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The SFR Show
Revolutionizing real estate investing on the blockchain
This episode features the masterminds behind Roofstock OnChain, Geoffrey Thompson, and Sanjay Raghavan. We discuss the revolutionary product of tokenized real estate, how it works, the problems it solves, the incredible scaling power of this new technology, and who it is for. Geoff Thompson built his career at top-tier law firms practicing in the areas of capital markets, banking and credit, structured finance, private equity, and cross-border transactions. Geoff's prior role at Roofstock was as general counsel where he advised on partnerships, product innovation, fundraising, deal structuring, real estate matters, securities law, international expansion, and all other legal and compliance matters. Sanjay Raghavan is the Head of Web3 Initiatives of Roofstock onChain where he leads the real estate investing platform's blockchain initiative. After being accepted into Cypher Accelerator, Sanjay continues to build connections between real estate investing and blockchain. Sanjay is also an advisor at Pudgy Penguins NFTs. Roofstock onChain is the Web3 subsidiary of Roofstock, the leading digital real estate investing platform for the $4 trillion single-family rental home sector. Relevant links: https://mobile.twitter.com/eth_sanjay https://mobile.twitter.com/_gthomps 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: What's going on everyone, Michael Albaum here from the Remote Real Estate Investor, we're actually in the midst of a pivot and so we're changing the name of our show to be the SFR show. Reason being is we really want to double down on the single family rental industry as a whole and so we wanted to pick a title and a name that's reflective of that. So join us here on the new show, the SFR show where we're gonna be bringing you everything you need to know about SFR investing from what the market is doing at the micro and macro level, to what the factors are influencing and changing the space. So let's kick it off with this first episode. We hope you enjoy. Hey everyone, welcome to the SFR show. We're going to be talking today with Geoff and Sanjay on Roofstocks web three team about cryptocurrency tokenization, alternative investments, portfolio theory and risk management just to name a few. So with that, let's just jump straight into it. Geoff and Sanjay, good to see you both. How have you been? Sanjay: Great. Good to see you again and, Michael, you look really different from the last time we spoke and so much younger and much more refreshed, I think after the holidays. Michael: Thank you. Yeah, I came back from the holidays ready, you know, cut, put some 10 pounds on and took 10 years off my face. So I'm doing the best I can, so… Geoff: That's it. Michael: That's it. So for anyone who didn't catch our prior episode together, I'd love if you could give a really quick intro who you guys are and what is it that you're doing here at Roofstock. Geoff: So yeah, we are co leading the web three business unit every stock. I'm Geoff Thompson, this is Sanjay Raghavan and we have been at Roofstock for several years and over the last year, we've spent all of our time focusing on how to use blockchain and web three technology to improve the real estate transaction process and to generally make single family rentals more accessible and asset class. Michael: And for anyone who isn't familiar with what web three is definitely go back and give that prior episode a listen. Sanjay gets into it and kind of what the technology is. So I'm curious gents where we are today, where are you seeing blockchain and tokenization playing a role in the single family space. Sanjay: So first of all, we had a sale of our Genesis property in mid-October. So for your audience who may have read about it on crypto Twitter or on media publications, that was a very successful launch of this product, we spent about 10 months working on legal and tax analysis of how to structure this product so that it would be compliant and when somebody was purchasing this property in a web three as a web three home, they were in fact getting, you know, ownership of the underlying assets. So that took us about 10 months to engineer and the sale. The first sale that happened in mid-October was a huge success, went viral on crypto Twitter, and was picked up by all the leading crypto and non-crypto publications and the reason for that was because for the first time, what really happened in crypto and blockchain, which, if your followers are looking at the market, in general, this has been a really particularly bad year in the industry for the stock market. Inflation has been at a 40 year high feds have been drastically, like we went to 475 basis point interest rate hike and so, you know, we're going through this very tumultuous time in the industry and crypto has not been an exception, either, they've, you know, Krypto has been having an unprecedented winter, where either like Bitcoin and Aetherium lost 60% of their value since last year to this year and then a bunch of crypto companies went insolvent, because of various either it was just poor risk management or just, you know, for whatever other reasons, you know, they didn't have the capital to withstand the, this bear market. So during these times, you know, this was sort of like a ray of light in this industry, because we had successfully demonstrated that it was actually possible to sell a single family rental property, which normally is a three four week closing process was done instantaneously using battery technologies. But we were also able to find a leverage partner who was able to provide a loan for that property at a 65% LTV and so the combination of all of this really was a very positive thing in the industry, and we got a lot of outreach because of that. Michael: Hopefully it wasn't FTX, right… Sanjay: No, the leverage partner was not FTY, it was Dehler finance. But specifically, you know, about your question about, you know, with respect to blockchain tokenization, what does that really mean for real estate is that, you know, we've been able to now demonstrate that it is possible to have a better sale experience, right? When you typically look at the three week closing process on a real estate transaction, there's a bunch of contingencies on an offer, both the buyer and seller are extremely nervous about what happens during the diligence period in those three weeks. You know, like, for example, as you're aware, you know, the inspection results come in, and then you find out something about the property that you were not aware of before and then there's typically some kind of negotiation that goes on the offer price after the fact. There's an appraisal, contingency financing contingency, and, you know, so anything can happen during this three week period, the seller and buyer, even though an offer was accepted, may have a disagreement later on, you know, based on the results of further analysis, and sometimes the offer can be rescinded and then you're back to the drawing board trying to relist the property and sell it. So it's a particularly stressful time, both for the buyer and seller and doing it through this web three mechanism essentially allows us to take a lot of that diligence, which still has to happen, but we're just moving it, you know, upfront in the process, so the buyer and seller have access to the same information about the property, and the buyer is able to perform all of their diligence upfront. The way Geoff talks about his experiences, you may spend a week or two looking at Amazon Prime to figure out what you want to buy for Christmas. But once you've made that decision, you want it to be delivered, you know, on Amazon Prime, same day or next day, you don't want to wait four weeks for it to be then shipped from China to you know, get to Los Angeles, and then from there to be transported to, you know, San Francisco. So, you know, we really want to make this process easy for people, right. So you do all your diligence upfront, but when you decide to make that purchase decision, it happens instantaneously and on top of that, when you add that financing in a way that's asset based and not based on your personal credit underwriting, you're not trying to find a lender and you know, sending them two years of tax returns and bank statements and as you as you're aware, Michael, what happens in this process is you send all this information, you get a pre underwriting approval and then as you're getting ready to close on the property a month or two have elapsed, and all your information is outdated, and you're resending all the information back to the lender. So you know, you want to avoid all of this as well, because that's also incredibly stressful as you're going through a purchase process and here, because it's a rental property, it's cashflow generating, you based on the value of the asset, you can actually underwrite the loan and say, you know, it's a $200,000 property, I'm comfortable giving you $100,000 loan against it and that makes the lending paradigm a lot simpler as well. So overall, it's generally a better experience, both for the seller and the buyer, when you bring in the battery technology into this process. Michael: This is mind blowing, you guys. So, I'm curious, like, how are you seeing really or rather, are people doing this at scale? I mean, is this we did it once we've, we've proven that it can be done once. But what is the scalability factor look like here? For both buyers and for sellers? Geoff: It is yeah, I can jump in here. It is scalable. It's scalable in the same way that buying and selling homes today can be done, you know in bulk, or you can assemble your own
The largest risk that one has is being an employee, with Neil Timmons
Being only an employee leaves you vulnerable to the ups and downs of the market. Real estate investing is one powerful defense against job loss and economic downturns. In this episode, Neil Timmons provides insight into the real estate business and shares his experience with overcoming economic adversity to secure a robust financial position. Neil Timmins is the CEO of Legacy Impact Partners, where they invest in real estate opportunities ranging from houses and apartments to industrial and medical offices. In 2021 Neil published his first book, Unicorn Hunting for Real Estate Investment Companies: How to Easily Attract, Screen, and Land a Unicorn. The book is tailored to helping real estate investors find and retain top talent through the strategic systemization of hiring. Neil also hosts his own podcast, "Real Grit" where he pulls back the curtain on real estate investing through interviews with industry titans. "Real Grit" provides listeners with the tools they need to secure their lasting real estate legacy! Episode Links: https://legacyimpactpartners.com/ https://legacyimpactpartners.com/podcast/ --- 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: 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 Neil Timmins, who is an author, a podcast host, entrepreneur, real estate investor and he's gonna be talking to us about going from an agent and employee to building a significant business in the real estate space and what it takes to do so. So let's get into it. Neil Timmons what is going on, man, welcome to the podcast. Thanks so much for taking the time to come hang out with me today. Neil: Good. It's so good to see you again. I appreciate the invite. Looking forward to this for some time now. Michael: No, likewise, the pleasure is mine. I'm super excited. So you and I of course know each other. We were chatting offline just before we hit record. But for anyone who doesn't know Neil Timmins, give us the background quick and dirty. Who you are, where you come from, and what is it you're doing real estate. Neil: High level out of Des Moines, Iowa, born and raised, started as a residential real estate agent built a built a brokerage there on to REMAX for a number of years was a top REMAX guy with my 20s and then eventually found my way stumbled into investing worked my way through single family investing, we still do a little today but morphed into commercial investing. And that's a primary focus today. Michael: Love it and I hear this this theme so often with agents start as an agent, got my teeth cut, then went into the investment side. My guess if you're a top performing agent, in your local market, you're making a lot more money on an annual basis than you would if you're investing. So why did you make that transition? Why'd you make that jump? Neil: Yeah, no good question. Well, the not so fun story is I was probably 31 ish at the time. Maybe 32, I came home one day to my wife of a decade in our three little kids, all about five or younger, and my wife had them all packed up and said she was leaving, leaving for good. I had spent the better part of seven years or so working like a dog every day of the week, I worked. My second year in real estate, it worked 355 days. So that business was built, ultimately, you know, I was able to put his team in place and that business, but it largely was built on my back and my effort and so it was at that point that, you know, I had an ultimatum and I begged and pleaded with her to go, you gotta give me give me an opportunity. I understand. So give me an opportunity. She did thank God. 45 days later, I sold my REMAX and took a whole bunch of time off to decide, well, how am I going to how am I going to do this? How am I going to make a living in contribute because I like doing what I was doing and not the not to the degree in which I did it. But I enjoyed real estate a lot, right? The people, all the fun things around it. So it took some time off to evaluate things and then ultimately plugged back in largely on the investment side. Michael: And today you own a business around the real estate investing space. Tell us about that. Neil: Yeah. So I own a couple of things. On the on the investment side of things. We're primarily focused on commercial investing, right, we buy by multiple asset classes, you're on a primary ladder, Des Moines, Iowa, we still do fix and flip in the office. Although I'm not largely involved, we've got a nice little machine that runs that really good. Contractor base in place, literally same contractor. Don't quote me on how many but we've done probably nearly 200 with the same exact crew. So it makes running things and the efficiencies there of all awfully simple. I love talking to people going you know what I don't like flipping because then I gotta go pick the carpet, I gotta pick the paint whatever else I'm like, What do you mean, you have to do that we picked it once. It's the same carpets, the same paint, same countertops, the same appliance, nothing, nothing changes. You're not doing a whole block of these things. It's not like anybody notices. You just pick it once yeah and so then also, I run an education business, which we launched this year, which has been very well received from folks who want to make that bridge want to leap into commercial real estate and, you know, figure it out either how to do their first deal or how to do their next deal. Michael: And I'm curious, Neil, because I also come from the education space, and the folks that you're working with, are they the DIYers or are they the folks that have heard of commercial and want to get exposure to it in some form or another are a mix of the two? Neil: Yeah, no, it's really DIYers. Yeah, that's not largely the passive investors, if you will, it's people who are active in real estate like, like using… if you will, you know, in my career was it just laid out you know, as well cradle to grave if you will, coming through I'd like if you were to go, how should someone progress? Although most don't do that, you know, they end up in one thing and often stick there, but I kind of work my way through that. Is this constant evolution of how do we elevate oneself and one skill set to take it to a to a new level and that's where these folks are they know they've done, they've done single family, they've largely been exposed to it, maybe they've been exposed a little commercial, but just haven't gotten to the results. They haven't they haven't been on a foundation, a legacy had been on a foundation of financial freedom and, you know, arguably, in mice that that commercial gets you there faster and easier. Michael: And within commercial because it is such a diverse asset class and really name where do you see folks going that are having the most success? Neil: Oh, good question there. You know, we bring people in, and we do a lot of things from a training standpoint, want to be in an asset class exercise to go alright, well, fill this little asset class matrix out, we have my hand if answer a handful of questions to go, you know, do you resonate better? Would you rather work with people or businesses, and we just bring them through a series of questions, and that lines it up to go well, top to bottom ranked, we focus on six level six largest asset classes, there's top to the bottom, here's what here's what it looks like and then my encouragement from there is, Listen, if number two resonates a whole lot better with you than number one on that list, that's what you should do, because it's just easier and you know, this, if we were to go work on something you can get passionate about, it's a whole lot simpler, then put a little more effort into it and something you're just like, huh, maybe? Michael: Totally, totally and, you know, I'm curious, so many folks, I think can go invest in single family on the side as a project as a test as an experiment, the DIYers that are doing commercial real estate, are they doing it on the side? Are they really jumping in with both feet, kind of like you did, and making this their full time gig? Neil: Yep, great question most are doing on the side, most are either stacking it on to their single family business or, you know, if they've got a day job and several folks do is they're doing this, you know, in the evenings, nights and weekends, side hustle, if you will and you think about you know, from makeup, a number of you were to go market to single family or markets or commercial just by being in commercial, the number of available prospects has been largely diminished. It's a much more manageable group of makeup, an asset class, let's say self-storage, you're going to go market self-storage is in your county, well, in comparison to houses, it is a mere fraction. So your ability to call text or you know, mail somebody or connect with a broker, perhaps it's very manageable. You don't have to do it full time. In fact, that would not encourage it, because you're gonna sit around, you're gonna get discouraged. Because there's candidly not enough to do versus the single family side, you could always find something to do. Michael: Interesting. Talk to us about kind of the exits and the thought process around the exit from that business. Because in my mind, and I think in a lot of other investors' minds, a house is a house is a house, you know what it is? I know what it is everybody on the street, you know, that you bump into knows what it is, and knows how to buy it, versus a self-storage unit. I could maybe Name one person that I know that's involved in that business and
