, but I post about it sometimes on Instagram or whatever and then people are like, you're kidding, right?   I'm not gonna find a 1%...   Michael: This doesn't exist.   Rachel: Exactly yeah, this doesn't exist in California like that. You're joking and I'm like, well, it does if you do two things if you are creative, and if you look for off market deals. So what I, what I mean when I say… Michael: Another mic drop.   Rachel: Yeah, thank you. When I say be creative, I mean look at it through another lens. So can you build an accessory dwelling unit an ADU on the property? Does the zoning allow for that where you could actually build a tiny home or another unit that you could rent out thereby increasing your cash flow would that be allowed? Could you convert a single family into a duplex? Could you convert a duplex into a triplex? Could you add on another unit by just making building another wall or making a very simple switch?   So these are ways you can increase your cash flow. One of my favorite methods that I personally have done and I'm doing again, is the rent by the room method.   Michael: Yes.   Rachel: Yes, if the zoning allows for it, if the city allows for it, if the HOA allows for, you have to check all these different things. But you can make any poor or good property into a cash cow by renting it out by the room. So take a single family house, four bedrooms, two baths, instead of just putting one tenant in there, or one family in there, or whatever, rented out by the room and put four tenants in there and now you've doubled your cash flow and now you meet the 1% rule. This is how people are doing it in Denver and you can house hack and do it this way and you can live in one room and rent out the other rooms and now you have a 5% down payment and now you have a cash on cash ROI, that's 30%. Or you don't have to live there and you rent out by the room. I mean, it's I get so excited because if you think outside the box, you can find a way to buy a cash flowing property in any market, I promise you that, so…   Michael: That's so good.   Rachel: Thank you that yeah, that's the first tip and then the second tip, and this is something that I specialize in and that I teach is you have to get off the MLS, and get off Zillow, and get off the couch. You have to go, you have to go out there and find off market deals because everyone right now is doing what's easy, right? Everyone who wants to invest in us, in real estate is working with an agent, they're looking at deals on the MLS, they're looking at deals on Zillow and they're sitting on the comfort of their home waiting for something to come up. That's what everyone else is doing and the market is so competitive, and it's so saturated, that you're just not going to find a good deal that way.   You have to be willing to do what others are not if you're going to find a good deal right now and that means doing things like getting probate leads, and getting Pre Foreclosure leads and driving for dollars and putting up bandit signs and there's a ton of other methods that you can use to find off market deals. And again, it comes down to being creative and going and spending the extra time and effort and getting off the MLS so that you can find the hidden gems.   Michael: I think that's so good for people to hear. Because I think I do think so many people look at the MLS and equate that with the market, what the real estate market is doing and you're so right like competition is fierce. There's a lot of owner occupants out there that are getting lower interest rates that it can afford to pay more with lower down payments and you're competing with them and so you've got to you've got to get creative, I love that. Did you see the SNL skit talking about millennials and Zillow?   Rachel: No!   Michael: Oh, it's so good.   Rachel: What is it?   Michael: It is basically like every millennial late at night watch, like getting online going. Looking at Zillow, like gets poured like oh, look at this 320, it's amazing. Like every millennial.   Rachel: That's so true. Well, one of my favorite pastimes is going on Zillow and looking at homes I can't afford so.   Michael: Yes, I think a lot of us do the same. We're all kind of sick in the head like that.   Rachel: Yeah, like, Oh, that $10 million waterfront property in California. Beautiful!   Michael: Yeah. Maybe one day maybe?   Rachel: My price range, yeah   Michael: Awesome. Well, Rachel, thank you so much for chatting with me again today. I really appreciate you coming on. If people want to get in touch with you have more questions have follow ups. Where's the best place for them to reach out?   Rachel: Thank you so much. Yeah, my Instagram is always great. So you can follow me @moneyhoneyrachel  both of my books money, honey and passive income, aggressive retirement are available on Amazon. And lastly, Michael, what I'd love to do for your listeners is if anyone wants to download my passive income starter kit, I will give that for free, so yeah…   Michael: Amazing, thank you so much.   Rachel: Absolutely. So you can go to www.moneyhoneyrachel.com/passiveincome to download that.   Michael: Okay and we'll post that definitely in the show notes below as well for anyone listening to this. Awesome, Rachel. Thank you again, always a pleasure to see you and look forward to keeping in touch, I can't wait to hear how this rent by the room goes for you.   Rachel: Thank you. Thanks for having me on again. It's so nice to hear to talk to you.   Michael: Thanks, take care, talk soon. All right well, that was our episode a big thank you to Rachel again for coming on and spending some time with me. Super interesting perspective on where we are in the markets really great insights on syndications and how to get involved if that's something you're interested in. I definitely can't wait to hear from Rachel going forward on how her rent by the room in Denver is going out in the Midwest out in Denver, Colorado.   If you enjoy the episode, feel free to leave us a rating review. Those are super helpful for us. We'd love to hear from you all and as always, we look forward to seeing the next one. Happy investing!

Daniel Wold is the acting president of the Americal Land Title Association (ALTA). Founded in 1907, ALTA's mission is to improve the skills and knowledge of providers in the real property transaction, effectively advocate member concerns, and standardize products for industry use.   In this episode, Daniel explains how title insurance works; how it is different than other insurance types; shares about how ALTA combats fraudsters: and informs you about what to look out for to keep your largest assets secure.  www.alta.org   --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals. Michael: Hey, everyone, welcome to another episode of the remote real estate investor. I'm Michael Albaum. And today I'm joined by Dan Wold, president of the American Land Title Association. And he's going to be talking to us today about title insurance. What is it? When do we need it, as well as wire fraud and how to combat it and all of our real estate transactions? So let's get into it.   Hey, Dan, thank you so much for coming on the show and hanging out with me today. I really appreciate it.   Dan: Well, it's my pleasure. And hopefully we can touch on some really important topics today.   Michael: Yes, yes, I'm very much looking forward to it. And right before we started recording here, you and I were chatting about kind of what it is that the American Land Title Association does, and you are the president of, but so I'd love if you could share a little bit with our listeners.   Dan: Well, our governance structure has a board of governors, and this year, I am the well, actually just just incoming president for the upcoming year. And that kind of a real quick primer on title insurance, you know, we basically are involved with land title transfers, and and then ensuring the lien priorities of the of the lenders as well. So we issue owner's title insurance policies, to the consumer that purchases the property. And we like to kind of just boil it down to we protect property interests.   And we also provide peace of mind because we're the ones that sweat the details in relation to all the stuff that goes on in relation to a settlement or closing. And so that the consumer, you know, they run around doing all kinds of things at the last minute, we're there to help them and give them peace of mind.   Michael: It's It's funny, how many things get pushed until the very last minute and most closing, isn't it?   Dan: Yeah, and things pop up. And, you know, we've got so many Lanta professionals around the country that, you know, do this for a living have seen pretty much everything that you can throw at them that they are very capable at, you know, navigating the challenges that could come up in any given closing transaction?   Michael: Well, that's good to know that I'm not I don't have to be the first guinea pig with any of my closings coming up. So that's exciting.   I'm curious, Dan, if you could just elaborate a little bit more on what title insurance is, because I've got to admit, as part of, you know, the head coach and Program Manager with Roofstock Academy. This is a question that I get asked a lot of times by students in the program, so give us a kind of a high level breakdown of just what is it? And why should somebody may be thinking about getting it because it is optional, oftentimes with an all cash deal?   Dan: Well, it is it's a one time charge that occurs, you know, as part of the closing transaction. And essentially what we do, which is interesting and unique about our industry versus other insurance industries, a lot of other insurance industry will use actuarial and then pool risk. What we do is we basically sweat the details, and we research the land property records, and other pertinent information so that when we issue our policy, it will say that you are holding title to that parcel of property or land, and then subjected to only the identified defects or lien rights that might occur.   For example, if you take on a mortgage, to purchase or a deed of trust, you know, depending on the part of the country that you're in, to acquire that property, then that would be shown as an exception to clear title. And what happens then is if there's somebody that comes in and challenges your interest, and if it falls within the scope of the coverage provisions of the policy, then we would defend and then also to the extent that we miss something, then then we would also have an obligation to pay money to recompense the landowner or consumer for the de munition and the like in relation to what we insured and what was the reality that the you know, have in relation to that property.   And so we provide a lot of peace of mind on a one time you know, it's it's your largest purchase for most people in their lifetime. And it gives you peace of mind that if somebody comes comes and challenges it, and there are instances where mistakes are made, and they if you don't acquire it, then you might be able to go back up against the prior owner if you got a warranty deed, but they might not have any money, or you can't pursue them. And so this is a third party that basically has the money to stand behind, essentially, their contractual obligations under the title insurance policy.   Michael: Okay. So if I were to break that down and say it another way, help, help me help keep me on the rails here. So if I'm a buyer, and I want to go buy a piece of property, and I get into contract, and I'm going to the closing table, and I see that line item that says Title Insurance, that I have the option to buy, and I do buy it opt to buy it. Now, six months down the road, somebody comes knocking on my door and says, Excuse me, Mr. Michael, I actually own this property, you don't own it, I could then engage with my title insurance company and say, hey, this person is claiming to have a right to ownership of this property, I clearly own it based on a transaction just went through six months ago. And so the title insurance company is going to help correct any outstanding issues and get this issue resolved.   Dan: Yeah, or we have also a duty to defend if someone Sue's you and claims that they have ownership interests. So there's, you know, multiple indemnification obligations under the policy, including the duty to defend, you know, so basically, you're pretty much spot on as to, to put it in layman's terms, kind of the function of what our product does, and the assurances that we give.   Michael: Okay. And I'm just curious, in your experience, and what type of claims have you seen where somebody can come to an owner and say, Actually, I own the property, and that wasn't picked up during the title search during due diligence phase of that subsequent purchase?   Dan: Well, I think I think another way to think about it, it's not always just a claim against ownership, it could be that there's a missed easement. So that all of a sudden, you got a utility easement in the back of your entire back of your yard. And you were intending to put a swimming pool in there. There's a there's a wide range of defects that could fall within the scope of coverage. And so basically, you know, to the extent that what is revealed in the title insurance policy is the scope of what are the are the diminishes from your your absolute ownership of that property without any third party interest affecting it from an easement or other standpoint, those are also matters that could fall within the scope of coverage and could result in us taking action to remove the defect or providing you with a, you know, a money award in relation to the scope of coverage.   Michael: Interesting, okay. And something that and we always joke on the show that so often these episodes are self serving that the hosts get to ask these questions that we're interested in anyhow, and then the listeners get the benefit of that. But there's something that I'm curious about is often we hear the term chain of title. And if you can keep your name out of the chain of title, if you're going to be using an LLC, there could be advantages to that. But so my question is, is how far down the chain of title? Do you see people run into issues that involve title insurance?   Dan: Well, I would suggest that more frequently than not, you're going to see stuff, that's more current that was missed. And, you know, one of the things to keep in mind, you know, a lot of times errors occur, you know, any any human endeavor, there can be errors. And so searching errors, for example, can give rise to a significant portion of our, our claims, you know, so basically, we would go in, and search, which, you know, there are other things that could arise too, because if they were not recorded properly, in the land tech, or title records, and so forth, there might be something that's sitting out there straight deed or other things.   So there's a whole range of factors that could give rise to a claim whether and then we would look at whether or not it falls under the scope of coverage. And ultimately, at the end of the day, if we have an obligation, we would try to cure the defect, because ultimately, we want consumers to be, you know, happy about their largest purchase, but if we can't cure that defect, then we we could also provide a monetary award in relation to what that policy provides.   Yeah, to circle back to your question. I mean, you could have something that's way back in the in the records. And remember, you know, it's kind of like a chain of title is basically if you look at the real property records, you know, let's say a county, use a county model, you know, they're, they're basically going to show transaction to transaction and the transaction, and you could go back and actually see what kind of history of who owned, you know the property or portion of the property that you have, you know, you know, oftentimes properties will be larger parcels that are subdivided or platted, into a subdivision and then you can go back to that original deed that came before the plat or subdivision occurred.   But ultimately, at the end of the day, you have the ability to search and go back. And that's what we do to determine whether or not there's any issues in relation to clear ownership rights to a piece of property.   Michael: Interesting. I've got another question for Dan, that I think I already know the answer to, but I'm going to ask it anyhow. Is there ever an instance where you'd recommend not getting title insurance?   Dan: You know, from my standpoint, I know that some people elect not to purchase a, you know, owner's title insurance. Partly, sometimes they just are not well educated as to the risks, or just make the value judgment that I'd rather buy a couch instead of, you know, ensuring, ensuring that I have pure ownership or clear ownership pursuant to this policy, to the title and they're willing to roll the dice. But from my standpoint, personally, I would not roll roll the dice with your largest purchase for most people in their lifetimes. And it's a it's a, it's a, it's a one time payment, that gives you peace of mind, and basically provides you recourse in the event that what you thought you were getting is not what you got.   Michael: No, I think that's very well said. And is it something that you can buy after the fact if you decide this year, hey, I'm gonna roll the dice and maybe next year?   Dan: Wow, I'm, yeah, yeah, no, no, we need you to, we need you to, you know, to buy it at the time of purchase. Because it basically is a it's a snapshot in time. That's, you know, basically we look back, and as of the date of closing, you have these rights, and we insure those rights.   Michael: Okay. So for anybody out there listening, that's thinking is on the fence about whether or not to purchase title insurance with their purchase, think long and hard, because it's a one time deal that you can't go back and redo.   Dan: Yeah, and there's lots of lots of horror stories of people that situations where all of a sudden, things emerge, and they've they've lost their their ownership rights, or or even worse, just getting involved with litigation. If it's a covered matter, you know, the lid, the cost of litigation, something that your policy, you know, basically provides you a defense. And that can be very costly.   Michael: To come out of pocket if you don't have that coverage.   Dan: Yeah. Yeah.   Michael: So let's shift gears here entirely, Dan. And I wonder if you could speak to something that I've been hearing a lot about, which is just wire fraud.   Dan: Yeah, wire transfer fraud is basically a real emerging risks that we see and are working really hard as an industry to educate and take the appropriate steps to minimize, you know, the risks that consumers and others have in relation to, you know, wire transfer fraud, utilized as part of the, the Real Property Acquisition. And, you know, we're kind of in a situation now, where that's by far the most prevalent method, for example, for acquiring a piece of property, you you wire, you determine what your net cost is. And then you wire monies to the recipient, as part of the transaction. You know, in the past, we oftentimes used to certify checks and things like that.   And I imagine way back in the day. You probably if you had good funds you might even have had if it would if you went way, way back, maybe maybe there was a cash transaction,   Michael: A suitcase of cash or a duffel bag.   Dan: Yeah, well, but now there's a lot of limitations as to how much what you can do with cash from from a reporting standpoint, things like that, but I'm just thinking, you know, back in the day when, you know, in the 1800s, or something like that, you might a lot of times that was before title insurance as well, but, you know, cash might have been king.   Now, so just understand it's business, email compromised schemes. It's not just this is not just an issue that we have to deal with in relation to the Real estate acquisition it's it's a, it's a broader attack on the manner in which we communicate and transfer funds in today's economy, but we focus it on it primarily from the standpoint of educating so that homeowners or future homeowners don't all of a sudden find out that they've been scammed. And they've now sent their life savings to a scamster, and aren't in a position to basically purchase the house of their dream i because of certain scamming activities.   And just I don't know how much your audience focuses on this, but we look at it a significant amount of time on this topic, as an industry. And so if you went to alta.org, bat slash wire transfer,   you could get a lot of information on this. And because it's a public service issue, you don't have to be a member to access that collateral. And we've got a lot of great information on there to educate and also to take steps to protect but if I were to back up just a little bit.   Now, these aren't all the most current pieces of data but ALTA did a the American Land Title Association, we will refer to it I'll slip up and call it ALTA as we go forward. But that's what I'm referring to. We did in 2021, wire fraud and cybercrime survey, dental insurance professionals reported cyber criminals attempted to trick employees to wire funds to fraudulent accounts, and about a third of all real estate and mortgage transactions. Just think about that. That's that.   Michael: Wait, did you say a third of all real estate transactions, there was some attempt at fraud?   Dan: A third. And, you know, wire fraud attempts are on the rise nationwide 76% of title agents report a wire fraud attempts were the same or increase in 2020. And also the FBI, internet crime Compliance Center, it's icy three, I mean, for whatever reason, well, we might reference that that's what that means. Recorded 13,648 prospective homebuyers were defrauded out of 213 million through real estate wire fraud. And this was 2020, which is an increase of 70% 17% from the year before. And obviously, cyber taxes as a whole are also on the rise.   And as a reflection of that during the second quarter of 2021, cyber insurance coverage increased 25.5%. So now, withstanding all of the efforts that we and our broader industry partners are taking to alert people of these challenges. But the cyber criminals and fraudsters also are evolving to go after, you know, basically, the wire transfers in real estate and other business, email compromised schemes. And if we were to kind of look back at this, and what are the techniques that they use, just generally, there's there's concepts like social engineering and PHishing, you know, phishing is not with the pole, you know, it's the pH is right,   Michael: You're not going to catch some salmon.   Dan: Yeah, you're not gonna catch salmon or, or, or bass in this example. But basically, what they'll do is they will use their fraudulent approaches to try to infiltrate, and let's just use a consumer as an example. And a lot of consumers will use unsecured email, trance, you know, trans portals. I'm not going to name them, but we all know what's out there. And so you get so basically, they will find ways to get you to click on things or do other things that allow them to plant kind of their, their their cyber tools into your email account. And then when triggers such as real estate transaction or things like that happen, they start to monitor those transactions. And at the last second, then, they they basically would mimic one of the professional email addresses in the involved with a transaction and get the consumer to then wire funds to the wrong recipient.   And, you know, we're talking some of these people, you know, it could be $500,000, or life savings going to purchase a house or 150 years, a million. And all of a sudden, then when they they to show up for closing, and this is not a laughing matter, but it's just amazing how dangerous this is. But they do show up for closing. And then the title company, say says, Well, we are the or the or the lender or whoever the recipient was going to be for the the wire transfer says we've never seen ever received it.   And so there are certain things that we do as an industry to try to come combat this, this this scourge. So basically, from my standpoint, a couple things that you should keep in mind and your audience should keep in mind is what we do as an industry then is we try to do a lot of consumer education, as well as you know, work with our, you know, the realtors, the bankers and others in the broader industry to coordinate and make sure that we can get ahead of this.   But, you know, we we provide consumer warnings about the dangers of this on websites and communications. And then we send notices to consumers, real estate agents and others, that informs them, the parties to the transaction of the title companies wire instructions, that they will never change during the transaction. So we get that set upfront. Because what happens is, there's always a last second change, that gives rise to the diversion of funds to the illicit party's account. And oftentimes, the fraudsters are overseas. And if you don't catch it quickly, it's it's very difficult to claw it back. So you might have 24 to 48 hours after the illicit ACH transfer occurs to pull that money back.   And so from that standpoint, that's why we advise early on in the transaction that you're not going to get an email from us changing the wire transfer, you know, wire wire fraud Academy, the wire transfer instructions. And so, yeah, there's also a couple other things that we look at. You know, we exchanged no numbers. So for example, what the fraudsters will do is also, so they'll mimic a legitimate email address with a diversion. And then they'll have stuff in there. And they might also, you know, have social engineering and follow the council they know the names and who the husband is all this kind of stuff. So that looks real real. And then they basically say, if you have any questions, contact, and I'm not going to pick on Louise, but why not Louise at such and such a number?   Okay, well, Louise is just basically working with the fraudster. So you call and they and they basically have a pat answer, if you were to call. And so basically, we also then, at the beginning of the transaction, want to set the known numbers that if there's any questions they can call, because if you rely upon the email, the email will also cover that contingency to basically complete the scam. And so they're really quite tricky here.   And a couple things that I would mention here, also. So some of the things that we see, for example, the title insurance professionals put in there, they're basically email signature lines, they'll have things like, I'm just going to read a couple here due to increase fraud. Buyer sellers and lenders should confirm all wiring instructions by phone directly with our office before transferring funds to a previously disclosed phone number. I've got another one here. Warning wire fraud advisory, wire fraud and email hacking phishing attacks are on the increase. If you have been asked for a closing transaction with us and you receive an email containing wire transfer instructions, and then an upper case do not respond to the email. Instead, call your escrow officer close closer immediately using previously known contact information and not information provided in the email.   So we provide quite a bit of education and warnings to consumers. But the challenge is this, you know, consumer, we get everybody educated and we get all these transactions that go smoothly. But then, kind of on a rolling basis, you've got a new group of consumers every three months or so.   Michael: Right, right.   Dan: I mean, it's a rolling new group of consumers. So that is a constant need to educate. There's constantly a new group of people out there that that the fraudsters can go after. And so this is kind of a, you know, like the Greek tragedy pushing the rock up the hill, you know, basically, we're always, we're always on top of this, but there's always risk. And so from that standpoint, you know, I really do think we are going to have to keep combating this, and people need to be aware of it. And that's why it's great that you are doing a podcast that highlights these risks so that consumers and others can pay attention to it.   Michael: Yeah, absolutely. And, and we're happy to do it. And so, Dan, if I'm hearing you correctly, it sounds like that initial communication that you're starting to have with your title or escrow closing officer at the beginning of the transaction, is kind of setting the tone or setting up the proper information, if you will, because that those cyber tools that you're mentioning, really sit and kind of wait and lurk for the transaction to occur.   Dan: Yeah, I've been important to write them to that right spot where all of a sudden, they swoop in, and give you Oh, we're changing, where you need to send the money.   And, and if you recall, you know, the average consumer, you know, they're, it's, it's a complex deal. And they've got all kinds of stuff going on. They're arranging for the moving van, they're, you know, you look at the list of things that they're doing in relation to real real property transaction, and moving from one, you know, whether from one home to another, or from an apartment to a home, excuse me, and the like. They're very busy, and they're very easily distracted. And so that's why we really focus on this. If I could, I would also like to highlight some of the stuff that you should do if you if you do find yourself to be evicted.   Michael: Yeah, absolutely.   Dan: Yeah. So, you know, if you if you do discover that funds are transferred to a fraudulent account, you really need to act quickly. And you should contact the Financial Institution immediately upon discovering the financial or the cumulative fraudulent transfer, and request that the financial institution contact the corresponding financial institution where the fraudulent transfer was sent. Now, you also should contact your local Bureau, federal bureau and you know, FBI office, if the wire is recent, the FBI working with the United States Department of Treasury, Financial Crimes Enforcement Network, we call that FinCEN might be able to help return or freeze those funds. And then you could file a complaint regardless of dollar loss with wwe.ic3.gov. And so it's really important for consumers to recognize that if they do find that there's fraudulent activity, they need to act. And like I said before, oftentimes, but not always, but oftentimes, you've got foreign actors that are targeting US citizens to try to divert funds. And so the money could flow into that alternative banking account, bank account that, you know, you didn't want to receive the funds, but then they're going to maybe chop that up and send it in multiple directions real quickly. And so it's really hard to claw that back, if it if it gets into multiple transactions and is overseas.   And so that's why you really need to move quickly. And you You oftentimes are able to recover a good portion, or at least some of the funds that were diverted.   Michael: Okay. And how long should a transaction a wire transfer typically take because I've filled out numerous wire transaction orders, and I said, oh, we'll send it at the end of the day or what have you, and then you'll get a confirmation. So how long should people wait before reaching out to the other party and say, Hey, did you get it without freaking out?   Dan: Well, I think one thing to keep in mind is it's really a good idea to to, you know, confirm stuff contemporaneously? I mean, I wouldn't dink around with this From my standpoint, if you wait a couple days, it's too late.   Michael: Right? Right. But so after initiating a wire, and I called my title escrow officer, and it's been an hour and they haven't received it, should I start sweating bullets?   Dan: These things go pretty quickly.   Michael: Okay,   Dan: So I would move quickly, I don't have an exact timeframe, and we could get that to you to follow up. But from my standpoint, you know, I wouldn't wait more than an hour to get confirmation.   Michael: Okay. Okay, that's great. That's great. Any other tips, tricks, advice for folks that they should be aware of things they can do proactively?   Dan: Yeah, I think I think number one, they just don't click on attachments and emails, if you don't know where it's coming from. Because that's, that's a vehicle to get kind of like what they call a Trojan horse, or, you know, and I'm not a, I'm not a tech expert, per se. So I might use the wrong terminology here. But basically, they'll use something that you click on to basically infiltrate your email system, so that the fraudsters are now inside and can kind of monitor what's going on. And so they can do it here. But there's also risks of them being in there, as well to steal identities and other things that could happen in addition to the challenges that we're talking about today.   Now, but I would also say that, you know, the ALTA website has a lot of great information here. And so I would recommend if people want to follow up on this and have any concerns, and that they could go to that website and look at all the tools. So we've created lots of products, to help raise awareness and protect consumers. So there's a rapid response plan, which is a 10 step guide on what to do and who to contact if you've been hit by wire fraud.   There's also the ALTA registry. And this basically is kind of a phonebook for basically title agents, so that banks can basically look at the title agencies that are on the registry, as well as the underwriters. And we could get into kind of the distinction between the insurance side and the agent side of our business. But suffice it to say, say we don't want to necessarily confuse people. But basically, we have agents who will issue the policies on behalf of the insurance entities and some of the insurance entities in some areas will also have direct operations that do that functionality. The registry basically has all of those different entities identified on there, so that a lender can go there, and essentially verify that who they're dealing with is a legitimate operation. So that's a great tool for the lender lending community to basically reduce their risk.   We've also created the Board of Governors for the American Land Title Association also created an information security committee a couple of years ago, and it to basically examine security matters and threats that affect our membership and by extension consumers. And they basically make cyber awareness, prevention, detection and response and recovery methods for the industry.   We also have, on our website, a page dedicated information security, there's federal and state requirements to protect data, there's also ALTA's best practices, which has pillars of appropriate conduct or recommended conduct, which are all designed to basically, you know, move everything in the right direction. And we have webinars, we've done webinars, we've also have videos and other infographics on there about this challenge that's out there. And so it's a it's really a great, great resource to look at, to basically see what the challenges are and what steps you might want to take. And there's some real great practical advice on there on there as well.   And one thing that we have discovered is that for example, the title agencies and and insurance entities that do the kind of the steps up front so that they've trained their people on this risks are less likely to have a loss. And so it's really a great campaign for everybody to pay attention to. And in that regard, I would just mention one more thing here. And that is that the American Land Title Association, helped form a national coalition called the Coalition to Stop real estate wire fraud. And so the goal of that was to raise awareness about the dangers of mortgage closing schemes and wire transfer fraud across the broader spectrum of our broader industry, you know, the lenders, realtors, and so forth that are involved in in the in the greater ecosphere of what we do, and explains how it happens. It provides tips to prevent it and what to do if you've been targeted by fraud. And there's also a video that can be uploaded, if you have an issue or an issue to share your story.   So there's a lot of resources out here. But from my perspective, we are going to have to keep battling this, you know, attack on kind of the entire system, and the attacks that are kind of perpetrated against consumers that may not be aware that those risks are out there. So we have to educate and provide the tools and then also provide practical methods to minimize the likelihood that the fraudsters are successful. And so we're gonna keep battling this this challenge. And I think that your podcast and getting it out to consumers, so that they become aware that this risk is out there. They just need to be aware and be careful if they get involved in a real estate transaction to, to not let this happen to themselves.   Michael: Yeah. Yeah, that's so great. And we will definitely link in the show notes to that went to the author website, because that's great. That's great. Dan, this has been fantastic and super informative. Any final thoughts before we let you out of here?   Dan: Well, I don't want people to be afraid. I mean, homeownership is great.   Michael: Doom and gloom.   Dan: Don't just don't just keep renting all your life, because you're concerned about wire transfer fraud. But if you do decide to purchase or if it's your second or third time of purchasing, you know, real estate, you know, a home and making those life changing events which are so meaningful. You know, basically make sure that you're aware of these risks, take appropriate action to ensure that you do not become a victim of fraud, and listen to your title professionals as well as the broader, you know, realtors, mortgage, mortgagees and OKC, mortgage companies, lenders and so forth, that all have an interest in making sure that you have a great experience and that you aren't a victim of fraud.   Michael: Love it. Love it. Well, Dan, thank you again, for coming on and spending some time with me. I really appreciate it. And I look forward to chatting with you soon.   Dan: I'm glad to have this conversation and appreciate your taking a moment to address these really important topics. Thanks so much.   Michael: My pleasure. Thank you. Alrighty, everyone, that was our episode a big big, big thank you to Dan and the American Land Title Association. super informative. Lots and lots of good info in there. And definitely a great website for a resource to check out as well. Hope you enjoyed the episode. We look forward to seeing you on the next one. And as always, Happy investing  