Billy Keels on making the leap from employee to entrepreneur
Today, we welcome Billy Keels back on the show to discuss how he went from living the corporate life to running his own business. We discuss his motivations, the mindset shift, the challenges, and finally, the rewards of his decision. Before becoming a real estate entrepreneur, KeePon Cashflow's founder Billy Keels worked in the corporate world. In fact, he was one of the best "corporate soldiers" you'd ever want to meet. Billy says that he was happy enough in his J.O.B., but something was missing. An emptiness and longing for a different life chewed on him, pulling him to what he knew he wanted to do more than anything else. Billy wanted to be an entrepreneur who brought two worlds together. So he took steps and kept on the path to his goals. Today, Billy is an international real estate entrepreneur, problem-solver, author, coach and mentor. He sees opportunities where others often don't in real estate. --- Episode Links: https://www.firstgencp.com/ https://www.firstgencp.com/paylesstax https://www.linkedin.com/in/billykeels/?originalSubdomain=es --- 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: 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 Billy Keels back on for another episode. For anyone who missed it Billy is an entrepreneur business owner ex former tech sales guy, and he's gonna be sharing with us today about how he started his business, why he started his business, and really the mindset shift around going from employee to entrepreneur. So let's get into it. Billy Keels, welcome back for round two, man. How are you? It's so good to see you. Billy: Michael, what's up man? I, um, super excited to be back. This is nice. Michael: I'm super excited to have you here. So for those listeners that did not catch our first episode together, give us the quick and dirty who you are, where you come from, and what is it you're doing in real estate. Billy: Very cool. But you know what? You know what I have to do first man, because you're very kind to welcome me back and I just wanna say everybody, by the way, if you haven't already, Leave Michael a nice, wonderful, honest written review as well as rating. It helps to… Michael: Oh my gosh… Billy: Bring guests to you, which is phenomenal. No, I mean seriously. I mean.... The energy, you all bring the organization, you bring the structure. Uh, and also I know a lot of the things that you are doing are making positive impact cause you're helping to educate people and also inspiring them to take action. So it's the least I could do also as a fellow podcaster, um, to go out. Uh, and, and, and ask of that. So, um, but yeah, Billy Keels, I'm still the, the same guy from the Midwest, uh, of, uh, of Ohio, who has spent the last 26 years of his life, uh, in corporate up until recently, uh, no longer, uh, in the corporate world. I've also been spending the last 21 years, uh, living in Europe. I know Michael, that's close to your heart as well? Michael: Very much so. Billy: And specifically, yeah, specifically between, uh, France. Italy and most recently Spain. I am someone who really, really had a great corporate experience. I really enjoyed it. It was fantastic. Some personal things happened in life that helped give me some clarity that was time to do some other things. Uh, and now I am very, very fortunate to be living, uh, you know, I'm living my, my best life and, uh, was able to make my nine to five optional and doing that in a point in time where I'm still in my forties and, uh, living between, uh, the US and, and Europe and that was part of my life goal. Uh, very, very fortunate and super excited to be back here and share another conversation with you, man. Michael: Oh my God, I love it, I love it. Billy, before we jump into it, I'm just curious, do you remember the best compliment you've ever received? Just outta curiosity. Billy: The best compliment. So you've kind of putting me, putting me on the spot, man. Um, I don't know. I think that's when you have to ask my parents. I don't know because they're , you know? I don't know. I just, I don't know. I, I, I can't remember. But usually it's, it's probably something that's not related to me, but something that I would've learned from my parents. More than likely. Um, but I don't remember specifically why, Why do you ask? Michael: I love it. I'm just curious, man. I'm curious to know if people remember, like human psychology, if people remember the compliments more, or do they remember the insults more? Billy: I spent 26 years of my life, uh, 20, one of the 26 years in sales and sales leadership roles. So the, the bad stuff I've learned to just kind of let it go. , the good stuff. I try to. Um, but if it, like, one of, part of the process that's happened with me is I try not to internalize too much of this stuff because then I kind of keep that and there's a tendency to say, Well, I've heard this so many times, therefore I am, um, I always try to work and be in the best version of myself, so even if I get a compliment, it's kinda like cool. I appreciate that. I probably learned that from my mom, from my dad. It's something I've seen from my brothers or something that my, my wife is helping me to be better in. Michael: I love that man, I love that. Can we turn back the clock a little bit, Billy, and talk about. Your corporate career, because I think that you have a, a similar story to a lot of folks, especially listening, have an amazing corporate job, are killing it in whatever it is they're doing. Um, and they can see themselves doing that maybe forever you had kind of a life change. I'm just curious, like why did you decide to go into business for yourself? Billy: So, you know what, Michael, this is actually super, um, such a wonderful question and I can tell you, I think the last time I told you that there was something that happened to me when my, um, it didn't actually happen to me. It happened for me when my son turned three, I missed his birthday right and I, because I chose to go to a business meeting that was in Germany because I was chasing the corporate dream. I was, you know, that was the thing that I was supposed to do, I was a really young father in that day. It was, I felt an incongruency in my, like, in my being right. I was, I woke my wife and son up to, you know, wake them up and our one year old just to give a hug to our three year old and kiss and then I was out the door. So that was the thing that made me realize like, hey, look, I've gotta kind of take action. I really like my, my corporate career, but I got lost somewhere along the way and my priorities got outta whack and so that helped me to take, start taking action, stop reading a lot of books. Cause I'd been reading books for probably three or four years, right? I knew all the numbers, all the theory, all the stuff, but I didn't take any action and I'm very, very proud to say that I've just celebrated a decade later, right? A decade later, I was able to accomplish the goal, which was being able to make my nine to five optional and even though I went in probably for the last three years and I didn't actually financially need to, I chose to go because, um, the life balance that I had was much better than it had been the previous years. Um, I was still enjoying the things that I was doing in my role. I was really well recognized. I was, you know, making way more money than I thought I ever should be, Uh, making and a decade later, like I literally just came back from, uh, Ohio, uh, where I was, uh, over visiting some friends, got to go to a, a sporting event, which was fantastic. Saw family members and then was able to be back here. Uh, for my son's 13th birthday. So a decade later, I recognized that the action that I took for a decade while I was working my day job, having this side hustle, like it really, it's paid off and it hasn't been perfect. Michael, Um, not even close to perfect, but the fact of the matter is I got outta my own head. I started taking action. I started seeing results, and then I started multiplying on that action and. Even though I left the corporate, because something also non-financial, and I think we talked about this last time, happened with my dad, and it helped me to realize like, okay, I really like what I'm doing, but there's some other things that I can do now less than a year later and my son's, you know, 10 year, 10 years later, his 13th birthday, I'm at a point where I'm like, wow, you know, all these things that I dreamt and wrote about on my dream board. They actually came to fruition. Um, not perfectly, like I said, but you know, being able to be in this point now is, I, I, you know, I'm glad that I started taking the action and I'm glad that I started that side hustle and I know that I worked through a lot of, you know, a lot of crazy hours during some of that time, but it wasn't all for nothing. Michael: Yeah. That's amazing, man. Well, first off, congratulations. That is super, super exciting to hear and I'm sure your family is super thankful as well. Let's talk about like, I think so many folks get it in their head that they can't have a side hustle, or they can't go build a business of their own either because they don't feel creative enough, they don't feel inspired enough, they don't feel called to do something, or they just feel like they don't have enough time. So talk to us about the mindset around. I'm working my nine to five scraping by or doing really well, not even scraping by just doing really well, but I'm exhausted at the end of the day. How does someone like that even think about doing something else? Billy: Yeah, so, and you know, I, I guess I kind of put it in a, there's a coupl
Why you might want to have a Public Adjustor on your team
In this episode, we welcome Public Adjustor, Andy Gurczak to speak about the role of PAs, and how you can make the most out of the undesirable experience of haggling with your insurance provider -- ensuring the highest possible settlement under the terms and conditions of the policy. Andy Gurczak started in construction as a laborer and got his in as a public adjustor through a contractor he worked for. Quickly climbing the ladder, he helped grow the business by attaining new clients and further building relationships with existing clients. Andy started his own company, AllCity Adjusting, where he and his team process over 1000 claims per year. Andy's Contact Info: https://www.allcityadjusting.com/ c: 708 655 4186 --- 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: 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 Andy Gurczak with All City Public Adjusting. And he's gonna be talking to us today about what a public adjuster is, and why anyone who owns property should consider using one if they have an insurance claim. So let's get into it. Andy, what's going on, man, thanks so much for taking the time to hang out with me today. I really appreciate you coming on. Andy: Mike, thank you so much for having me on. It's a pleasure. It's always it's fun to do these. So I'm excited. Michael: No no. It's truly my pleasure. You're the first like we've done I think this is episode 300 and change and you're the first public adjuster we've had on so anyone who knows me knows that I'm a total insurance nerd and insurance buff so but for anyone who's not familiar, like what is a public adjuster and kind of give us a quick and dirty of what you're doing in real estate. Andy: First of all, Bravo on 300 episodes. Plus, that's awesome. So thanks for you guys. And I'm lucky PA so this is pretty cool. Yeah, so public adjuster is is licensed by the state, he's legally able to represent the insured in their claim process, negotiate and settle the loss for them. Whether it's commercial or residential. It's basically like having an attorney on your side or an accountant doing your books. It's the same exact thing. They're licensed by the state that they work in as well. Michael: Okay, okay. And I mean, it just seems like kind of counterintuitive. I go and pay an insurance company every single month, every single year to give me insurance. Then when I have a claim, an insurance claim, I go to the insurance company said, Hey, insurance company, here's this claim, pay me for the claim what I'm owed. So why do I need a public adjuster? Like why does your job even exist? Andy: Yeah, that's a that's a great question. The reason our job exists is because insurance companies don't pay claims and don't pay them fairly. We've talked about this before the show, Mike, you work the insurance side. So you know, that claims, actually two people that work in our office work the insurance side, and they've got they seen how bad a guy and came to our side. Because claims are handled, I mean, horribly every year, it gets worse and worse. And our we just had a meeting with a couple of attorneys just discussing what's going on and what we could do in some situations, because it's getting so bad, that, you know, insurance companies aren't responding for a month or two months, or just I mean, so having a PA on your site, even though it's your claim, and you think you have to remember that insurance adjuster, that staff adjuster and every one that they send out every vendor contractor they sent out, they all get paid by the insurance company. So they're all working for this one entity. And then you're by yourself. And you're thinking, well, they're on my side, no doubt on your side. It's all about profits, margins, all that good stuff. So… Michael: Yeah, I know it's so the word of news is sick. When you find out kind of what's going on under the hood. It's really what should be a partner relationship. Like you mentioned, everyone on the same team working for the same goal can be come very contentious very quickly. So you said it's like having an attorney or like having a bookkeeper on your side? I mean, it sounds expensive. How much do public adjusters charge? Like, how does that work? Andy: Easy. Yep, Pa is most of the time charge a contingency fee. So there's no retainer is nothing, it's all contingency on what they recover. And you know what the claim settles for. And standard is 10%. Like our company has adopted just a 10%, nationwide, whatever claim we're handling, whatever the size is now, some situations where we come in, let's just say months after a year after the claim has been paid, and we're just trying to figure out maybe another coverage or paid additional than it might be a higher fee of maybe 20-25 on the money that we recover above that amount that would the only difference, Michael: Okay, and so just so we get it crystal clear for all of our listeners, because I just went through this on a claim to fire claims I had on a property. If the insurance company comes into my claim, and says, Hey, Michael, we're gonna give you $100,000 For your claim, and I'm like, There's no way it's gotta be worth way more than that. You will come in or a public adjuster comes in, you end up getting me a million dollars, you're gonna take 10% of that additional 900k That you got me above and beyond what I was originally awarded. Andy: Yeah, exactly. And something in your situation. So when we have claims, and we have large investors and management companies, we have a pay scale that actually the percentage goes down once it reaches a certain amount. So reaches, you know, half a million that 10% may become nine, right for every client, we kind of work with them, just because we kind of know their position. And again, we want to create a relationship that is long term, because then we're getting called when before the claim even starts right because we want to be there. You know, another question is when do you want to hire PA for the day you have a claim, because you want to make sure if that claim is a legit claim, if you should even file that claim, whatever your deductible is, is that even a covered loss? A PA will, you know, we do this for our clients all the time we do their policies with their claims without making any money or charging any fee. It just part of our relationship with our clients. Michael: Okay, I'm so glad you brought that up, Andy, because I get this question all the time. Because so many people don't like, insurance, education is not something that's really provided out there. And I'm wondering if that maybe is on purpose by the insurance companies, but like, how should people if they have something happened to their property? And statistically, if you own a property or enough properties long enough, you will probably have a claim? So what's the process? Like if you could articulate and paint us a picture of as a property owner, whether it's our own property or an investment property? What should that process look like? What should what should owners be doing? Who should they be talking to? Andy: Yeah, if you don't have a PA, and you're kind of going to try to do this on your own, you want to first stop whatever loss happens, you want to mitigate the loss, right, you want to get first you want to you want to get your copy of your policy to you want to see if your agent because you most likely don't have a copy, because no one knows that they don't have a copy until they have a loss to be like, Oh, I have this page, I'm gonna get your declaration, you need your policy, your booklet, you know, no one gets that usually, until something happens. And then it's hard to get it from the insurance company, it's like, they don't want to give you your own policy, very normal. Then you want to mitigate the loss. So if it's a fire, you want to board it up, protect it, make sure no one can get in there. Or if it's a roof, you want to cover the roof, if it's a roof claim, and then you want to go and take pictures and document as much as you can, and then call the claimant. And when you call on the claimant and you're trying to set the reserves high enough. So then when they come in, and let's just say you have $100,000 loss, but when you told them the claim, you might have said, well, it's a small fire in the kitchen, small smoke, they might have reset the set the reserves at 25,000. And now the claim is actually 100. So now when we're trying to fight it, we're going to five managers like what's the example at State Farm, for example, once it goes past the reserves, you're going through letters like five managers to approve one payment are one extra additional line item, it's it gets really crazy. So the most important is mitigating, mitigating the loss, getting your policy, reserving the claim calling the claimant, right? And if you don't know the answer, when you're discussing that claim, when you're calling it in, just say I don't know, because a lot of people get into trouble by trying to say too much to be too honest. And it's not about being honest or not, or, or lying. But people say the wrong words, they might use the word like mold, I see mold. Oh, well, molds not covered. Here's a denial letter. Well, the water, you know, the water happened three days ago, we have there's mold, because you know it's wet, it's humid mold molds catch up, but there's still water damage that's covered. So different words they use. So you gotta be careful with words you so you want to do your due diligence, or even call your agent to call that claiman
Can you crowdfund a 1031 exchange into institutional real estate?
Mr. Fernandez is President and Chief Executive Officer of 1031 Crowdfunding. Before founding the Company, he was Senior Vice President of Healthcare Real Estate Group in Irvine, California. Since January 2001, Mr. Fernandez has been responsible for researching and compiling accurately verifiable documentation across various industries, including assembling compelling content for marketing materials related to the purchase and acquisition of various real estate holdings. He has over 20 years of inside and outside sales experience. He is personally involved in raising over $800 million of equity from individual and institutional investors through private and public real estate offerings. He hired and trained a national internal wholesaler and external wholesaler sales force. In this episode, he shares how he interprets the current state of the economy and the real estate market; and how his company, 1031 Crowdfunding, creates opportunities to take advantage of during times of uncertainty. Episode Link: https://www.1031crowdfunding.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: What's going on everyone? Welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum, and today I'm joined by Ed Fernandez, President and CEO of 1031 Crowdfunding and he's going to be talking to us today about the state of the economy, the market, and his company, 1031 Crowdfunding, and how we all can take advantage of crowdfunding 1031 exchanges. So let's get into it. Ed what's going on, man, thanks so much for coming on and hanging out with me today. I appreciate it. Ed: No problem. Michael, thank you so much for having me. Michael: No, it's really, really my pleasure, I am super excited to chat with you, because you've got a really cool company doing some pretty cool things. So I know a little bit about it but for all of our listeners who aren't familiar with 1031 Crowdfunding give us a little bit of background, what is it that you all are doing? Ed: Sure, so what we're doing is we're taking real estate, packaging it up and selling it to investors in little pieces. For those investors that are either tired of the tenants, the toilets in the trash, or they run out of this 45 day Id period that you have to actually do for the IRS and so if you're looking for institutional real estate, but you really don't want to go running around trying to find your own property in this limited period of time, you can come to 1031 Crowdfunding, where we have a slew of institutional property for those investors who are looking to be passive, and defer their taxes through a 1031 exchange. Michael: Man, I love it, we are definitely going to come dig deeper into that because I was under the assumption that you couldn't turn 1031 into a passive investment. So we've got a lot to talk about. But before we get there, I would love if you could give us a little bit of insight into where you see us currently in today's housing market with all the stuff we got going on. We're recording this towards the latter half of September and 2022. What's going on man? Ed: Well, as you know, yesterday, the Feds hiked rates again to another 75 basis points and so what's so what they're trying to do, obviously, and it's currently not working, by the way, they're trying to slow down in the housing market. But with money continuing to flood the economy, real estate prices are still exceeding and going up and people can afford real estate or housing, because interest rates are going up. So we're in a weird market today, I can say we can go back to 1991- 1992 and kind of look at that market, very similar type of events that are occurring today. Michael: Okay, and for all of our listeners that weren't plugged in to the to the real estate market back then what was going on back then. Ed: So back then it was the tech boom, right? Remember the tech bubble that blew up? Michael: Yeah. Ed: Prior to that event occurring, interest rates on loans were double digits 12-14% and people were still borrowing and buying houses and getting involved in real estate. But then the bubble burst in the tech industry and all that money flooded into real estate and that's where you had all this appreciation on the real estate side. So in today's market, even though we're not in double digit interest rates, interest rates are higher than what real estate is producing. So we're not as bad as we were. But we're actually pretty close to where, and who knows, we might get there. If the fence keep doing that. So those are the similarities where interest rates exceeded yields on real estate, and real estate just kept going up. Michael: Yeah, that's so interesting. I mean, I remember hearing about those double digit interest rates, but I also have to think back and you could go park your money in a bank CD and make 6,7,8, 9%, which now is unheard of. So it's, again, we have these super high interest rates, but you can't make a yield, letting your money sit in the bank. It's getting eroded by the high inflation. So it's a really unique time Ed: And I'm glad you brought that up. You know, what's very interesting is that Treasury bills now you could buy a federal backed treasury bill, fully liquid and get 4% where real estate is producing three and three and a half percent. So you're kind of seeing what's going on in this market. Michael: Yeah, yeah. Where do you think we're headed? I want you to break out your crystal ball, change the batteries out put fresh ones in there. What's going on in the next two, three years? Ed: You know, it's, it's, it's a weird market, you know, I'm not gonna get into the political frying pan of who's doing what? Michael: Yeah… Ed: Right. But if money continues to flood this economy, I don't know how you put on the brakes on inflation, if that continues to happen. So what has to happen and what I hope happens is that money tightens up so that the feds can kind of slow down and we can get real estate to a level where people can still buy a home, the millennials, those are the first time homebuyers and investors can still get a yield. I don't see that happening at least for another two years. That's where I think we're headed but we'll wait and see. Michael: Okay and are you thinking that the interest rate hike is going to continue along that two year frame or are we kind of plateauing and we just have to wait a little bit longer for the effects to take hold? Ed: Well, if Feds continue to raise interest rates, then now we're gonna go into a recession and how do we come out of that? So it's a fine line of how much to push and how much not to push. So we just got to wait and see, look, if I had a crystal ball, and I can tell you exactly what is going on, I would not be on this call. I'd be on my 200 foot yacht in Monaco watching F1. So I'm just letting you know. Michael: Totally. Yeah, that's a great point to make. All right. Well, I am very curious to see how it all shakes out, I think, as are many others, but and let's transition here and talk about temporary 1031 Crowdfunding. So someone has an asset to sell. They've, they've seen the skyrocketing appreciation and let's just walk through it like some numbers as an example. Because I find that makes the conversation a bit more concrete. someone's property is worth a million bucks. They got 400,000 and debt on it and they want to go 1031. The thing, so they sell it for 1,000,000 1031 rule says they got to buy something for at least a million, if not more. Where does sentry one crowdfunding come into play here? Does someone have to bring additional 400k that was in debt to the table to invest in have a proper 1031, how does that work? Ed: No, no, absolutely not. So one of the one of the biggest things of a 1031 exchange is what we call closing risk, right and so you have 45 days to try to find something and then that's not, you know, there's holidays, weekends, that all counts, right? So you're out there, pounding the pavement, trying to find a replacement property within that 45 day period, which makes it very difficult. So in using your example, if an investor had a million dollar sale with $400,000 of debt, they can invest as long as they're an accredited investor and let me define that either an annual income of $200,000 a year for an individual 300,000 per couple or a million dollar net worth excluding the home you live in, you can come to our website and at any given time, we have anywhere between 30 to 50 different options to choose from and these investments are called Delaware statutory Trust, the term we use is DST been around since 2004, directly on the IRS website, and really what the DST is, is very similar to a living or family trust, where there's a trustee managing a trust for the beneficiaries, you as an investor, or a beneficial owner of a trust that's on title real property. So it could be a $50 million apartment building $100 million Amazon distribution center and for as little as $25,000, you can own a piece of this big property, right off all your expenses, like you're doing today, on your schedule II get paid cash flow on a monthly basis every 15th of the month, and when the property is sold, all the investors get 100% of the upside, and you're still in another 1031 exchange. So that's what we do. We're looking for those investors that are looking for passive investments, tired of the tenants and toilets in the trash or running out of time? Those are the ones that give us a call. Michael: Yeah, no, that makes total sense and it sounds awesome. So if we go back to our example, of the million bucks in the in the 400k in debt, how doe
The full story of REITs and fractional ownership with Daria Davydenko
Daria Davydenko is a Securities Sales and Operations Specialist at Roofstock where she supports Roofstock's fractional ownership product, Roofstock One. Prior to that, Daria served as Vice President at Goldman Sachs. Her background in finance provides her with a unique view of financial markets and risk management. In this episode, Daria walks us through the history of public and private REITs, and who might be a good fit for investing in them. Additionally, she covers Roofstock's exciting new investment, Roofstock One, a fractional ownership option for accredited investors. Episode Link: https://www.roofstock.com/one --- Transcript Before we get into the episode, this podcast is intended for general informational purposes only and is not financial, investment, or tax advice. The information provided is not directed toward any investor or category of investors and is provided solely as general information products and services or to provide general investment education. Nothing in this podcast should be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. 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 Daria Davydenko, who is our sales and operations lead for Roofstock One and she's going to be talking to us about the history of public and private REITs really what they are, and who might be a good fit for investing in them. So let's get into it. Daria, what's going on? Welcome back to the podcast. Great to have you back. Daria: Hey, Michael, good to see you again. Thank you for having me. Michael: Yeah, my pleasure, my pleasure. Great to see you again. So today, we're talking about a really cool offering Roofstock has Roofstock One. Can you give us a really quick insight into what that is and then I would love if you could help walk us through kind of the history of REITs in this product and how it came to be? Daria: Yeah, sure. So Roofstock One is a relatively new offering that we have as part of all of the different products use that we have on roofstock.com. Roofstock One is structured as a private REIT. So one of the benefits of investing in Roofstock One is if you invest in real rental properties, you have the benefit of knowing exactly what your own. While it is a nice benefit, generally, it's not available to visit more passive real estate investments like REITs, public or private. However, we made Roofstock One different, even though it is structured as a private REIT. It is a fully transparent and customizable. So you know exactly what your own by buying a share of Roofstock One. So it is the first of its kind single family rental rate that's transparent and somewhat customizable to investors. Michael: Awesome. All right. Well, we're definitely gonna dig more into that here in a little bit. But I would love if you could give us again, a kind of a background, like what is a REIT? How did we get here public versus private, bring us up to speed. Daria: Yeah, so actually, what so REITs have a very interesting history, that I don't think a lot of people realize how the first I guess, you know, private equity firms have emerged, and then how can a REIT structure was created. So back in the 1980s, investors were mainly individuals and they were kind of using real estate to kind of harvest losses and shelter profits. So that was kind of the main reason why people were investing in real estate and also in the 80s, there was something that was called S and L. That they were created by the Federal Home Loan Bank act of 1932. They were like Savings and Loan Banks that basically had some caps on interest rates on deposits and loans, and but they were able to basically lend money to those individuals so they can buy real estate. Now, obviously, in the 80s, we all know that there was a recession and so because of the restrictions that were placed, placed on this SML banks, you know, because they had some caps on interest rates on deposits and loans, it greatly limited their ability to compete with other lenders as the economy slowed and inflation took hold and so for instance, as savers spelled money into the newly created money market funds that were yielding, like a much higher interest rates, like SNL just could not compete with those traditional banks due to their kind of lending restrictions and so when you add the recession of what happened is because the recession was sparked by the high interest rates that were set by the Fed in an effort to end the double digit inflation, which is kind of what we are kind of seeing right now, nowadays. So now we're left with little, you know, little more than, you know, kinda like a dwindling portfolio of low interest rate mortgage loans and so obviously, their revenue stream, you know, were severely tightened and so in the 1986, Reagan changed the law and then this indication was, you know, basically it was no longer working and there was no longer like the tax loss harvesting that was allowed in real estate, that can actually cause a real estate values to crater because a lot of people did not see any value of investing, I guess, are holding real estate anymore and so that actually caused SNL crisis and so I think a lot of people don't realize but during the SNL crisis, there were like 8000 banks that have failed. So, because of this, yeah, because of this kind of crisis that happened. I mean, this was like the largest crisis, you know, since the largest collapse of US financial institutions since the Great Depression. And so like that, that kind of happened in the 1986 and so what happened, right, so once there's no kind of crisis happened, the government had to step in. So while they found that there was a lot of highly levered foreclosed personnel that owned a lot of real estate, and so government inadvertently owned those banks, and so they end up owning hundreds and 1000s of properties. What happened next is they have created something that's called the Resolution Trust Corporation, that basically became a property manager. So there sole purpose was to own and dispose of those distressed assets. So Resolution Trust Corporation or short, RTC was a temporary federal agency. So basically, from the 89, to the 95. You know, they largely were trying to kind of resolve this SNL crisis that happened in the 1980s, they, you know, they were basically like trying to do some property management, cleanup, what kind of what was left behind and another, I guess, purpose or creation, the RTC was to dispose of this assets. Now, the government wants to sell a lot of assets and so they need to have, you know, it's going to be highly inefficient for them to find like a single bar and buy, like, you know, who can just buy like a single property. So what they had to do is they had to figure out how to find a pooled vehicle that can just come in and buy this pooled kind of assets and so that's when the first private equity firms were created, who kind of came in, they were able to kind of pull financing, and then kind of buy like large amounts of