When you have been investing in real estate for years, you've probably seen a lot of weird things. In this episode, longtime real estate investors Heath Silverman, Michael Albaum, and Paul Moore each tell one of their real estate investing nightmare scenarios. Not only are these stories spooky, painful, and entertaining in retrospect, but they offer some lessons for investors on what to look out for in their investing journies. --- Transcript   Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey everyone, welcome to another episode of The Remote Real Estate Investor . I'm Michael Albaum. And today we have what has now become known as a tradition on the podcast. We are doing our Halloween Horror Story episode. We did this last year was a lot of fun. We're doing it again this year. So I guess now it's definitely a tradition, we have to do it forward every Halloween going forward. So we have a couple spooky horror stories from some other investors we're gonna be sharing with you. So let's get into it.   All right, Heath, so tell us your spooky Halloween story.   Heath: Yeah, so as a somebody who's been investing in properties now for around 20 years, I've had my share of horror stories, from people dying and buildings to apparent ghosts that are hunting properties while I'm living in them in the middle of a renovation. But the one I'm going to focus on here was was probably I would say the, the scariest thing that happened to me in my early days of investing. So this is back in, I think it was 2004 when I was remodeling a garage on the first single family rental that I was living in and house hacking at the same time, 17 years ago.   When I bought the building, it was a bit rundown, you did a fair amount of work, and is going through, you know, remodel the top floor, found a contractor who was pretty solid, and he had a foreman on the job who I became pretty close with because he was there, you know, all the time, and I was living in the building at the time of the remodel. And once that was done, my very next project that I needed to do was to remodel the detached garage. So it was a detached garage that had some serious water issues, whenever it rained water was like pouring into the walls and there was a fair amount of rot and a significant amount of work needed to be completed.   At the time, some of the bids just came in a bit higher than I would have liked. And I didn't have the bandwidth to move the work forward. So I kind of put it on hold. And I don't know it was like six months later, the guy who was the foreman on the earlier job came by and he said hey, I know you wanted to remodel your garage. And hey, I just got my license. And I'm now a GC and I'm starting, you know, kicking off my own business and looks like you haven't done the work. I was driving bios in the neighborhood, I'd love to bid it, I can do a great job. So I said sure. And we you know, we got the work started.   And this was one of his early jobs as well. He ended up charging me a fair amount up front, I probably paid like 70% of the work, or 70% of the bid upfront before really getting deep into it. And they ended up demoing, he had a couple other guys who he brought on site, they demo the entire garage, garage, knocked out the roof knocked everything out. And next thing I know, they just stopped showing up.   So here I am, you know, in this, in this house that I'm living in, you know, there's just like debris everywhere. We're about to hit the rainy season again. And this whole thing is opened up, there's crap everywhere, they didn't even really have a dumpster and remove anything. They just kind of disappeared. And I didn't really understand what had happened. So I start playing, I'm trying to call him I don't I don't get a response. And I tried to reach out to people who I knew knew him no response. And then finally, a friend of mine said, Hey, if you looked at the newspaper, see what's going on, I think this is your guy. And it turned out that he that the contractor is using ended up being arrested under suspicion of being the 580 sniper.   There's somebody who was sitting on top of a mountain, you know, over the interstate 580 and shooting cars as they drove by. And it turned out that that person had, I believe was driving a white pickup truck. And maybe he matched the description of my contractor. But they ended up finding, you know, my contractor in a white pickup truck with a with a firearm in the vehicle. So this guy matches the description. And they arrested him. And then because they arrested him, they did go into his house. And at his house, they ended up finding some a couple other people living in his house, who maybe one of them had violated parole.   So So these were the guys who were the ones who are doing the work and my place. And they found a whole bunch of bomb making materials. Again, this is this is what's in the news. Right? So, you know, from my perspective, he was just a normal contractor you happen to have a car you have that, you know, it's all fine and and you have to have a lot of pipes and stuff at his house because the contractor does work. But the news blew this thing up into like, yeah, they arrested basically my GC and a couple people he was living with and it was a disaster. And I didn't know what to do. I was like, Hey, how do I move this thing forward that this place is a mess? There's no way I'm getting my money back.   Luckily, I did vet him beforehand and I had worked with him and he was a GC who was licensed and bonded. So I reached out to the Contractor State License Board in California. And then they get for any investor out there either. I recommend do your due diligence before you hire a contractor, make sure they're bonded, make sure they're insured, all that good stuff. So he was all of the above, I reached out and the Contractor State License Board, you know, they gave me all this paperwork. And they're basically like a, you're never supposed to pay more than 10% up front, you really should, you really should have paid all this money up front before the work started. But they went through all the details, you know, did an investigation.   Once again, I can't verify this. But one of the people in the CSLB basically said that they were afraid to go and interview him directly, because he was being held somewhere in jail, and they didn't really want to have to do an interview in jail, to get his side of the story. So in some ways, I think he really got screwed, I think I think it was I never followed up. But I highly doubt that he was the actual person who was doing this, he was a good guy, I worked with him on an earlier project. And when all this came out, he didn't really have an opportunity to defend himself or anything, but the CSLB did their investigation. And they ended up getting refunded for the portion that I paid him that was on incomplete and ended up finishing the work with somebody else.   But that experience going through the process of having my you know, my job abandoned on one of the first bigger jobs that I had ever done before and then hearing the news that he had been arrested for pretty serious and very scary a crime. It was intense and definitely was a that was sort of my first big horror story as a real estate investor.   Pierre: Alright, Mike, what is your horror story?   Michael: Alright, so this horror story involves actually my very first property that I ever purchased way back in the day, which seems like a lifetime and a half ago. So it was my first set of tenants actually, that I ever had in my first property. And I was I bought the property and it was vacant, and it was turnkey, it was ready to go. And I was just hounding my property manager, we gotta get it rented. We got to get it rented, we got to get it rented. And the timing was weird, cuz I think I closed like in November so and in Southern California, the weather isn't amazing as it normally is. So a little bit of a slowdown in the holiday months. And I just kept hounding her and honey, we got to get some we gotta get we gotta get some snow. So terrified. So she says, Okay, I have this, I have this tenants they applied. It's a mother and son. They aren't as qualified as I'd like them to be. There's a little bit a few kind of demerits here and there. But what do you think, as a good get them in there, I don't care. We just got to get someone paying rent. So we got him in there. And that was the beginning of the end.   So fast forward a couple months, I get a phone call from my property manager. The police have been called numerous times on these folks, that when the mom goes to work, the son is partying, when they're both home, the mom is yelling at neighbors making threats to neighbors just like everything you don't want to hear about your tenants doing. So then fast forward a couple of months, and I went on a European vacation with a buddy of mine. And when I landed in Europe, I got a Facebook message from the tenant from the son. And he writes me, he goes, Hey, but you know, your property manager is a criminal. She's doing all these things, she's robbing you blind is that the other thing and I'm like, Oh my god. So keep in mind, I've known this property manager. She's a good family friend. She's kind of who helped me get involved with real estate. My father knew her for forever. So she's just a good like a good human being above and beyond being a great family friend. And so like, there's no way that, you know, my property manager, she's robbing me blind, I think it's just a tenant who's pissed off. And I said, Thank you for letting me know, I appreciate it, please, you know, communicate through the property manager. I'm not trying to get involved here in a much more polite way. I communicated that.   And he was just writing constantly. I don't know I don't know how we got a hold of my contact information. But he somehow figured out who I was found me on Facebook and I started writing in your You're so stupid, she's robbing you blind. She's a criminal. We can't deal with her. She's, she's trying to kick us out. All this sounds like oh, my gosh, all the all the meanwhile, I'm forwarding this to my property manager be like, hey, these people are are bashing your name up and down the street. I don't know who else they're talking to. But like, I know that you're a wonderful person. She goes, oh my god, I'm so pissed. I'll take care of it. So I don't know if I mentioned but they also stopped paying rent. That was that was a caveat to all this. They stopped paying rent.   And so my property manager went to evict them. And then they just weren't leaving. And it was this whole thing. So fast forward a few more weeks, maybe a few more months. My property manager calls me she goes Michael, the house is trashed. There's human fecal matter smeared on the walls as they left the property. So it just like all the bad stuff you hear about, like happened all at once and on my first go at this owning rental property thing. So I said, you know, what do we do? And she goes well, we already kept that we're keeping their deposit obviously. She says you can go after them in small claims court because about $15,000 in damage.   And I was like yes great. Let's do that. So needless to say if anyone has had experiences small claims court they might be laughing to themselves right now thinking Oh, Michael, how naive of you thinking you're going to go get $15,000 from someone in small claims court but we try it anyhow cuz I didn't know any better. And we the judgment, we basically won the judgment. These folks didn't even appear they didn't show up in court. So the date got moved pushed out again. And it didn't show up again. And so basically made our case my property manager went, I paid her for time, we won the judgment. Okay, great, there's a very big difference between winning a judgment and actually collecting on that judgment. So now we have to go find these people.   And, and start to try to collect money for them. So now this person reaches back out to me, again, I can't believe you did this, we don't have any money, we're so poor, this sending their thing. And so I'm like, I just don't even respond to these people. We, my, my property manager finally reaches an agreement with these people. And I think they paid like $3,000 or $4,000, over the course of like two or three years, in increments. And I was like, it's like, you spend so much money on like, buy property manager going to court, and then just the court legal fees and the filing fees.   And it's just such a headache. And it occupies so much mental bandwidth and the money is gone. So it's a sunk cost at that point. But I was just so frustrated, and so mad at myself about these people out myself, because I went against my better judgment. And I really pushed my property manager to get someone in there. And she said, it was against her better judgment, too. But I was so forceful, and so scared that we just got somebody in there, and it ended up costing me big time. So I think the big, big, big takeaway for me is you got to listen to your gut. And if something doesn't feel right, if you're if you're seeing red flags, listen to those things. And and investigate those things further. And don't be so short term sighted. Because that's what cost me in the long run.   Pierre: Yeah, I mean, it's funny that I mean, these stories are really funny when we look back at it. But I'm sure it was a nightmare as you're going through them…   Michael: Yeah, very funny, Pierre!   Pierre: But it's interesting to me that I know this being your first property, it didn't scare you out of going back into more.   Michael: Yeah, it probably should have truth be told, it would have been very easy. And I don't think anyone would have would have knocked me for it or make fun of me or anything of that sort. But I think I was too naive to know that I should walk away. My property manager said, this isn't typical. This is very abnormal. And so let's just try to do better with the next one. And I said, Okay, that sounds good. So, part of me is glad that I, I don't think it really hit me about how frustrating it was.   And part of it too, is that the process took so long. So everyone listening is getting it in a five minute compressed version. But this is happening over months, and even years. And so to get to the end result, I had already done other stuff. I had already made other investments. And so it was it was which I think is great. It made it tougher for me to just walk away from it all saying, oh, man, that sucked. I guess this whole investing thing is is a kaput idea because I was having success with these other investments   Pierre: That makes sense.   Michael: So, again, just word to the wise. Listen, listen to your gut. Keep an eye out for those red flags. Be be aware of what you're getting into a small claims court and just go hard in the paint.   Pierre: Thanks, Mike.   Michael: You got it.   All right, Paul. So take it away with your Halloween Horror Story.   Paul: Man, did I ever tell you guys what my favorite investment was?   Michael: Yeah, I don't think so. No.   Paul: My favorite investment is mobile home parks. I love investing in mobile home parks. I only wish I would have joined Sam Zelle, America's most successful billionaire real estate investor decades ago. In discovering this amazing asset class mobile home parks. Sam Zelle has over 155,000 mobile home park pads in his company and he's a billionaire and he's just it's just an asset class that's been long overlooked and mostly scorned or ignored. I know of people who have mobile home parks they say they used to go to parties and people would say what do you do a mobile home by Okay, where's where's the hors d'oeuvres?   But my least favorite investment on the planet is mobile homes. Mobile homes are my like, I've got three horror stories with mobile homes. I wish I would have quit after the first one because man what a nightmare. And so I'm going to tell you one of those mobile home horror stories today if that's okay with you guys.   Michael: Yeah, it sounds great.   Paul: Yeah, so I was I had a friend I had this idea wouldn't it be cool to renovate some of those like a mobile home and like put it on a lot and you know, set it up and then rent it lease it as a home you know, put a permanent foundation on etc, etc. So I got a double wide and it had been somewhat trashed, it only it was only like three years old. But mobile home tenants aren't always the very best tenants and sometimes they don't take a lot of ownership. They don't take a lot of pride in their place. And so I decided I was going to somehow be smart and do a lease to own on it. So it wouldn't just be a rental.   And so I got this mobile home doublewide and put it about an hour and a half from my house, found a lot there, it already had, well, septic driveway, set it up. And then I started getting friends who were between jobs, I just happen to know a couple people between jobs to start renovating it. Now, I found out something when I tried to build some houses, I found out that it's not smart to build a house if you don't know how to tighten the doorknob on your own house. And that's why I think people, you know, really appreciate companies like Roofstock, you know, who have experts do this kind of stuff for them.   But anyway, I had these couple guys who were doing the renovations, they were driving an hour and a half from Roanoke, Virginia, way down into the sticks of southwest Virginia. And they and for some reason this thing took like a year to renovate. I don't know how you can take a year to renovate a mobile home, but somehow it did. And so we finally got somebody moved in. And we actually made it into a lease to own.   And so it was a couple who had just moved from a state or two away. And they signed a rent to own agreement. And basically it said that they would make payments, rental payments for three years. And then they hopefully their credit would be to the right place where they could just buy the house. I thought, Okay, not bad.   So I was pretty excited about this. And they started making payments. And they made payments for one year, two years, three years. And then they just kept making payments. And so I was kind of hands off busy with my other business, I didn't pay much attention, the payments just kept coming in. And so finally I reached out to the lady. And I said, Hey, you were supposed to close on this, you know, rent to own? And she said, Yeah, we just we couldn't get our credit score to the right place. So do you mind if we just keep renting till we do. And of course, you know, when you got a good tenant who's only missed maybe like one payment in three years. You want to keep them.   So I said, sure. I'll work with you. So this went on your four year, five years, six years seven, year eight. And they had fortunately made a good number of payments, you know, as far as a percentage of what I had in it at that point. But then I didn't I didn't get a payment. And then I missed a second. I missed a third. And I realized, Wait, something's going on. And so I called her. And she said, Yeah, we broke up. And I moved back to Baltimore. And I thought you wouldn't mind, I went ahead and leased it. I sub leased it to a section eight tenant. And I said, you went through the effort of getting a section eight sub lease and you didn't, you didn't call me or anything. She said now she goes, I'm like two states away now. Can you go check on it? And I said, oh boy.   So I got there. And it was like a warzone this place. So I only checked on once or twice in eight years. It was like unbelievable. I don't even know what happened. The people were gone. All the appliances were missing. There were scratches and scrapes all over the wall. And I looked at the evidence on the floor. And let me say it was disgusting. I tell you, I mean, this story, I don't know who was involved. Exactly. But I know it involved a dog or dogs. I know it involved a baby or babies. And I know and involve alcohol, more than likely alcoholics.   And this was it was unbelievable. I don't even know how you could do this much damage to your own enemy. It was like some kind of war criminal camp. And like they just went around for like what would possess somebody who wasn't even paying their rent at all to want to destroy someone else's property? I never met these people. I never knew their name. But I went in there and I calculated you know, okay, so this place was in like not that bad a shape. Eight years ago when it took us a year to renovate it. I think it would probably take 117 years to renovate right now.   So I did the calculations, I actually had a contractor out there. And everybody was just like shaking their head, this is beyond salvaging. And so I ended up paying, I think it was like $1,000 to have it hauled away to the junkyard. And I ended up selling this lot, by the way I was supposed to make $60,000 63,000 maybe when it closed, and I ended up selling the lot for $15,000.   That's my Halloween Horror Story. Like I said, I've had four mobile homes over the years, and three were disasters at almost this scale. And the fourth one was my mom's. But seriously, I really don't like leasing mobile homes, it sounds like a great idea on paper, and even sounds a great idea to get these used mobile homes and push them into a park. If you can find a mobile home park and then sub or you know, lease them to tenants. And then you're the tenant of the park, I actually did that once and had multiple, like it was trashed, this old home was trashed multiple times, we finally hauled it off to the dump as well. And so not a great business, especially if you don't like being a landlord, which I don't.   Pierre: Is there a moral of the story other than don't invest in mobile homes?   Paul: If you're going to manage your own properties, you've got to be intense about it. You've got to you know, give them the impression, you know, I'm not taking any crap from you are not going to you know, you're going to pay on time and in full, I'm going to evict the day you don't I mean, I think that I've come to a conclusion that with real estate, and this is controversial, and I don't think a lot of people are going to like what I'm going to say, but I've concluded that you either need to be fully involved, intensely involved, treat it like a business, actively managing it, or you've got to completely outsource it to an expert.   I think a lot of folks and I talked to investors every week, and I talked to quite a number of investors, who say that when they try to go in and do something on the side, like they tried to build up, like this dentist I was talking about talking to he said, Yeah, I'm building a 20 home portfolio to replace my income. And I'm so excited about replacing it in. And then he took a deep sigh and he said, kind of exhausted talking, talking to painters between oral surgeries and screening tenants in the evening, and I'm getting tired already. And I'm only on house number three.   And I talked to a lot of people like that. And so I think it's really important that you find someone to outsource this type of stuff to if you're focused on either a great career, or hopefully a family or retirement. It's it's hard to juggle that. And I hear frequently people say, Man, this has just become like a second job. And sometimes the returns aren't as what you know, aren't as high as they expected either. So I think it's really important that people find somebody to outsource to if they want to get in real estate or do it full time.   Michael: It's so important for folks that are self managing really look at the the ROI on their time, and what they're actually paying themselves or what they're saving as compared to outsourcing. For me, that 10% That I'm paying every month is like the best 10% I've ever paid to buy back my time.   Paul: Exactly. Totally agree. Yep. That's a really good point.   Michael: Paul, this was great. As always, thank you so much. And we look forward to talking with you soon.   Paul: Man. It's always great to see you guys appreciate you and thanks for having me on again. Happy Halloween.   Pierre: Thanks, Paul.   Michael: Happy Halloween.   Alrighty, everyone, that was our episode. I hope that these stories just provide you with some great fodder and some takeaways. Lessons learned not to scare you away from real estate investing, but rather to help you learn from our mistakes going forward. We hope you enjoyed the episode. We look forward to seeing the next one and as always, Happy investing

@lauraracky is a #commerciallawyer in her own firm @LLGold. But her being her knows that's not really enough. She likes to have lots of things going. Her portfolio of interests includes;#cofounder @AllFounders - a business which is more focused on #leadershiptraining and #businessstrategy but has expanded into #podcasting #tickertv#founder @LGlowBeauty - because she just loves all things beauty and skincaremultiple board and advisory roles (past & current) in #nfps and #communityorganisations including @channel31 @hibgrouphug #mazzeifoundationFor Laura these #newbusinesses are a kind of hobby and an outstanding source of constant learning which feeds back into her core role as #commerciallawyer and  #businessowner. She #loveslearning, #newchallenges and #newbusiness. In our discussion we cover;the #businesschallenges thrown up by #covid19#takingstock how #businessowners are adapting and reinventingthe boring but important things to do in the #first100days of a new business a love of learning new things and being challenged becoming a better #businessadviserhow she chooses to do what she does and time management learning that not everything is urgent or important #givingbackgetting involved with #nfps #ecommercewww.kerrcapital.com.auA full transcript is below.Michael Kerr: Hi, it's Michael Kerr here, presenting Small Business Banter. A healthy micro and small business sector means a successful economy and a more vibrant society. Small Business Banter is about helping regional business owners better prepare for current challenges but also for the next stage of business success. I'm Michael Kerr, founder of Kerr Capital, advisors to business owners.Each week, I interview a fellow small business owner or an expert and they share their stories, their lived experiences, the wins and the losses, and their best advice to help you, the listener, get the most you can from your own business. Small Business Banter is brought to you from the studios of 104.7 Gippsland FM and is heard across Australia on the Community Radio Network. And thanks also to Kerr Capital supporters of the show.Okay, so welcome to another edition of Small Business Banter radio. Laura Racky from LL Gold. Laura is in, chatting to us today. Laura's got a really diverse background, and what we're going to focus on today is her experiences as a commercial lawyer but also, as a founder and a business operator, how she manages to fit all that in, and some of the tips and advice she would give to prospective business owners.So Laura, a principal at LL Gold, founder of LGlow Beauty, also a director of All Founders, a host on All Founders Show, you can tell us about that in a minute, Laura. And look, you've got a host of other advisory or board roles that span sort of tech companies, small new businesses, as well as, you had a strong involvement with Channel 31. So firstly, welcome in, Laura.Laura Racky: Thanks, Michael. Great to be here.Michael: Yes. It's really great to have you in. Do you want to just expand a little bit on the sort of major things that you're involved with and why you do that, firstly?Laura: Absolutely. So I suppose my sort of number one career baby is my law firm, LL Gold. And she's nearly 5 years old now. That's probably, I suppose, where my main bread and butter comes from. But me being me, that's not really enough. I like to have lots of things going on. So we've also recently started up the All Founders business. So that's more focused on leadership training and strategy. This year, we kicked off LGlow Beauty. I just love all things beauty and skincare, so I thought why not give it a go. So that's been really fun, getting into e-commerce.Michael: Classic lawyer stuff.Laura: And then, yeah, I'm very lucky and grateful to be working with some excellent not-for-profits at the moment, Big Group Hug and the Mazzei Foundation. So lots of things going on keeps me interested, I guess.Micahel: For sure. Let's start with how you choose what to do and how you manage your time with that extensive portfolio of things.Laura: Yes. I suppose when you do run your own business as your main line of work, so the law firm, that does give me some flexibility in terms of where I spend my time. And I always joke about when you run your own business, you choose which 20 hours a day to work. So really, I've got a funny little timetable.I actually don't start and sit down at the desk until about 10:30. The majority of the working day is on the law firm, and then it's really the evenings that the extracurricular sort of interests and board roles or advisory roles get looking. So it's a bit of a mixed bag, but it just means that my days are very diverse and there are lots of jumping around, which for some reason, just works for my brain.Michael: Yeah. So why get involved in this range of things? Is that your role or purpose to be fully and fully again occupied? Is it because opportunities come your way? Or is it because you just see yourself driven to achieve? I'm really interested in the underpinning motivation for you.Laura: It's funny you ask that because I think many people during, well, this COVID time, it's been the first time in my life I've actually taken stock and ask some of those questions. It's just always been this internal driver for me to load up and be completely sort of overwhelmed, I suppose. But I think the more that I step back and look at it, I really like learning new things. I like being challenged.And as much as being a commercial lawyer throws up new challenges every day because I don't know everything and all of my clients have all different types of businesses, I think that doing this just gives me a great opportunity to work with all different types of people in all different types of capacities. And every day, something different comes up that I have an aha moment or I can learn something from. And it's actually very interesting and rewarding.And obviously, on the not-for-profit side of things, in my view, when you're a professional and you get to a certain stage in your career, it's really important to find ways to give back to the community. And I've got special skills, so that seems to be the most appropriate way to give back.Michael: Yeah. And some people want to give back and others. I think about it and probably, maybe, don't see the benefit of it because it is giving back. But does all that experience make you a better commercial lawyer in the end?Laura: Absolutely. I mean, when you're sitting on not-for-profit boards or advisory boards, especially as a professional consultant, all of a sudden, you're actually involved in a business from that director-level where you can have a real oversight on all of the working parts rather than when you're an advisor, people come to you often with a very sort of small problem or issue and that might be all that you'll see about their business.Whereas, when you get to work as an advisor or a director on a not-for-profit, you see everything. You're involved in operations, partnerships, employment, leasing, the full gamut. And it actually, I think, makes you a much better advisor because you're actually, all of a sudden, exposed to the wide range of things that a not-for-profit or a business face every day rather than this little pocket of problems, I suppose.Michael: Yeah. Yeah, I think as a specialist advisor, often, you can be busy, but the clients already framed their problem. And it's like if I knew this or that, I could have helped you more broadly. So that's kind of what you're saying. You see those same business challenges from a different perspective and you can bring up other advice or other solutions.Laura: Exactly.Michael: Yeah. And look, I do a lot of work with SME owners and a lot busy doing the day-to-day stuff. And it's kind of hard to have the conversation that you need to take time out of the business. And you can learn away from the business and bring things back. But I understand why people just sometimes say, "I'm too busy." But the roles you have with not-for-profits and other organizations, as I say, can be really rich in learning. How do you go from the law to beauty? Like this is in e-commerce and social media and all that goes with that business.Laura: I will admit, it has been a real personal challenge for me. So in my legal career, I have often worked in insolvency, restructuring, and litigation. That sort of work is very, very urgent [corsstalk] and heavy and considered, I think, important.Michael: Heavy.Laura: And so I have this general expectation because my clients are very responsive and they moved quickly and I am the same, that I felt that in this new endeavor, that anything that I wanted to complete or get done or buy would move in the same way and be as easy to navigate. Boy. I know this sounds crazy, but really simple things like ordering stickers for packaging, for someone who's just used to things just going through in a very linear fashion and it being really quick and easy, it's just like, you might send an email to a prospective supplier, and you might get a response like 6 days later. And to someone like me, who's used to things just getting done, it just [inaudible].Michael: How hard is it?Laura: Yes. But again, it's made me realize not everything is urgent or important, and different types of things have different ways that people work in them. So I think just from a personal perspective on patience and navigating a different industry and world, that's been really challenging and interesting. But yeah, just, I think e-commerce, obviously, it's not going away, it's only going to grow. And I feel that being an advisor in this day and age and not really getting into this world and understanding how it works would be a miss. I'll be missing out to try and do it myself.So a lot of learning. We're still growing, changing. I'm still trying to work out what the brand's voice is, what we're about, our mission, all of these things. But I'm now at the point where I say, "You know what, you ran headlong into this. You didn't know what you were doing. You're making it up as you're going along. You don't have to. This is not a Sprint. It can be a marathon." So I really realized I don't have to be turning over a million dollars. Let's just actually use this as this tool taught for learning. So it just so happens it coincides with something I really enjoy, the beauty and skincare industry. And so I'm trying to treat it as something fun.And actually, you talked about business owners feeling like they don't have time. To me, I think you can view all these extra things, if you love business, if you love having autonomy and doing things that interest you, you can actually start seeing all of these things as fun. I know that sounds really lame, maybe, to a lot of people, but I think there's a lot of us who actually get a lot of pleasure out of all this learning and interest. And it so happens that our hobbies and our fun are running businesses and learning things.Michael: Yeah, you're not playing golf.Laura: Yeah.Michael: Not there's anything wrong with those things, but you've got a different interest.Laura: Yeah.Michael: Yeah.Laura: So I stay tuned, LGlow Beauty. I'm going to take over the world, but just not straight away. And that's okay.Michael: I have wondered whether there was any reference to LL Cool J in that.Laura: I actually can't even remember where. I mean, L, my name is Laura, but I don't even know where, when I came up with LL Gold, came from. I didn't want it to be my name. I didn't want the firm to be my name, but yeah, no.Michael: It's a pretty contemporary brand. It's great. But it suits with the energy and the interest you bring to it. With your clients, just to come back to some of the stuff you're dealing with us today, I'm keen to understand what you're seeing your business clients, what are the big challenges they've got at the moment.Laura: It's been a bit cyclical. There was, obviously, March onwards for the first few months, a lot of issues with leases. And they were the clients who literally were shutting their doors, work-from-home wasn't a possibility. So we're talking about hospitality, entertainment. So that was sort of a huge focus at that time, a lot of negotiating with landlords, also employment issues. But now, as we're sort of, I don't know, coming out of it or learning to live with this new normal, yes, there are still leasing issues, but a lot of people are trying to get out of leases, moving to new premises, change the way they work.And also, I think this has been an opportunity for a lot of businesses to take stock and look at the way they interact with their clients, what their employment agreements say. When things are good, we just put our contracts in a drawer and we hope to never look at them. But I think over this last 12 months, this has been the first time maybe a lot of businesses have had to look at employment agreements, have had to look at their leases or their employments with their customers or their clients.Michael: And even, by the sounds of it, their core business model.Laura: Yes.Michael: Why we're in business? How do we do it differently? Can we do it without a lease on a property?Laura: Exactly, exactly. So there are lots of strategic questions. And part of that is flushing out, "Well, where do we sit in our contractual landscape? What leeway do we actually have to make these changes?" I mean, if you're stuck in a 5-year lease, it's pretty hard to get out of it. So these sorts of questions, I think, have been interesting. But then, more from a strategical leadership perspective, a lot of clients have are facing heaps of issues with their employees.And I think this is not new, no one's surprised about this, but people's expectations have changed, people's wants and desires have changed. Things they thought were important 12 Months ago, they don't think are important anymore. Getting people back into the office is tricky. So it's a weird time, a really weird time.Michael: Yeah, it sure is. I want to continue that, but on today's episode of Small Business Banter, we're talking with Laura Rocky from LL Gold. Laura, yeah, this complete rethink, some owners might see that as an opportunity, and maybe not right now but later on. They've kind of been able to completely remodel or being forced to remodel the way they do business. Are you seeing, with your clients, an outflow of people? Getting to the point where they go, "The lease is too challenging. I'm going to reinvent. I'm going to do e-commerce."Laura: Look, a lot of clients who are coming towards the end of their leases and now looking at different spaces, I think co-working spaces, I think, had a very, very difficult time over COVID, but I think they'll find that there'll be a resurgence because a lot of businesses are going to look for more nimble and agile spaces for their staff. I think that physical spaces are still going to be really important. We are human beings and it doesn't matter how comfy it is to work in your UGG boots, we like to be around one another sometimes and to have that choice. But look, a lot of things have changed.And actually, a little pattern that I have noticed in the last couple of months with clients is there is a lot of discussions that clients are having with potential partners or potential sales of their business. There's a lot of movement, a lot of exploratory movement because I don't think people know what's going to happen in the next little while, but there is a lot of, I wouldn't say M&A activity, but just lots of discussions about what if we move into this space or what if we join forces with this partner. And a lot of these discussions are happening because I think, for the first time, like I said, people are facing a shift and the revenue isn't just flowing in without thought anymore.Michael: Yeah.Laura: A lot of businesses have had to stop and think about how they make money.Michael: Yeah, yeah. Look, you said you need to pull out those contracts, employment contracts, lease agreements, others. But underpinning that is just, "How am I going to continue to do business?" And so on that front, alliances and joint ventures and I think you do work with bringing in employees to businesses as well so it's diversifying and collaborating. It's all those kind of nice words, but it's maybe forcing a complete rethink of how we're going to survive. But not just survive, prosper but by maybe getting closer to other businesses and bringing in key employees.Laura: Yes. Yeah, I think when things are good, it's easy not to navel-gaze. But when things start getting tricky, yeah, we've got to be creative and inventive. And that's why this time is actually very, very interesting.Michael: Yeah. Yeah, and look, at the hub of all of that is personal relationships, whether it's with suppliers, partners, customers, employees. And the value of those personal relationships, even in a business context, is so important. You got to put time into them. And entering into business with someone, I mean, you and I have talked about this in the past, you got to have an exit plan from all those sorts of things.Laura: Yeah.Michael: You've got to think through the good and the bad, unfortunately, because sometimes, they don't work.Laura: Absolutely. And I talk about this a lot with clients, especially when we're starting new businesses or entering into new organizations where we've got a group of shareholders. It's always very nice at the start. And everyone's all really excited and everyone puts on their best behavior. And when everyone's making money, everybody gets along great and we never have to look at a shareholder agreement. But when things turn or people's life circumstances change, this is the stuff, this is when the rubber hits the road. So if people have not been thinking about these things early on, it can cause a bit of drama later.Michael: It sure can, yeah. So you launched All Founders.Laura: Yes.Michael: So this is kind of like a further progression of your portfolio, but also a logical extension of running your own business and experiencing just those day-to-day operational things around stickers. So is that the impetus for...?Laura: Well, All Founders came early last year, so this was before COVID and before LGlow Beauty, everything.Michael: Oh, okay.Laura: So Christian Cunningham and I are at the head of All Founders. And where it came from is, I run a legal business, he runs a recruiting M&A business. But what we both realized is that over our careers, we actually had learned so much from the people we work with and from advising that we needed a new brand to offer those types of services. It's very hard to pick up the phone and say to your lawyer, "Can you give me some leadership training?" I just think intellectually, people want to see it in a different bundle. And obviously, the same for him. From a recruitment and acquisition specialist, no one's expecting strategy and leadership training from him.So we bought that all together under the All Founders brand. We set up the All Founders Show, a podcast that then ended up a TV show on Ticker. And that's been really interesting and fun to go and work with clients in a totally different way than as a lawyer or a recruiter because I think, for me, when I walk into the room as a lawyer, people do bristle and they respond differently and they get a bit nervous. And it's good to just sort of come in and say "Yes, I'm that but today, we're going to-"Michael: Switch hats.Laura: Although I do get wheeled out often by Christian to give the governance training, but anyway, that's for another day.Michael: Yeah, yeah.Laura: It's very important. So that's been really fun, to actually work with clients in a different way, to talk about their succession planning, their short and long-term strategy, building up managers. And I think, again, when we talk from the COVID perspective, there's going to be a huge gap in our managers and our leaders who are not being managed and led through COVID because we're all remote.Michael: Right. You see a really big hole getting bigger.Laura: Absolutely. And if you're not around your leader often to have those really quick chats to run things by them, I mean, you're not picking up your phone every 5 minutes to make that call to your manager to ask the question. I remember, even just as a young lawyer, always wanting to sit in the office or the spot outside the partners office because I loved hearing them on the phone. I loved hearing them in meetings with other partners because you learn so much just by listening. And we are losing this. So I think there is this big gap where a lot of these leaders are just going to need a little bit of outside mentorship to get them through, to get their skills up. I think they're a bit at sea at the moment.Michael: Yeah. Look, and it's probably the same as it's always been for those small business owners who have always done it solo.Laura: Yes.Michael: I've always been their own counsel. They've always struggled to find somebody that is a trusted advisor. So yeah, I think it's kind of the same thing, but it's obviously removed from employees in a massive way in the last 12 to 18 months. And it goes to where we started, which is developing broader experience outside of whatever it is you do day-to-day. You sought out a partner to learn. And I mean, there are opportunities everywhere you look. I think there's an explosion of clubs and online networking business things, so the resources are out there.But we've only got a little bit of time left, Laura. There are two things I want to cover. One is there's a lot of energy with businesses recreating or starting afresh. So in the first hundred days, what are the three or four things you're thinking about reinventing your business or starting? What are the three or four things you absolutely must address?Laura: Yes. Look, the really boring thing, I think, is always structure. It always shocks me how many small business owners have no understanding, I guess, of how they exist in the legal space.Michael: So this is in the sense of having a company versus a trust versus a partnership?Laura: Yeah.Michael: Yeah, okay. Yeah.Laura: And what if it's really boring and it is very expensive, but if you're going to do it, I think you need to do it right.Michael: Yup.Laura: Because if you don't get that right, then the next thing, which is contracts with your customers and your suppliers, you're not going to get that right. So if you don't know who you are as a business from a structural perspective, you can't enter into contracts properly. So those two things go quite hand in hand. And then obviously, we've got things like your insurance and your work cover and your employment agreements.Michael: It's very easy as I'm excited, which is going to work and we're going to get on with it, but don't fall for the trap.Laura: Exactly.Michael: Yeah.Laura: I think lots of small business owners get super excited. And I get it, I've done it too, about logos and branding and websites and Instagram. But at the heart of all of that, you still need to have a functional structure in a business because here's hoping you're going to go gangbusters. And rewinding and fixing those structural issues later is very, very difficult.Michael: Hey, Laura Racky, that's fantastic, really enjoyed the discussion with you. Thanks so much for sharing everything. I just wanted to close out, you had an involvement with Channel 31. We're on the Community Radio Network so there's some pretty good news. Just before the end of June, a renewal for 4 years?Laura: Yeah. So I think it's 3.Michael: Three?Laura: Yes.Michael: Yeah.Laura: So really fantastic. I mean, the last couple of renewals have only been for a year, which is not a lot of time.Michael: Yes.Laura: I think the 3 years is a real recognition that one, the spectrum is not going anywhere so we may as well put it to good use.Michael: Yeah.Laura: And two, that these organizations need that time to transition properly. So I'm really thrilled. I think it's wonderful.Michael: Yeah, it's a great result. Hey, Laura Racky from LL Gold, thank you very much for your time today.Laura: Thanks, Michael.Michael: So that is all for today's episode of Small Business Banter. I continue to be inspired, bringing you small business experts and other small business owners and hearing their stories.If you want to listen to any past episode, jump onto your podcast platform of choice and search Small Business Banter. There, you will find a diverse and fascinating collection of small business owners and experts openly discussing and sharing their experiences.For any of the links, resources, or information we've talked about on the show today or to contact me, please head over to smallbusinessbanter.com or you can find us on Facebook and Instagram. And it would be great to have you tuned in the same time next week for another episode of Small Business Banter.[END]