this kind of real estate that was left behind after the SNL crisis. So that's where kind of their real estate or you know, kind of private equity investment was created. That's kind of the history of it. Now, the real estate investment trusts were a way for individual investors or intervene institution investors to get exposure to real estate without kind of having to go through, like active management of the underlying real estate. So Real Estate Investment Trust was a way to, for you to get exposure to, you know, real estate as a class. But you don't, you don't have to kind of forego, like, you know, the whole kind of financing closing, you know, property management aspect of it, while still enjoying the benefits of getting dividend distributions from the rental income, you know, the appreciation of the properties, etc. and then, in addition to that kind of REITs were created to encourage investors to get into the real estate market, and also get some kind of tax benefits from it. Now, I know I spoke a lot. So I just want to make sure I, you know, there's any questions that I can answer for you, Michael. Michael: This is super interesting. I mean, one thing that terrifies me is this idea of government, governmental property management, that just would have been an absolute nightmare, because we all know how that probably worked out. But no, I think that makes a ton of sense and so the so these private equity firms were created to buy all of the hundreds of 1000s of distressed assets that the government ended up owning because of the collapse and the financial crisis. But so maybe, help me understand what a REIT is, like, is a REIT a share of the private equity company that then owns these properties, is that how that works? Daria: Yeah, so REIT is basically like a pooled vehicle, you can imagine that, you know, let's say, like, just as a simple example, let's say you, Michael, you own kind of 10 different properties and you would like to allow other, you know, investors to kind of participate in ownership of those properties. You know, you can package them basically into a read. Of course, this is more complex than kind of what I'm describing, but in the simple terms, you can package it into the REIT and sell basically shares of the three to other investors who can get economic benefits of kind of owning 10 of those properties. REIT like many companies, they distribute earnings to investors in the form of dividends, unlike many companies have a REIT incomes are not taxed at the corporate level. So kind of that means that REITs are actually they avoid the double taxation of corporate tax and personal income tax. So instead REITs are sheltered from the corporate taxes so their investors are only taxed once and this is a major reason why investors value REITs over you know, other dividend paying kind of structures out there. Another benefit of REITs I guess, that they were created is that they're wide
The facts and fictions of asset protection with lawyer, Brian Bradley
Brian T. Bradley, Esq. is a nationally recognized Asset Protection Attorney. He has been interviewed and a featured guest on many top shows such as: Bigger Pockets Rookie, Flipping America Podcast with Roger Blankenship the "Flipping America Guy" and member of the Forbes Magazine Real Estate Council. Brian was selected to the Best Attorney's of America's List 2020, Lawyers of Distinction List three years in a row (2018, 2019, 2020,) Super Lawyers Rising Star List 2015, nominated to America's Top 100 High Stake Litigators List, nominated to the 2017 Law Firm 500 Award. Brian also writes on high-end asset protection. Ownership of real estate has many benefits from an investment and tax standpoint. There is downside risk, however, since the value of real estate holdings may be significant and can be used to cover damages awarded in a lawsuit. Therefore, it's important to consider asset protection strategies relating to real estate holdings in order to minimize such risk. In today's episode, Brian lays out how asset protection really works from a legal standpoint and dispels some common myths that are thrown around in the industry. Episode Link: https://btblegal.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: What's going on everyone? Welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by Brian Bradley, asset protection attorney and he's going to be dropping some knowledge about all the things we should be aware of as real estate investors when it comes to protecting our assets. So let's get into it. Brian, what's going on, man? Thanks so much for taking the time to hang out with me today. I really appreciate it. Brian: No, absolutely Michael, thanks for having me on. It's going to be an important topic, a fun topic, I'm gonna try to keep it fun and not legally dense and you know, just like I'm not anyone's, you know, Attorney here legal guru. So we're just gonna be talking generalities, right? We're gonna learn a lot in this, you know, it's gonna be a lot of fun and as you're building scale and making more money, you know, you're getting a bigger red button on you and so like this world of where we're gonna be talking about asset protection is kind of a big deal. There's just a lot of ways to skin a cat, different layers, different strategies for where you're at in your life. So, you know, I think as we break these down, hopefully I can, you know, make this will make a little bit more sense for you and your listeners. Michael: Yes, it will. Thank you. I am super excited to learn a lot because before we hit record here, you and I were chatting about some of the topics that we'll be covering today and I was like, what is that totally brand new. So I'm really excited from a self-serving perspective. So give everyone that quick and dirty background who doesn't know Brian Bradley, who you are, where you come from, and what is it you're doing in real estate today? Brian: Yeah, absolutely. So, you know, I'm an asset protection attorney, you know, we're talking about it off recording, like from Lake Tahoe, so you know, big snowboard ski, you know, ski bum, you know, Lake bum, I got into asset protection from the litigation side of the law, I was selected to America's best attorney list 2021-2020 Super Lawyers rising star 2021-2015. Michael: My guess is that no, that's not like an online survey, you filled out to get that… Brian: Oh, no, and another do with me, that's really just people that you work their butt up in court, and then they recommend you or judges recommend you and I have nothing to do with it and it's actually pretty, you know, I appreciate even just the nomination, let alone winning it, you know, to where I think they only say 1% of all attorneys in the nation even get nominated for those awards, let alone then, you know, 1% of those even gets picked to as a as a winner and so… Michael: Congratulations… Brian: Thanks, yeah and for me getting into, you know, asset protection, which will define what that is, you know, in a minute, like, that'll be like our think our base starting point. I just, I just got into this weird area of law, because when I like money, I like investing, I like, you know, not paying as much taxes as you know, as I can and as you grow, you got to be smart with your money, right and who can take it from you and so as a trial lawyer starting out, I just had so many clients who were being sued and their lives just turned completely upside down coming to me after they're already being sued and at that point, you know, you're just too far down the rabbit hole, you know, it's like going to get a car insurance after you already got in an accident or, you know, home insurance after your house already, you know, caught on fire, it's just, it's not gonna happen and so I see a lot of people thinking that they don't need to do anything is another misconception. You know, it's kind of human nature, right? You know, like, I'm just gonna ride lady luck. I'll deal with it when I when, you know, it hits me later on and that's just not how anything that needs to be proactive in the legal sense is going to work like insurance or asset protection. Wishful thinking is not a protection tool. You know, that's how everything you know, like, go to Vegas, go to breaks and hit the roulette table and see how long your wishful thinking is gonna last for you, right? You know or, you know, as you're leveling up, people forget about this. Like, as your wealth is leveling up, you're leveling up, you don't level up your protection, you don't level up your insurance. Yeah, people go buy an umbrella policy, but they don't realize what an umbrella policy is just like everything else, right? You know, it just provides more access and money to, you know, for coverage, but it doesn't, it's not the same escape clauses, you know, like, there's no insurance in the world that's gonna say, okay, hey, if I go punch you in the face, are you gonna cover it for me? No, like, they don't cover you for intentional wrongdoings or allegations of fraud and intentional wrongs and so that's how they have their escape clauses out especially for very big cases. You know, if you're talking about like a million dollar or more lawsuit. A couple other big misconceptions that we need to address as we lay this landscape is just, you know, the revocable living trust, if people think like, oh, yeah, I have a trust, right, that you know, they don't realize trust. There's a lot of different types of trust. Your family estate plan, your revocable living trust are not designed to protect you while you're living in they don't have the lead have teeth to be able to. So once you pass, they're only designed to avoid probate not protect you while you're living from lawsuits and then over the last five years, I've noticed this massive misconception about the use of limited liability companies. LLCs and they just think that they're like, you know, Silver Bullet Dracula slayers and you guys miss, like, first word first letter, like limited, I tell you. Whereas, whereas this happened, where's this come from? Like, they're not hiding the fact they tell you like they titled it telling you limited liability. So like, now we have to reeducate people on this, like, yeah, don't put everything in the world under one LLC. Otherwise, if it gets pierced, you're gonna lose it on like, What are you talking about, which we'll break that down, you know, in a little bit. And then the sad thing is like, and I think it's worth explaining is this, if you just look around, and you look at, you know, our legal system and the world we live in, it's just broken, it's a broken system, you know, and we're so happy nirvana and just to like, kind of lay this framework down a little bit more. We're no longer about justice. We're about redistributing wealth from the haves, which is you, your listeners, people trying to grow and accumulate more to the have nots and over the last 40-50 years, things that didn't happen in the past, or that weren't allowed to happen in the past like contingency fee lawyers or law from advertising their common place. and then this created a cultural shift of a predatory legal system that's no longer about justice. So it's about profits now and then when you get on the road of high net worth, in affluent families and wealth, this level of protection, now we have to deal with taking a macroeconomic, more of like a global look about what's going on and the big picture here is really that we have a global financial system that has structurally deep rooted issues. You know, we have government backed fiat currencies that are now in question. This is also including the US dollar. So don't think like, just because we're in the US, we're exempt from all of this, you know, monetary policy today, you know, the one that exists is, you know, inflate or die and then you got governments looking for a deep and accessible pools of financing and meaning our money, you know, the hard workers, the people who are investing, along with financial repression, monetary economic manipulation. So this just adds all the challenges that we have to deal with when we're looking to protect your assets and so asset protection is that modern best bet to level this playing field by using a lot of the tools and the combination of the tools that we're going to talk about today to make it very hard for you to be collected on and so what this is really about is just like a talk about giving you peace of mind, lifestyle preservation, and you know, really just how collectible are you at the end of the day… Michael: Love it. But well, I am all about doing things to help peace of
How different corporate structures work and how to choose the right one
As a lawyer in Nashville, Tennessee, Brian Boyd helps clients with real estate, construction, and business matters. It is with that knowledge that he and his wife, Dawn, have grown their portfolio to a six-figure income. Brian earned his BA from the University of Tennessee—Chattanooga, a JD from Samford University's Cumberland School of Law, and an LLM in Taxation from Georgetown University Law Center. When not practicing law or working with Dawn on their real estate ventures, Brian can be found on the Brazilian Jiu Jitsu mats at his local gym. His newest book is Replace Your Income: A Lawyer's Guide to Finding, Funding, and Managing Real Estate Investments Today Brian talks about corporate structures, how they differ, and what you could be doing to protect your assets. Episode Links: www.briantboyd.com. www.boydwills.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: 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 Brian Boyd, who is a legal tax professional as well as an author and active investor. He's gonna be talking to us today about what we need to do to protect our rear ends. So let's get into it. Brian, what's going on, man, thanks so much for taking the time to hang out with me today. I appreciate you. Brian: Hey, Michael, thanks for having me today. I'm glad to be here. Michael: I am super excited to chat with you. Because you are a legal attorney and investor something we don't often see too much of. Brian: Yeah, I am. I started out in Washington, DC as a tax attorney at a company called Ernst and Young. And over the years, I got into real estate and investing because I was representing a lot of contractors and developers and started looking at the way they were doing their businesses. And from there, I started tweaking their models trying to figure out well, how can I make this a little bit more tax efficient, create a little bit more loss with a lot more cash flow. And so that's when my wife and I in 2017, decided to get into real estate investing on our own. And now we're up to 25 doors, and we're cash flowing just fine. You know, in, in fact, maybe in the next year or two, she could step away from her full time job. And we'll just manage real estate. Michael: Man, I love it. And so is your background in tax or on the legal side of things, or both. Brian: So I have a JD and I have an LLM, which is a master's degree in, in law. But It specializes in tax. So yes, I do corporate formations. I do business transactions, helping people the real estate, anything and everything to do with businesses, individuals and their finances. In real estate investing. That's what I do. So there was a time I used to go to court, but I don't go to court anymore. My partner goes to court, and I just do business transactions and real estate investing. Michael: Man, I love it. And before we get everyone's hopes up, you are located out in Tennessee. But is that the only state in which you practice in? Or can you help folks all over the place? Brian: So I am licensed in Tennessee and Vermont of all places. My partner is licensed in Tennessee in Maryland. But if it has to do with federal law, I can work all over the country. However, if people are asking specifically about California law, I'm not your guy, call a local attorney speak to a local attorney. But from a structural standpoint, I can give you the basics and kind of point you in the right direction. But unless you're in one of those jurisdictions, and you want me to practice in those jurisdictions, those are the jurisdictions I'm limited to. Michael: Okay. Well, let's talk about that for a minute. Because I think we were chatting before the show, we hit record, and there are a ton of Californians physically moving out to Tennessee. But my guess is they're probably a lot of Californians investing out in Tennessee. And so for those folks that maybe live outside Tennessee, but are investing in