Author of Happy Ever After, The 7 Dollar Millionaire, joins us again to shed light on the complex world of personal finances. He shares tips on getting started, saving money, and aligning your goals with your family to work your way to financial peace of mind one step at a time. --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The remote real estate investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, and welcome to another episode of the real estate investor. I'm Michael Albaum, and today I'm joined by my co host,   Tom: Tom Schneider.   Michael: And with us we have a very special repeat guests, the 7 Dollar Millionaire, if you recall, he wrote a book that we had him on chatting about Happy Ever After. And today, he's going to be talking to us again about personal finances, some things you can do to get started, as well as how to talk to your spouse or significant other or partner about personal finance. So let's get into it.   Michael: Awesome. Mr.7 Dollar Millionaire, thank you for joining us again, we so looking forward to recording with you.   7 Dollar Millionaire: It's a pleasure. Thanks for having me back on that says, this is a first for me. No one's ever invited me.   Michael: Well, hopefully the first of many. So how have you just curious how are things out in Singapore?   7 Dollar Millionaire: Things are just improved. Yesterday, we had like a mini re lockdown. So they call it circuit breaker here for about a month. Because there was a bit of a spike in cases. But that ended yesterday. The big change is very little apart from Oh, you're now allowed to go to restaurants, their restaurants are all closed. That's pretty much it. Gyms are kind of reopening slowly, that kind of stuff. But yeah, that was that was nice. It's nice to kind of go and get a meal somewhere, you know. But otherwise, it's you know, as with a lot of Asia, they're taking that kind of minimal risk approach to it.   So I mean, even when there was a spike, it was like 100 cases a day. 5 million people, right? I mean, it's still a very low number.   Michael: Yeah. But everybody in your world is healthy and safe.   7 Dollar Millionaire: Oh, yeah. Thanks. And you guys are on good.   Michael: Yeah, we just chatted with some family friends of ours yesterday, and they are double vaccinated. But she and her daughter just got his tested positive. So she had a breakthrough case. So she's feeling pretty crummy at the moment. But I'm hoping that she's hoping she's not going to go to the hospital or anything like that. So the breakthrough cases don't seem to be as severe as the unvaccinated stuff.   7 Dollar Millionaire: Fingers crossed. Yeah, fingers crossed. touchwood. Right. That's that's the big hope. As long as it stays like that we can live with it. Right?   Tom: I have a friend who had a breakthrough case who's also vaccinated. And he's got a wife and three little kids and his wife and three little kids didn't, didn't catch it. So he's hanging by himself. And you know, I feel much more for his wife, who's managing a house full of Toddlers and Babies versus him who's just hanging out at their their lake. Well, he's men. He's on the men. He's feeling much better. But it's Yeah, really.   7 Dollar Millionaire: Did she get did she get like a second opinion on that? Right. Yeah.   Michael: Thank goodness.   Tom: Yeah. Doing recovering. Well, good, good.   Michael: Well, Tom, it's it's funny as the wrong word. But interesting. This kind of segues nicely into what we want to chat with the 7 Dollar Millionaire about today. Again, circling back and talking some more about personal finance. But a question that I have is, so often people have these target goals in mind, and whether that's net worth or cash flow monthly annual basis. But that's so often based on today's needs, for their whatever family is currently in the picture. And I've got to imagine that changes over time. And so as someone who doesn't have kids, I don't have a really good sense of what kids costs, it could be 20 bucks a day, it could be 100 bucks it you know, I don't have a good sense for that. So how do you recommend folks think about not only their cash flow needs for today, but also for their future selves, as they continue to age but also as additional family members may enter the picture?   7 Dollar Millionaire: Yeah, I mean, it's a it's a there's no right answer, right?   Michael: I mean, I mean, oh, well, then we can we can we can cancel the show. We're done here.   7 Dollar Millionaire: There's just no single one right answer. I mean, the first step with the first answer to this is actually just taking the first step start actually doing some work, right. I think I was working recently with talking about how you make all the progress in personal finance. And a lot of people are discouraged because they think they can't come up with an answer. And it's like painting, right? The first blob of paint on the on the canvas doesn't look like the painting You can't expect it to you go put it on, put it on, put it on. Only after a long time does it actually start to get to the real picture, and it's the same, it's exactly the same with this. You just got to start doing the work. And starting doing the work is actually working out what you want your kids to be like, what kind of life you want to live with them where it's going to be, and the kinds of expenses you're going to have.   So you can roll that stuff out pretty easily. I mean, so For me, because I was an expert, I had to put my kids in international school, there's some serious education expenses. You know, it's like the, for me, when my kids went to college, they got cheaper. I mean, that doesn't happen very often, right? My kids got a lot cheaper when I was paying for them to live in a foreign country, flying them backwards and forwards and paying college fees, they were cheaper than the local education costs for me.   So that's how individually these things can be right? I mean, you just have to do that. So you have to look forward and you think, okay, and I'll give you perfect opposite example, really good friend of mine used to live like five floors below where I had seen the apartment block right here. He's got for various reasons, he ended up with like, kind of one of those joint families who so like, five kids under the age of five, you know, bizarrely, and really bonded, situated,   Tom: Yeah, Brady Bunch situation.   7 Dollar Millionaire: And he's, he's like a, he's a fund manager, based in Singapore. And he worked out that he could actually, it made sense for him to quit his job and move back to California, because paying for five kids in local education system here, when you know, that, and everything else, it's cheaper to move to a place with a good free education system and have a normal job rather than trying to have a high paid job and pay those kinds of costs.   So that's how individual all of these kinds of decisions get to be. The first thing is just to sit down and, and dream a little, right, exactly. Who do you want your kids to be? And how do you want to live with them. And because a lot of the costs, like your actual food costs, it's not a big deal, it's really not going to be an enormous deal. So the basic, you know, adding one bedroom to the house may or may not be a big deal, depending on on where you're at. And then after that is things like education and flying, holiday is right, they do cost literally an extra person on every single thing you do, when you start and that's times 20 years, right?   So there's, there's some, there's a lot of extra costs on that kind of stuff. And it's really just sitting down and working out those kinds of things, and those kinds of budgets. And then as you move closer, closer towards the end, you'll realize exactly what is going on, you'll get a much closer impression. But as always, it's just start, just sit down with a piece of paper and just go, Okay, I think it could be this, and then find out the extra information that you'd actually need. Because it can be a scary amount, or it can be really, if someone for someone like me, that was having to pay man it was 15 years of 14 years of school fees. I don't want to think what that was, you know, really, I definitely don't want to, you know, PV it, I mean, that's just insane amount of money. But you know, had to be done for In my case, if you don't have that you don't need to put it in.   Tom: I love that analogy of the paint, and it just kind of evolving a little bit over time. As far as, you know, practically getting the paint down, would you recommend a model where, say this is in Excel, and each row is like a year, and then, you know, perhaps there's some different sort of expenses within the different rows, or it's just like a really kind of basic form of that is that sort of a rough construct is, and I'm sure it's you know, could be a little unique for everyone. But that's immediately where my mind goes is seeing in that sort of a model.   7 Dollar Millionaire: That's definitely where I think you move it, I actually like to do a pen and paper to start with, I think there's a, there's kind of a free flow, when you're actually kind of sit down with pen and paper and just as scribble stuff out. I've even tried doing it on my iPad with you know, like the sketch but it doesn't work as well, there isn't that sort of connection, which sitting there with a piece of piece of paper and a pen for 10 minutes, and just sort of scribbling out the bunch of the cost because we're all prepared to be kind of messy on a piece of paper, right, and we can just draw in things and loop them around, that connects to that, scribble that out and need this.   And then once you've got probably only 10 minutes in, you can move that to a spreadsheet, seven or eight lines, seven or eight lines is going to get you most of the way to the kind of things you're thinking about.   Michael: And Tom, I'm curious not to put you on the spot here in the hot seat but having a young child is this an exercise that you went through with your wife and was this conversations that you had prior to the little one arriving?   7 Dollar Millionaire: You know, I was actually so I'm in my mid 30s now and when I was in my mid 20s and early 20s actually was way more active about kind of performing out like 20-30 years in advance so I actually had to pull back the old spreadsheets pain analogy I think it's probably time to have another round I love these interviews with you 7 Dollar Millionaire I literally after our last call that we had I went and totally redid all my you know auto deposit into my investing and I already have some immediate action items from from this one. So just to kind of go back I was I not not so much with these with with my current kid but I think it's an exercise to go revisit some work that I did in my mid 20s.   7 Dollar Millionaire: It's always good to know right? It's also good to know how good you are at modeling. Where you make mistakes and modeling, I mean, we we professionally we do that. And it's you know, you can be miles out. But if you actually, I mean, there's a company modeling, we're actually modeling like an investment will have various inputs that we can that we can change them to go back and you look and go, Oh my god, I was miles out, but then you realize that one of the inputs was x, y, zed, which turned out not to be remotely true. So you can, okay, then change that. And sometimes it kind of comes back to closer to reality. So all these things are really, really important to actually just understand how well you model because it's not like you have to stop modeling, or you never stop acts.   And modeling is like, it sounds like it's too specific to what we do. But we're all forecasting all of the time. Now, my favorite analogy for forecasting and how we're all forecasting all the time, is we all pretty much expect chairs not to break when we sit in them, right?   I mean, even some of my weight, I don't expect the chair to break when I sit in it. But I pretty certainly if you if you sat on three chair, three different chairs in a row, and they broke every time, that fourth chair, you'd be like pushing it scratching it thinking, Okay, is this thing solid, you'd have lost all your trust in chairs, that's just forecasting. It's just natural forecasting. We do it all the time. And so knowing if you're good or bad at it is a is an amazing life skill.   Tom: Do you find that most people are overly optimistic when forecasting I guess you could apply this to business or to kind of personal? I'd love to hear your kind of thoughts on, I guess human nature and in applying forecasts and ways to beat yourself and be better at it.   7 Dollar Millionaire: Yeah, I honestly, unfortunately, it really it is really bad answer. But 50% of people are better than average. And there's no other way of looking at it. I think the key is most of us aren't doing it particularly consciously most of the time. And so sense of like actual aware forecasting and awareness of how optimistic or pessimistic we tend to be. Pessimists, I mean, pessimism is one of the reasons that overcaution is what keeps a lot of people out of the markets. Right. And because they think of it as markets, right, they don't think of it as I'm working. I'm living in this economy, and not being in it with my capital is essentially an enormous risk that this economy is going to crash and burn. I'm literally taking that investment option. And not seeing it that way keeps them out because they view it as being very, very high risk and pessimistic because they don't understand it enough.   Let's throw some analogies around that's just like being in the dark, right? It's just being in the dark, you can walk out into your hallway with no light, and you can't find your way along the hallway anymore. Right? That's, it's it's still there. Everything's exactly where I was people without the education. I mean, we're moving back into financial education, right. It's what keeps people out. It's they're unsure, they're in the dark. And that's why I think creates most of the pessimism and overcaution around it.   Yeah, there's a bunch of people who, too, you know, too optimistic, too. But that's what I mean. I tend not to mind it when when investing, I don't engage over optimism. But when I'm doing things like a little bit more entrepreneurial, then yeah, I shoot for the moon. There's just no point right? or shoot for the stars even then you get the moon there's no point not being no point starting an endeavor without thinking it's going to be amazing.   Michael: Yeah, I love that analogy about being in the dark. I wonder though, your take on, when people have gotten out into the hallway realize that it's not that scary. Or maybe they've gotten a little flashlight, it a little bit of education, they understand. And now they think, Well, I know everything. And so how does that that little bit of education, a little bit of knowledge, not get overblown, and a bit turned into overconfidence, where now you are taking risks, well beyond your your light beam, so to speak.   Tom: Great point, Michael.   7 Dollar Millionaire: Yeah, it, it's it's actually why I think it's so important. This gets taught in schools. And, you know, there's, there's a bunch of different sides on this. But it's, that's why, you know, why are we confident reading? Right, we're confident reading because we've been taught it at such a young age, right? This is this is how we have that kind of confidence. Why are we not confident in a foreign language? Because we weren't taught it. We don't know any of the words, we don't know how this thing's put together. And we need that it's, it's about having that broad underpinning to what we do, and it's why it needs to be taught in schools because any other way, you're coming in at some random entry point, right?   So some friend tells you the you know, you should trade options on Robin Hood because I made x, y, zed and then you kind of get in there and you learn a little bit about it. Maybe you have like some Beginner's luck and you do quite well. That's now your little wheelhouse. It may just may be a good wheelhouse for you. It may be a terrible one. More likely the second option, right. So that becomes your think that's what you need that we need the education to make sure we get a little bit of light in all areas.   I mean, I'll give you a perfect example for this. I so the CFA exams Chartered Financial Analyst. I'm not one I did level one.I got way too busy to do levels two and three, my first daughter was born like immediately after getting level one. And level one even just shows you the entire spectrum. So you kind of you get like a beginners entry level on everything. And that's like, you kind of you know where to come back to later. Right? If I need to calculate a bond price, I can't do it off the top of my head, but I know where to read. I know where to look. And then I'd know how to do it. And that, obviously, that's a little bit specific for most people. But that kind of general entry level stuff is I think, you know, what's needed otherwise, you do end up with the flashlight, or moving from analogies. Under the under the street lamp looking for their keys, right?   You know, the stories like, you know, and the guy's looking for his keys under the street lamp and a piece of wedge, you lose them over there. So why are you looking here? Well, this is where the light is, right? That's it's so important to just have like a basic level of light.   Tom: To know what you don't know. Definitely.   Michael: Yeah, that's Yeah. I'm curious to know, in your opinion, if someone is looking to invest in the next 12 months, they're looking to get educated and wanting to get involved, whatever investment class they deem is in their wheelhouse, where should they be keeping those funds? Should that be something that they're investing the whole time labeling? And, you know, dollar cost averaging? Or should they kind of wait till they have enough funds to do something with curious to get your thoughts?   7 Dollar Millionaire: Okay, well, always dot dollar cost average, unless there's like a ticket price that, you know, makes that unavoidable that you have to go in single level, like, like some kinds of property, right, where you have to have a certain amount of downpayment, and that's the minimum you can get involved. The great thing about other asset classes is you can dollar cost average in the tiniest amounts. And you always should, I mean, cuz, you know, you can't predict the future, you don't know if it's gonna go up or down, right. So you should try and remove as much of that risk as possible. And dollar cost averaging is the is the free way of doing that.   Michael: Right.   7 Dollar Millionaire: So right, so always dollar cost averaging, I think there's a one thing that I quite like is what I think of it in my head is like a reverse ladder. So you know how you have ladders on fixed deposits, time deposits, whatever they call them. In the US, you know, where you can get kind of get like a little bit more return, if you lock the money into a deposit account for longer, let's say three months, six months, whatever it is, and you stagger it in. So you put in like a sixth this month and a six the next month, and then you do that over six months. So you got the money, you got access to six of the money every single month, you can put it put it into those and then actually dollar cost into the thing you're putting it into. So you can sort of you're still making a little bit of money doesn't have to sit as pure cash. Right.   Michael: So so go get six CDs.   7 Dollar Millionaire: Yeah, exactly.   Michael: on six month intervals. And okay, gotcha.   7 Dollar Millionaire: Yeah, exactly right. And then you can just plug it straight in. And you might only be making like an extra, like a few bucks. But this is how you make money, right is by it's like that little extra, which for no risk, right? That's always the key a little bit extra, no risk is better than a lot extra for a lot of risk. So just that just that small, those small moves are always useful.   But I think also one of the other things to do is depending on the asset class, if if what you're doing, if the cash you've got is a long way away from the asset class, then it does make sense to have some kind of hedge if it's possible. So I mean, I think one of the things often is say, like, being able to put some of the money into a REIT in advance of buying a property.   So let's say if there's like, if you're going to buy property in New York for some reason, then there's a new york rate, if you can do enough analysis around that read to understand it's like, oh, this is, this is pretty similar, this should go up when my property goes up, it should go down when my property goes down, you can at least put some of the money as you're building towards that downpayment into the REIT and then hedge out a little bit of that extra risk. Because, I mean, the risk on property is nearly always, everywhere in the world, the government prints more money, right? I mean, properties actually don't…   Micheal: Inflation.   7 Dollar Millionaire: Yeah, well, yeah, properties don't often go up in value, your money goes down in value in terms of property, right, that's what actually happens. So actually, removing that risk is is is useful. So I'd always think through these ways, rather than thinking, yeah, just chucking money in now. Just steady push it in steadily as it's just if you can, if you have the patience.   Tom: That's a that's a good discipline. I mean, it kind of related as an act of discipline I can think of like going to a, like a kiss going to Las Vegas or something and playing blackjack and it's like, oh, do I push it all in on one hand or do I slowly and you're gonna have a better time to her a little bit slower. I guess that kind of really kind of relates to having fun at the casino versus having fun at.   7 Dollar Millionaire: It is a good point because I do the exact opposite. I really don't like being in casinos and when I'm forced to go to them, I put it all in on one hand and literally   Michael: Walk away.   7 Dollar Millionaire: Just like get this over and done with either make a lot of money on one hand, or we are I'd leave and have a better time than I would do by sitting at a blackjack table, losing money steadily.   Michael: I love how you knew kind of exactly where I was going with the question with regard to property investment. Because I mean, Tom you were in a similar situation with regard to you had some cash or cash out refinance, you were looking to deploy it. And in the meantime, you were thinking about putting it in the market, and I think you ultimately did. And then there was some fluctuation in the market. And you're like, Whoa, this is not this is not feeling good. So you pull back a little bit, right?   Tom: Yeah, yeah, just, I think like within, there's more, like risky allocations, and then safer allocations. And I think, being cognizant of kind of which risk profile I was investing, versus the strategy I initially did was go running up to the blackjack table and throwing it all down. And, you know, thankfully, didn't get getting didn't get burned too bad. But, you know, stepped back away and left the casino and invested in a nice asset allocation that was comfortable for the time horizon at which I wanted to spend it. So..   7 Dollar Millionaire: That's I mean, that's, that's, that's also the other point is actually nothing wrong with taking a second most important thing of investing is actually understanding your own psychological needs, because you can't invest against them. It's really, really hard to actually invest in a way that you don't think is correct for you. So taking too much risk. And just I mean, I don't have sleepless nights with what I do for a living. Because I don't invest in a way that is wrong. For me. I actually feel like I understand what I do. Whenever I hear people like they have sleepless nights like that's because your style investing does not match what you actually believe. I mean, that just can't be. That can be the only reason I think what you did, there was smart.   So the only way I've done this in the past is that I buy I bought properties in the past in, in foreign countries I have bought in Singapore, once I buy in the UK, I bought in Japan, I bought in Australia, one of the things when I know I'm going to do that is I immediately switch the money into that currency. If I think it's cheap, I think it's expensive. I don't.   But I try and you know, work because current currency, and I do sometimes take a view on the currencies. So you know, but that's it's that kind of move. So for example, I think I kept I think I kept just cash in a deposit in Sterling for about three years before I bought a property there because I wanted to take away because it was cheap. And I wanted to remove the currency risk, that it would get more expensive at that particular time. Basically, the moment Brexit happened and the pound and the pound collapsed, I put money into Sterling, because I knew I'd be thinking about buying a house not long after,   Michael: I think I've mentioned this to you in the past, Michael, but I really took it on the nose with the currency exchange because I bought a place in Portugal. And it was right around February, January, when we were looking at doing a transaction and the dollar against the Euro was like 94 cents. And it has just continued to climb and climb and climb. And so this is going to be great. This is going to be an equal transaction, by the time I go to actually pull the trigger. And so I waited, waited, waited and then COVID hit and the dollar just tanked. And I really got taken to the carwash on that one.   So I think that makes sense is if if you if you know what it is today, that's worth something and how you feel about it, I think is also important, but also a bird in the hand is worth two in the bush.   7 Dollar Millionaire: Well, it's it's actually a lot of these things is understanding future liabilities, and not just your existing liabilities, but your future liabilities. And that's one of the ones like with kids, right? You're going to have these are future liabilities, you've got costs down the road. And if you know that you've got, you want to have a place in Portugal, then if you think the currencies pretty decent, and you know, you don't have a view either way, you can just put that money into into euros immediately and just remove that risk, right, there's no risk now. Right?   If that money wa s just gonna sit, and you could have it in euros doing something else, I mean, you can still take another risk on top of that, but at least you've closed off that currency risk. And currencies, they move around a lot. I mean, there's, you know, within like a two or three year timeframe, they can really shift. And that's a risk that's nice not to have or even potentially gain you can make rather than, you know, taking that huge risk.   Tom: So backtracking Just a minute, a little bit ago, you were talking about if you were to evaluating buying property in New York, and you know, parking it into a REIT in that space. I never and then you know, you can research that read I never thought of that, because they're sort of there's this is, you know, primarily single family rental investors. There are single family rental REITs out there. And is the idea to maybe to to learn more about that specific REITs that you're going into that asset class like to benchmark what kind of returns you what are my totally hearing this on a different?   7 Dollar Millionaire: I think you know more about the US property market than I do. So I'm, uh, yeah, you're probably hearing things I don't know, all I mean is is as close as you can remove risk, I'm not talking about actually   Tom: Sure getting as close.   7 Dollar Millionaire: Yeah, the closer the asset thing, the asset class you're going to buy, you're removing as much risk as you possibly can. So if it's in similar geography, in a similar asset class in a similar geography, it still may not correlate, and there's nothing you can do about that there may be a problem with the REIT, and there may be a problem with a manager and maybe a problem with something else. But if you're going to buy commercial property in New York State, if you can find a commercial property right, in New York State, yeah, then maybe maybe there'll be reasonably correlated, and you're taking a risk there, that, you know, there's no reason for cash to be correlated to it, there's definitely no reason for any other asset class to be correlated to that thing. So just a little bit of work and probably find you, okay, what's the new what's the New York State REIT, which ones are similar? Bang, okay, that one might reduce my costs and reads tend to pay pretty good dividends as well. So you actually could get paid out while you're doing it. So the return could be stronger, while being more correlated. And that's kind of all you're aiming for. with that.   But I mean, I'm gonna say as well, I don't know, if I mentioned on last couple of one of my it's a small family single, you know, real estate, is actually just such one of the best asset classes to be in as an individual. Just because it's not not something that big corporations do particularly well. And that's where it's sort of maybe steer clear of big corporations tend to do big properties very well, right. It's just like one guy making a decision pushes a button, and then the whole building does x, y, zed, right? Whereas when you look at what we all live in, so small fixer uppers, those single unit setup takes an enormous amount of management to run as a business.   So that's one of the reasons I love real estate as an asset class is because the world's capital is not trying to jump into this, right, it's just individuals doing the thing they do. So we can have an advantage. But within the REIT, maybe less if you get too specific, too granular. And I just sort of aim, you know, and the other thing would be to not get into to smaller thing, right? You want it to be liquid, you want it to be well traded, you know, one reasonably well known   Tom: That makes sense definitely.   Michael: Makes a ton of sense. I'm curious, Michael, do you have generic guidelines or principles when you're teaching, you know, financial education to folks around how much of someone's paycheck or how much someone's net worth should be broken down and spent on the different typical categories? So housing, or transportation or food entertainment? Do you have a pie chart that you that you utilize?   7 Dollar Millionaire: No. I mean, there is one, right. There's the 50 30 20, that is commonly used. And it's a great starting point, I actually think the 50 30 20 is a great starting point. But I think there's just too many examples of people who do way better than that, than I do. You know, you don't want to set the goalposts too easy, right? You know, you just come across people who are saving half or even three quarters of their of their income, and you don't want to tell them, You should save 20 it's similarly right, you know, it's just like, but the only one I really use is like, never go above like a third of your income on property.   And I think if you can keep it below that number, pretty much everything else starts to slide with it. Right? You start your cut, a lot of other costs are gonna be I mean, so in the book Happy Ever After I use 50 3020 as a starting point, but then say, Well, yeah, you know, but what if you could do 30 30 10? Right, you know, 30 30 30 30 30 40, because it would be, because 30 30 10 doesn't add up great. But if you can keep those costs down, all of those extra the 1530, way below those numbers, you're adding up to a much higher number on the 20. And that's the thing, I think, to use that 50 30 20 is a great thing to say to someone who's saving zero, or 5%.   Tom: Sorry, just to clarify the 5030 is 50% is your needs housing, grocery grocery, all that 30% is the ones and 20% savings. Is that the?   7 Dollar Millionaire: Yeah, that's right. Yeah, that's, I mean, it's not that I didn't invent that. I think that's a standard financial personal finance tool. And, you know, as as with the glob of paint, right, it's a great job of paint, unfortunately, it's kind of it sounds to 20 20% is gonna have you if you did it from the age of 20 20% is going to have you retired somewhere in your 60s. It's not amazing, right? That it's it's, it's better than not, but it's it's not amazing, and that's where I wouldn't want to see it to see us as I try to use it just as a general this is dob of pain. 20 is great, but if you want to do better, you should aim for better.   Michael: Yeah, that makes tons of sense. And I think that's great. I love I love that dob of paint analogy. I think it makes so much sense. I'm a very visual person. So that that resonates with me.   7 Dollar Millionaire: Cool. That's good. That's really good. Because it's because I wrote it for for a new book I'm working on. So I'm glad it works. I'm trying it out with you guys.   Michael: Are you really writing a new book?   7 Dollar Millionaire: Yeah, yeah. This is actually the first morning in about three weeks I am, I've got up to talk to you guys instead of getting up to write. But I've been writing to non stop for last three weeks.   Michael: Awesome. Can Can we get a little preview as to what it's about?   7 Dollar Millionaire: Yeah, it's it's an attempt to combine Zen mindfulness practice and personal finance. So I'm trying to map I'm trying to get that Venn diagram. I feel at the moment, those Venn diagrams are like, here, I'm just trying to merge them. But in many ways, I feel that they merge really easily. It's like, you know, it's what is tracking what is tracking your spending, if not being mindful of what you're doing?   Right. I mean, you sit down and journal but journal your expenses, right actually know what you're doing in life, I actually think they they align quite neatly, I just haven't seen anyone do it before. And, and I, one of the things I've realized more and more about personal finance is that the SEC, the same five or six things, we all need to know how to do the basics. But we need to approach every person in a slightly different way to get those five or six things in. Once you're in, you'll learn them really fast, but you need to get in.   And that's why I sort of just occurred to me will be a fun thing to do. So yeah, I need it to be fun. As well, I need to actually want to be able to, if I have to get up at six in the morning, I have to want to   Tom: Yeah, big, big mindfulness fan, I try and do have a personal retreat every year. And man, I can just see how a lot of those concepts of just being present is so relevant. And you can basically apply it to anything and it's so natural into, you know, the currency that, that our resources that we live off of its camp can't wait for it to talk more about it and for it to come out.   7 Dollar Millionaire: Cool. Well it come at it. Well, if I finish it, it should come out next year. That's exactly what it is. I mean, it is this sense of in every place in our finances, if you're not aware, they take control of you rather than the other way around. And if you can be aware and mindful of what you're doing. So even to the standard market to you over emotional, are you under emotional, you know, how are you what's actually going on in you, that is making you do things that are not to your benefit and understanding those things are such important drivers and in the in the space. So addressing all those things. Equally, what's quite nice is I feel like I can recycle the some of the Happy Ever After book as well, because the middle of the middle bit of this book is a man being the same steps mission, money income saving, spending, investing, owning now those steps.   And so rather than to using sort of like the fairy tale, we sort of really creating a path. And as with so many things on sort of mindfulness, this is a path, you have to understand the path and now you hear whether the dob of paint was coming in, right? Don't get upset that you don't know where you're at, you're just putting a dob of paint is just the first dollar painting this will build. And that's Yeah, that's why I'm so happy like the analogy cuz it's right up the front.   Michael: Oh, this is great. I'm very excited to read the book. I want to shift gears here a little bit. And I'm curious to know if you have any tips or tricks or guidelines for folks to have these types of financial, personal financial conversations with a spouse partner significant other, because so often I hear in the Roofstock Academy is Hey, I'm all on board for real estate, but my husband isn't, or my wife isn't or my partner isn't interested? How do you bring them in in a productive way?   7 Dollar Millionaire: Yeah, it's hard. And you know, you, it's okay, we're gonna get back to the mindfulness, but just for a second, and I'll come back to this, right, because   Tom: It's all part of everything   7 Dollar Millionaire: You have to know is that you, you can only affect yourself, you can't create change outside yourself, you can only create change inside yourself. So you, you can't force a partner to come up to your speed when you want them to. So that's the number one understanding. So you got to be ready for them to not be prepared to do this.   The second thing is, it's why I wrote the book is for the original one happy ever after it was to outsource a lot of the conversation with this time, but that time with my daughter to paper, get her to read it. So I don't have to go through an enormous amount of the background of how this works, right? It I can just imagine it. When I realized my daughter didn't know anything about money. I was like, I've got a teach her this stuff. I don't want to spend every weekend for the next year having daddy daughter money lectures, because that's just you know, it's wrong.   Right? So but if I write her book, she can read it in their own pace, and we can have those conversations and she's already up to speed. Right? So to get some level of outsourcing so to encourage, could you read this book, have a look at this, what do you think about this, and then let the person do it in their own time. So they'll come up to speak because again, we go back to that you can only change you they have to change themselves on on their timeframe.   I think the other thing is too, sometimes it's useful just to have like a group budget as a track as a family exactly where all the money goes. Because that That, to me is like, is the starting point we're spending money on on these things. And you know, if there's any dispute, it's like, let's get the, let's get the receipts out, this is actually exactly where all our money went in the in this period. Because I think that's the, I think it's very difficult to jump from an investing mindset. Jump to it, without going through saving. And you have to warn you that that requires understanding your spending.   So those two things combined to be like, okay, we understand that what we're saving and what we're spending, okay, now we can invest our asset class, we can we can move on to as you said, How do I get my spouse to think about real estate, they're probably not thinking about it, because they're not probably not thinking about the saving and spending, the moment you think about your, I'm going to give up this spending to save the money, you tend to get a lot more interested in how much money that money is going to make for you. So you tend to get a lot more interested in the asset class. So I that's why I do see these things as being a 1234. And then you can get them interested in the asset class.   Tom: Maslow's hierarchy of conversations to have with your significant other. Yeah, it's, so this is a one would be, I guess, spending, saving, and then more offensive investing that I understand this kind of triangle correctly.   7 Dollar Millionaire: Okay, I will never allow spending to go in front of saving savings by okay. It's in the dictionary in the book in life saving comes first, right? Get the saving done first. And the saving is how you top up your yield. So the safe spending is cutting down on your spending is how you top up your savings. Right? Did you put the put the savings away first.   But yeah, and then once you've got savings, you need to do something with them. And so the thing you do with them is what asset class and then you can have those conversations. But if the person isn't engaged in the saving, right, then they're probably saying I don't want to invest in real estate, because actually, I'd rather be spending the money on a car.   And you've got to move the people have got to be with you on those steps. And it's, if then if they haven't got those fundamentals like Well, yeah, we could buy the car, but these savings will double in 10 years time and quadruple in 20, et cetera, et cetera. And then we'll be setting we can have as many cars as we want, if that's your thing. But let's just actually understand our priorities today, and where we want to be with that.   But I do think it's really important not to make that a face to face conversation too often, unless you're both open to that and let that someone like me, let an author let a book, let a TV show, do the heavy lifting, right? I mean, and then then have the conversation subsequently.   Michael: So for anybody listening, needing to broach this subject with a partner, spouse, you can either go get Happy Ever After by 7 Dollar Millionaire, that's great.   7 Dollar Millionaire: I couldn't have said it better myself. Love it, love it.   Michael: I know you're not really familiar with the US system of Roth versus non Roth, but we can talk about it in a higher level discussion. And so in the US, we have Roth and non Roth retirement accounts. A Roth is simply you pay the tax on the dollars that you invest on the front end, and then you get tax free growth and distributions on the back end, versus a non Roth is you get a tax benefit of reducing your taxable income today, it grows tax deferred, and then when you go to remove those dollars, it gets taxed at that point in time. Do you have a sense for pros cons, how people might be thinking about this?   7 Dollar Millionaire: The only thing that go into there is I'm assuming there are some other sub clauses in terms of what your access to the money in the intervening periods? Right? So I'm guessing from what you've said, that the one where you get, like, you pay tax now and you'd be don't pay tax on on the eventual money. You can only take it out on a certain date. And if you take it out between those dates, I'm assuming there's some kind of penalty as the as the price of actually getting a tax tax, tax free later on, are tax exempt.   Whereas the other one sounds more like well, if you know, you're actually if you're not being taxed on the money that goes in that's probably fairly similar. But I'm guessing it's probably a little bit freer money in terms of you can probably access it at any point in time.   Tom: The big gating factor between the two is there's limitations on who has access to use a Roth, this one that's taxed up front, and that your income needs to be under a certain level.   Michael: But the access to the funds are fairly similar in that you pay a penalty on both if you remove them before your retirement age. Yeah, yeah, I mean, I think if you can afford it, you probably want to put the money away that you can take it out later tax free. That to me sounds like you know, because then you, hopefully if it's a long period of time, and it compounds reasonably well, that's a bigger number than the money you're putting in. And that's how the only thing I could think of that. Honestly, these things is weighing me up. I people make tax codes way too complicated.   It's just like they make tax codes complicated. And then don't teach financial literacy in schools. The idea of this is beggars believe, right? The problem with making them complicated is very often, it tells people like, it's like, we go back to a dog with pain, right? We go back to our dob of pain, someone is telling you, I need you to paint the Mona Lisa, and you've never painted before, you're scared to put the first piece of paint on, you won't, you'll just, you know, you'll have you'll kind of you'll have like a punk rock moment, and you'll toss the canvas and break it on the wall and walk out the room.   That's what everyone does. Everyone's just like, this is too hard. I'm not doing it. And so you stop people actually getting involved. So I am going again to run again, all of these systems are way too hard. The correct answer is save them money, one of those will be doing deep, it will be better than none of them and don't over stress it.   Personally, I probably go to have the tax deferred later. Because I want the money to compound my age, that's probably wrong. Because I'm you know, I'm probably begin taking the money out in 10-15 years, so might not compound that much. And I might be better off actually having more money now. And I suspect that's where the differential is. That's probably where, you know, that's where the delta is on that. But God, I mean, that's just way too hard. Sorry, not telling you off it. But it's way too hard a question to put to someone who probably has very minimal financial literacy, I could probably work out what the right answer is with a spreadsheet. That means it's a really bad policy to be offering people. Sorry to criticize your country.   Tom: I like it.   7 Dollar Millionaire: Okay, good.   Tom: My wife's a tax attorney and keeps keeps busy. Yeah, moving tax code.   7 Dollar Millionaire: Oh man. It's actually it's actually also one of the reasons why, you know, the financial literacy thing is so important, because you can't trust governments with this stuff. In the we all think that everything we experience from childhood has been around forever. The reality is, before the Second World War, most people were dying around 65 70, they did not get a pension because they didn't need it. They were literally going to last maybe four or five years after they after they finished work, they would expect to work to death. And only after the Second World War, do we get this mass input of pension schemes? And which is why in lots of countries, they're just paid out of government revenues. And I'm not saying that's necessarily a bad thing. But it does. What it means is it's not necessarily going to be around forever. Tax codes aren't around forever. And it's one of the things that I worry too much about putting too much time into worrying about tax codes. Because by the time you take the money out, you'll have been through five different tax codes. It will all have changed so many times that if you try to think long range about tax, you're doing the wrong thing, because the risk on that is enormous.   Michael: That's such a good point. I think so many people hear about Taxco changing scramble to do whatever they can. And then next president next administration comes around things change scramble to do what we can and then you know, over and over and over again.   7 Dollar Millionaire: The people that make the money are Tom's wife. They make all the money!   Tom: She is just there, interpretating whatever, whatever comes out. Yeah,   7 Dollar Millionaire: Yeah, exactly.   Tom: It's good for the Schneider family. It's good for them.   Michael: That's great. Well, I think we just got to wrap this up, Tom, any other questions for the 7 Dollar Millionaire?   Tom: No, I love it. I think of all of our podcast guests. I never have more like impactful like meaningful, like things that I go off and do after the episode. So I really appreciate you coming on super excited about the book coming out.   7 Dollar Millionaire: Yeah, thanks very much for that. It's, it's, um, I'm really excited about it, too. It was the publishers Wiley to appeal to published happy ever after. And they, they asked me when I kind of that they were actually publishing happily ever after they said, do you want to do a follow up? And I was like, No, no interest. The and it because I took that to mean that did they want me to write teaching my daughter how to invest properly, and not as a cop out? That's just too complex.   You know, the reason I write what I write is I'm interested in getting people off the ground up to being able to understand other books. I'm not interested in the other books, those are all great. They've already been done, you know?     And then, you know, while he was coaxing me and saying, Well, no, we have this book series called “The Little Book of“ Series, which like the Little Book of Common Sense investing is written by John Bogle. And I'm like, kidding, right? I get to write a book in series that that goes in. And actually the bigger one for me was actually The Little Book valuation is by Aswath Damodaran. Who, I don't know if you guys know him, but in my industry, he's a god.   Aswath Damodaran book bbout this thick on on, it's just got damodaran valuation. And it's got every way of valuing everything ever. And it's the Bible for my industry. Everyone's got a copy everyone's read it cover to cover. It's literally and it I mean, it's dense. He's I think he's a, he's a professor at NYU stern. And just like, super clever guy. So he wrote the little book of value valuation. And they're asking me 7 Dollar Millionaire if I want to write one of those. So I thought I've got to think about it. So just like so thinking about it. And I was like, still didn't want to write a follow up on investing. Now, I did literally woke up one morning, I was like, the little book of Zen Money. And just that the title just runs so nice. I was like, Yeah, okay, what, what can I do with that, and I was like, then the subtitle came to my head was like, okay, a simple path to financial peace of mind.   Okay. And literally, I'm writing the thing, first word to last word and like, not how you should write, you should break it up into bits. And Right, right, like the middle first, and then the end. And then the beginning. And I'm literally going from the title. And the last word, all right, will be the kind of the end. And just going that direction, because it just makes sense to me all the way through.   Tom: Yeah, it's there already. just pulling back.   Michael: Yeah, gotta get it onto paper.   7 Dollar Millionaire: I stay away from the other analogy. But the other analogy is chipping blocks off the stone, right to make a sculpture. That's what I'm doing with this one. It's there. It's already there. I've just got to find it. enough fun. Yeah, I wake up every morning and get at it part from today, when it's fun to talk to you guys instead.   Tom: Yeah, I mean, one of the takeaways also for these conversations is like, you know, this 80-20 principle where, you know, you get 80% of your value from 20% of the work and that last 20%, like, that's where it gets, like overly complicated moving targets, you know, anxiety, all that stuff, but just getting up and getting that initial blob of paint? I mean, I feel like I'm probably repeating a lot of the conversation, but it's a really powerful one.   7 Dollar Millionaire: Exactly. I mean, you know, it's it really is that that first move separates you from everyone who's not investing, who's not saving. That's it, right that if you were the stat or last year, it was ended. 2019. Right there, 61% of Americans didn't have $1,000 in an emergency fund.   Just having $1,000, that puts you already in the top 39% of the richest country in the world. That is already that that's the 80 20 rule right there. They're taking their money and opening an investing account, bang, you're probably in the top 10%. Right. And taking those actions is what moves you along these things all the time. That's why is is so important.   Yeah. It's the problem, as you said is, someone tells you, you should invest. Oh, and you should invest in this. So what you know, that's just way too complex. It should just be you should save, you should invest, and probably, you know, VTI just go there. He can be a while before you find anything else. So you can overcomplicate it later when you're ready to overcomplicate it, but to start with just go there.   Michael: Love it.   Tom: Love it. And VTi is the vanguard index fund. That's just kind of just blankets. The economy beautiful. Yeah, big fan.   7 Dollar Millionaire: It's, it's the it's the biggest economy in the world. It's the top 500 companies in the biggest economy in the world. You know, when we if you live off grid, you're not involved in the global economy. Fine, right. But that's like naught point naught naught 1% of us that's discussing this properly off grid. The rest of us are buying stuff to live our off grid life anyway, we're in the economy. That's that the most natural hedge just by that.   Michael: And the folks that do live off grid probably aren't gonna be listening to this podcast on their iPhone, in the middle of nowhere wherever they live off grid, so I don't think we have to worry about them.   7 Dollar Millionaire: They probably are.   Michael: Living off grid with faster Wi Fi than any of us.   7 Dollar Millionaire: Exactly.   Michael: Awesome. Well, $7 millionaire Always a pleasure to have you on thank you again for hanging out with us and bestowing some wisdom. And like I mentioned, and I mentioned very much looking forward to the book when it comes out. I know I'll be getting it. We will both be getting it I'm sure.   7 Dollar Millionaire: Excellent. Well, thank you very much. It really it's always a pleasure. Really good fun. Thanks, guys.   Michael: Awesome. Take care. I'll talk to you soon.   Alright, everybody, that was our episode a big big, big thank you to 7 Dollar Millionaire always such a pleasure chatting with him. Tom, I know you and I get so much value out of our talks with him and after all of our conversations, we have going making some changes to our own personal finance realm. So very excited to do that yet again. If you'd like the episode, please feel free to leave us a rating or review wherever it is just in your podcast. If you're checking this out on YouTube feel, feel free to hit that like and subscribe button. And as always, we look forward to seeing on the next one. Happy investing.   Tom: Happy investing.