Tennessee, in terms of structuring their team around them, should they be thinking about having a local attorney local to them, as well as someone such as yourself or a an attorney located where the property is? How should you be thinking about that? Brian: No, that's great question. I actually had an attorney contact me a few weeks ago and he is a he's in Chico, California. He called me and said, Hey, I properties in Tennessee. Can you help me on what? Yeah, I'll absolutely be happy to help you. And so what we did is we structured a Tennessee holding company with a wholly owned Tennessee subsidiary. And even though he's out there, he owns the LLC here. And as he invests around the country, like Texas, or Florida, or you know, any of the other states, you know, we'll set up other holding companies to represent those entities. But he can stay in California and own these companies, as long as they're structured properly, to pass through to him over in California. Michael: Okay, awesome. Well, Brian, give us like, the quick and dirty if there is such a thing of what investors need to know, because I think a lot of our investors are starting to scale their portfolios that got a couple of deals under their belt, and they're really looking for some asset protection. What are some things they need to be aware of and where have you seen people go wrong? Brian: So I have seen people go wrong with a few misnomers about what they believe series LLCs are and what land trusts are. So a series LLC, I know that everybody hears therefore multiple properties. and they are. But they also don't understand that when you have a series LLC, you have to have a separate bank account, a separate tax ID separate books, all of that creates an administrative burden on you to keep all these bank accounts separate all these books separate all these tax IDs separate. And typically I see those used more efficiently if you're a developer, that way you can develop a series, sell it, and not worry about it. Again, if you're holding your assets in series LLC, and you have series one through 10, for example, that's 10 tax IDs, that's 10 sets of books, that's 10 book keeper entries every month for those separate things. Whereas if you just have an LLC, and you treat it properly, so your corporate veil cannot be pierced. And a corporate veil is the corporate formalities that you have to adhere to. So your corporate structure is honored by the courts. And typically, here are the things that people get popped for, they'll pay for their groceries out of their LLC, they'll pay their own mortgage out of their LLC, or they'll just treat their LLC like a checkbook. And that's not what it's for. It is a standalone entity, and it has to be treated and respected that way. So if you don't do those things, you're fine. Your one LLC is going to handle it just fine. For example, my wife and I have, we have a parent company, and that parent company has two LLC is underneath it. And one LLC is for our portfolio over here. And the other LLC is for that portfolio over here. And it all flows up into the holding company, which is a perfectly fine way to structure your holdings. Yes, it is more filing fees every year, it's three filing fees. But if you're trying to get away from filing fees by creating a series, LLC, you're losing the war to win the battle on a filing fee. Because you're gonna pay all these other expenses for tax IDs and book entries and bank statements. And you're just creating a mess. I would not use series LLCs. Now as it relates to land trust, we mentioned that earlier, I've heard a lot of people say, Well, I want to use a land trust. Why do you want to use a land trust? I understand that land trust, get it out of your name. And I'm well aware of that. But it doesn't really create any protections like an LLC would. A lot of people say, Well, I want the anonymity of an LLC, well, you can have the anonymity, you know, of an LLC without using Land Trust. Many states, Wyoming, Tennessee, Texas, you can file your LLC documents, and your name won't appear anywhere on there as long as you use a registered agent. So you can receive the benefits of the anonymity that comes along with the land trust by simply using the LLC. And you'll get more protections with the LLC. So I would encourage your listeners to go talk to a lawyer about setting up an LLC to hold their assets, I tend to eschew Land Trust, they don't really provide the protection that people think they do. Unless you're using an irrevocable trust, which is a trust that gets it out of your estate. Not only does it get it out of your estate, it gets it out of your control, and you can't do anything with it, you have to go through a trustee and that trustee is supposed to use their best judgment on what to do for the trust. So think about that, as you move forward. And these these ideas that people read about online, I really like LLCs, my wife and I use them, I encourage my clients to use them. So that's just coming from my experience and what I do day to day in my practice. Michael: Yeah, from a lot of the folks I've spoken to it sounds like the LLC has come like the Colt 45. For real estate investors. It's reliable, it's standard issue, it can do a lot of the things you need, you need it to do. It's nothing fancy, it just can get the job done. Brian: No, absolutely. I agree with that statement completely. Okay, cool. Michael: And, Brian, I think you're a good person to ask because I think we have similar styles of investing and asset protection, which I'm glad to hear. It sounds like you've broken down your portfolios into two separate LLC
What is happening in the mulit-family market today with Neal Bawa
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 so
Entity structures for investing, and which one is right for you w/ Garrett Sutton
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:
How investors can use private capital to scale with Derek Dombeck
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 wha
Buy real estate on the blockchain with Roofstock onChain
Raising finance for new real estate projects is difficult. Property development firms face interest rates as high as 29% when working with banking institutions as single-source loan providers. They also face challenges with multiple loan sources as crowd financing can be difficult to administer. Blockchain simplifies access to alternative financing models by facilitating investor management for developers and ensuring investment transparency and continuous ROI tracking for investors. In today's episode Goeffrey Thompson, Chief Blockchain Officer of Roofstock, and Sanjay Raghavan, Head of Structured Securities and Co-head of Digital Securities Initiative, walk us through what blockchain technology is and how they are tokenizing properties in a revolutionary way to buy and sell property. Episode Link: https://onchain.roofstock.com/ https://twitter.com/rsonchain --- 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: What's going on everyone? Welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by Geoffrey Thompson, who's the chief blockchain Officer here at Roofstock and Sanjay Raghavan, who's the head of web three initiatives here at Roofstock and we're gonna be talking today about what blockchain is, and how it applies to us as real estate investors. So let's get into it. Goeff, and Sanjay, thank you so much for hanging out with me today. I am super excited to chat with you both. Sanjay: Likewise. Goeff: Thank you for having us, thank you. Michael: No, absolutely, absolutely. So I know a little bit, obviously, who you guys are because we work together. But for anyone who isn't familiar with you. Give us a quick and dirty description who you are, and what is it that you're doing at Roofstock? Goeff, I'll kick it over to you first. Goeff: Sure. So I'm Goeffrey Thompson. I currently have the title of Chief blockchain Officer at Roofstock. Previously, I was General Counsel and I've been a lawyer for by training for a long time and now heading up the blockchain initiative at rootstock together with Sanjay. Michael: Awesome, great. Sanjay: I'm Sanjay, head of web three initiatives. Previously, I was leading securities initiatives at roof stock coming up on actually three years this week. So super exciting tomorrow, I think. Michael: Right on, so really quick follow up questions for you both. Jeff. Were you just like a crypto guy in your everyday life? I mean, how does a real out as a lawyer turn into a blockchain official at a company at the C suite level? I mean, that's incredible. Goeff: Yeah, I kind of backed into it. That wasn't a plan but I had been advising friends. Since 2017, during the ICO boom, the initial coin offering boom, and I started hearing people in my network, talk about it and say things like, oh, well, it's not a security because it's a coin. So you don't have to follow the securities laws, you know, and I thought, I don't get a lot of the technical stuff that talking about, but I know I can help them with the legal stuff. So then I just I was acting as legal advisor for a couple of years and, and then Gary, our CEO knew that and last year, maybe 12 months ago or a little bit more, our board came to our CEO and said, you guys, Roofstock, you need to get smart on blockchain. We're not saying you have to do it. But you know, we want you to have an idea of whether there's something there and so he asked me and Sanjay, because he knew I had some crypto background and there's a lot of legal and obviously, the financial structure is critical as well, so we kind of got into it together. Michael: Awesome and Sanjay, at the risk of sounding like a total rookie, what the hell is web three man, I hear so much about it. Break it down for us. Sanjay: All right. So I know it's so web low. So let's take a step back, right. So web one, which was kind of the first incarnation of the internet, right? There were sites that had static information, you could like type a URL, URL and go and, like, consume that information. But that's all you could do is just a read only type of a platform and then a few years later, the internet evolved to kind of web two, which widely is known as the read write version of the internet. So not only could you consume information, but you could go and, you know, provide information and content to the internet as well as a consumer and what happened with web two was it you know, that ability to read and write created all kinds of new interactions, and that allowed a lot of kind of the internet economy to bloom around it, where the Googles and the apples and eBays and other large companies were able to curate a lot of the content and manage a lot of the traffic. But you know, with social media and stuff, you are providing content as well, and you are consuming content, there was ecommerce, so a lot of these things came about, but the power resided with a very few large corporations that kind of controlled all of these transactions and the when, when web one started, the kind of original vision behind it was a more collaborative environment, where the consumers and the creators and consumers could actually work with each other and use a token economy and share you know, revenue and monetization. So that idea of you know, read, write and then adding on to it at the end. So it's a read write own type of economy that's decentralized. permissionless trustless has its own native payment rails, where the content creators and con Then consumers are all working together and you know, there's no power resting with large corporations, but it's, you know, giving power back to the people. So that's how that's how I would sort of succinctly describe, three and it's so it's a sort of a new way of thinking about things and it's super exciting. Michael: Yeah it does sound super exciting and so give us all like a background again, treat me like a third grader, because that's probably my IQ level when it comes to the crypto and blockchain world. Give us all an idea of like, what is blockchain and what is cryptocurrency and then we'll get in maybe on how to be thinking about it. With regard to the real estate space and why it even belongs here you don't think this… Goeff: Yep, sure, so the core concept for blockchain is that it's a network that can be validated the data that's recorded onto the network, which is the chain can be validated by an a limitless number of third parties who aren't organized or connected in any other way. So these are called validators I could have when you could have when they just computers that read the information that's coming in from the blockchain, they perform some mathematical calculations, and then they verify that the data that's been submitted is, is what it says it is and then at that point, it's formalized and recorded to the block and then, so these blocks are really just pieces of data, data that had been put together and then as you form one block after another, that becomes the chain. So it's really just a chain of data that's been validated by third parties that are completely decentralized. So why is that important because it means that there's no third party, a corporation or government, whoever it might be, that can intervene in the functioning of the blockchain, once it's up and running, and you have enough people who are validating and writing to the to the system, it goes infinitely, and it can't be shut down and so the first use case that really grabbed a lot of attention was payments, right? That's what Sanjay was alluding to, in the early you know, the current web two universe, you don't have an easy way to send value to another person without going through a bank or a financial services company, Blockchain, Bitcoin allows you to do that, it's just simply on the on the chain, if you have value in the in the form of Bitcoin, you can send it to any other address anywhere in the world, instantaneously and no one can stop you from doing that. So this really arose from kind of an idealistic perception, like, we have to be able to have to guarantee our own freedom, you know, the government can't intervene and prevent me from sending money to you and that's where, you know, it came from, like the sophisticated cryptographers mathematicians who had an idealistic view, and that's where Bitcoin came from and then since then, it's expanded to a lot more utility, where you can do much, many more things other than just send payments. You can, you know, NFT, you can have lending platforms, you can have social media companies that are effectively on a blockchain and can't be shut down or controlled by third party. So that's, you know, that's the overview of kind of where it came from and why it's important today. Sanjay, anything to add? Sanjay: Yeah, no, taking a step from there right and that's exactly right, Geoffrey, the original idea was, you know, this all came about during the great financial crisis of 2008 2000, you know, 10 or so, where people thought that these, you know, financial intermediaries are, you know, in control of our lives and so Bitcoin kind of, you know, that was the reason why it came about as a peer to peer system where you can exchange value without involving these intermediaries. But then over the years, we've kind of seen that world expand rapidly and there's other cryptocurrencies now and one of the notable ones is Ethereum and on the Ethereum network, there's actually the ability to create what's known as a smart contract and a smart contract is essentially a piece of computer code that will execute based on a certain event occurring and why that is important is if you think abo
Systems to scale up a healthy portfolio with Steve Rozenberg
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 a
Learn about estate planning and trusts from an attorney