Michael: Hey everybody, welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and today we're gonna be doing our weekend wisdom. I'm joined by Dana Dunford, the CEO and co-founder of Hemlane, who we have on an upcoming episode to dive deeper into what they do as a company. But I wanted to talk with Dana today about some recommendations that she has for folks who are doing self-management. Let's get into it.   Michael: So Dana, curious to get for our listeners, your best advice, input, recommendation for folks that are looking to self manage, because you've been on the professional management end of the things you've done on the self management end of things, and now you've got hemline kind of in the middle? If someone's looking to self manage, what can you what tips tricks, advice would you share?   Dana First is education hands down. And I do believe that Roofstock has an academy for this as well. But educating yourself on how to mitigate risk? And really what I mean by how do you qualify tenants? How do you set up the lease contracts like the lease contract will make or break you? And then how do you make sure that as you're going through with repair coordination, which service professionals you're sending out, even rent collection? What are the best ways to collect rents like Venmo, credit cards, PayPal can all be disputed in a heartbeat like that. Those are terrible ways to collect rent,   Michael: I thought you're gonna say those are all great ways. I was like, Oh, awesome.   Dana No! So I think one of the biggest things is education. And then the second thing is do what you love. Because there's so much when you think about property management, you have to be a jack of all trades. You have to be good at accounting at sales at being a lawyer, right lease, contract, maintenance and repair, you're not good at all of it. So if you're going to self manage, figure out what you're really good at, and use other folks and other professionals to help you with what you're not good at. And that will really help you succeed.   Michael:                                                Well, that was our episode, everybody. Thank you so much, Dana for the weekend. Wisdom really, really great tips for everybody out there looking to self manage, greatly appreciate it. If you'd like this episode, feel free to give us a rating and review wherever it is using your podcast. We'd greatly appreciate it as they really help us out. Thanks so much for listening. We'll see on the next one. Happy investing

Michael: Hey everybody, welcome to another episode of The Remote Real Estate Investor. This is our weekend wisdom episode. I'm Michael album and joined today by Tom Schneider and Roofstock CEO, Gary Beasley.   Theme song   Michael: So, Gary, we want to ask you a question about what is your favorite metric to use when evaluating properties? And how do you think about that metric when it comes to total return.   Gary: So I like to think of single family rental homes as sort of like a bond that's indexed for inflation with an equity kicker, and I'll explain what I mean by that. And the reason I think it's particularly relevant right now, is we're in a low interest rate environment, people do feel like with all the money we've been printing over the last few years, there is a potential for inflation down the road. So you want to think about what kind of investments could potentially be inflation hedges in case inflation. And the Fed has said, we're gonna keep rates low, and we're not so worried about inflation, so we're not gonna be as aggressive in raising rates.   And then you've got this equity kicker element in homes, which is really the appreciation component of it. So let me tell you what I mean. So the bond component is that the cash flow that you could generate from the home when you own it, and that's like the bond piece every year, you could raise the rent to at least keep up with inflation, because their annual contract. So if there's a lot of inflation in the market, you can raise the rent. So if you had to sign a 10 year lease that was flat and inflation went up, you would be in trouble. So you've got that annual indexing.   And then you've got the capital appreciation piece, which if the property goes up, you know, 3%, a year or 4%, a year, which is historically has done over the long term, you get that capital appreciation piece, like you would get, say, in a stock with a stock value going up, you've got the value of your underlying asset going up. And what's nice about real estate, unlike with stocks, which are harder to, in most cases, put leverage against unless you have a margin account, anyone could get a loan for a house. And so you could get a 70 or 80% loan on the house. And I like to give a you know, very simple example, if you have a home that basically just covers its costs over, say, a five year period, but it goes up at three and a half percent a year and you have an 80% loan on it, you could get a 14 or 15% annualized return on that, because you've got someone else paying down your mortgage and creating principal value, you've got, you know, you're you're riding the property value along, and you're getting kind of four to one leverage on your equity.   So when you sell it, your annualized return over that period can actually be quite high, even if you're not pulling money out or getting current return along the way. So when I look at investing in homes, the yield is one component of it. But I'm really more of a total return investor, I don't necessarily feel like I need to pull the money out every month and then spend it or put it into something else, what I'm trying to do is create value in that asset. And so I like the idea of having someone else pay down the loan balance for me, and create value over time just by getting that exposure to housing, and letting the market be your friend. And then at some point in the future, if you decide to liquidate it, you've got a lot of hopefully embedded equity value, that's when you could sort of realize the benefits of that investment.   Michael: That's a great kind of analogy and pictorial representation. Can you talk just real briefly about how a bond works if somebody wanted to go buy a bond, so that way they can compare that investment versus real estate? How does that traditionally work?   Gary: Yeah. So when you buy a bond, what you buy is a coupon on that that bond, and then you get your money back. So you could buy a municipal bond or Treasury, something like that. And let's say you get an interest rate on that bond of 3%. And you buy your hundred dollar bond, and you get $3, every year back. And then at the end of that term, you get your hundred dollars back. That's the entirety of your return. And that's a 3% annualized return, because you're getting your 3% every year, the difference between like a bond and a single family rental home, which you might be able to get a similar kind of return every year on a home, but the value of the underlying home is going up. And so then instead of getting $100 back, maybe you get $120 back, right and so that's where that's that equity kicker piece that I'm talking about. That's over and above that bond piece.   Michael: Already, everyone that was our quick weekend wisdom a big big, big thank you to Gary super informative. If you enjoyed the podcast, please feel free to leave us a rating and review wherever it is you listen to your podcast. We look forward to seeing the next one. Happy investing

In our second Ask Us Anything, Tom and Michael bring on guest host, Mark Woodling to tackle listener submitted questions on buying from wholesalers, the difference between auction and foreclosure sites, preferences between umbrella policies and LLCs, tax liens, how Roofstock selects markets and more.    --- Transcript     Tom: Greetings and welcome to The Remote Real Estate Investor. And today's episode, we're doing another ask me anything. And on today's episode, we have myself, Tom Schneider. We also have one of our hosts, Michael. Michael, say hello.   Michael: Hey everybody, how's it going?   Tom: And we also have a guest host today with some special expertise in the auction world, as well as some experience on tax liens of wholesales and all that good stuff. So we have Mark with us today. Mark Woodling say hello.   Mark: Hey, thanks for having me on.   Tom: All right, let's do it.   Theme Song ♫   Tom: Welcome back. We have another ask me anything episode, super excited about it and let's jump right into it. So, as we mentioned before, with some of these questions that we saw, you know, they might not be in our wheelhouse, so we wanted to bring in experts and that's why we are fortunate to have Mark Woodling on today. So, Mark, do you want to give the 32nd kind of pitch on all the interesting stuff that you've done in the real estate space to give a little bit of background? Uh, you've been on an episode before, but maybe a brief reminder to folks who haven't listened to that episode.   Mark: Sure, sure. Thanks for having me on guys. I work as the director of local market growth for Roofstock. So really it's a unique role where I work on opening up new markets and how we can really bring new supply into those markets, but it's kind of a unique role. So having a unique background was really why they picked me for this cause I used to go around the country, traveling to tax lien, auctions. I would go and bid for a private equity firm around the country about 26 different States every single year. So a young buck out of college really had no limits, I guess you could say, but learning the real estate game, I've also worked at Fannie Mae in the recession. I was there in their auction group. So we're selling about 18,000 properties a year, just through auction in all 50 States in DC. And then after that worked at a company called Xome X-O-M-E and was their chief auctioneer and with selling glide, the Countrywide portfolio that was kind of leftover toxic asset group after the recession. So, you know, became licensed as an auctioneer in 27 different States and it was doing everything online. So have a bit of a marketplace background as well as just a ton of unique kind of distress real estate background.   Tom: Awesome. Love it. Well, well, let's jump right into it. So our first question we have came in from LinkedIn. This is from Dave and Dave asks, what's the best way to scale your portfolio in the smallest amount of time. And let's see, Michael, do you want to take the first pass at this one? Or do you want me to lead the way?   Michael: Yeah, I would say just get a bunch of money.   Tom: Honestly. The way that I was thinking about this question is kind of twofold. It's like if you have a bunch of money, that's a different answer, right? So if you have a lot of money already, like, okay, getting into portfolios, just buying portfolios outright, or, you know, building a fund with an actual like employment of like acquisition folks like that works really well, but let's go ahead and assume this question is if you don't have a money machine in your basement and you're just scaling and scrapping, what would be your feedback on the quickest way to scale in the shortest amount of time with the limitation on funds?   Michael: I think that there's going to be no quicker way to scale than by partnering with people that have what you don't have. And so if money is tight, you don't have the money go out and make a name for yourself as someone who can put deals together and acquire doors. And I would rather there's this very famous, I don't know how famous it is, but a lot of people say, you know, I'd rather have 50% of one deal than a 100% of no deals. And so if acquisition scaling is the name of the game, go find people that don't have the time or the knowhow or the ability to put deals together and bring them to those people who are looking to get into the real estate game and have the money to do so. That would be my advice. Mark, what do you think?   Mark: I think you're right in line where going to portfolio route really is the easiest way, because then again, you're dealing with one property manager in one city, you know, if you're spreading yourself too thin, you can buy a lot of properties in different markets, but then again, you're having to manage all these property managers and that takes a lot of time. It takes a lot of resources of your own. So I think if you're going to get right to it, you really need to focus on a concentrated area of figuring out diversity, maybe within one market or a few markets, and really figuring out, you know, how to leverage your time when you only have so much time.   Tom: My last little tidbit I'll add on this is the best way to scale your portfolio. My recommendation is really tapping into your, any appreciation and equity that you have in ramping up your leverage as much as possible. Now there's some downsides and risks. If values go the opposite way. And you're only planning on holding these a short period of time. There's some risks for getting under water where the loan is worth more than the property. But if you're trying to squeeze as much dollar as you can into scaling and building acquisitions, it would be basically getting the most leverage that you can. So every single dollar of equity you can have, you're using to scale scale scale. So excellent. Let's go on to the next question. And we have a shout out to Michael on this question, Michael, why don't you read this question?   Michael: This next question comes to us from Ricardo from Walnut Creek and Ricardo is a good buddy of mine. So the question is what's up Roofstock, shout out to my boy, Michael Albaum. This question has to do with working with wholesalers, from what I've seen, you can get some pretty spectacular deals with less competition, but it seems you assume much more risk as far as condition of the property, as well as constraints with financing. What has been your experience working with wholesalers? And what advice would you tell to a new investor who are the wholesalers and what do they do? How do they make money and how do you find them? So, Mark, do you want to take a stab at this one with your background?   Mark: Yeah, absolutely. I go to a lot of mastermind groups and you know, these mastermind groups are really for more advanced real estate investors and many of them are actually wholesalers, but they also and hold. And then, you know, they have their fix and flip models and so forth, but wholesaling could be a very lucrative business because when you put a property under contract, right, you're tying up the contract, that buyer who tied it up under contract is then going to sell their equitable interest, right. They're selling that contract and assigning it to someone else. So they really don't have a specific range of, you know, how much they can make and they don't need to be a real estate licensee. So anybody could be a wholesaler. Really so if you want to get to really who the wholesalers are and what they do, you need to go find guys that are doing this for a living. They go really find great properties that are going to be marketable to the masses. And they will tie up that property. They'll sit down, visit the property, take pictures, you know, run some after repair value type values.   And then they present it to the market as off market deals. So, you know, their job is really go out there when I call bird dog, right? They're the boots on the ground. They're spending a lot of money on marketing and then tying up these opportunities to then sell it without having have any risk or money down besides a small earnest money deposit. So it's not that they own the property ever. They only have it under contract and how they make money. So they'll say at closing, I'm going to make a certain amount of money or they can say, Hey, you're going to have to put $5,000 down and I'll give you my contract. And so they're going to make money one way or the other. And the thing is, you're never connected to the person actually selling the property at the beginning. So, you know, things go a different direction, you know, it can get kind of sticky.   So you really need to know who you're dealing with and really have some trust and not just chase after deals because the property may not be in great condition. And you may never even see the property before you tie it up under contract by how you find them. I'll just finish up on that. You know, the interesting part about that is you can go to Facebook and get on investment groups and say, Hey, I am a qualified buyer. I have cash rate of spend in a specific market. And here's my email address, put me on your buyer list. So you're kind of putting yourself out there and into the worldwide web a little bit and exposing yourself, but that's a great way just to get on these lists and see what kind of flow comes through. But again, these don't sit on the market for very long. So you really need to be able to act quickly in order to take advantage of those opportunities. But yeah, wholesaling's a wild West game. So, you know, proceed with caution.   Tom: Sure. I'm going to paraphrase a little bit. So at a super high level wholesalers, they're out looking for distressed or people need to sell right away. That's right. And they basically get it in contract this wholesaler, and then they sell that contract and never actually take ownership. Right. They almost, it's almost like an arbitrage position. Am I accurately depicting that?   Mark: Exactly. That's exactly the way to put it.   Tom: Awesome.   Michael: Tom, have you ever bought a wholesale deal, a deal from a wholesaler?   Tom: I have not. You know, I definitely have been approached to sell to wholesalers. Their marketing is relentless.   Michael: We buy homes for cash!   Tom: We buy ugly homes. Those guys are all the wholesaler ecosystem. And it's funny, the list of people that they're looking to potentially buy from. It's a kind of a rough list. They're like looking for death divorce, like whatever, kind of like quickly to sell. So, you know, as an investor, there's some potential to buy some off market deals from wholesalers, but you know, to Mark's point, you know, you got to still have a really good diligence process and know the deal. Yeah, no, your buy box. Awesome. All right. So this next question we have is from Andy Dobbs in New Jersey. So Andy asks, does Roofstock provide property management or do we need to find one ourselves? Mark, do you want to take the lead on this guy?   Mark: Sure. So Roofstock doesn't actually provide the property management, but we do guide you through the process of how to find really qualified property management companies. So we take a significant amount of time when we bring on what we call our preferred property managers, we certify them and vet them to make sure that they really do work well with outside investors. So, you know, being an investor from out of state, you do have a different level of expectation with property managers because you will never see that property. You, you may not even be able to drive by it, right? So they can really be your eyes and ears. So we establish that network. So that really transitions to investors, having higher levels of confidence. So we will always guide you in that direction and have great profiles on our website, but you are always free to manage with an outside vendor, but you know, these are always great vendors that we're dealing with on a massive scale. So we do see, you know, how they're acting around other investors and that's great data to make sure that we're always working with the best.   Tom: Yeah. And you know, I think it's great that Roofstock does this initial diligence, but I highly recommend as an investor doing that extra step and giving them a call and asking for some references and making that decision and you don't have to use one of Roofstock's property managers that has gone through this process. It's just available for you as a resource. And if you want to, you can self manage or you can find a different third party, property manager, you have options. It's just kind of giving you a step ahead in that process. Excellent. So this next question we have is from Steve in St. Louis. So Steve asks, so he's seen auction sites, auction.com, an example Xome where Mark used to work at are these sites like actual foreclosure sites and how do they different? What are considerations if I were to buy on one of these auction site, could I use financing? Is there contingencies? What are some of the unique risks? So Mark, this is right in your wheelhouse. So do you want to spiel for a little bit on some of these different auction platforms?   Mark: Absolutely. This is an area that I stumbled into my first job, right out of college back in 2001. So, you know, there there's a lot of different types of auctions in the sense of there's tax lien, auctions. There's an actual foreclosure auction, which is what most people will understand what the courthouse steps. And then there's also REO options that even retail auctions. So kind of walking through, you know, the foreclosure and the REO, meaning real estate owned. That means the property has already been foreclosed on when it's an REO, it's typically bank owned, but what's happened in the last, last real decade is that, you know, after the recession that banks were realizing that there was less inventory available. And there earlier on in the process of buyer can kind of get the edge to buy that property the quicker they can get it off their books.   So again, if a property has been foreclosed upon it, typically in certain States will go to the courthouse steps and you can buy it as a foreclosure. The actual auction is like the final step of the foreclosure process, but in this instance that it doesn't matter there. Then it would go back to the bank and then they can sell it with full ownership. So let's just go into, you know, the foreclosure aspect. If you want to go to the courthouse steps and buy, I mean, it's a great time to be able to buy, but typically you're buying sight unseen. So you really don't know what's on the other side of that door and you cannot use financing. So there may be some really creative ways to get financing, but you're going to need to pay for that property, either at the courthouse step with a cashier's check or you put a certain amount down and then pay the rest soon after.   So that part you're going to have to be really buttoned up for. And these are nowadays being conducted even by auction.com, Xome or Hubzu, which are actually at the courthouse steps and working as a third party to really replace the attorneys who are doing these foreclosure auctions before. So you may see like the full on auction going on, where there's a big tent, big TVs, you know, there's a level of organization that's happened in the last, I would say five, six years to really make those more friend link to anybody coming in from the outside so that they actually have customer service representatives there to answer questions. So if you're really curious about those, I always suggest go, it is fun. It is really exciting. And there may be multiple auctions, like I'm in Dallas. So in Texas, they have what they call super Tuesday and you go to the courthouse steps.   There could be four different companies out there doing four different auctions. So it's really something that you need to get comfortable with and ask a bunch of questions that you'll meet people there they're wholesaling, you'll meet people there they're buying for their own. And then you'll have major institutions that are there and they probably won't talk to you about their strategy. That's kind of holding the cards close to the vest, but I would just say coming from an auction background, the risks, that's really something that you need to understand your own risk appetite because there's online auction portals, where you could go in and bid on properties that may have either been foreclosed upon or are just about to get foreclosed upon. And they're trying to sell it before it goes to foreclosure. So if you are going to take the risk, really understand, you know, what kind of websites you can go to and dig in deep, because if it's going to foreclosure, there may be other liens, whether it's federal liens or just other kind of sticky liens that you may have to navigate through.   So you really need to be prepared for that. But most of the time at the foreclosure, you know, any other liens are wiped out. So study, study, study, understand your risk, understand buying sight unseen, you know, have numbers in mind, don't get caught up in the auction. Cause that's something a lot of people get caught up in because it's that active bidding. It's a lot of energy. That's what the auctioneers do. I come from that background. I only have done online, but I have watched and studied the live auctions and they are entertainers. They want to squeeze money out of you. So go in, know your numbers, understand your risk, understand your rehab, know your numbers, know your numbers, know your numbers, and then proceed with that strategy that you've been putting together.   Michael: Mark, I've got a question. Did I hear you right in saying that the banks might want to get these things at auction before the final step of foreclosure, but did I miss hear you?   Mark: Yeah, well the banks have a few different plays sometimes. So if they bring it to foreclosure auction, they get to set a bid and they are the ones that say here's the amount that I would be owed and that I would set as the reserve. And so if they're going to go in and they are there and somebody is going to bid on that property, they need to meet that certain amount. And if that amount is not met and they can foreclose at that point on the property and then bring it to sell any other way that they would want, they could put it into a retail platform like MLS, or they could bring it to another auction site and try the auction again, because typically these are properties in distress situations, but the bank's goal is typically to sell the property as early on in the process. So they don't need to do all of these asset management post foreclosure, which means they have to have staff. You know, they have a lot of costs to get the property cleaned up and presented and ready for market. So they typically want to dispose of that as early in the process. And some of them don't even let it go to foreclosure auction. They'll sell alone in a 90 day delinquency just to say, Hey, I'd rather sell this off to someone else rather than have to go through this longer timeline, even though they could potentially make more money. It just makes more sense to them to take the money and, you know, let somebody else take care of the risk.   Michael: Got it. Thanks.   Tom: All right. This next question, I think is a good one for Michael here. Gilbert, from LinkedIn asked, what parts of the team should in can be local and what doesn't really matter in your, in your own state, or just thinking about locations of that real estate team that you have, where they should sit.   Michael: Yeah, that's a great question, Gilbert. So I'll just share kind of how my team looks on a personal level. And so I've got property managers and agents and insurance agents local to the property out where the property is physically located and my CPA and my attorney are in California. And so that's kind of how I've set up shop. Now. I was chatting with an attorney, uh, excuse me, with a CPA. We had Joel Jensen on from Tax Sentry on the podcast a few episodes ago, and he's out in Utah and prepares returns in all 50 States for investors. And so I'm realizing now that you know, more and more of your team can likely be remote. I think having an attorney local to where you live in your state, because you're going to be subject to local laws. If you're setting up LLCs in your state, I think it's important to have an attorney locally, but it could also be beneficial to have a local attorney to where the property is since if you are going to get pulled into a lawsuit resulting from that property, the local laws to where the property are, are the ones that are going to be applicable. So understanding how to cover your bases in that state is I think important as well.   Tom: I think an interesting point you make is having the insurance agent be local to the property. I'd love your thoughts on that. It's just, you know, being able to squeeze out the best deal on insurance or   Michael: Yeah just having access to local markets, which isn't the case across the board. So for example, I work with a company in California that doesn't write that, that doesn't write insurance in the Midwest. And so the, a lot of the Midwest insurance agents just have access to different carriers and these carriers are gonna know the markets inside and out. There's a reason why the California insurance companies aren't participating in the Midwest because they don't know the market. And so very similar to having a local lender to the property. They can often be more creative because they know the market better allows them to be more competitive. So again, that's another part, a team member that I left off is lenders. So I have lenders local to the property in which the property is located. I also have lenders that work on the national level and I give them both a shot at it and whoever can come up with the best terms and financing usually gets the cake. So I think it's important. Your property manager obviously should be local. Your real estate agent, I think should also be local, pretty much everybody else. It could go either way. I think it's very beneficial to have local people to the, so at least you can ask those questions as a comparison to the folks that you have locally to where you live.   Tom: That makes sense. You know, one of the markets that Roofstock operates in, in Florida and for properties that go through our certification process, we come up with an insurance quote that is an insurance quote. That will be, that is bindable, right? That a company is willing to agree to. But oftentimes we found that Florida, the national provider that we use is rates are a little bit higher than some of the local ones. So I guess in markets work and be a little bit more tricky and there's more potential liability on the insurance side really worth going in and getting the local quotes. And even if it's not that tricky, I like that. That's a great point. This goes in very nicely to the next question that Corey from Austin is asking. So, Hey, Roofstock a long time listener. First time caller. I'm about to acquire my third SFR with you guys. Awesome. Congrats Corey. And I'm wondering when is hazard insurance enough versus getting an umbrella policy, a related question that we got from somebody else as well, a good umbrella policy help replace the LLC. And I think kind of the hardest question is, you know, at what point do you start kind of bundling properties into umbrella versus like individual? So Michael this is right in your wheelhouse. What are your thoughts on this?   Michael: Yeah, I would say Corey again. Great question. We just recorded a podcast with actually my California attorney and we asked this exact question. So I would say, definitely give that episode of listen. That episode should be released in about two weeks or so, but so again, I'll just share kind of my personal anecdote. When I first started investing in single family homes, there was a couple thousand dollars in cashflow a year coming off each property and to have an LLC in California, it costs $800 a year just simply to have it. So that expense wasn't justified given the amount of cashflow these properties were generating. So I bought three properties prior to opening up an LLC and then put everything, wrapped, everything up, did a quick claim deed and transferred everything to the LLC. Now there's two very distinct camps. There's the pro LLC camp and the no LLC camp.   And the pro LLC camp argues that, Hey, if you can bundle everything, put it into a silo and segregate your assets from your personal stuff. That's really great. The no LOC camp argues that you can get that same type of coverage, that same type of asset protection with a high liability insurance policy and an umbrella policy. Who's right, will only be determined once there's a lawsuit. And so it's all comes down to your comfort level, your comfortability, you can get very high liability insurance limits on the underlying policy itself on each specific property policy itself. And couple that with an umbrella policy and umbrella policies are very inexpensive for the amount of coverage that you're getting. And so you've just got to decide for yourself, Hey, how much do I have personally? And how much am I going to be putting at risk with this investment property that will often lead you down the right decision path to what makes the most sense for you? But I think a lot of people really hung up on is, Oh, I need an LLC though, they're pro LLC camp. And they think I need an LLC before I ever start investing. I would say that soften backwards. And I would say focus on getting the property first, making sure that the property is a good fit, then look to see how that LLC plays into the picture. And what's important to note here on this long soapbox rant is that a lot of lenders won't lend to LLCs if they're purchasing single family homes. So have a conversation with your lender, have a conversation with an attorney about what's involved with setting up and maintaining an LLC in your state. And just look to understand what the implications are of having one and have not having one. And then look to make your decision because it's really not a one size fits all approach Michael out.   Tom: Well, you know that the benefit of the LLC is you can name it something. Cool. Did you name yourself a cool LLC Michael?   Michael: I named… no. I just, well, it's tough because a lot of the cool names are already taken. And so you've got to make sure that it's not a, you know, that name is available. All the cool ones like surfer dude23 was already taken. I was pretty bummed.   Tom: Sounds like your AOL chat bot.   Michael: That's how I got my inspiration from.   Tom: Awesome. Our next question is from front of the show, Bobby from Seattle asks, I've heard of investors making money, buying tax lien. What does this really mean? And is this a viable strategy for investing in real estate? Mark Mr. Tax lien? What are your thoughts there?   Mark: Yeah. Right up my alley. Gosh, you've teed up these questions very nicely. I'm going to sound like the smartest guy. Well, here's really what it comes down to a tax lien is, you know, a municipal tax lien means that you owe money to the government. And that's really what when tax liens are purchased, it's typically because somebody didn't pay their County taxes. Right. And what's interesting about tax liens is a tax lien is a municipal tax lien sits in front of any other liens, like a mortgage. Okay. Now, you know, there's a caveat to that. Like federal tax lien, that's a whole nother story, but most properties don't have a federal tax lien if they have delinquent County taxes. So really what happens is every single state has different state statutes of what they're supposed to do with delinquent taxes, right? Because the County needs money to pay for schools, to pay for police officers, to pay for so many more things.   So they need that money and they sell off those tax liens just like at the County courthouse. And the person that buys them basically is paying the delinquent taxes on behalf of that homeowner. And in turn, they're going to earn a percentage of interest off of those tax liens. And so when you buy a tax lien, you don't just buy the property, but you're sitting in that first position, even beyond a mortgage. So in the event, let's say the, what they call redemption period. It's typically one, two or three years when that redemption period goes by. And if you're still the tax lien holder, you have the right to foreclose on that property and own the property. So when you used to hear about all these old infomercials about buying properties for pennies on the dollar, I guess they would say that's what the tax lien buying was all about.   So what people don't realize is that probably 99.5% of the time, somebody has got to pay off those tax liens. And you can earn anywhere typically between eight to 24% on that investment. And so look at it as almost like buying a note where you're very passively investing in real estate, but the kicker is you may have the ability to foreclose on that property, take ownership and own that property for potentially pennies on the dollar. But again, those stories are the rare ones it's like watching Storage Wars and finding that, you know, old school Bronco sitting in, you know, if the storage unit, you're the guy that bought that yeah. That is made for TV, but it does have, so the tax lien industry, um, it can be safe in some ways, if you're doing your due diligence and really understanding, Hey, if this property takes two years to what they called redeem, or when that redemption period expires, is it going to be in good enough condition where they're still valuing the property? And if you feel comfortable, you can invest knowing they're going to probably get that interest. If not, you could potentially foreclose on that property and own it for very little.   Michael: So we should have a new segment on the show called confessional corner.   Tom: Yeah.   Michael: So I did this, I purchased tax liens, read a book and thought, Oh, this is easy. So I've purchased some tax liens out in Arizona. And the auction is while it was an online auction. And so I did some due diligence and understood, okay, what counties and, and Arizona, what States I should be looking at. So I decided on Arizona. And so I ended up purchasing a bunch. I ended up winning a bunch of these tax lanes and probably 80% of them paid us. And I was like, this is the easiest money I've ever made. This is so awesome. But so what I'm wondering Mark is, so the 20% that haven't paid off, this was probably three, three and a half years ago that I did this. The ones that haven't paid off, I think the redemption period in this County, Arizona is two years. What should I go do now? Because my understanding is that if I decide to for clothes in order to, for clothes, you need to pay off all the existing liens on the property. And so if someone had purchased the tax liens from four, five and six years prior to me, there are still these existing liens on the property that I would need to pay off in order to foreclose on the property. Is that accurate? Or do you know, what do I do now?   Mark: Yeah. So two things I would do. Number one, I would send somebody out there to look at the property. Number two, I would, you know, really understand what the timeline looks like and understand if it's a judicial or administrative state where, you know, when the foreclosure happens, you know, like let's say you can actually file to get the tax deed. You need to know, you know, what all those steps are. And sometimes it's an admitted straight of approach. It's just paperwork. But if you have to go to the judicial approach, it means that you would have to actually have to go before a judge in order to earn those rights and earn the tax deed, where did that person would lose the property? So for you, you just need to understand what positions are out there, where do you fit in? And so a title search would show what other liens are out there.   Or you could go to potentially, yeah, I would say run a simple type of report, but also understand the condition of the property because it's something that you're like, man, I do not want that property. I want to I'll even pay my own taxes off. You can get yourself out of that position. If you happen to be the front runner, I would say, or if you happen to be in a position kind of buried in the middle, you may end up getting paid off at somebody ends up foreclosing and taking ownership of that property plus the interest, of course. So I would just understand your position and then if you need to spend some money to go out there and take a look at the property, because there's a chance you may get it. I would know what you actually are holding the golden ticket to.   Michael: Sure, sure. And let's just say as a thought experiment that I'm in first position that they paid their taxes prior to when I purchased them. And, you know, I decided that I don't want to foreclose on the property. It's a mess. It's something I don't want to get involved in. Is there any risk to me having paid those taxes and kind of being that first position lien holder that I need to then do something or pay additional fees as a result of being that first lien holder?   Mark: Yeah. Every state's going to be so different. I mean, these are state statues written back in like, you know, this 17, 18, 19 hundreds, like early, like way back when, so..   Michael: Four score and seven years ago..   Mark: It doesn't hurt to pick up and review on your own and really get to know, Hey, if I am the first lien holder, you know, and there's no other mortgages and this thing is clear to go, you know, what do I need to do? Do I want this? So there's a lot of questions that come with it. But I mean, if 80% of paid off, you'll probably find as it gets closer to actually redeeming during that period where you could potentially take the property, most of the delinquencies get paid off. Right, right. At the very end. So it may turn into that 99% kind of statistic that I gave you before.   So there's a lot of who knows at this point, but as you get closer, I would definitely want to know more information about, you know, what the condition is, where you fit in, in the front runner position. And it could be something that you could be that a half a percentile that ends up really good. So you never know. I mean, the story I used to tell people was we ended up doing a tax lien in Hilton Head, South Carolina. And it was a condo sitting on the water. I think we had 35 into it with this private equity firm and the kids that they have just lost a father who owned the property. None of them wanted to pay the property taxes there. They were just had a fight. Well, it went all the way through the foreclosure process. We ended up with a tax deed to that property and had 50, I think it was 58,000 into a $700,000 property. It happens, but don't expect it to happen.   Michael: Right, right, right. I think there's a, I just had a couple aha moments. And the vast majority of them is that I had no idea what I was doing and for those listeners, but go get educated. Good. Don't do what I did.   Tom: What is it like, ready shoot aim?   Michael: That's right. That's right. Yeah. That was a good learning experience.   Tom: Gosh, love this tangent right here. All right. Well, we're going to jump into the question.   Michael: Great question. Bobby.   Tom: Bobby K the man. Last question we have from Jessica out of Boston is how does Roofstock choose their markets and a related question, why is restock not available in all States? Mark, do you wanna take a quick pass at this guy?   Mark: Yeah, absolutely. This is a kind of what I work on every day, just for those listeners out there. Uh, you, but Roofstock when we started, they really went to markets with a specific intention and that was around cashflow. Right? That's what most of our investors are always chasing is really quality cashflow. But what we're realizing is that, you know, appreciation may be a different play that other investors are more interested in and, or maybe even a blend of the two. So as Roofstock went to markets from like the st Louis is to the Cleveland's to Memphis and Birmingham, kind of the typical suspects, right? Those are just very highly demanded markets because investors require a certain amount of cash flow. You can get 10% plus cap rates in some of those markets. But what we're trying to do is really balance out different investment strategies for all the different, uh, investors out there. So when it comes to, how do we choose our markets? We want to go to markets where we feel the real estate economy is definitely going in the right direction. That not only from a macro level, but also from a micro level, that there's really healthy local markets where the risk and return really feels good from, you know, the areas compared to what you can make in that cashflow. But we're also looking at kind of expanding that logic where we're saying, Hey, let's just make sure we're going to markets where there's enough supply. Right. And there's some affordability because certain markets like here in Dallas, I mean, it's gotten really tight.   And so there's just not much supply that we can source because there's so many other exit strategies that I would say are more geared towards owner occupants, right? So fix and flippers are sourcing properties and going towards those exit strategies rather than investors, because they think they can get more money. So being a marketplace, we have to really grant it, we have to react to the market and let it ebb and flow where we're trying to be the guys in the middle where supply and demand meet. Right? So that just goes to the whole, whole logic of it. You know, we're not available in every state, you know, Washington state, Oregon, California. Those are very much appreciation markets and you're just not going to have the same level of demand from investors. So we're always trying to cater to our network, but please reach out, be vocal, tell us where you want to go. And it really is a conversation point between what Tom and I talk about all the time. And he gives me a lot of feedback where the demand is. So if there's enough demand, the markets make sense. Like we're about to open up and De Moines, Iowa in Richmond, Virginia. And we feel really good about these markets. They're kind of economics. Those are areas we want to go to, but we want to hear your feedback so we can open up in more States and cities like that.   Tom: Love it, love it. And opening up new markets all the time. Excellent guys. Well, thanks for the questions that everybody's been sending in and please continue to fire them in and don't be shy on how either advanced or how novice the question is. We're going to bring in the right folks. If we can't answer the questions ourselves, I think that's a fun thing about this network that we have. And Mark, thank you very much for joining us today.   Mark: Thanks for having me on always a pleasure.   Michael: No, the pleasure is ours.   Tom: The pleasure is ours. Storage Wars. That was such a great show. My favorite part is when they, that one guy Darren. Yeah. And he's like, Oh, that's a $3 bill or, Oh, that's a $50 bill or a nonsensical bill. $50 is a real bill, like a $45 bill. Anyways. Okay. Enough of that. All right.   Mark: I'll leave you with a good story if you wouldn't mind. So talking about storage Wars. So I had to go to auction school to become an auctioneer, right? And they actually have an auction school where you show up and for eight, you have to do 80 hours in Texas. And for two hours every day, we had to do tongue twisters and we had to do, you know, counting up, counting down five, 10, 15, 20, 25, 30 to 35, 40. What do you do around the rough and rugged rock, the ragged rascal ran, right. And do it all day long. And I'm just scratching my head like, teacher, I'm going to be an online option that really make a difference. So funny enough, but they always did a charity auction at the very end. And guess who walks into my auction school in Texas? It was Walt Cade of Texas storage Wars. I'm like, get out. This is, this is like living in a weird world, but the auctioneer world is really interesting, different real estate to watches, to tobacco and cattle. And there's all kinds of things you learn. But again, I kind of raised my hand, like I'm just here for the real estate online course. We don't have that. Get back to your tongue twisters Mark. So if you really want to talk about some funny stories, it's a great world. Auctioneer's are fun, but you know, there's kind of a new regime coming through more online auctions, which is a fun way for people to kind of get comfortable with, you know, buying from anywhere in the world. Very much like what Roofstock is doing with our marketplace. So yeah. Full of fun stories, but had to share that one.   Tom: Awesome.   Michael: So cool.   Michael: Alrighty, everybody. That was our episode for today. Thank you so much for listening in a big, big, big, thank you to Mark Woodling. Always a real pleasure to have him on as always. If you liked the episode, feel free to give us a rating or review, or even if you didn't like the episode. No, don't give us a rating review if you didn't like the episode, wherever you listen to your podcasts, we look forward to seeing you on the next one.   Tom: Happy investing.   Michael: Happy investing.    

Labster CEO Michael Jensen was on XR for Learning not-too-long ago, talking about how XR can teach kids science in the classroom. Now he explains to Alan how that same technology is making professional training safer and more cost-effective. Alan: Hey, everyone. Alan Smithson here. Today we're speaking with Michael Jensen, CEO of Labster, a venture backed, award winning company that focuses on revolutionizing the way science and safety is taught at companies, universities, colleges, and high schools all over the world. They started with creating multimillion dollar science labs in a VR headset. And now they're ready to take on the enterprise training world. All that and more, coming up next on the XR for Business podcast. Michael, welcome to the show. Michael: Hey, Alan, thanks so much, honored to be here. Alan: It's my absolute pleasure to have you. I know you were on my partner and wife Julie's podcast, XR for Learning. And I learned all about how Labster is revolutionizing how we teach science, and making it more exciting, gamified, but also bringing the opportunity to create multi-million dollar science labs for the cost of a cup of coffee. So let's unpack that. Michael, how did you get into this? Michael: Yeah, so that actually started about nine years ago, when my co-founder and I saw an opportunity to create much more engaging online learning content for students and learners around the world. Basically, most people were learning in very boring, non-engaging formats as we saw it. And at the same time, we saw these billions of dollars being invested into the gaming industry to create really engaging games. And we thought, why not find a way to combine and merge the learning world and the gaming world in a more engaging way, so that we can engage learners in the content, make them more excited about the topics, but also use these mechanisms to help them understand some of these more complex concepts in a much better way. Alan: Walk people through what a typical Labster lab looks like, and why this is exciting. Michael: There's two main components that we really looked at. One is engagement -- as I just talked about -- and the other one is timesaving, cost savings. And so what we looked at was, how can we best address some of the biggest challenges in the industry by presently creating virtual training -- similar to a flight simulator that was revolutionizing pilot training -- and then create, for instance, virtual laboratories to simulate dangerous experiments or dangerous scenarios -- like safety training -- and then that way help the universities, in our case as well as high schools -- but now also corporates -- dramatically reduce their cost and saving, as well as the time spent on this training. And we did a huge research project now -- about two years ago -- a $6-million research project involving hundreds and hundreds of employees around the world in large pharma companies, to really analyze and understand, does this really help? Is there a way for us to create better, more engaging content? And if so, does that really help students or learners understand it better? And does it also help save costs? And the results were quite overwhelmingly positive, was published and peer reviewed -- among others -- in Nature magazine, where we saw more than a doubling of the learning outcomes, as well as engagement for learners, compared to -- for instance -- standard online e-learning training, or even personal one-on-one training. So even compared to a personal one-on-one trainer, we found that this virtual immersive training format can be far superior, both in costs, as

Labster CEO Michael Jensen was on XR for Learning not-too-long ago, talking about how XR can teach kids science in the classroom. Now he explains to Alan how that same technology is making professional training safer and more cost-effective. Alan: Hey, everyone. Alan Smithson here. Today we're speaking with Michael Jensen, CEO of Labster, a venture backed, award winning company that focuses on revolutionizing the way science and safety is taught at companies, universities, colleges, and high schools all over the world. They started with creating multimillion dollar science labs in a VR headset. And now they're ready to take on the enterprise training world. All that and more, coming up next on the XR for Business podcast. Michael, welcome to the show. Michael: Hey, Alan, thanks so much, honored to be here. Alan: It's my absolute pleasure to have you. I know you were on my partner and wife Julie's podcast, XR for Learning. And I learned all about how Labster is revolutionizing how we teach science, and making it more exciting, gamified, but also bringing the opportunity to create multi-million dollar science labs for the cost of a cup of coffee. So let's unpack that. Michael, how did you get into this? Michael: Yeah, so that actually started about nine years ago, when my co-founder and I saw an opportunity to create much more engaging online learning content for students and learners around the world. Basically, most people were learning in very boring, non-engaging formats as we saw it. And at the same time, we saw these billions of dollars being invested into the gaming industry to create really engaging games. And we thought, why not find a way to combine and merge the learning world and the gaming world in a more engaging way, so that we can engage learners in the content, make them more excited about the topics, but also use these mechanisms to help them understand some of these more complex concepts in a much better way. Alan: Walk people through what a typical Labster lab looks like, and why this is exciting. Michael: There's two main components that we really looked at. One is engagement -- as I just talked about -- and the other one is timesaving, cost savings. And so what we looked at was, how can we best address some of the biggest challenges in the industry by presently creating virtual training -- similar to a flight simulator that was revolutionizing pilot training -- and then create, for instance, virtual laboratories to simulate dangerous experiments or dangerous scenarios -- like safety training -- and then that way help the universities, in our case as well as high schools -- but now also corporates -- dramatically reduce their cost and saving, as well as the time spent on this training. And we did a huge research project now -- about two years ago -- a $6-million research project involving hundreds and hundreds of employees around the world in large pharma companies, to really analyze and understand, does this really help? Is there a way for us to create better, more engaging content? And if so, does that really help students or learners understand it better? And does it also help save costs? And the results were quite overwhelmingly positive, was published and peer reviewed -- among others -- in Nature magazine, where we saw more than a doubling of the learning outcomes, as well as engagement for learners, compared to -- for instance -- standard online e-learning training, or even personal one-on-one training. So even compared to a personal one-on-one trainer, we found that this virtual immersive training format can be far superior, both in costs, as