Kellie Chrisman is a California licensed attorney who has experience in estate planning, trust administration, contested trust matters, conservatorships and business/corporate law throughout California. Following graduation, Kellie found her passion for helping people and clients by making the complexities of the law accessible and approachable during the worst of times, planning for a loss or following the loss of a loved one. It is with great pleasure that Kellie feels she can take the worries and difficult tasks of legal issues off her client's minds and allow them to simply be in the moment and focus on what is most important to them. Tune in for today's episode where Kellie shares her insight on what you as a real estate investor need to be aware of to protect your estate and some real-life experiences of some of her own clients. Episode Link: https://www.taylorchrismanlaw.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 Kellie Chrisman who's returning on the podcast with me. Kellie is an attorney extraordinaire, and she's going to be talking to us about all the things we as real estate investors need to be aware of when it comes to protecting our estate. So let's get into it. Before we get into the episode, I would definitely encourage everyone listening to go check out the Roofstock Academy at roofstockacademy.com. It is a one-stop shop education platform that comes with over 50 hours of on-demand lectures one on one coaching access to private slack forums and our community as well as a bunch of other financial benefits depending on which program you opt to enroll in. Just come check us out at roofstockacademy.com. Looking forward to seeing you in there. Kellie Chrisman, welcome back to the show. It is always a pleasure to have you on. Kellie: Awesome. Thanks for having me. Michael: No, it's totally my pleasure. I'm super excited. You are an attorney, an amazing person, a mother a rockstar. For anyone who hasn't heard your prior episodes, give us a quick and dirty who you are and what it is you're doing. Kellie: Oh, this morning…My name is Kellie Chrisman. I'm an attorney I practice law in California and kind of I practice California law for other people throughout the United States. I grew up in Chico, which is in Northern California town, Sierra Nevada, beer, Chico State, things like that and then went to college at UCLA law school at Loyola and then my husband, I say we got stuck in LA for about 10 years. But we loved it, we had so much fun and then moved back to the Sacramento area to be close to family and really close to the mountains, we can get to Tahoe in an hour and a half we can get to San Francisco or an hour and a half. It's awesome. So that's where I'm based now and practice state planning, business for setting up business entity that has information and strategy for smaller investors and real estate clients and if I can't help somebody I like to send them where I would trust. So yeah… Michael: Love it, I'm so glad you mentioned estate planning since that's the topic that I really want to focus on today. So I think I mean, in full disclosure, you are my attorney, you've helped me so much with estate planning and entity formation and just getting all my ducks in a row. So I want everyone to know how amazing you are and I can personally attest to that. Kellie: You can say it I can't, you know I can't. I really appreciate it… Michael: Absolutely. So let's talk about what investors specifically real estate investors need to know when it comes to estate planning. What are some things that people should be aware of? What are some things they should be doing? What are some things that they should be thinking about kind of long term? Kellie: Yeah, I think that, for me as an attorney in this area of law, because I do I do before people pass away the planning part and then I do when people don't plan anything. So I've seen both sides, and I've seen the worst of both sides but it's not necessarily just investors, it's anyone over 18 than then then when you add on, if you own property in California at all, we'll get into the dirty details, I'm sure, then you not really needing to trust powers of attorney. If something happens to you while you're alive, who's managing your investments, who's making sure you know, tenants are paying who's making sure you know, you're in the middle of a transaction and that it can close all that type of stuff, is stuff you can accomplish through an estate plan and I think it becomes this big giant thing a lot of people don't know anything about and a lot of attorneys try to make very complicated but it doesn't have to be. Michael: Okay. So it sounds like just having a will from Legal Zoom, that maybe isn't going to cut it. Kellie: I mean, it'll, it'll get you somewhere. Michael: Maybe it's not where we want to go. Kellie: I legally was great and so I think that there's this is one of those areas where I actually had a conversation with a client yesterday where she was very surprised by the cost and I told her, you know, there's always going to be someone cheaper, there's always going to be someone more expensive. You can go to Costco and buy the wills drafting program or go to Legal Zoom and buy a will and it will do some things it'll avoid, you know, maybe getting your property where you don't want it and you can get your property where you want it. But there's a lot of little nuances in this area where I think if you do it right the first time you, you don't have to pay for it. Again, it's an investment in your future and it's a gift to your family down the road. So it's interesting. Michael: Needless to say, so talk to us about like, what a trust is, how does it get set up? Like, what should people be thinking about in terms of cost, or like who even needs one as opposed to just a will? Kellie: Yeah, so the difference between a trust and a will and I think the big thing in this area is probate and probate. People get very scared, and it's simply the court monitored administration of an estate. That's all it is. So you can pay, go to Beverly Hills, pay $10,000, for a will, or by your Costco will drafting program and pay $40, for your will, and you're both going to end up in probate. The scary thing about probate it's public. So if you want to know what was in a celebrity's a state that had a will, you can go and look it up, see where it went. They publish about it and it takes about a year. I say a year you say your NADs about a year and a half, with the way that COVID has affected the court system, and it's expensive. So the attorney ends up taking about two to 3% of the estate, the fees are set by law and then the administrator or executor, whoever does it takes two to 3%, then everything is distributed. Versus a trust is when you have enough that you need to trust which is in California $166,000. Whether you have a mortgage or not. A trust avoids the whole process. It says here's who I trust, to administer my estate and here's where I want it to go. The court is not involved. That's the that's the goal and that's the difference between having a trust you've done yourself, or trust that's been done completely, and having it done in tailored to us that the trust has been created correctly, it's funded correctly, and it just functions seamlessly down the road for you. So the will is great, and it says where your property goes. But it's probated and the trust is the same thing. Avoiding the probate process. Michael: Got it, and so why, like, Why does a will exist versus a trust? Like, it seems like a trust is the obvious choice for anyone that has more than 166,000 in asset or value? Kellie: I think so many so many levels to that answer. I mean, the will is something that has been adopted from common law, something that's been based on what was done in the UK back in the day, which is where a lot of our laws are from and at a basic level, not everybody needs a trust. So if you don't own over 166,000 and assets, so you don't really in California, I just assume if you own a house, you're over that. In every state's a little bit different. I've noticed in some states, I know not everybody's California, some states that's as low as like 45,000. So it's, it's vary state to state. But it just, it's there because it's easy. and so if you don't have enough assets to maybe make the trouble of a trust worth it, then the will is there and allows you to say where you want your things to go. So it avoids what the basic, okay, the other thing is, uh, wills a lot easier to create. You can hand write a will, as long as it's signed and dated, which I've told some of my friends, they they're going on vacation, and I'm like at least handwrite it out. Michael: If you don't want it on the airplane on the napkin. Kellie: You can do it on a napkin. You can do it, people have done it, you know, dying with a crayon on a wall, that's a valid will wow. At that, at that core level, it's just easier. You don't need a notary, you need witnesses. So it allows you to do things, if you have kids, that's where we do guardianship. So wills do all sorts of things and then and then to add a layer of attorney complexity, if you have a trust, you're also going to have a will which actually ends up making sense, but it just doesn't do as much. Michael: Okay, okay, got it and so yeah, for all of our listeners that are not California based, is what we're talking about, at a very high level universal in the sense of if I have a will I'm going
Learning from the mistakes of a veteran investor w/ Pete Neubig
Pete Neubig is a realtor who focuses on investment properties. Pete has been investing in real estate since 2001. He has owned and managed a 39, 52, and 100-unit apartment complex. 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. Tune in for today's episode where Pete talks us through some of the mistakes that he made as an investor and how he's doing things differently today. 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: 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 Pete Neubig who is a real estate investor and CEO of VPM solutions and Pete is going to be talking to us today about some of the mistakes that he made as an investor and how he's doing things a little bit differently today than maybe your typical investor. So let's get into it. Pete, what's going on, man? Thanks so much for hanging out with me today. Appreciate you coming on. Pete: Michael, thanks so much for having me, I'm really looking forward to it. Michael: No, me too and so before we hit record here, you were telling us about the three different lives that you've lived. So you are a super interesting guy. Needless to say. So for anyone who hasn't heard of Pete Neubig before, give them the quick and dirty rundown of who you are, where you come from, and what you're doing in real estate today. Pete: Sure. Well, real quick. Let's see, I'm from New York City originally, I moved to Texas in Houston back in 1995. So I have a gun. So I guess I'm a Texan now. Michael: Give me one when you move to the state, like I think… Pete: They give you a cowboy hat, a gun in some boots, you know. So I started buying real estate in 2001 when I bought my first property, actually, I bought a duplex and a single and a a 100 unit apartment complex like same day, like I closed on the same day, I ended up owning bunch of property that I ended up starting a property management firm and I got so busy doing that, that I stopped buying real estate for a while just to build the investment, the property management business, I ended up selling the property management business and now I started a an online platform. It's a virtual property management solutions or VPM solutions where we connect the real estate industry with virtual talent around the globe, so… Michael: That's so cool. Pete just taking a total step back to say you're from New York now living in Texas, do you remember like I don't know in the late 90s, early 2000s there was that pace salsa commercial where like all the cowboys were sitting around like, where's that guy from New York City, New York City? When you say that, that's like the first thing that I thought of like, oh, hey, salsa commercial. Pete: And I still can't say y'all correctly I get I get I get yelled at all the time and I'm down here saying y'all, so… Michael: Y'all with the New York accent, I love it, I love it. Well, you did you I mean, this is a really cool trajectory that that you've ended up on and I would love to focus on kind of the first stage of your investing career where you own a bunch of rentals and again, we were chatting before we hit the record button, and you were saying that you had sold a bunch of them off, and then actually paid off some of the remaining ones. So walk us through, you know, like, why because I think I think a lot of people would be like, oh, that's stupid, like, what is Pete doing? You gotta have leverage. That's how you juicy return. So, you know, walk us through how you built up the portfolio and then why you decided to sell them but then keep some free and clear. Pete: Sure thing. So I started buying on my own first right so I own like 12 I think it was like duplexes. I was for some reason I was love duplexes. I think most people would say, well, it's the cash flow, right? Duplexes, have a great cash flow and I was always looking at just cash flow and I think if I go back in my, in my investor life, I can tell you, Michael, I've lost so many millions of dollars by not buying houses with very low cash flow, because I forgot about this thing called appreciation, right? I wasn't buying cash flow, right and my goal at the time, I was a young man, I was early 30s, like 30-31 when I started buying, my goal was to get enough cash flow so I can just leave my corporate job. That's kind of what the way I was thinking. So I buy a bunch of properties and then I get I get talked into being a passive investor for 100 unit apartment complex and I told if I buy one apartment complex, I can retire right? So I'm like, oh, great, you know, monopoly, I'll buy a bunch of houses, sell them and all that good stuff. Well, it just never materialized. I was buying lower income homes and if anybody knows the lower income homes a cash flow is really just on the sheet of paper. It's not it's not true returns unfortunately, because there's little things like you know, the evictions or you know, not getting all the rent and in the make readies are not a couple 100 bucks or a couple of $1,000 because people in low income they take what's called parting gifts. You know, they take your AC, your doors… Michael: Your goodie bags, you know… Pete: Yeah, good. Yeah, exactly. Exactly. So, so I ended up connecting with a business partner named Steve Rosenberg, who he's kind of a a national speaker now but Steve and I ended up finding his guy who is offloading a lot of his portfolio. So we thought this is great and we ended up buying like 30 houses and we were both enamored with buying property. But we didn't had no idea what to do once we bought them. Like we were terrible and how to manage them. So what happened was… Michael: Pete was this was this local in New York or local in Texas, there was this remote? Pete: Yeah, great question. So I was, I was, I had lived in Texas at the time, we're buying everything in Houston. I there was no such thing as Roofstock that we knew have to go buy stuff in other areas and back in the early 2000s, the average price of a single family home in Houston was like around 130. I was buying it for 35,000. Like, lower low income houses. Yeah. Michael: But not have roofs, like, what's the deal? Pete: Man, they were just in low income and today, those houses are now worth about 150, right, 20 years later, and I was buying them at 35 and they were worth 50 to 55,000. So I was buying them below. But I just found an investor who wanted to offload stuff but he was offloading me all his problems, right and if you don't have good management, behind you, if you have a good management company, by the way, it's really difficult to manage these low income stuff. It just is because they don't pay online, they don't abide by the lease, they have dogs, when they say they're not going to have dogs, all that all this stuff that you have to deal with. It's just difficult and so Steve and I, we ended up buying 31 homes. So now I have 31 homes, and we advertise bad credit, okay, no credit, okay, like you have you have a pulse and $1 will, we're gonna let you in the house and of course, that comes back to bite you to the point where not only are we not making the cash flow that was projected, but we're losing money at the end of the year, now I have to come in and pay for my taxes and my insurance and so now I'm working even harder at my nine to five than I did and I'm working hard to manage these properties. But all of a sudden, this this like, dream that you have is becoming a nightmare and so, you know, caution, number of cautionary tale number one for your listeners is buy absorb, right, and then buy some more like don't just keep buying if you can't manage the assets, or number two is go find a professional management company that will take your properties. My problem was I had my problems was so low, I couldn't get a professional management company to take my properties. The manager companies know how hard they are and I'm like, Well, I'm gonna give you 25 They're like, Yeah, great. Keep it like, we want to charge you more. So I ended up creating the management company with Steve so we can manage our own properties and so there's been two there's two things, the two big instances that happen in my investing life that has propelled me to pay off properties, right. So let's get to your question. The first thing was I bought all those properties, and I wasn't making cashflow, right, but I had to pay the note every month, right and at the end of the year, now I'm getting in tax and insurance. And so there was no cashflow there and there's no appreciation I just told you it took him 25 years to get that double or triple of appreciation. So I own these properties for 10-12 years for 35,000 and they were worth like 45,000 right 50,000 I told you I got equity, but that nothing ever increased. So when that when the banks are coming and asking for their money, and I gotta go work a double because I need more money, or I gotta go sell off stock because I got to. So that that was something that kind of made me realize maybe I want to be the bank myself, or maybe I don't want to owe the bank so much money. So that was the first thing. The second thing was, I ended up buying that 100 unit apartment complex that I told you about and that 100 unit apartment complex. I am stil