If you work in Kubernetes, cloud native, or any other fast-moving ecosystem, you might have found that keeping up to date with new developments can be incredibly challenging. We think this as well, and so we decided to make today’s episode a tribute to that challenge, as well as a space for sharing the best resources and practices we can think of to help manage it. Of course, there are audiences in this space who require information at various levels of depth, and fortunately the resources to suit each one exist. We get into the many different places we go in order to receive information at each part of the spectrum, such as SIG meetings on YouTube, our favorite Twitter authorities, the KubeWeekly blog, and the most helpful books out there. Another big talking point is the idea of habits or practices that can be helpful in consuming all this information, whether it be waiting for the release notes of a new version, tapping into different TLDR summaries of a topic, streaming videos, or actively writing posts as a way of clarifying and integrating newly learned concepts. In the end, there is no easy way, and passionate as you may be about staying in tune, burnout is a real possibility. So whether you’re just scratching the cloud native surface or up to your eyeballs in base code, join us for today’s conversation because you’re bound to find some use in the resources we share. Follow us: https://twitter.com/thepodlets Website: https://thepodlets.io Feeback: info@thepodlets.io https://github.com/vmware-tanzu/thepodlets/issues Hosts: Carlisia Campos Josh Rosso Duffie Cooley Olive Power Michael Gasch Key Points From This Episode: Audiences and different levels of depth that our guests/hosts follow Kubernetes at. What ‘keeping up’ means: merely following news, or actually grasping every new concept? The impossibility of truly keeping up with Kubernetes as it becomes ever more complex. Patterns used to keep up with new developments: the TWKD website, release notes, etc. Twitter’s helpful provision of information, from opinions to tech content, all in one place. How helpful Cindy Sridharan is on Twitter in her orientation toward distributed systems. The active side of keeping up such as writing posts and helping newcomers. More helpful Twitter accounts such as InfoSec. How books provide one source of deep information as opposed to the noise on Twitter. Books: Programming Kubernetes; Managing Kubernetes; Kubernetes Best Practices. Another great resource for seeing Kubernetes in action: the KubeWeeky blog. A call to watch the SIG playlists on the Kubernetes YouTube channel. Tooling: tab management and Michael’s self-built Twitter searcher. Live streaming and CTF live code demonstrations as another resource. How to keep a team updated using platforms like Slack and Zoom. The importance of organizing shared content on Slack. Challenges around not knowing the most important thing to focus on. Cognitive divergence and the temptation of escaping the isolation of coding by socializing. The idea that not seeing keeping up to date as being a personal sacrifice is dangerous. Using multiple different TLDR summaries to cement a concept in one’s brain. Incentives for users rather than developers of projects to share their experiences. The importance of showing appreciation for free resources in keeping motivation up. Quotes: “An audience I haven’t mentioned is the audience that basically just throws up their hands and walks away because there’s just too much to keep track of, right?” — @mauilion [0:05:15] “Maybe it’s because I’m lazy, I don’t know? But I wait until 1.17 drops, then I go to the release notes and really kind of ingest it because I’ve just struggled so much to kind of keep up with the day to day, ‘We merged this, we didn’t merge this,’ and so on.” — @joshrosso [0:10:18] “If you find value in being up to date with these things, just figure out – there are so many resources out there that address these different audiences and figure out what the right measure for you is. You don’t have to go deep on the code on everything.” — @mauilion [0:27:57] “Actually putting the right content in the right channel, at least from a higher level, helps me decide whether I want to like look at that channel today, and stuff that should be in the channel is not kind of in a conversation channel.” — @opowero [0:32:21] “When I see something that is going to give me the fundamentals, like I have other priorities now, I sort of always want to consume that to learn the fundamentals, because I think in the long term phase of, but then I neglect physically what I need to know to do in the moment.” — @carlisia [0:33:39] “Just do nothing, because our brain needs that. We need to not be listening, not be reading, just nothing. Just sit and look at the ceiling. Our brain needs that. Ideally, look at nature, like look outside, look at the air, go for a walk. We need that, because that recharges the brain.” — @carlisia [0:42:38] “Just consuming and keeping up, that doesn’t necessarily mean you don’t give back.” — @embano1 [0:49:32] Links Mentioned in Today’s Episode: Chris Short — https://chrisshort.net/ Last Week in Kubernetes Development — http://lwkd.info/ 1.17 Release Notes — https://kubernetes.io/docs/setup/release/notes/ Release Notes Filter Page — https://relnotes.k8s.io/ Cindy Sridharan on Twitter — https://twitter.com/copyconstruct InfoSec on Twitter — https://twitter.com/infosec?lang=en Programming Kubernetes on Amazon —https://www.amazon.com/Programming-Kubernetes-Developing-Cloud-Native-Applications/dp/1492047104 Managing Kubernetes on Amazon — https://www.amazon.com/Managing-Kubernetes-Operating-Clusters-World/dp/149203391X Brendan Burns on Twitter — https://twitter.com/brendandburns Kubernetes Best Practices on Amazon — https://www.amazon.com/Kubernetes-Best-Practices-Blueprints-Applications-ebook/dp/B081J62KLW/ KubeWeekly — https://kubeweekly.io/ Kubernetes SIG playlists on YouTube — https://www.youtube.com/channel/UCZ2bu0qutTOM0tHYa_jkIwg/playlists Twitch — https://www.twitch.tv/ Honeycomb — https://www.honeycomb.io/ KubeKon EU 2019 — https://events19.linuxfoundation.org/events/kubecon-cloudnativecon-europe-2019/ Aaron Crickenberger on LinkedIn — https://www.linkedin.com/in/spiffxp/ Stephen Augustus on LinkedIn — https://www.linkedin.com/in/stephenaugustus Office Hours — https://github.com/kubernetes/community/blob/master/events/office-hours.md Transcript: EPISODE 17[INTRODUCTION][0:00:08.7] ANNOUNCER: Welcome to The Podlets Podcast, a weekly show that explores Cloud Native one buzzword at a time. Each week, experts in the field will discuss and contrast distributed systems concepts, practices, tradeoffs and lessons learned to help you on your cloud native journey. This space moves fast and we shouldn’t reinvent the wheel. If you’re an engineer, operator or technically minded decision maker, this podcast is for you.[EPISODE][0:00:41.5] DC: Good afternoon everybody and welcome to The Podlets. In this episode, we’re going to talk about, you know, one of the more challenging things that we all have to do, just kind of keep up with cloud native and how we each approach that and what we do. Today, I have a number of cohosts with me, I have Olive Power.[0:00:56.6] OP: Hi.[0:00:57.4] DC: Carlisia Campos.[0:00:58.6] CC: Hi everybody.[0:00:59.9] DC: Josh Rosso.[0:01:01.3] JR: Hey all.[0:01:02.8] DC: And Michael.[0:01:01.1] MICHAEL: Hey, hello.[0:01:04.8] DC: This episode, we’re going to do something a little different than we normally do. In most of our episodes, we try to remain somewhat objective around the problem and the potential solutions for it, rather than prescribing a particular solution. In this episode, however, since we’re talking about how we keep up with all of the crazy things that happen in such a fast ecosystem, we’re going to probably provide quite a number of examples or resources that you yourself could use to drive and to try and keep up to date with what’s happening out there.Be sure to check out the notes after the episode is over at thepodlets.io and you will find a link to the episodes up at the top part, click down to this episode, and check out the notes. There will be tons of resources. Let’s get started.One of the things I think about that’s interesting about keeping up with something like, you know, a Kubernetes or a fast-moving project, regardless of what that project is, whether it’s Kubernetes or, you know, for a while, it was the Mesos that I was following or OpenStack or a number have been big infrastructure projects that have been very fast moving over time and I think what’s interesting is I find that there’s multiple audiences that we kind of address when we think about what it means to ‘keep up,’ right?Keeping up with something like a project is interesting because I feel like there’s an audience that it’s actually very interested in what’s happening with the design goals or the code base of the project, and there’s an audience that is very specific to wanting to understand at a high level – like, “Give me the State of the World report like every month or so just so I can understand generally what’s happening with the project, like is it thriving? Is it starting to kind of wane? Are there big projects that it’s taking on?”And then there’s like, then I feel like there’s an audience somewhere in the middle there where they really want to see people using the project and understand, and know how to learn from those people who are using it so that they can elevate their own use of that project. They’re not particularly interested in the codebase per se but they do want to understand, are they exploring this project at a depth that makes sense for themselves? What do you all think about that?[0:03:02.0] CC: I think one thing that I want to mention is that this episode, it’s not so much about on-boarding people onto Kubernetes and the Kubernetes ecosystem. We are going to have an episode soon to talk specifically about that. How you get going, like get started. I think Duffy mentioned this so we’re going to be talking about how we all keep up with things. Definitely, there are different audiences, even when we’re talking about keeping up.[0:03:32.6] JR: Yeah, I think what’s funny about your audience descriptions, Duffy, is I feel like I’ve actually slid between those audiences a bit, right? It’s funny, back in the day, Kubernetes like one-four, one-five days, I feel like I was much more like, “What’s going on in the code?” Like trying to keep track of like how things are progressing.Now my role is a lot more focused with working with customers and standing up cube and like making a production ready. I feel like I’m a lot more, kind of reactive and more interested to see like, what features have become stable and impact me, you know what I mean? I’m far less in the weeds than I used to be. It’s a super interesting thing.[0:04:08.3] OP: Yeah, I tend to – for my role, I tend to definitely fall into the number three first which is the kind of general keeping an eye on things. Like when you see like interesting articles pop up that maybe have been linked internally because somebody said, “Oh, check out this article. It’s really interesting.”Then you find that you kind of click through five or six articles similar but then you can kind of flip to that kind of like, “Oh, I’m kind of learning lots of good stuff generally about things that folks are doing.” To actually kind of having to figure out some particular solution for one of my customers and so having to go quite deep into that particular feature.You kind of go – I kind of found myself going right in and then back out, right in, going back out depending on kind of where I am on a particular day of the week. It’s kind of a bit tricky. My brain sometimes doesn’t kind of deal with that sort of deep concentration into one particular topic and then back out again. It’s not easy.I find it quite tough actually some of the time.[0:05:05.0] DC: Yeah, I think we can all agree on that. Keeping track of everything is – it’s why the episode, right? How do we even approach it? It seems – I feel like, an audience I haven’t mentioned is the audience that basically just throws up their hands and walks away because there’s just too much to keep track of, right? I feel like we are all that at some point, you know?I get that.[0:05:26.4] OP: That’s why we have Christmas holidays, right? To kind of refresh the brain.[0:05:31.4] CC: Yeah, I maybe purposefully or maybe not even – not trying to keep up because it is too much, it is a lot, and what I’m trying to do is, go deeper on the things that I already, like sort of know. And things that I am working with on a day to day basis. I only really need to know, I feel like, I really only need to know – because I’m not working directly with customers.My scope is very well defined and I feel that I really only need to know whenever there’s a new Kubernetes release. I need to know what the release is. We usually – every once in a while, we update our project to the – we bump up the Kubernetes release that we are working against and in general, yeah, it’s like if things come my way, if it’s interesting, I’ll take a look, but mostly, I feel like I work in a spiral.If I’m doing codes related to controllers and there’s a conference talk about controllers then okay, let me take a look at this to maybe learn how to design this thing better, implement in a better way if I know more about it. If I’m doing, looking at CRDs, same thing. I really like conference talks for education but that’s not so much keeping up with what’s new. Are we talking about educating ourselves with things that we don’t know about?Things that we don’t know about. Or are we talking about just news?[0:07:15.6] JR: I think it’s everything. That’s a great question. One of my other questions when we were starting to talk about this was like, what is keeping up even mean, right? I mean, does it mean, where do you find resources that are interesting that keep you interested in the project or are you looking for resources that just kind of keep you up to date with what’s changing? It’s a great question.[0:07:36.2] MICHAEL: Actually, there was some problem that I faced when I edit the links that I wanted to share in the show. I started writing the links and then I realized, “Well, most of the stuff is not keeping up with news, it’s actually understanding the technology,” because I cannot keep up.What does help me in understanding specific areas, when I need to dig into them and I think back five or four years into early days of Kubernetes, it was easy to catch up by the time because it was just about Kubernetes. Later right, it became this platform. We realized that it actually this platform thing. Then we extended Kubernetes and then we realized there are CICD-related stuff and operations and monitoring and so the whole ecosystem grew. The landscape grew so much that today, it’s impossible to keep up, right?I think I’m interested in all those patterns that you have developed over the years that help you to manage this, let’s say complexity or stream of information.[0:08:33.9] DC: Yeah, I agree. This year, I was thinking about putting up a talk with Chris Short, it was actually last year. That was about kind of on the same topic of keeping up with it. In that, I kind of did a little research into how that happens and I feel like some of the interesting stuff that came out of that was that there are certain patterns that a project might take on that make it easier or more approachable to, you know, stay in contact with what’s happening.If we take Kubernetes as an example, there are a number of websites I think that pretty much everybody here kind of follows to some degree, that helps, sort of, kind of, address those different audiences that we were talking about.One of the ones that I’ve actually been really impressed with is LWKD which stands for Last Week in Kubernetes Development, and as you can imagine, this is really kind of focused on, kind of – I wouldn’t say it’s like super deep on the development but it is watching for things that are changing, that are interesting to the people who are curating that particular blog post, right?They’ll have things in there like, you know, code freezes coming up on this date, IPV6, IPV4, duel stack is merging, they’ll have like some of the big mile markers that are happening in a particular release and where they are in time as it relates to that release. I think if that’s a great pattern and I think that – it’s a very narrow audience, right? It would really only be interesting to people who are interested in, or who are caught up in the code base, or just trying to understand like, maybe I want a preview of what the release notes might look like, so I might just like look for like a weekly kind of thing.[0:10:03.4] JR: Yeah, speaking of the release notes, right? It’s funny. I do get to look at Last Week in Kubernetes development every now and then. It’s an awesome resource but I’ve gotten to the point where the release notes are probably my most important thing for staying up to date.Maybe it’s because I’m lazy, I don’t know, but I wait till 1.17 drops, then I go to the release notes and really kind of ingest it because I’ve just struggled so much to kind of keep up with the day to day, “We merged this, we didn’t merge this,” and so on. That has been a huge help for me, you know, day to day, week to week, month to month.[0:10:37.0] MICHAEL: Well, what was also helpful just on the release notes that the new filter webpage that they put out in 1.15, starting 1.15. Have you all seen that?[0:10:44.4] JR: I’ve never heard of it.[0:10:45.4] DC: Rel dot, whatever it is. Rel dot –[0:10:47.7] MICHAEL: Yeah, if you can share it Duffy, that’s super useful. Especially like if you want to compare releases and features added and –[0:10:55.2] DC: I’ll have to dig it up as well. I don’t remember exactly what –[0:10:56.7] CC: I’m sorry, say? Which one is that again?[0:10:59.1] MICHAEL: The real notes. I’ll put it in the hackMD.[0:11:02.8] DC: Yeah relnotes.k8s.io which is an interesting one because it’s sort of like a comparison engine that allows you to kind of compare what it would have featured like how to feature relates to different versions of stuff.[0:11:14.4] CC: That’s great. I cannot encourage enough for the listeners to look at the show notes because we have a little document here that we – can I? The resources are amazing. There are so many things that I have never even heard about and sound great – is – I want to go to this whole entire list. Definitely check it out. We might not have time to mention every single thing. I don’t want people to miss on all the goodness that’s been put together.[0:11:48.7] DC: Agreed, and again, if you’re looking for those notes, you just go to the podlets.io. Click on ‘episodes’ at the right? And then look for this episode and you’ll find that it’s there.[0:11:58.0] CC: I can see that a lot of the content in those notes are like Twitter feeds. Speaking personally, I’m not sure I’m at the stage yet where I learn a lot about Twitter feeds in terms of technical content. Do you guys find that it’s more around people’s thoughts around certain things so thought-provoking things around Kubernetes and the ecosystem rather than actual technical content. I mean, that’s my experience so far.But looking at those Twitter feeds, maybe I guess I might need to follow some of those feeds. What do you all think?[0:12:30.0] MICHAEL: Do you mean the tweets are from those like learn [inaudible 0:12:32] or the person to be tweets?[0:12:35.3] OP: You’ve listed some of there, Michael, and some sort of.[0:12:37.6] MICHAEL: I just wanted to get some clarity. The reason I listed so many Twitter accounts there is because Twitter is my only kind of newsfeed if you will. I used Feedly and RSS and others before and emails and threads. But then I just got overwhelmed and I had this feeling of missing out on all of those times.That’s why I said, “Okay, let’s just use Twitter.” To your question, most of these accounts are people who have been in the Kubernetes space for very long, either running Kubernetes, developing on Kubernetes, having opinions about Kubernetes.Opinions in general on topics related to cloud native because we didn’t want to make the search just about Kubernetes. Most of these people, I really appreciate their thoughts and some of them also just a retweet things that they see which I missed somewhere else and not necessarily just opinions. I think It’s a good mix of these accounts, providing options, some guidance, and also just news that I miss out on because not being on the other channels.[0:13:35.6] OP: Yeah, I agree because sometimes you can kind of read – I tend to require a lot of sort of blog posts and sort of web posts which, you know, without realizing it can be kind of opinionated and then, you know, it’s nice to then see some Twitter feeds that kind of actually just kind of give like a couple of words, a kind of a different view which sometimes makes me think “Okay, I understand that topic from a certain article that I’ve read, it’s just really nice to hear a kind of a different take on it through Twitter.”[0:14:03.0] CC: I think some of the accounts, like fewer of the accounts – and there are a bunch of things that – there are listed accounts here that I didn’t know before so I’ll check them out. I think fewer of the accounts are providing technical content, for example, Cindy Sridharan, not pronouncing it correctly but Cindy is great, she puts out a lot of technical content and a lot of technical opinion and observations that is really good to consume. I wish I had time to just read her blog posts and Twitter alone.She’s very oriented towards distributed systems in general, so she’s not even specific just Kubernetes. Most of the accounts are very opinionated and the benefit for me is that sometimes I catch people talking about something that I didn’t even know was a thing. It’s like, “Oh, this is a thing I should know about for the work that I do,” and like Michael was saying, you know, sometimes I catch retweets that I didn’t catch before and I just – I’m not checking out places, I’m not checking – hash tagging Reddit.I rely on Twitter and the people who I follow to – if there is a blog post that sounds important, I just trust that somebody would, that I’m going to see it multiple times until like, “Okay, this is content that is related to something and I’m working on, that I want to get better at.” Then I’ll go and look at it. My sources are mainly Twitter and YouTube and it’s funny because I love blog posts but it’s like I haven’t been reading them because it takes a long time to read a blogpost.I give preference to video because I can just listen while I’m doing stuff. I sort of stopped reading blog post which is sad. I also want to start writing posts because it’s so helpful for me to engrain the things that I’m learning and hopefully it will be helpful to other people too. But in any case, go Duffy.[0:16:02.8] DC: A number of people that I follow – I have been cultivating my feed pretty carefully, trying to get a broad perspective of technical stuff that’s happening. But also I’ve been trying to develop my persona on Twitter a bit more, right? I’m actually trying to build my audience there. What’s interesting there is I’ve been trying to – to that end, what I’ve been doing is like trying to amplify voices that I think aren’t heard enough out there, right?If I see an article by somebody who is just coming into Kubernetes. or just coming into distributed systems and they’ve taken an effort to really lay out something that they found really interesting about pretty much anything, right? I’m like, “Okay, that’s pretty awesome,” and I’ll try to amplify that, right? Sometimes I even get involved or I’ll, not directly in public on Twitter but I’ll offer to help edit or help provide whatever our guidance I can provide around that sort of stuff.If I see people like having a difficult time with a particular project or something like that, I’ll reach out privately and say, “Hey, can I help you with it so you can go out there and do a great job,” you know? That is something I love to do. I think your point about like not necessarily going at Twitter for the deep knowledge stuff but more just like making sure that you have a broad enough awareness of what’s happening in different ecosystems that you’re not surprised by the things when the things change, right?A couple of other people that I follow are Akira Asuta, I can’t say enough about that person. They are amazing, they have been doing like, incredibly deep security stuff as it relates to containerization and stuff like that for quite a while. I’m always like, learning brand new things to me when following folks like that. I’ve been kind of getting more interested in InfoSec Twitter lately, learning how people kind of approach that problem.Also some of the bias arounds that which has been pretty interesting. Both the bias against people who are in InfoSec which seems weird to me. Also, how InfoSec approaches a problem, like do they put it like a learning experience or they approach it like an attack experience.It’s been kind of fascinating to get in there.[0:18:08.1] OP: You know, I kind of use Twitter as well for some of this stuff but you know, books are kind of a resource as well but in my head, kind of like at the opposite scale. You know, I obviously don’t read as many books as I read twitter feeds, right? It’s just kind of like, with Twitter, you can kind of digest the whole of the stuff and with books, it’s kind of like – I tend to be trying – because I know, I’m only going to read – like I’m only going to read maybe one/two books a year.I’ve kind of like – as I said before, blog posts seem to take up my reading time and books kind of tend to be for like on airplanes and stuff. So if – they’re just kind of two opposite resources for me but I find actually, the content of books are probably stuff that I digest a bit more because you know, it’s kind of like, I don’t know, back to the old days. It’s kind of a physical thing on hand and I can kind of read it and digest it a bit more than the kind of throwaway stuff that kind of keeps on Twitter.Because to be honest, I don’t know what’s on Twitter. Who is kind of a person to listen to or who is not or who is – I just try and form my own opinions and then, again, it kind of gets a bit overwhelming, because it’s a lot of content just streaming through continuously, whereas a book, it’s kind of like just one source of information that is kind of like a bit more personal that I can digest a bit more.[0:19:18.1] JR: Any particular book recommendation in 2019, Olive, that you found particularly interesting?[0:19:23.5] OP: I’m still reading, and it’s on the list for the episode notes actually, Programming Kubernetes. I just want to kind of get into that sort of CRD sort of mindset a bit. I think that’s kind of an area that’s interesting and an area that a lot of people will want to use in their organizations, right, because it’s going to do some of the extensibility to Kubernetes that’s just not there out of the box and everybody wants something that’s not out of the box or always in my experience.[0:19:47.4] MICHAEL: I found the Managing Kubernetes, I think was it, by – from Brendan Burns and some other folks which was just released I think in the end of last year. Super deep and that is kind of the opposite to the Programming Kubernetes, because I like that as well. That is more geared towards understanding architecture and operations.Operational concepts –[0:20:05.0] OP: They’re probably the two books I’ve read.[0:20:08.4] MICHAEL: Okay.[0:20:08.9] OP: One a year, remember?[0:20:11.4] MICHAEL: Yeah.[0:20:14.6] OP: Prolific reading.[0:20:19.6] CC: I think if you know what you need to learn about cloud native or Kubernetes, there’s amazing books out there, and if you are still exploring Kubernetes and trying to learn, I cannot recommend this book enough. If you are watching this on YouTube, you’ll see the cover. It’s called Kubernetes Best Practices because it’s about Kubernetes best practices but what they did simultaneously and maybe they didn’t even realize is just they gave a map for the entire thing.You go, “Oh, these are all the elements in Kubernetes.” Of course, it’s saying, “Okay, this is the best way to go about setting the stuff up,” and this is relatively thin but I just think that going through this book, you get really fast overview of the elements in Kubernetes. Then you can go to other books like Managing Kubernetes to go deep and understand all of the knobs and switches.[0:21:24.6] DC: I want to bring it back to the patterns that we see successful projects. Projects that you think are approachable but, you know, projects that are out there that make it easy for you to kind of stay – or easier at least to stay up to date with them, what some of those patterns are that you think are useful for projects.We’re talking about like having a couple of different entry points from kind of a weekly report mechanism, we’ve talked about the one that LWKD is, I don’t think we got to talk about KubeWeekly which is actually a weekly blog that is actually curated by a lot of the CNCF ambassadors. KubeWeekly is also broken up in different sections, so like sometimes they’ll just talk about – but they’re actually going out actively and trying to find articles of people using Kubernetes and then trying to post those.If you’re interested in understanding how people are actually out there using it, then that’s a great place to go find articles that are kind of related to that. What are some other patterns that we see that are out there that are useful for books?[0:22:27.6] DC: One that I really like. Kubernetes, for everyone listening has this notion of special interest groups, SIGs oftentimes. They’re focused on certain areas of the project. There’s some for networking and storage and life cycles of clusters and what’s amazing, I try to watch them somewhat weekly, I don’t always succeed.They’re all on YouTube and if you go to the Kubernetes project YouTube, there’s playlists for every SIG. A lot of times I’m doing work relating to life cycles of clusters. I’ll open up the cluster life cycle playlist and I’ll just watch the weekly meetings. While it doesn’t always pertain to completely to me, it lets me understand kind of where the developers and contributor’s heads are at and where they’re kind of headed with a lot of different things.There’s a link to that as well if anyone wants to check it out.[0:23:15.9] MICHAEL: Exactly, to add to that. If you don’t have the time to watch the videos, the meeting notes that these gentlemen and women put together are amazing. Usually, I just scroll through and if it’s something to triggers, I go into the episode and watch it.[0:23:28.7] OP: I almost feel like we should talk about tooling to handle all of this stuff, for example, right now, I think I have 200 tabs opened. I just started learning about some chrome extensions to manage tabs. I haven’t started really using them but I need. I don’t have a good system. My system is open a video that I’m pretty sure I want to watch and just get to that tab eventually until something happens in my chrome goes bust and I lose everything.I wanted to mention that when we say watch YouTube, some things you don’t need to sit there and actually watch, you can just listen to it and if you pay for the five bucks for YouTube premium – I don’t get a commission you people, but I’m just saying, for me, it’s so helpful. I can just turn off you know, put my phone on my pocket and keep listening to it without having to have the phone open and on the whole time. It’s very handy.It’s just like listening to a podcast. I also listen to podcasts lots of days.[0:24:35.1] MICHAEL: For tooling, since I’m just mostly on Twitter and by the time I was using or starting to use Twitter, they didn’t have this bookmark function, so I was basically abusing likes or favorites at the time, I think, to bookmark. What I realized later, my bookmarks grew, well, my likes grew.I wanted to go back and find something but that through the Twitter search was just impossible. I blew the tiny little go tool, kind of my first exercise there to just parse my likes and then use JQ because it’s all JSON to query and manipulate the stuff. I almost use it every day because I was like, that was a talk or blog post about scheduling and just correct for scheduling and the likes.I’m sure there’s a better tool or way of doing that but for me, that’s mine too. Because that’s my workflow.[0:25:27.6] DC: Both of the two blogs that you mentioned both KubeWeekly and LWKD, they both have the ability to take – you can submit stories to them. If you come across things that are interesting and you’d like to put that up on an aggregator somewhere, this is one of the ways to kind of solve that problem because at least if it gets cleared up on an aggregator, you know that you go back to the aggregator to see it, so that helps.Some other ones I’ve seen out there, I’ve seen people, I’ve seen a number of interesting startups now, starting to kind of like put out a podcast or – and I have started to see a number of people like you know, engaging with Twitch and also doing things like what we do with TJK.io which is like have sort of some kind of a weekly thing where you are just hacking on stuff live and just exploring it whether that is related to – if you think of about TJK is we’re going to do without being related necessarily to anything that we are doing at VMware just anything to do with the community but obviously if you are working for one of the small companies like Honeycomb or some other company.A smaller kind of startup, you can really just get people more aware of that because for some reason people love to watch others code. They love to understand how people go through that, what are their thought process is and I find it awesome as well. I think it is amazing to me how big a draw that is, you know?[0:26:41.1] OP: And is there lots of them out there Duffy? Is that kind of an easy searchable thing or is it like how do you know those things are going on?[0:26:48.4] DC: Oddly enough Twitter, most of the time, yeah. I mean, most of the time I see that kind of stuff happening on Twitter, like somebody will like – I will scope with this or a number of other people will say, “Hey, I am going to do a live stream during this period of time on this,” and I have actually seen a number of people doing live streams on CTFs, which are capture the flags. That one’s really been fascinating to me because it has been how do people think about approaching the security of an application.Like where do they look for weak spots and how do you determine, how do you approach that kind of a problem, which is fascinating. So yeah, I think it is important to remember that like you know, you are not the only one trying to keep up to date with all of this stuff, right? The one thing we all have said pretty consistently here is that it is a lot, and it is not just Kubernetes, right? Like any fast moving project. It could be your favorite Ruby module that has 200 contributors, right?It doesn’t matter what it is, it is a lot to keep a track of, and it represents some of that cognitive overheads that you have to think about. That is a lot to take on. Even if it is overwhelming, if you find value in being up to date with these things, just figure out – there are so many resources out there that address these different audiences and figure out what the right measure for you is. You don’t have to go deep on the code on everything.Sometimes it might be better to just try and find a source of information that gives you a high enough of a view. Maybe you are looking at the blog posts that come out on Kubernetes.io every release and you are just looking at the release notes and if you just read the release notes every release, that is already miles ahead of what I have seen a lot of folks out there when they are starting to ask me questions about how do you keep up to date.[0:28:35.9] JR: I’m curious, we have been talking a lot about keeping up as an individual. Do you all have strategies for how you help, let’s say your overall team, keep up with all the things that are going on? To give an example, Duffy, Olive and myself, at least at one point, were on the same team and we’d go out to disparate customers and see all of these different new things that they are trying to do or new projects that they are using.So we’d have to think about how do we get together and share that internally to make sure we are bringing the whole team along with what is going on in the ecosystem especially from a customer perspective. I know one of the ways that we do that is having demos and things of that nature that we share weekly. Are there other strategies that you all use with your teams to kind of share interesting information and news?[0:29:25.5] M: So what we do is mostly the way we share in our team, and we are a small team. We use Slack. We pre-filter in terms of like if there is stuff that I think is valuable for me and probably not for the whole team – obviously we are not going to share, but I think if it is related to something that the team has or to come grant and then I will share on Slack but we don’t have any formal way. I know people use some reports, weekly reports, or other platforms to distribute but we just use Slack.[0:29:53.0] DC: I think one of the things – one of the patters that we had at [inaudible 0:29:54] that I thought was actually super helpful was that we would engage a conversation. “I learned a cool new thing about whatever today,” and so we would say, “I am going to – ” and then we would start a Zoom call around that and then people could join if they wanted to, to be a part of the live discussion or not, and if they didn’t, they would still be able to see a recorded Zoom pop up in the channel later on.So even if your time zones don’t line up, like I know it is 2 AM or 3 AM or something like that for Olive right now, you can still go back to those recorded sessions and you’ll just see it on your daily Slack stuff. You would be able to see, “Oh there was a conversation about whether you should deploy Kubernetes crossed availibility zones or not. I would like to go see that,” and see what the inputs were, and so that can be helpful.[0:30:42.5] JR: Yeah, that is a super interesting observation. It is almost like remote-first teams that are used to these processes of recording everything and putting it in a Google doc. They are more equipped for that information sharing perhaps than like the water cooler conversations you’d have in the office.[0:30:58.5] OP: And on the Slack or any of the communication tool, we have different channels because we are all in lots of channels and to have channels dedicated to a particular subject is absolutely the way to go because otherwise in my previous company that seem to be kind of one main channel that all the architect used to discussed everything on and you know sometimes you join and you’re like, “What is everybody talking about?”There would be literally about a hundred messages on some sort of theme that I have never heard of. So you come away from that thinking that, “That is the main channel. Where is the bit – is there messages in the middle that I missed that were just normal discussions as opposed to in around the technical stuff,” and so it made me a bit sad, right? I would be like, “I haven’t understood something and there is a whole load of stuff on this channel that I don’t understand.”But it is the kind of central channel for everyone. So I think you end up then start looking up things that they are discussing and then realizing actually that is not really anything related to what I need to know about today or next week. It might be something for the future but I’ve got other stuff to focus on. So my point is that those communication channels for me sometimes can make me feel a little bit behind the curve or very much sort of reactive in trying to jump on things that are actually not really anything to do with me for me now and wasting my time slightly and kind of messing with my head a little bit in that like, “I really need to try and focus out stuff,” and actually putting the right content in the right channel, at least from a higher level, helps me decide whether I want to like look at that channel today, and stuff that should be in the channel is not kind of in a conversation channel. So organization of where that content is, is important to me.[0:32:37.6] CC: I am so in the same page with you Olive. That is the way my brain works as well. I want to have multiple channels, like if we are talking about Slack or any chat tool, but some people have such aversion to multiple channels. They really have a hard time dealing with too many – like testing their threshold of what they think is too many channels. So I am always mindful too, like it has to work for everybody but if it was up to me, there will be one channel per topic. So I know where to focus on.But you said something that is so interesting. How do we even just – like you were saying in the context of channel, multiple channels, and I go, if I need to pay attention to this this week as oppose to like, I don’t need to look at this until some time in the future. How do we even decide what we focus on that is useful for us in the moment versus it would be good for me to know but I don’t need to know right now.I am super bad at this. When I see something that is going to give me the fundamentals, like I have other priorities now, I sort of always want to consume that to learn the fundamentals because I think in the long term phase of, but then I neglect physically what I need to know to do in the moment and I am trying to sort of fish there and get focused on in the moment things. Anybody else have a hard time?[0:34:04.5] DC: You are not alone on that, yeah.[0:34:06.7] CC: It is terrible.[0:34:08.3] MICHAEL: Something that I wish I would do more often as like being a good citizen is like when you read a lot, probably 90% of my time is not writing but reading, maybe even more and then I share and then on Twitter, the tweet for them the most successful ones in terms of retweets or likes are the ones where I do like TLDR’s or some screen captures like too long to read. Where people don’t have the time, they might want to read the article but they don’t have the time.But if you put in like a TLDR like either a tweet or a thread on it, a lot of people would jump onto it because they can just easily capture it and they can still read the full article if they want but that is something that I learned and it is pretty – what is the right word? Helpful to my followers and the community but I just don’t do it that often unfortunately. If I am writing, summarizing, writing, I kind of remember. That is how the brain works. It is a nice side effect.[0:35:04.9] DC: I was saying, this is definitely one of those things where you can be the change you want to see if you, you know?[0:35:08.6] M: Yeah, I know.[0:35:10.0] DC: This is awesome. I would also say that what you just raised Carlisia is like a super valid point. I mean like not everybody’s brain works the same way, right? There are people who are neuro-divergent. There are people who think very linearly and they are very comfortable with that and there are people who don’t. So it is a struggle I think regardless of how your brain is wired to understand to how to prioritize the attention you will give any given subject.In some cases, your brain is not wired – your brain is almost wired against that whole idea, like you are just not set up for success when it comes to figuring out how to prioritize your attention.[0:35:49.0] CC: You hit the nail on the head. We are so set up for failure in that department because there are so many interesting conversations and you want to hop in and you want to be a part of the conversation and part of the group and socialize. Our work is so isolating to really put our heads down and just work, it can be so isolating. So it is great to participate in conversations out there even if it is for only via Twitter. I mean, obviously we are very biased towards Twitter here in this group.But I am not even this on Twitter so just keep that in mind that we are cognizant of that but in any case, I don’t know what the answer is but what I am trying always to cut down on that, those social activities that seem so appealing. I don’t know how to do that from working out.[0:36:43.9] JR: I am in the same boat. 2020, I am hoping to let more of that go and to your point, it is not that there is no value in it. It is just, I don’t know, I am not deriving the same amount of quality out of it because I am so just multiplexed all over the place, right? So we’ll see how it goes.[0:36:59.9] CC: Oh if any listener has opinions and obviously it seems that all of us are helpless in that department. Share with us, please.[0:37:12.5] DC: It is a tricky one. I think it is also interesting because I find that when we talk about things like work-life balance, we think of the idea of maybe work-life balance is that when you come at the end of the day and you go home and you don’t think about work, right? Sometimes we think that work-life balance means that you have a certain amount of time off that you can actually spend with your family and your friends or your community, what have you, and not be engaging on multiple fronts.Just be that – have that be your focus, but when it comes to things like keeping up, when it comes to things like learning or elevating your education and stuff, it seems like, for the most part, and this is just my own assumption, I am curious how you all feel about this, that we don’t – that that doesn’t enter into it, right? Your personal time is totally on the table when it comes to how do you keep up with these things. We don’t even think about it that way, right?I know I personally don’t. I definitely have to do more and cut back on the amount of time that I spend reading. I am right there with Michael on 90% of my time when my eyes are open, they are either reading or staring up on the sky while I try to think about what I am going to write next. You know one way or the other it is like that is what I am doing.[0:38:24.0] CC: Yeah.[0:38:25.1] MICHAEL: I noticed last year on my Twitter feed, more people than the years before will complain about like personal burn out. I saw a pattern, like reading those people’s tweets, I saw a pattern there. It wasn’t really like a spiral and then they realized and they shot down like deleted Twitter from their phones or any messaging and other stuff, and I think I am at the point where I also need to do that when it comes to vacation PDO, or whatever.Because I am just like, as you said Duffy, my free time is on the table when it comes to Twitter and catching up and keeping up because work-life balance in my mind is not work but what is not work for like – Kubernetes is exciting, adding in all the space, like what is not work there? I need to really get better at that because I think I might end in the same spiral of just soaking in more until I just –[0:39:17.7] CC: Yeah and like Josh said, it is not that there isn’t a value. Obviously we derive a huge value, that is why we’re on it, but you have to weigh things and what are your goals and is that the best way to your goals from where you are right now, and maybe you know, Twitter you use for a while, ramp up your knowledge, ramp up the connections because it is great for making connections, and then you step back and focus on something else, then to go on a cycle.This is how I am thinking now. It is just like what Olive was saying, you know, books are great, blog posts are great, and I absolutely agree with that. It is just that I don’t have even the time and when I have the time, I would be reading code and I would be reading things all day long, it is just really tiring for me at the end of the day to sit down and read more. I want to invest in learning how to speed read to solve that problem because I read a lot of books and blog posts. So something on my list.[0:40:22.8] DC: One of the biggest tips on speed reading I ever learned is that frequently when you read you think of saying the word and if you can get out of that habit, if you get out of the habit of saying the word even with your mouth or you just get out of that habit that will already increase the quickness of what you read.[0:40:39.5] CC: That is so interesting.[0:40:41.4] DC: Yeah, that is a trippy one.[0:40:43.1] CC: Because I think being bilingual, I totally like – that really helps me understand things, by saying the words.[0:40:52.9] DC: I think the point that we are all working around here is, there is a great panel that came out at KubeCon EU in 2019 was put on by Aaron Crickenberger, Esther McNaMara, Steven Augustus, these folks are all very high output people. I mean, they do a lot of stuff especially with regard to community and so they put on a panel that was talking about burn out and self-care and I think that it is definitely worth checking that one out.And actually also thinking about what keeping up means to you and making sure that you are measuring that against your ability to sustain, is incredibly important, right? I feel like keeping up is one of those subjects where we end up – it is almost insidious in its way to – it is a thing that we can just do all the time. We can just spend all of our time, any free moment that you have, you are sitting on the bus, you are trying to keep up with things.And because that happens so much, I feel like that is sort of one of the ways that we can feel burnt out as you are seeing today. We can feel like we did a lot of things but there was no real result to it and keep in mind that that’s part of it, right? Like when you are thinking about how we are keeping up with it, make sure that the value to your time is still something that you have some cognizance about, that you have some thought about, like is it worth it to me to just spend this six hours reading everything, right?Or would it be better for me to spend some amount of time just not reading, you know? Like doing something else, you know? Like bake a cake for crying out loud, you know?[0:42:29.5] CC: Something that a lot of times we don’t allow ourselves to do and I decided to speak for everybody I am sorry, I just do nothing, because our brain needs that. We need to not be listening, not be reading, just nothing. Just sit and look at the ceiling, our brain needs that. Ideally, look at nature, like look outside, look at the air, go for a walk. We need that, because that recharges the brain. Anyway, one thing also that I want to bring up, maybe we can mention real quick because we are coming up at the top of the hour.How do people, projects, how do we really help the users of those projects to be up to date with what they are doing?[0:43:18.4] DC: Well yeah I mean this is the different patterns that we are talking about. So I think the blog posts help. I like the idea of having blogs that are targeted towards different audiences. I like the idea of having an aggregate here for putting up a big project. I mean obviously Kubernetes is such a huge ecosystem that if you have things like KubeWeekly and I know that there are actually quite a number of things out there that try and do this.But if we can kind of agree on one like KubeWeekly I think is a pretty good one because it is actually run by the CNCF. So it kind of falls within that sort of governance as a model but having an aggregator where you can actually produce content or curate content as it relates to your project that’s helpful, and then office-hours I think is also helpful to Josh’s point. I mean office-hours and SIG hours are very similar things. I mean like office-hours there like how to developers think about what’s happening with the space.This is an opportunity for you as an end user to show up and ask questions, those sorts of patterns I think all are incredibly helpful as a project to figure out there to those things.[0:44:17.8] OP: Yeah, I know summary articles or the sort of TLDRs that Michael mentioned earlier, I think I need more of those things in my life because I do a lot of reading, because I think my brain is a bit weird in that I need to read something about five or six different times from five or six different articles for it to sort of frame in my head.So what I am trying to – like for 2020, I have almost tried to do this, is like if I think somebody knows all about this and it would save me reading those five, six, seven articles and if that person has the time, I try and sort of reach out to them and say, “Listen, have you got 20 minutes or so to explain this topic to me? Can I ask you questions about it?” It just saves me, saves my eyes reading the screen, and it just saves me time. I just need a TLDR summary of a project or a feature or something just so I can know what it is all about in my head and talk fairly sort of confidently about it.If I need to get in front and down under the weeds then there is more reading to kind of do for me maybe the coding on the technical side, but sometimes I can’t figure out what this feature sort of means and what is its use case in the real world and I have to read through lots of articles and sometimes kind of vendor specific ones and they’ve got a different slant than maybe an independent one and trying to marry those bits up my head is a bit hard for me and there is sort of wealth of information.So if you are interested in a topic and there is hundreds of articles and you start reading four or five and they are all slightly different, eventually you figure out that – you are confident and I understand what that product is about but it has taken a long time to get there and it is taken a lot of reading time. So TLDRs is like really work and I think as Josh mentioned before, we have this thing internally where we do bench demos.And that is like a TLDR and a show and tell really quickly, like, “This is what this does and this is why we need to know about it and this is why our customers needs to know about it, the end,” you know? And that’s really, really useful because that just saves a whole bunch of people a whole bunch of time figuring out A, whether they need to know about it and B, actually now understanding that product or feature at the end of the five, 10 minutes which is what they typically are. So they are very useful short snippets of information. Maybe we are back to Twitter.[0:46:37.8] JR: Similar to the idea of giving a demo Olive, you made me think of something and that is that I think one of the ways that I keep up with the space is actually through writing along with reading and I think the notion of like – and this admittedly takes up time and the whole quality of life conversation comes in but using writing to help develop your thoughts and kind of aggregate all of these crazy inputs and try to be somewhat concise, which I know I struggle with, around something I’ve learned.It’s helped me a ton and then that asset kind of becomes reusable to share with other people the thing that you wrote. So for people listening to this I guess maybe a call to action for 2020 if that is your style as well, consider starting to write yourself and becoming a resource, right? Because even if you are new to this space, you’d be amazed at just how writing from your perspective can help other people.[0:47:26.3] DC: I think another one that I actually have been impressed with lately is that a number of consumer companies like people out there like Lyft and companies like that have actually started to surface engineering blogs around how they are using technology and how they are using technology to solve things, which I think, as a service provider, as somebody who is involved in the community of Kubernetes, I find those to be incredibly valuable because I get to actually see how those things are doing.I mean at the same time, I see things like – we talked about KubeCon, which is a convention that they have every year. Obviously the project is large enough to support it but there is actually an incentive if you are a consumer of that project to go and talk about how you are using it, right? It is incentivized in that it is more likely your talk will be accepted if you are a consumer of the product than somebody building it, right? We hear from people building it all the time.I love that idea of incentivizing people who are using this thing get out there and talk about it or share their ideas about it or how they are using it, what problems did it solve for them. That is critical I think.[0:48:31.0] CC: Can I also make a suggestion – is to not so much following on the thread that we are talking about just now but kind of on the general thread of this episode. If you have resources that you do use to keep up with things, stop this recording right now and go and give them a like, give them a follow, give them a thumbs up, show somehow appreciation because what Duffy said just now, he was saying, “Oh it is so helpful when I read a blog post.”But people who are writing, they want to know that. So give them some indication, it counts a lot. It takes a lot of effort to sit down and write something or produce a podcast and if you take any, derive any benefit from it, show appreciation. It motivates people to keep doing it.[0:49:26.4] DC: Yeah, agreed.[0:49:27.9] M: I think that is a great bind maybe to close off this episode because it reiterates that just consuming and keeping up that doesn’t necessarily mean you don’t give back, right? So this is a way of giving back, which is really important to keep that flow and creativeness.[0:49:41.8] CC: I go through a lot of YouTube videos and sometimes I just play one after the other but sometimes, you know, I have been making a point of going back and liking it. Liking the ones that I like – obviously I don’t like everything. I mean things that I don’t like I don’t listen in but you know what I mean? It takes no effort but just so people know, “OK, you did a good job here.” By the way, go to iTunes and rate us. So we will know that you liked it and it will help people find our show, our podcast, and if you are watching us on YouTube, give us a like.[0:50:16.1] DC: All right, well unless anybody has any final thoughts, that is what we wanted to cover this session. So thank you all very, very much and I look forward to seeing you next week.[0:50:25.3] M: Bye-bye.[0:50:26.3] CC: Thank you so much.[0:50:27.4] OP: Bye.[0:50:28.1] JR: Bye.[END OF EPISODE][0:50:28.7] ANNOUNCER: Thank you for listening to The Podlets Cloud Native Podcast. Find us on Twitter at https://twitter.com/ThePodlets and on the http://thepodlets.io/ website, where you'll find transcripts and show notes. We'll be back next week. Stay tuned by subscribing.[END]See omnystudio.com/listener for privacy information.