The life-changing impact of adopting the investor mindset
Real estate investor, author, and podcast host Henry Washington entered the industry in search of building passive income to achieve financial freedom. In just three and a half years, Henry built an impressive rental portfolio and now turns his focus to teaching others how to create wealth through real estate investment. Listen in todays episode where Henry talks us through how to work with small banks to get initial loans, make contractor connections, market effectively to generate leads, and adjust your mindset for success. Episode Link: https://henrywashington.clickfunnels.com/order-485129501621009952063 --- 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 Henry Washington and Henry is an investor and he's gonna be talking to us about how he went from zero to like a gazillion doors in a very short amount of time, and what he did to get there. So let's get right into it. Henry, what's going on, man, thanks so much for coming on and hanging out with me and I really appreciate you. Henry: Hey, man, thanks for having me, I appreciate it. Michael: No, it's gonna be a lot of fun. So I know a little bit about your background but for those of our listeners who might not be familiar with the Mr. Henry Washington gave us the quick and dirty who you are, where you're coming from and what is it? You're doing real estate today? Henry: Yeah, Henry Washington, I'm a real estate investor based out of the Northwest Arkansas market. So it's the northwest corner of the state. It's this like little unique bubble have an area. There's so much huge recession proof industry here. So it's a lot of money in this little part of the country that makes this market pretty unique and so I've been investing here, four and a half years, I'd say close to five years now I bought my first house five years ago and prior to that I was a nine to five or working for I worked for Walmart and so they're headquartered out here. It's one of the companies, you know, that's, that's based out here and so I did data analytics and software development for them for 10 years, and made a great salary and I also spent a great salary and so I often found myself not having money before I was to get paid again and, you know, I think a lot of people find themselves in that situation. My, I guess the pivot for me came when I got married, got married fairly quickly, my wife did not want to run out of money before we got paid again and that was that was the first time where… Michael: A reasonable request… Henry: I guess. It's so I, you know, I started to realize that the path I was on financially wasn't going to provide me the life that I truly wanted and I knew that but when it was just me, like, there was no like, I was okay, I was like, whatever, I'll figure it out but like, when you have somebody else who's depending on you, you know, a lot of those things become a lot more real and so I had a panic attack one night, after we tried to buy a house together, and I couldn't be on the loan, because my credit was so bad and the bank said, hey, you're gonna ruin this for your wife, if you guys want to be able to buy a house and so then we, you know, we had conversations as a couple of about our future and what we wanted and kids and dream houses and you know, all the things married couples, young new married couples talk about, and I was like, I can't afford any of this. Like, I just, it was just as unsettling realization that like, even though I did all the things inside me told me to do, you know, I got the good grades, I went to the good schools, I got the good degree, I got the good job and I still couldn't do normal things, you know, without an extensive amount of like planning, budgeting, and like, it just was normal, things were going to be difficult and I just, I didn't want life to be like that and I didn't want her to feel like she was struggling by choosing me as her partner, and so I had a panic attack. Three in the morning woke up in a cold sweat because I was like, I gotta figure out a way to make some money and so I googled, how can I make some money and that's when that's when real estate kind of hit me over the head were really, really long story short is that's when I started to like pay attention to the articles that were popping up about passive income and about building wealth and well, you know, all those buzzwords that we all hear all the time, but like none of it seems to stick in our brains. Well, it started to stick and I started to realize that like, owning real estate was feasible. I just never thought it was feasible before. I just thought super rich people in corporations on real estate, but like, stumbling upon us across articles on bigger pockets and all these places and seeing that it's just regular people that have real estate and they are building wealth and they are retiring from their jobs and I was just like, This is crazy and I didn't I didn't know it was I didn't know it was achievable, you know, and so I just made a decision that three in the morning and then I was going to figure it out because I figured it if all these people on the internet have figured out how to do it, there's no reason that I can't figure out how to do it. Pretty smart guy, so I'll just I'll just I literally said, I'll just do this and I had bad credit still and I had only had $1,000 in my savings account. So I didn't have any money. I had bad credit, but I made the decision that I was going to be a real estate investor and, you know, at the time, I'm sure that sounds like a crazy idea. But you know, now fast forward five years, I've got, we just counted yesterday, we've got 75 doors, and we are, we flipped 10 to 12 to 15 houses a year and I teach people how to be investors now and CO hosts a couple of Bigger Pockets podcasts and you know, why stick in a crazy turn in five years. Michael: Dude, dude, that's amazing. So, okay, I have so many questions. Tell me some of them in the episode, when you say we are talking about we owning sending code, or is that you and your wife is that you and a partner, tell me about that? Henry: Yeah, so when I say we, I'm referring to my wife and I, so my wife and I own the majority of our portfolio. Together, I have about 25 doors that I do have with a business partner that we bought early on in my investing career early on, I'm still early on in my office, but like in the first couple of years, and then I've got a few other doors and some partnerships, but you know, it's a mix, but the majority we owe… Michael: Okay and so there's a pretty big gap in your story here, Henry, from the day that you woke up at 3am, Nicole 12 1000 bucks to now having $74. So fill in a little bit about for us and let's start with kind of that first deal. I mean, what did you do because I think so many people listening to this right now are in a similar boat. They're like, what I'm doing isn't working and I just discovered that real estate investing. I've always thought it was for other people. But I'd realize it can now be for me. So walk us through how do you get that first deal done? Henry: Yeah, man. So I'll give will give to a couple of mindset and a couple of practical pieces of advice. So what I've learned, through retrospect, I didn't I wasn't the smart one at AG when I actually did it. I didn't know what I was doing. But now that I've looked back here, and I see I see what it was right and so I think the thing, the one thing that I did, that led me to where I am today had nothing to do with buying real estate. It had everything to do with mindset and I know people get all like, ooh, it's not that easy. You can't just make up your mind. You're rich, like, you're right, you can't but you can make up your mind that you're gonna do whatever it takes to hit to your goals, right and so that's what people that's what people mean, when they say the mindset changed their life because without the mindset, none of this was possible and so for me, the thing that I did, that led me here, the one thing was at three in the morning, I decided I was going to be a real estate investor, I made a decision I chose right, decide the suffix of the word decide aside, like suicide, or homicide, it means to kill off, there's no other option, right? It's option A, or there's no option B is going to work or it's gonna work, right and when you decide, what you're doing, is you're telling your brain that this is what is going to be. So when we can't figure out how to do something, brain, go help me figure out how to do it, right, and you just open your mind up to helping you search for the answer for the root for the path for the thing that you need to get around the obstacle, like our brains are powerful, they do that. Like, if you tell your brain, if you tell your brain that we're doing something, it's gonna help you try to figure out how to do that and I think that most people, when they go down a path of anything, a business or a new venture, you know, fitness, whatever it is, like when you go down that path, most of us say, well, yeah, that looks cool. I'll give that a try, right? I'll try that out and when you say you're gonna try something, what you're telling your brain is like, we're gonna do it until we don't know what to do anymore and then we're not going to do it, your brain is just not going to help you navigate the difficult parts you didn't tell it to. You just told me you were trying it. You did, right and so I think the most powerful thing you can do is like truly make a decision in your heart and your mind. Like no matter what
Learn the secrets of creative deal structuring with Derek Dombeck
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 today's episode, Derek shares his strategy for creative deal structures and how he raises private money to execute more deals. 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 real estate investor. I'm Michael Albaum, and today I'm joined by Derek Dombeck, who's an investor, owner of a private lending company as well as conference host. So let's get into it and hear about Derek's private money and sophisticated purchasing strategies. Hey, Derek, what's going on? Thanks so much for taking the time to hang out with me today. Derek: Yeah, I just appreciate you having me on. Michael: I think it's, it's totally my pleasure. I think we're gonna have a lot of fun today, because we're talking about a pretty interesting topic here but before we get into the meat, and potatoes and sausage, as you mentioned, the in from Wisconsin, give all of our listeners a little bit of background and insight into who you are as an individual and what it is you're doing with real estate today. Derek: Well, don't forget about the beer in Wisconsin as well. Michael: That's right. Before we get to the beer and sausage… Derek: Yes, I just started out as a construction worker back in the day and started in 2003, just like most people do, you know, we buying and selling at that time holding rental properties and we were buying in the state of Wisconsin buying cash flow properties but we also got, I don't want to say sucked in in a bad way. But we kind of got sucked into the craze of building new construction in Florida in the early 2000s, which went really well until it didn't. So and in 2007, you know, in that short period of time, my wife and I had built up a pretty nice portfolio and, yeah, it we lost it. We lost it all down there. Fortunately, we didn't lose our personal residence but the majority of our holdings, I mean, at that time, we had about 29 doors, right around $4 million in assets and just within months, it was down to a million dollars in assets on paper, cash flow was negatives and I look at that now, as such a blessing. It didn't feel like a blessing back then. I mean, it was definitely a blessing in disguise. But we would have never been forced to learn how to get creative and learn how to structure deals creatively because when we started, we use banks for everything. You know, we were just like lending tree, everybody was throwing money at us and we had great credit, good income, jobs, all the stuff that banks love and we quickly realized how little control we had over our business, the bank's control their business and when the bank stopped lending, we were dead in the water. So it took a few years but fast forwarding on we learned how to get creative and more than that, I learned how to talk to people, because I didn't hide from our problems. Like many I didn't join all these class action lawsuits, blaming everybody for everything that went wrong. There certainly were people that did us wrong. But at the end of the day, we take responsibility for our own actions and I want it to be able to, you know, approach the banks, and especially our local community banks, that we have been doing business with, and they wrote it out with us. I mean, I had a couple of community banks, who didn't get their doors locked, that ultimately, you know, hung on with us and rewrote those notes and you know, the stuff in Wisconsin was cash flowing. It was the stuff in Florida that was burying us and you know, we made it through. But as we've transitioned forward and met my current business partner about 10 years ago, he had never used a bank ever to do any kind of real estate and he started one or two years after I did so we've both been in the business since the early 2000s and he had always raised private capital to fund all of his deals and so combination of raising private capital for the cash deals and structuring terms on the creative deals. That's how we've grown our business to this day. Right now we our goal is to buy two or three real estate acquisitions a month, but our bread and butter actually transitioned into the lending space because we got really good at raising money to fund our own deals to the degree we had more money than we had deals. Michael: Wow, you never hear that… Derek: Yeah, so we had a lot of friends and I think this is important, Michael. The first eight years of my business I was a closet investor. I didn't go around trying to build a network, I didn't really tell a whole lot of people what I did, I had a full time job and I, I built my real estate, you know, on the side with my wife. After that, we realize it's a team sport and I had to go out and find people to work with, and, you know, people to collaborate with when I needed help. So that's actually how I met Jeff, my business partner, he was running the real estate investor Association in Green Bay, Wisconsin, which is about an hour and 20 minutes from where I live and, you know, I started to see the importance of having a network growing a network and since then, that's where we found all of our borrowers we had, and that's where we found a lot of our private money as well. So we had the reputation of being reputable, we knew what we were doing on the real estate side, our investors had money to place, our friends needed the money for their own deals, and we started playing monkey in the middle, and getting paid to, you know, put the deals together, that parlayed into what is now about an average of 20 to 25 loans a month, going out the door, and, you know, several million dollars a month in in loans and it's we're