In the late 19th century, Eadweard Muybridge – to win a bet – took several pictures of a horse in motion, and in the process, basically invented film. It was a brand new way to experience media, and it changed the world. Radiant Images hopes to do the same with an investment in 360 video production, and VP Michael Mansouri drops in to explain how. Alan: Welcome to the XR for Business Podcast with your host, Alan Smithson. Today’s guest is Michael Mansouri, co-founder and vice president of Radiant Images. Michael is known as one of the industry’s most knowledgeable, inventive, and passionate technologists. Born into a family of filmmakers, he has produced and directed several high impact documentaries, most recently for the United Nations Geneva Summit for Human Rights. His documentaries help raise awareness of human and animal rights violations around the world, to provide a voice for the voiceless. He’s been always interested in the overlap of film and technology, so he co-founded Radiant Images in 2005. Mr. Mansouri’s efforts in filmmaking led to NASA and JPL’s 2018 Emmy win for outstanding original interactive program for Cassini’s grand finale, which was NASA’s first recognition in the film community. At Hawk-Eye, he hopes to break through the technology barriers surrounding digital innovation and provide a more meaningful impact that connects and engages humanity. You can learn more about the great work that Michael and his team are doing at radiantimages.com. Michael, welcome to the show. Michael: Hey, good morning, everyone. Michael Mansouri, co-founder of Radiant. Very happy to be on this podcast with you guys. Alan: I am super excited. You know, the first time I found out about Radiant Images was at the UploadVR launch party in LA. And I was in this beautiful space and people were drinking drinks and everything. Good time. And I walked into one of these small rooms and I saw the collection of quite possibly the craziest 360 cameras I’ve ever seen. There was cameras with 20 lenses. There was ones that fit on your head like a helmet. There was little miniature ones. You guys had kind of everything. And I just– coming from somebody who started in VR using 360 cameras — you know, the GoPro rigs where we glued them all together — and coming from that and then walking into this room, where you would take in what we were doing from a basic standpoint of collecting 360, and you just took it to the next level. How did you guys get involved in that? Like, what was the first precipitating factor of going from traditional film to 360 filmmaking? Michael: That’s a great question. Radiant’s history is traditional, but we do traditional way, in traditional methods. How we got really excited and involved in immersive was our background is documentarians, we ask always questions. And we ask a lot of questions that break beyond the surface and beyond the obvious. We always were much more interested in taking deeper and deeper. And part of what we did is we started really looking at our industry, motion picture, media, entertainment, and just in fact, communication, our communication methods. How have they changed in the cycles of technology shifts that happens every 10 years? What is the new method of how we engage? And what we realized is, the average American sees between 4,000 to 10,000 pieces of content, every single day. How do we distinguish? Alan: Say that again? What? Michael: Yeah. It’s a fact. [chuckles] The average American sees between 4,000 to 10,000 pieces of content every single day. Alan: Okay, we’ve got to unpack. That is ridiculous. Michael:

In the late 19th century, Eadweard Muybridge – to win a bet – took several pictures of a horse in motion, and in the process, basically invented film. It was a brand new way to experience media, and it changed the world. Radiant Images hopes to do the same with an investment in 360 video production, and VP Michael Mansouri drops in to explain how. Alan: Welcome to the XR for Business Podcast with your host, Alan Smithson. Today’s guest is Michael Mansouri, co-founder and vice president of Radiant Images. Michael is known as one of the industry’s most knowledgeable, inventive, and passionate technologists. Born into a family of filmmakers, he has produced and directed several high impact documentaries, most recently for the United Nations Geneva Summit for Human Rights. His documentaries help raise awareness of human and animal rights violations around the world, to provide a voice for the voiceless. He’s been always interested in the overlap of film and technology, so he co-founded Radiant Images in 2005. Mr. Mansouri’s efforts in filmmaking led to NASA and JPL’s 2018 Emmy win for outstanding original interactive program for Cassini’s grand finale, which was NASA’s first recognition in the film community. At Hawk-Eye, he hopes to break through the technology barriers surrounding digital innovation and provide a more meaningful impact that connects and engages humanity. You can learn more about the great work that Michael and his team are doing at radiantimages.com. Michael, welcome to the show. Michael: Hey, good morning, everyone. Michael Mansouri, co-founder of Radiant. Very happy to be on this podcast with you guys. Alan: I am super excited. You know, the first time I found out about Radiant Images was at the UploadVR launch party in LA. And I was in this beautiful space and people were drinking drinks and everything. Good time. And I walked into one of these small rooms and I saw the collection of quite possibly the craziest 360 cameras I’ve ever seen. There was cameras with 20 lenses. There was ones that fit on your head like a helmet. There was little miniature ones. You guys had kind of everything. And I just– coming from somebody who started in VR using 360 cameras — you know, the GoPro rigs where we glued them all together — and coming from that and then walking into this room, where you would take in what we were doing from a basic standpoint of collecting 360, and you just took it to the next level. How did you guys get involved in that? Like, what was the first precipitating factor of going from traditional film to 360 filmmaking? Michael: That’s a great question. Radiant’s history is traditional, but we do traditional way, in traditional methods. How we got really excited and involved in immersive was our background is documentarians, we ask always questions. And we ask a lot of questions that break beyond the surface and beyond the obvious. We always were much more interested in taking deeper and deeper. And part of what we did is we started really looking at our industry, motion picture, media, entertainment, and just in fact, communication, our communication methods. How have they changed in the cycles of technology shifts that happens every 10 years? What is the new method of how we engage? And what we realized is, the average American sees between 4,000 to 10,000 pieces of content, every single day. How do we distinguish? Alan: Say that again? What? Michael: Yeah. It’s a fact. [chuckles] The average American sees between 4,000 to 10,000 pieces of content every single day. Alan: Okay, we’ve got to unpack. That is ridiculous. Michael:

Hear from one of the finest organists in the world about his life, his early days becoming an organist, studying at the Curtis Institute in Philadelphia, his amazing career as both famous teacher and concert artist. As a Grammy-winning artist, Dr. Jacobs tells of his grand projects, from the playing of the complete works of Bach at the age of 23, to commissioning works for and playing with the most famous orchestras around the country. He will be joined by two of his students who now play for two of the largest churches in the country, St. Patrick’s Cathedral in New York and Christ Cathedral in Garden Grove, CA. This is a fascinating look these great musicians in both the concert world and the world of Sacred Music in the church. As fierce champions for the Pipe Organ, and as performers on some of the largest and greatest organs in the country, hear their predictions for the future of the organ in the church and in concerts halls.Music: Segment 1 Fugue in D Major, BWV 532 J. S. Bach Recorded LIVE at Alice Tully Hall, Lincoln Center, NYChttp://a.co/hLiZyvYSegment 2: American Mavericks Album: Lou Harrison: Concerto for Organ and Percussion Orchestra, San Francisco Symphony, Michael Tilson Thomas, Conductor, Paul Jacobs, Organist Fourth Movement.http://amzn.to/2s2IGk9Segment 3: Livre du Saint Sacrement: III. Le Dieu cache (The Hidden God), Olivier Messiaen, Paul Jacobs's GRAMMY-winning albumhttp://a.co/hPvFOPUSegment 4:, Divine Redeemer Album: Christine Brewer, Soprano, Paul Jacobs, Organ, 12 Pieces, Op. 59: No 6Fugue in D Major, Max Regerhttps://www.amazon.com/Divine-Redeemer-Paul-Jacobs/dp/B011QAHDL6

Moving beyond workhorse bottles, you'll find a country full of distinct regions and a broad range of grapes. Explore Syrah, Cabernet Franc, and find out whether or not Cabernet Sauvignon is Chile's best red grape. A Carménère conversation looks at its sometimes polarizing flavors and considers the grape's place in Chilean wine. Befitting a nation with huge coastline, seafood and its natural partner in Sauvignon Blanc get a nod as well. Wines discussed: @3:56 Valdivieso 2014 Caballo Loco Grand Cru Limari Syrah (Limarí Valley) @8:05 Undurraga 2015 T.H. Terroir Hunter Alto Maipo Cabernet Sauvignon (Maipo Valley) @15:00 Maquis 2011 Franco Cabernet Franc (Colchagua Valley) Transcript: Jameson: Welcome to Wine Enthusiast's What We're Tasting Podcast. I'm your host, Jameson Fink. Join me as we discuss three fantastic wines and why each one belongs in your glass. This episode, we're looking at Chilean wines with Michael Schachner, who covers and reviews wines from the region. What We're Tasting is sponsored by Vivino. With the largest online inventory, Vivino finds the right wine every time. Including delicious Chilean wines. Download Vivino to discover and buy your favorites. And stock up at vivino.com/wineenthusiast. So a couple of months ago I met with a Chilean winemaker, Rodrigo Soto of Veramonte and more wineries, too. And we had an early morning conversation. Had coffee, it was very nice. No wine, it was like 8:30 in the morning. Maybe a little too early for wine, except for maybe sparkling. But that's a story for another day. But it was a really candid chat and I appreciated him talking about issues that Chilean wine faces in the United States and sort of the challenges that it has. And one of the things I thought that was interesting that I wanted to talk about with you, Michael, welcome to the show. Michael: Hey, thanks, Jameson. Jameson: Chile has this reputation wine-wise of just being this like value center, like value. Like 10 dollar wines and things like that. And one of the things we talked about is the challenge of people, you know, who are gonna spend 30, 40, 50 and more dollars on a bottle of wine to consider Chile as a source of those wines, which it certainly has. Do you see it as a challenge that Chile has to face? There are amazing values there, but now it's almost to its detriment as far as people trading up. Michael: I mean, Chile certainly built its reputation in the Western world with value wines. But that was like from a different era. More of a 1980s, especially a 1990s phenomenon, back when there really was quality wine being produced for under $10. But Chile has since then gone to probably one of the most organized and best-accessible tier systems of any of the New World producers, any of the major wine producing countries in the world. Chile I think is the seventh-largest wine producer in the world. And while probably a good chunk, 50% or more, of what they produce is still in that value category, you can go at multiple levels on top of that. You can go to a value plus level very quickly. High teens, low 20s. You can then go to what I consider to be what they do at their best. And that's a mid-tier plus luxury minus. And these are wines in the 30 to 40 dollar price range that you just talked about. And then they have their high-priced iconic wines, which they are modeled after California, Bordeaux, Italy, places that have had plenty of success with $100 and up wines. Chile has those, they struggle to sell them. Jameson: Well, I think that's our notion as wine drinks of value is also, value doesn't necessarily mean inexpensive, too. I mean, actually the three wines we're gonna talk about today are all in the $30 to $35 range. And I think when you start spending, you can still talk about value when you talk about wines that are over $10 or $15 or $20. Michael: Yeah, no. One of the great things about Chile is that they can deliver superb wines. Wines that rate 90 plus in this kind of mid-tier plus range. The economies of scale work for them. Larger vineyards, a cheaper workforce than, say, in the heart of Napa or in France or in Italy. And so it works to their advantage. They're able to extract a lot of quality and hence the consumer, you, me and anybody else, can receive a lot of good value at wines that are 20, 25, 30, 35. Jameson: So the first wine I want to talk about is Syrah. It's the Valdevieso, 2014 Caballo Loco Grand Crew Limari Syrah, it's a mouthful. The first thing I wanted to ask you ... Editor's Choice, 92 points. The first thing I wanted to ask you about that wine, is Syrah, Syrah is something that I don't really expect from Chile, or know that much about. Is this a rising star? Or have they been making it really notably for a while? Michael: No, I wouldn't say that they've been making it notably for that long. It's a great variety that came in when I would say in the modern era. These are wineries and winemakers that have evolved from a basis of Cabernet, and Cabernet Sauvignon, and Carménère. And then there's been a lot of experimentation. Chile has a terroir and a layout that's very similar to the west coast of North America. The north is very desert like, so that would be your Baja, California, San Diego area. Then you come into the southerly lake region. That would be like the northwest. And then you have that cut in the middle. And that to me reminds me very much of California. And so the same way California has had success and the ability to grow a multitude of grapes due to very kind, sun rich weather. Chile's very much the same. Especially in its central valleys. Limari is an area up north, it's an area that was known mostly for fruit production. And maybe growing grapes that were produced into Pisco. But winemakers started to understand that there's some limestone up there. There's coastal influences, and that maybe they could produce something in the vein of a cool climate type of wine. Chardonnay was planted up there, some Sauvignon Blanc as well, and Syrah. To try to capture a more oceanic style. Sauvignon Blanc didn't fare well, but the Syrah in Limari, although not a lot produced, I have found to be really excellent. It's a leaner, more structured style, but still gets enough son to be ripe. It's not tomato-y or green. It's more full bodied, but it just has something that gives it a unique character. Maybe it's those limestone soils. I'm not sure, but this one's an interesting one. Caballo Loco, the crazy horse. Valdivieso is one of the more traditional wineries in Chile. It's been around for a while, but they have explored different regions, they've explored different grape types, I would call them a more progressive type of larger winery. Caballo Loco has always been there catch all type of wine. Named after one of the owners of the company, who exhibited tendencies of being a crazy horse. He was a let's do this, let's do that, we can do this, we can do that. So he always had a wine named after him, Caballo Loco. And for a long time it was a mystery blend. It was generally speaking Cabernet Sauvignon, but they would never tell you the vintage, they might blend a few years here and there. They've expanded a little bit with Caballo Loco, to include this Grand Reservo variety thing, and it's again supposed to imply that this is a weird off the grid type of wine, not something you're going to see a lot of. There really are only a couple of producers of Syrah in Limari, and Valdivieso is one of them. Jameson: And where, just to orient myself, if I fly into Santiago, I mean how far away are we from the Limari valley? Michael: Limari is actually a bit remote. I would put it up in that northern quadrant of the country. It's very dry, it's where the Atacama Desert meets the ocean in it's most southerly area. You would go to the coastal city or La Serena, that's where you would go to get to the Limari valley. You can fly there, or I think it's roughly about a six hour drive from Santiago straight north on the ocean, and I've been up there once before. It's pretty remote, but it's cool, and just like the whole Pacific Coastline there, it's really quite beautiful. Jameson: And let's move on from Syrah, and talk about a grape that's maybe more well known in Chile. And that's Cabernet Sauvignon. So the second wine I want to talk about is the Unduragga, 2015 Terroir Hunter, Alto Maipo Cabernet Sauvignon, 91 points. First of all what is this Terroir Hunter series of wines all about? Michael: Unduragga, I can give you a little bit of background on them as well. Unduragga, that's a very big name in Chilean wine. The Unduragga family founded Unduragga, probably three, maybe four generations ago. It was one of the early family owned wineries in the Maipo Valley. They sold to a multi faceted business man, about ten years ago. And obviously acquired the brand name, that was important. And Unduragga has continued to produce a large amount of wine, but also some really interesting wines. Their most interesting are in the Tey Hachey, TH series, Terroir Hunter. And this is where their winemaker, a really cool progressive young guy, good friend of Rodrigo Soto. And a guy that I've loved to work with a lot, love to quote, love to meet with when I'm in Chile, or when he comes to New York. His name is Rafael Urrejola. And Rafa is a really good winemaker. Comfortable in various different varieties. Makes good Pinot Noir, makes some good Syrah, has been very involved in reclaiming the old vines of the south, down in Maule and Etota, so you get some Canyon, and some Malbec's, under this series. So it's usually older vineyards from various specific Terroir's within Chile, and there giving light to this. Going to Cabernet, is obviously the prime variety for Chile. It's what it's known for, and this wine comes from Pirque, which is a real, super good Cabernet zone. It's in the Maipo Valley, it's only about 20 miles outside of Santiago. Foothills of the Andes, can see the mountains from there. It's right on the edges of the Maipo river, and it's so alluvial, if you just go down a couple feet into the ground, nothing but gigantic rocks. And this is become the prime zone, basically call it the left bank, or the heart of the Napa Valley of Chilean Cabernet production. Jameson: So is Cabernet Sauvignon, is that Chile's best grape? Best red grape? Michael: Well I'm not so sure it's the best, it's definitely the one that's grown the most, it's the most prominent one. We talked about the value wines at the beginning. For Chile was able to produce a lot of pretty good, very nice, drinkable Cabernet in the $8, $10 range. It's harder for them to do that now with international pricing and just where everything's going. Cabernet likes dry, sunny, coastal weather. Same reason there's tons of Cabernet in California. There's tons of Cabernet in Chile. But there are some really good specific areas that get away from simple, industrial production, and give you some real grapes of character. Pirque is one of them. Jameson: And then what's up with Carménère, as far as it's status today? I know a lot of people, they've got this stereotype of, oh it's all, it's green, it's vegetal, blah blah blah. But is that the case now? Michael: Carménère has its tendencies. Its suicidal tendencies. It's a grape that was originally from Bordeaux, never replanted after the Phylloxera plague of the 19th century there, because it was just prone to greenness. And that was in a "cool climate". Chile being a little sunnier, a little warmer, having a higher heat index, and a higher sun index than Bordeaux, has had the ability to ripen Carménère better. Carménère is a signature grape if you will, simply because I think 98% of the world's Carménère is in Chile. For a long time people thought it was Merlot. Green tasting, herbal Merlot. It just has a lot of pyrazines. And it's very difficult to get that out of the grapes. There are now ways of going for max ripeness, then trying to maybe acidify the wine back into balance. It's not my favorite style, but that's what you see. It's the big sort of here we are, iconic Carménère level. And then Carménère at that inexpensive level, large crop, high economies of scale for the winery. That's not really one of my favorite wines. Jameson: Yeah, I like those green, herbal flavors. They're polarizing, it's like Sauvignon Blanc, some people love it. Michael: Cabernet Franc. Jameson: Some people can't stand it. But I like those flavors, and I think they are to me part of the grape, in trying to blow it up and blow it out. And obscure that to me does a disservice. Michael: Yeah but the feedback in Chile, is a very feedback oriented country. Being located where they are and exporting so much of their product. It's only 17 million people in the entire country. And it's not a really huge wine drinking country, despite the fact that they produce so much, and it's one of their top six industries. So they have to export a lot, I think the feedback around the world is, your Carménère's interesting, and we understand it's your signature grape and that you do it more than anybody else, but that doesn't mean we love it. I think you're a little more experimental than the average wine drinker. Jameson: Right, I'm the middle aged, natty wine, Brooklyn hipster drinker. So my demo isn't. Michael: ou might a liquid weed patch. Jameson: Yeah, exactly, I love that. Bring on the full on green pepper. Poor it into a hallowed out green pepper and I'll drink it. Michael: You get the bell pepper surprise, you can get that. So yeah. But you know what? Even Cabernet Sauvignon, and there is this typical Chilean character which there is a lot of mint, and menthol, and Eucalyptus, and tea, and tobacco, and these types of flavors and aromas, that work there way into the grape. And true Chilean Cabernet is pretty unique too. It may have the power and the structure, the smooth tannins of a Napa wine, or may have the age ability of a Bordeaux, but it's also, if you taste it blind ... And I've done a bunch of these top Cabernet's from around the world, they stick out. And it's generally speaking a little bit of that greenness. And just must be in the water. Jameson: Yeah. And again, those are to me, when I drink Cabernet, when I want great Cabernet, I want a little bit of those green herbal minty, Eucalyptus things. But again that's just me, and I'm an outlier. Just an outlier. Hey we'll be back to the show very shortly, but since you're here, I know you're already a fine of wine podcasts, why don't you check out our other show called, The Wine Enthusiast Podcast, download it wherever you get podcasts. So the third wine is a Cabernet Franc. It's the Maquis 2011 Franco, Cabernet Franc, Colchagua Valley, 92 points, seller selection. So for a herbal wine loving guy like me, is this Cabernet Franc going to make me happy? Or is it going to make me disappointed? Michael: This one might not be your wine Jameson, but it might be again, in tune with the global pallette. It's not a green, spicy, leafy version like you might get from the Loire Valley. Jameson: Right. Michael: Or that you might get in a cool year Bordeaux from Saint-Émilion. Or even a left bank wine with a fair amount of Cab Franc in it. It is more, probably in tune with the "International full bodied red style". But I like it in the sense that, Chile can be a little bit cool for Cab Franc, and some of the Cab Franc's that I have tasted down there have been really leafy, really highly herbal. They could fool you for being Carménère. This one comes from a cooler vintage, in the Colchagua Valley, that's an area we haven't spoken about yet. It's a really, I would say it's probably Chile's most, prototypical contained wine valley. I've described it in my articles, as resembling a small Napa. You've got hillsides on both sides, a river running through the middle of the valley heading out to the ocean, coastal influences. Warm, warm valley. And known for red wines. Maquis has there vineyards hidden down by the river. It's one of the cooler areas of the Colchagua Valley. And so they get a little more character. The Franco, is a double play on words. Obviously it's for the Cab Franc, but it's also a wine planted on its own rootstocks. So it's Pie Franco. It's not grafted, it's not an old vineyard taken over. It's a vineyard planted several decades ago. And it was planted on it's own stocks to Cab Franc. I think it's a ... Really, we're talking about wines that are tasted blind here. And so we're not ... When some of the characteristics that I talk about, and the point total. And the fact that, gave it an Editors Choice, Seller Selection, saying this wine can age. That's what impressed me in the tasting. Not so much it's, oh I can varietally peg this as Cab Franc. You, as a Cab Franc lover with an affinity for green, Finks an Irish name, so. Jameson: Yeah, Eileen Kelly, my mom. Super Irish, Jameson my first name. Michael: Exactly, so. Being a man of green, kelly green in this case. You probably might want a little more of that character in it, just so it reminds you of a nice Bourgeois, or Chinon or something. But it's just not going to do that. It's going to be a Chilean version, warm valley, fuller bodied type of wine. But I think very interesting. And one that can actually sit nicely with Cabernet Sauvignon, or any of the better, full bodied red wines that Chile produces. So it's one that I've always like. I think Maquis done one of the more consistently good Cab Franc's in all of Chile. Jameson: Yeah, and I just noticed it was a 2011 vintage. So it's already got a few years of age on it. Michael: Exactly. Jameson: So that bodes really well, especially with your 92 point review. And I want to touch on some other red grapes. What's a rising star, or maybe something that's been neglected, now is being revitalized, is Pais a big deal? Michael: Pais is a big deal in the regions where it comes from. That's mostly the southern regions where the old vineyards, that are dry farmed. And have either been barely tended to, neglected, reclaimed. That's where Pais comes from. That's the old mission grape. It's the old country grape. It's grape that was used for jug wines. And wine sold at the market for filling out bulk wine in everything. There's a movement to reclaim it. And to make it, can be done in a fun, natural way. I think for the nat wine funkster type, I think Pais is probably your very best bet. And the wineries and winemakers that are working with it tend to really fulfill that whole narrative. But my favorite obscure grapes, also largely from the old vineyards of the south. Areas like Maule and Etota, are the two C's. Carignan and Cinsaut, all grapes that were brought over from France in the 19th century, largely forgotten and neglected. Used just for bulk wine, co-op wine, these types of things. And now people are saying wow, Priorat in Spain is known for Carignan, other areas of Spain are known for Carignan. There's Carignan in the South of France. And it's a racy, red fruit style wine for the most part. It's got good tension, can be made in a fuller bodied oak style. It can be done in a more restrained, leaner style. So I like that. And Cinsaut another French grape that you see very little, is from the South of France, used in Rosé and things like that throughout Provence, and the lower Rome Valley. Is being done in a fresh, light bodied, Bougelet style. I think you would really like it. Jameson: Yeah, right up my alley. Michael: Yup. I think Rafael has a TH, a Terroir Hunter Etota Valley Cinsaut. There's a couple other winemakers in the country that are making it in clay amphora, or in neutral cement eggs to try to really give the off root, all history, all terroir, no oak, very little manipulation. Interesting wines and very small production. Small distribution, but they're out there in small numbers. I really like those two oddball grapes. Jameson: And then finally, I would be remiss if we didn't touch on white wine. I've had a lot of, I guess my introduction to Chile was probably Sauvignon Blanc, because I love Sauvignon Blanc, and I found really great Sauvignon Blanc, really tasty coastal type of wines. And I'm starting to have some really good Chardonnay's too. What's the state of white wine in Chile right now? Michael: Well, it's an interesting question Jameson, because in Chile, hands down the best type of cuisine, food, comes from the ocean. Comes from the Pacific. Jameson: Yeah. Michael: 4,000 miles of coastline. Gigantic fishing industry. Shellfish, crab, octopus, you name it. Anything that's in the Pacific Ocean, they pull out, and it's much better than the steaks. You want steak, go to Argentina. Jameson: Right. Michael: Or go to Uruguay, even go to Brazil. In Chile eat the seafood. So what do you want to drink with good seafood? White wine. Mostly though I've found that for a long time it was about quaffability, and fitting what they thought were norms. They weren't natural white wine producers, so they were trying to match styles. Chardonnay, for a long time was lost in the Chilean forests, with poor oak, overripe fruit. So you got the flat, melonny, banana ball, with a lot of oak. Some of it real, some of it fake. Really not a great way of putting a Chardonnay foot forward. Jameson: No it sounds very [crosstalk 00:23:06]. Michael: Sauvignon Blanc, got a lot of credit for being this coastal, fresh type of thing. I think it was a little bit premature, a little bit overrated. It led to some overproduction of Sauvignon Blanc. And also, I think just a flooding of the market. And I think it needs to be reevaluated. Made in smaller quantities, because there's too much Sauvignon Blanc competition. It's not as popular a grape type as we would like it to be. Or think that it might be. Sauvignon Blanc, yeah everybody drinks it. No not really. Jameson: Yeah, it's polarizing. It's a flavor profile. Michael: Not really, and I think that it's only 2% of the wine market in the United States. So you have this impression that, "Oh, I bet everybody's drinking Sauvignon Blanc". Not so. Chile I think, they have good coastal Sauvignon Blanc, but it runs the risk of being repetitive, and this zesty, quaffable, screw cap type of wine. Chill it, kill it. But there are a few that are, again where the vineyard matters. Where the winemaker's doing more with the grapes than simply just picking and popping them into a tank. There could be some work with cement. There might be a minute amount of barrel aging going on in there. And these wines I do find interesting. I find that they drink better on the spot. And with the local food maybe than as an export wine. But I'm glad you brought up Chardonnay, because I they're really improving it. Getting away from that over the top, blowsy, not necessarily well made, artificial style. And going with a little bit more of a Burgundian higher acid, and site specific. Trying to stay near the coastline, Casablanca Valley. You don't find hardly any Maipo, or Maule Valley. None of the internal, central valleys they've pretty much taken the white wine out of those valleys. Moved them close to the ocean. That's a good move. Jameson: Yeah, well I think it's a good move to explore everything that Chile has to offer. Don't be afraid to get into that $30, $40 range or higher if you can. But there's still great, easy drinking wines and old vines to explore. And fuller style. There's just a little bit of everything. So I think we should all be drinking more wine from Chile. And Michael thank you for being on the show. Michael: Good deal Jameson, great. Jameson: And thank you for listening to the What We're Tasting Podcast, sponsored by Vivino, wine made easy. The three wines we discussed today were the Valdevieso, 2014 Caballo Loco Grand Crew Limari Syrah. Unduragga, 2015 Terroir Hunter, Alto Maipo Cabernet Sauvignon. And the Maquis 2011 Franco, Cabernet Franc. Find What We're Tasting, on iTunes, Google Play, or wherever you find podcasts. And if you liked today's episode, please give us a five star rating on iTunes, leave a comment, and tell your friends. What We're Tasting is a Wine Enthusiast Podcast. Checkout Wine Enthusiast online at winemag.com.

In this episode...     Are people "going offline" as a result of increasing dangers of the Internet? This article makes the case for yes: http://www.techspot.com/news/64839-increasing-number-internet-dangers-driving-millions-americans-offline.html But ... "millions"? We collectively call BS As the world moves more to mobile and digital, who thinks they have 'control' of their own data anyway?   "Sandjacking" allows attackers to install evil iOS apps IF that attacker is physically holding your device AND your device is unlocked AND it takes a while because you have to backup, and restore a phone ... one app at a time SO this isn't something you do to infiltrate someone's phone while they walk away for a few minutes to the restroom Cool trick bro, but where on the spectrum of critical things does this fall? The technique is called "Su-A-Cyder" ... awful name, lose points http://www.securityweek.com/sandjacking-attack-allows-hackers-install-evil-ios-apps   Dropbox takes heat for a breach, that wasn't their breach So what happens when you get blamed for a breach that you don't have anything to do with? http://krebsonsecurity.com/2016/06/dropbox-smeared-in-week-of-megabreaches/ What would YOUR company do if you were Dropbox?   Lenovo's asking people to uninstall it's bloatware "Accelerator" app ...because it's a massive security breach waiting to happen Of all the bloatware vendors install, I'm willing to be this isn't unique [Michael] Hey, at least they're admitting defeat here, right? http://www.zdnet.com/article/lenovo-begs-users-to-uninstall-accelerator-app-in-the-name-of-security/ [Raf] Does no one sense the delicious irony of a Chinese PC maker riddled with security issues in their product?

Come hang out with me while I'm driving with my hands off the wheel. On this special episode Russell drives a Tesla while talking to Michael Rutherford about how he became the top earner at Prove It! And how he earned his Tesla. Also find out how you could also earn two free cars! Here are a few cool things to listen for in today's episode: Why Russell is sitting in the drivers seat of a Tesla, but not really driving it. How Michael Rutherford became the top earner at Prove It! And how you can earn not one, but two cars by following Russell's and Michael's advice. So listen below to find out how a car that costs 6 figures could end up in your driveway for free. ---Transcript--- Hey everyone, this is Russell Brunson and welcome to the Tesla sponsored addition of Marketing In Your Car. Alright everyone, I'm in San Diego right now. I'm driving by Sea World. I'm in a Tesla driving, I'm going 70 miles an hour and my hands are not on the wheel, my feet are not on the ground. I'm floating, it's the craziest thing in the world. So I thought what better time to do Marketing In Your Car than right now. Because I don't even need to be looking….I'm going 72 right now, I'm looking backwards, no hands on the wheel, I'm looking at the camera's around me. This is freaking nuts; I don't know how this is legal. You'd think that when Elon Musk was like, “We're going to build a car that you don't have to look at the road..” Oh it's slowing me down. Speaker 2: The car in front of you is slowing down, so it slows down automatically. Russell: Oh weird. So the car in front of me slowed down so it automatically slowed me down. You think that the government would be like, “Elon no, people are going to get in wrecks.” And instead he was like, “We'er going to do it anyway.” And now I'm driving it. I'm not even driving the car, I'm sitting in the passenger seat and this is insane. So that's what's happening right now as we speak. We're actually filming an episode of the reality TV show. We're at the Prove It event right now. I spoke at it earlier today, we've been documenting this whole journey which has been really fun. So when Funnel Hacker TV comes out make sure you watch the episode on Prove It funnels. Do I need to grab the wheel? Speaker 2: Just touch it so it knows you're alive. Alright you're good. Russell: Cool. Anyway, so today we went and talked to the leadership team and got them all fired up about the new Ketone funnels coming out. We got 2 funnels coming out for them. And then right now we're driving the Tesla to the Tesla dealership, because I'm getting a Tesla through Prove It, which is  kind of cool. So if you guys haven't won a Clickfunnels car yet, you can come to Prove It and get a Tesla car. You can get 2 cars, one for every other day of the week, that way you'd never have to drive the same car twice in a row. Anyway, it's pretty insane. If you guys haven't driven in a Tesla yet, this is really weird. I seriously feel like I'm about to die, I'm on the edge of my seat. So I'm sitting here with Michael Rutherford, who is the….are you the number one money earner? I know you don't want to brag about it, but are you? Michael: Yeah. Russell: Number one money earner at Prove It right now and tell them something cool. Michael: Okay so the….about Prove It or just in general? Or about the car? Russell: This is marketing guys, they want to know about marketing. How did you become the number one money earner in Prove It, I'm curious? Michael: Lit myself on fire, utilized the product to its highest capability and I told every living being that would listen to me for even the smallest amount of time, and I did it with a high level of passion, belief and expectation and I didn't care what they thought and I just kept going. And the really cool thing is results follow passion. If you have passion take action and results will come and it's like a pinwheel. When you get a little result, you'll take more action which creates more belief, which you'll take more action, give you more belief, get more results and it just keeps going and going. And then the next thing you know, a car that costs 6 figures that drives itself shows up in your driveway and you get to drive it for free because you gave people the option to buy a product that would change their life. It doesn't matter what you do, doesn't matter what you sell, what you share, or what you teach, what you coach. Doesn't matter what you do, do it with a high level of passion and don't stop. Just do it more than anybody else and you'll be number one, if that's your goal. Maybe your goal is just to find passion, so take action and passion will find you. That's one of the things that's really been fun. So it's crazy cool to hold the camera with Russell while he's driving, or while the Tesla's driving us. Russell: He's filming me, I'm recording him. Michael: We got another camera in the back seat and the car's driving us. Russell: I wonder if Brandon's getting nervous back there. He's holding the camera watching us not watching the road. It's just crazy. Michael: Hey guys, life is crazy if you dare to take big action. And it'll reward you every time. Russell: How long you had your Tesla for? Michael: I've had my Tesla for 3 weeks and it's currently being completely Prove It customized at a place here in San Diego called SD Wraps. Russell: Is that where we're going right now? Michael: We're going to the Tesla dealership and depending on time, there's a place called SD Wraps that's got Lamborghini's, Bentley's, Tesla's. The coolest cars all being wrapped and customized by them. So yeah, it's pretty wild. Russell: That's awesome. So that's what's happening today. So there you go you guys. There's some words of wisdom. Now you can say you guys have all been in a Tesla with me. Because you've been sitting in a Tesla with me for the last 4 minutes 29 seconds in Marketing In Your Car time. That's what I got for you guys today. Tonight I'm speaking at the No Excuses event. We're going to be presenting the MLM version of the Funnel Hacks presentation that I spent the last week building out. Oh, it's telling me to hold the steering wheel again. Are we going to the right spot or do I need to … We're going the right way. Anyway, I'm going to be testing out that presentation and the offer tonight. To the network marketing industry and we're going to be sharing how funnels work in the offline world. I don't know if you know that, I'm showing them tonight the Home Party Funnel, the Hotel Meeting Funnel, and the…I haven't thought of a cool name for the third one, but I'm showing this is how hotel meetings happen, this is the online equivalent. This is how home parties happen, this is the equivalent. So it's going to be awesome. I'm excited. There you go guys. I'm going to check out and make sure I don't die. But I want you guys winning a car, either through Clickfunnels, Dream Car Contest. You can go to whatsyourdreamcar.com, or come join me in Prove It and win a Tesla through here. Or join both and get two cars. Because 2 is always better than one. Alright that's what I got for you today, talk to you soon. Bye everybody and see you on the next episode.

Come hang out with me while I’m driving with my hands off the wheel. On this special episode Russell drives a Tesla while talking to Michael Rutherford about how he became the top earner at Prove It! And how he earned his Tesla. Also find out how you could also earn two free cars! Here are a few cool things to listen for in today’s episode: Why Russell is sitting in the drivers seat of a Tesla, but not really driving it. How Michael Rutherford became the top earner at Prove It! And how you can earn not one, but two cars by following Russell’s and Michael’s advice. So listen below to find out how a car that costs 6 figures could end up in your driveway for free. ---Transcript--- Hey everyone, this is Russell Brunson and welcome to the Tesla sponsored addition of Marketing In Your Car. Alright everyone, I’m in San Diego right now. I’m driving by Sea World. I’m in a Tesla driving, I’m going 70 miles an hour and my hands are not on the wheel, my feet are not on the ground. I’m floating, it’s the craziest thing in the world. So I thought what better time to do Marketing In Your Car than right now. Because I don’t even need to be looking….I’m going 72 right now, I’m looking backwards, no hands on the wheel, I’m looking at the camera’s around me. This is freaking nuts; I don’t know how this is legal. You’d think that when Elon Musk was like, “We’re going to build a car that you don’t have to look at the road..” Oh it’s slowing me down. Speaker 2: The car in front of you is slowing down, so it slows down automatically. Russell: Oh weird. So the car in front of me slowed down so it automatically slowed me down. You think that the government would be like, “Elon no, people are going to get in wrecks.” And instead he was like, “We’er going to do it anyway.” And now I’m driving it. I’m not even driving the car, I’m sitting in the passenger seat and this is insane. So that’s what’s happening right now as we speak. We’re actually filming an episode of the reality TV show. We’re at the Prove It event right now. I spoke at it earlier today, we’ve been documenting this whole journey which has been really fun. So when Funnel Hacker TV comes out make sure you watch the episode on Prove It funnels. Do I need to grab the wheel? Speaker 2: Just touch it so it knows you’re alive. Alright you’re good. Russell: Cool. Anyway, so today we went and talked to the leadership team and got them all fired up about the new Ketone funnels coming out. We got 2 funnels coming out for them. And then right now we’re driving the Tesla to the Tesla dealership, because I’m getting a Tesla through Prove It, which is  kind of cool. So if you guys haven’t won a Clickfunnels car yet, you can come to Prove It and get a Tesla car. You can get 2 cars, one for every other day of the week, that way you’d never have to drive the same car twice in a row. Anyway, it’s pretty insane. If you guys haven’t driven in a Tesla yet, this is really weird. I seriously feel like I’m about to die, I’m on the edge of my seat. So I’m sitting here with Michael Rutherford, who is the….are you the number one money earner? I know you don’t want to brag about it, but are you? Michael: Yeah. Russell: Number one money earner at Prove It right now and tell them something cool. Michael: Okay so the….about Prove It or just in general? Or about the car? Russell: This is marketing guys, they want to know about marketing. How did you become the number one money earner in Prove It, I’m curious? Michael: Lit myself on fire, utilized the product to its highest capability and I told every living being that would listen to me for even the smallest amount of time, and I did it with a high level of passion, belief and expectation and I didn’t care what they thought and I just kept going. And the really cool thing is results follow passion. If you have passion take action and results will come and it’s like a pinwheel. When you get a little result, you’ll take more action which creates more belief, which you’ll take more action, give you more belief, get more results and it just keeps going and going. And then the next thing you know, a car that costs 6 figures that drives itself shows up in your driveway and you get to drive it for free because you gave people the option to buy a product that would change their life. It doesn’t matter what you do, doesn’t matter what you sell, what you share, or what you teach, what you coach. Doesn’t matter what you do, do it with a high level of passion and don’t stop. Just do it more than anybody else and you’ll be number one, if that’s your goal. Maybe your goal is just to find passion, so take action and passion will find you. That’s one of the things that’s really been fun. So it’s crazy cool to hold the camera with Russell while he’s driving, or while the Tesla’s driving us. Russell: He’s filming me, I’m recording him. Michael: We got another camera in the back seat and the car’s driving us. Russell: I wonder if Brandon’s getting nervous back there. He’s holding the camera watching us not watching the road. It’s just crazy. Michael: Hey guys, life is crazy if you dare to take big action. And it’ll reward you every time. Russell: How long you had your Tesla for? Michael: I’ve had my Tesla for 3 weeks and it’s currently being completely Prove It customized at a place here in San Diego called SD Wraps. Russell: Is that where we’re going right now? Michael: We’re going to the Tesla dealership and depending on time, there’s a place called SD Wraps that’s got Lamborghini’s, Bentley’s, Tesla’s. The coolest cars all being wrapped and customized by them. So yeah, it’s pretty wild. Russell: That’s awesome. So that’s what’s happening today. So there you go you guys. There’s some words of wisdom. Now you can say you guys have all been in a Tesla with me. Because you’ve been sitting in a Tesla with me for the last 4 minutes 29 seconds in Marketing In Your Car time. That’s what I got for you guys today. Tonight I’m speaking at the No Excuses event. We’re going to be presenting the MLM version of the Funnel Hacks presentation that I spent the last week building out. Oh, it’s telling me to hold the steering wheel again. Are we going to the right spot or do I need to … We’re going the right way. Anyway, I’m going to be testing out that presentation and the offer tonight. To the network marketing industry and we’re going to be sharing how funnels work in the offline world. I don’t know if you know that, I’m showing them tonight the Home Party Funnel, the Hotel Meeting Funnel, and the…I haven’t thought of a cool name for the third one, but I’m showing this is how hotel meetings happen, this is the online equivalent. This is how home parties happen, this is the equivalent. So it’s going to be awesome. I’m excited. There you go guys. I’m going to check out and make sure I don’t die. But I want you guys winning a car, either through Clickfunnels, Dream Car Contest. You can go to whatsyourdreamcar.com, or come join me in Prove It and win a Tesla through here. Or join both and get two cars. Because 2 is always better than one. Alright that’s what I got for you today, talk to you soon. Bye everybody and see you on the next episode.

The guys live long and prosper by welcoming Star Trek expert Michael Liberto to discuss the Prelude of Axanar fan film and the copyright infringement claims alleged by CBS and Paramount. Full Podcast Transcript NASIR: Welcome to our podcast where we cover business in the news and add our legal twist. My name is Nasir Pasha. With us, we have our Star Trek expert, Matt Staub. MATT: Oh, no. Well, we talked about Star Wars – it was in December, right? Or maybe January? NASIR: The last thing you want to do is basically say Star Wars and Star Trek are the same thing but go ahead. Please, go ahead. MATT: I know. I almost didn’t because I know it was going to be bad. But, yeah, I only brought it up because of this. We talked about Star Wars a month or two ago – or whenever the movie came out – and I knew some but Star Trek I know even less – actually, very little at all. So, I’m not the expert by any means. But, luckily, we found somebody who is a Star Trek expert and this is Michael Liberto. MICHAEL: Hey! How are you doing? NASIR: Thanks for joining us! Just so everyone knows, he is our resident Star Trek episode for all our Star Trek episodes that we’ve had and will have going forward which I’m sure will be a ton. But thanks for joining us! MICHAEL: Yeah, thanks for having me. NASIR: So, Matt, why do we have him on? What are we talking about here? MATT: Michael is going to chime in on a lot of this but let me give the premise as I understand it. There was a group of fans that actually started a Kickstarter to raise some funds to produce this fan movie, essentially, about Star Trek called Axanar and I think, at this point, they’ve only produced kind of the prelude of it – not the full-length picture that they ultimately want to end up doing. You know, to be honest, I looked at it and it’s actually pretty good quality. It looked very professional in my opinion. They’ve put out this prelude to it. Now, CBS and – I can’t remember who else. MICHAEL: Paramount. MATT: Yeah. NASIR: We’ll fill in the blanks for you. MATT: Basically, they’re saying, “Look, this is straight up copyright infringement. There’s a lot of issues with this. You can’t be doing this. Blah blah blah.” In order for us to kind of explain the legal side of things, we need to understand the factual side of things. That’s why we were hoping, Michael, that you’d be able to fill us in on some of these holes that we can’t really help with. My first question – and maybe this is a stupid question – what is Axanar? MICHAEL: Well, Axanar is a planet that’s part of the Federation. It’s nearby Vulcan and Andoria and a bunch of other Federation planets. But, more importantly, it would be kind of a Prelude to Axanar – you had mentioned that before – is this brilliant piece done. Seriously, the quality of this is exceptional. But it’s a pretty long story. Axanar is basically a planet where the Federation Admiral Ramizer is the gentleman making the Constitution class vessel which we know could be the original Enterprise. NASIR: I’ve heard of that. MICHAEL: Yes, they’re kind of warship models because the Federation didn’t have any warships until four years’ war with the Klingons and Axanar where it is being produced. In the Prelude to Axanar, we can see in this documentary feature the Supreme Warlord sending their brand new D7 battle cruiser to Axanar to wipe out the Federation’s ability to fight this war. Prelude to Axanar is the beginning of this huge battle that’s going to decide the four years’ war. NASIR: Everything you’re describing is completely new stuff, right? This isn’t something that Paramount or some of their Star Trek writers came up with. This is a spin-off, right? MICHAEL: It is a spin-off but there are a couple of caveats. First of all, Garth of Izar is mentioned in a couple of original series – well, actually, in one original series show – and he is the role model of Captain Kirk. Also, Ambassador Soval – who is played by an actor named Gary Graham – he...

In today's Q&A, we are helping Amanda figure out how to validate her idea before she spends a lot of time and money developing her digital product. Do you have a question you want answered on our podcast? We would love to help you! Click here to ask your question! [Tweet "Ideal customer =  least amount of work and most amount of money @solohour"] Resources Mentioned in this Episode Today's expert is Michael O'Neal from solopreneurhour.com Our episode with Michael O'Neal Evernote Michael's product called Sololab Tim Ferris Screw the Nine to Five Let's dive into this week's question! JOCELYN: Hey y'all! You're listening to an Expert Q&A with S&J. Today's expert is Michael O'Neal of The Solopreneur Hour podcast and solopreneurhour.com. Welcome to the Flipped Lifestyle podcast where life always comes before work. We're your hosts, Shane and Jocelyn Sams. Join us, each week, as we teach you how to flip your lifestyle upside-down by selling stuff online. Are you ready for something different? All right, let's get started. SHANE: What's going on guys? Welcome back to another Q&A with S&J mini-podcast. Today we have an Expert Q&A and we are super-excited to welcome back Michael O'Neal of The Solopreneur Hour podcast and solohour.com. Michael, welcome back to the show, man! MICHAEL: Hey guys! So good to be back, I appreciate you having me on again. JOCELYN: Yeah, we are excited for you to answer another question – MICHAEL: Appreciate chya! Does that sound better? JOCELYN: Yeah, that's better. SHANE: I told somebody we were on your show and I said, I swear he had a drawl at the end of that; we sucked him into the south, man. MICHAEL: I'm ready, I'll do the whole show like this. I don't mind. JOCELYN: All right well, Amanda of teachsheetz.com says, “How do I validate my idea with my audience? I want to tell teachers about my Teach Sheetz website I'm currently working, on which can be used to create customized board sheets. Instead of sifting through the millions of options online, they can customize their own worksheet in under five minutes, using a site that has a functionality of Canva. I think this is a great idea but how can validate it with my target market? How do I know others can think it's a good idea before I spent all the time selling it? I don't have a huge audience, what do I do?” SHANE: This is a huge question we get Michael, and I'm really interested to see what you think about this because most of the time when I hear people get frustrated and quit online marketing, it's because they spend a month creating a product and nobody bought it. So Mike, how do you look at an idea and validate that in your business before you spend all that time, you know, creating something that nobody may even want? MICHAEL: I have an answer for both scenarios: One being that you have no list, no platform and one being that you have some list and some platform. So, the no-list and no-platform, here's one misnomer I think people have about online marketing in general is that everything has to be done online. And when you have more time than money, you can afford, time-wise, to actually go talk to people and if she is already immersed in the teaching community – I think a lot of times, when people come out with ideas for very, very niche businesses or products, it's because they are totally immersed in that – SHANE: They are the market basically. MICHAEL: They are the market. She's creating something for herself in this case. So, she has to go out and literally go find some of herself which is, don't do it super-casually, don't be like, ‘Hey, you want to come to happy hour at six o'clock and we'll have a chat'. It's like no, find ten of your friends at least that are in the situation you are in and ask them, ask them what are your challenges here and how would you – I have this idea; however, before I tell you my idea, this is very important like what order you do this in.

We are super excited to reveal that our third host for (we hope) the duration of William’s absence will be none other than David J. Peterson!  Take a listen as we talk through the challenges of making an agglutinative language that isn’t depressingly boring. Top of Show Greeting: Kihā́mmic Feedback: Email from (another) Michael: Hey guys, I’ve... Read more »