still 100% privately funded, we don't take on institutional money, I won't sit here and say it'll never happen, but we have no intentions of it because part of the cool thing, Michael is what I do with mom and pop investors, I get to help them, right, a lot of our investors were getting, you know, 1% 2% 3% return on their money, and they're getting nine, secured by real estate, like it's changed a lot of their lives, and a lot of their retirement accounts and things like that. So it's been really, really fun. I honestly don't know where it's gonna lead to I mean, the, the opportunities are presenting themselves and, and we're, we're open to growth, as long as it's controlled growth and you and I talked a little bit before we jumped on camera here, about our, our lifestyles, and I really like to be able to travel with my, with my family, and work remotely and that's something that the lending business affords us versus managing flips, or even rental properties. We still do that, and we have staff, but if I'm going to scale a business, I want to scale the lending business versus the land lording business. Michael: That makes sense. Yeah, it makes total sense. So Derek, I'd love if we could dive into something that you mentioned and that's about structuring deals creatively. Since I think it's something that people talk a lot about. A lot of our listeners have probably heard the term creative financing or creative deal structuring but let's talk about and unpack what does that really mean? So give us a little bit of insight when you say that you structure your deals creatively, what like, what does that mean? Derek: So I think I want to clarify what people title creative deal structuring. So you've heard of purchasing a property subject to its mortgage, you've heard of leases, you've heard of options. You've heard of land contracts, or contract for deed, seller financing, using notes and mortgages. Those to me are all individually, they're all strategies. When you stack those strategies together in any 1234, you know, different strategies all together, I consider that deal structuring. Okay… That's, that's my definition for it. So when I get a seller, I do the majority of my negotiating over the phone only because we operate in a fairly rural area and we operate in a 200 mile diameter. So, yeah, and I don't want to jump in the car. Even though gas is cheap, I don't want to jump in the car and drive 100 miles to a house, if there was never a chance that I was actually going to put a deal together on that house. So I got really good at it being able to talk to people over the phone, and getting them to open up about what their goals are in it. It's to me, it's super important. solving their problem. I don't even need to mention what my goals are because I know them internally. I'm not going to do the deal if I don't hit my goals. So I'm only working towards their goals. I'm only talking about their goals and through those conversations, you know, a lot of negotiation books and gurus and people at Teach sales really try to tell you just ask questions, ask questions, ask questions, and that's not incorrect. But I really feel it's important how you ask those questions. What the tone in your voice is what the response and the tone in their voice is the body language even if you can't see them. You can hear it and very much on that. that type of stuff. So I just did a presentation last week. So I'll probably use a couple of the same case studies but I did a presentation down in Milwaukee, Wisconsin, on this very topic and people are like, well, how do you get somebody to tell you what they really want? How do you get someb
How to succeed in the vacation rental investment market
Shawn Moore was selling high-end resort properties back in 2008. He was making big money, living lavishly, and about to close on a new mansion in Newport Beach. When, out of nowhere, the owner of the resort they were selling for got indicted on securities charges. Feds came in and shut everything down overnight, including their paychecks. In this episode, discover how Shawn came out of this huge loss and turned around to excell in a related sector. Shawn shares his strategies for growing and scaling a short-term vacation rental portfolio. Learn from Shawn's 20 years of ups and downs as an investor. Episode Link: https://vodyssey.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: What's going on everyone? Welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum, and today I'm joined by Shawn Moore, who's the founder of VITC, a short term and vacation rental education program and he's gonna be talking to us today about what we need to be aware of as we get involved in the space as investors. So let's get into it. Shawn Moore, what's going on, man, thanks so much for hanging out with me. I appreciate you. Shawn: Awesome, Michael. Thanks for having me, man. I really, really excited to chat with you. Michael: Now, likewise, likewise. So it's gonna be a lot of fun. We're gonna be talking all things short term vacation rental today. But I want to give our listeners a little bit of background into who you are, where you come from, and what is it you're doing real estate today? Shawn: Yeah, awesome. Well, first, thanks for thanks for having me and, yeah, we've been around the real estate game for a little while now. I've been a full time real estate investor for 22 years, if you can believe it. I feel like I've been around the block a time or two and really started my journey into real estate in the fix and flip game for a long time, I was just doing mostly fixing flip houses I wholesaled. One deal, it's what got me into the into the game back in 2000 and then realized I wanted to wanted to start doing the actual rehab on the properties and did that for a good bit of time and I remember going back in the day to a real estate investment club, local real estate investment club meeting, kind of sticking my chest out and acting like I was a big shot and telling everybody how awesome I was at I think I was about 23 at the time and felt like I'd had I had arrived, right and I remember this old guy named George, he came to me and put his arm around me and just said, Hey, Shawn, you I know you think you're pretty, pretty big deal around here. But you're really not a real estate investor, you need to quit referring to yourself as an investor, you have a job fixing up houses and at the time I really shot my ego, right? I was like, man, this this kind of sucks. I mean, he's like, if you can't be an investor, if you don't have any passive income and that was that was back in the you know, I was a couple of years into real estate in what I thought was investing, which a lot of people a lot of us have done fix and flips and but he was right, you know, really I was, I'd buy a house, I'd have to fix it up and I'd sell it and I have to keep doing over and over and over again and really that's what I had, I had a job of fixing up houses and selling. So it opened my eyes back then that conversation to the idea of passive investments and passive income in real estate and, you know, there's lots of avenues, lots of lanes that you can run down in real estate and the natural lane that I ran down at that time was single family rentals, and just buying some single family properties over the over a couple year period. Back this was back in the early 2000s and if you could fog a mirror, you could get a mortgage and so we were able to get a lot of mortgages really quick. We got about 52 properties in a period of a couple of years. All single family homes, we had one four plex everything else was single family or duplexes. But I and so we started building that passive income up, it just wasn't exciting for me, it didn't. It was one of the biggest mistakes in 2005 we sold them all and I always tell people I at the time I acted like I was a genius because we sold them course right before the crash. But kind of the top of the market, they're close to the top of the market that it was, I mean, obviously, we were making like I think out of that entire portfolio, I was making about $3,000 a month in passive income. But on each of my flips, I was making you know, 30 to $50,000, depending on the flip that we had and I was like man, this I can make, you know, making a year's income with one flip is versus having this whole portfolio that I was managing myself and it's just kind of a pain, and really didn't figure the game out as far as how to how to actually make them passive and so we ended up selling them all. I had, you know, again, those probably the biggest mistake we ever made, because then we went back to not having any passive income, right, I had this portfolio that people were paying for. I was making money, not a lot of money, but I was making money every month and ended up having to get out of that game. But at that time when we sold them. We started getting into the high end resort properties. We started really diving into resort properties and second homes and I'm talking like really high end private ski Golf Resort properties like in the 20 to $30 million range and so not what we do now, and it was this really exclusive resort but it introduced me to this new world of the hospitality world the second home world the resort type style properties vacation home properties, right and, and at that time I had bought a, we bought a cabin, my wife and I bought a cabin in 2006. And that was our first vacation rental that we ever bought. Well, in 2008, we started doing this in 2005 2006. Well, in 2008, late of 2008, the FBI came in and shut down this resort that we were selling properties for these really high end resorts, the owners got indicted on securities charges and so like we literally just overnight, computers are gone with the resort, we've gotten the word that we're involved in and selling properties that all of a sudden get shut down and we're like what is going on, right? We, we stopped our fix and flip business. I didn't have any passive investments at the time because I sold them all and I had this one property, this one vacation rental, I sat on my hands for about six months and threw myself a six month pity party and started to realize nobody was coming to save us. We didn't know what to do. This is in 2009 at this time, and the markets were tanking every day that the you know, the news is there's more foreclosures than there are you know, every single day, there's just worse and worse news. We're in the middle of the great recession and I started selling real estate I started I had a real estate license, I had never done that in my life. As far as actual an actual residential sales Asia, we started doing that I started working with investors to help them build portfolios of again, because I understood that I understood investors, I had been one but I didn't have any money to invest at this stage and really started getting back into selling real estate and kind of hustling to pay the bills and during this whole time, as I was throwing my six month pity party, we lost our house, I lost my vehicles we started, we literally lost everything because I sat there and blamed everybody and everything on my situation rather than doing something about it and I had this one asset, this one property that during this entire slide was it was producing and it was a vacation rental and at the time that was before they were really popular, right that was, you know, they weren't mainstream. They were obviously Airbnb was around and VRBO was around, but they weren't as mainstream as they are right now and I started to, I started to at least those seeds were planted in my head that this might be a viable asset class to, to pay some bills, make some passive income, even during a pretty rough time of real estate, right, even during the that eight 9, 10 that slide that were in the middle of and so as I started to build back up and get back involved in investing and developing properties, again, I had a we ended up my wife and I ended up having some kids and we ended up having twins in 2011 and that kind of changes your perspective on everything, you instead of this really cocky freewheeling, like, you know, okay, I can just make money whenever I want and do whatever I want. I, my perspective on everything started to change, I started to ask different questions I wanted it to be you start to say, okay, what kind of an example can I be? What am I really building? What am I really doing things for? So you ask those different questions and as they started growing up, I started to say, you know, I love real estate. I remember walking on the beach with my son, and he was they were four, we were in Hawaii, we always go to Hawaii for their birthday and I was frustrated. I was working on a deal. We were doing development deals at the time and I was working on a deal and I got off and he could tell us frustrated and he's just a little kid and he's like, Dad, you should just do real estate in Hawaii, it's way fun. Like, like Dallas, all my problems, right? Like we're hearing, why might Why don't you just sell real estate here and do stuff here because it's you won't be frustrated on your phone calls, right? That's the perspective of a four year old but what really got me thinking was, what do I love about real estate and one I loved investment properties. I loved the idea of building pas
A data scientist's process for success in multi-family real estate
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 buildi
How to weed out the good from bad in real estate syndications
Taylor Loht is the founder of NT Capital and host of the Passive Wealth Strategies podcast. He teaches busy professionals how they can invest in real estate without dealing with tenants, toilets, and termites. He lives in Richmond, Virginia, where he started and runs the monthly Richmond Multifamily Investors Meetup, trains Brazilian Jiu-Jitsu, and actively contributes to Bigger Pockets. Intrigued with real estate investing but concerned about picking up a second job and more headaches, Taylor Loht searched for new investing strategies. As a busy professional himself, he understood the importance of learning passive investing strategies and sharing those insights with others. In today's episode, Taylor provides us with some insights on passive & active investing and real estate syndications. Episode Link: https://www.passivewealthstrategy.com/join-the-investor-club/?source=investwithtaylor 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 Taylor Loht, founder of NT capital and Taylor is going to be talking to us today about syndications and how to spot some of the not so great actors out there and who syndications may and may not be for as an investor goes. So let's get into it. Taylor, what's going on, man? Thanks so much for coming on and hanging out with me today. I really appreciate you. Taylor: Thank you for having me today. I'm really excited to talk with you. Michael: No, likewise, likewise. So I know a little bit about your background and kind of what you're doing but for those of our audience members that don't know who you are, give us a quick and dirty who you are. Where do you come from and what is it, you're doing real estate today? Taylor: Sure, absolutely. I'm a real estate investor based in Richmond, Virginia, I decided to make the switch to real estate investing. A number of years ago, I don't even honestly remember exactly when but had been investing in Wall Street, you know, typical things. For a few years. You know, at the time, it was kind of hard to pick and miss on Wall Street because it was right in the wake of the great recession. But I just saw real estate as a better opportunity to create passive income and then, you know, here we are. Michael: Awesome and now today, you got a company and T capital. Talk to us a little bit about what it is that you all do. Taylor: Sure, absolutely. So it's part of my real estate syndication investing. So basically, I help people passively invest in real estate syndications. Got the securities licenses and everything to do that and help sponsors raise capital in a compliant manner, of course, and, you know, help people, as I say, on my podcast, escape the Wall Street casino and build wealth on Main Street by investing in real estate. Michael: Love it and what is your podcast called for anyone that wants to go check it out? Taylor: Sure. Thank you for the opportunity. It's the passive wealth strategy show available every Monday, Tuesday and Thursday, new episodes interviews, just like this one, Michael: Right on. So it's a common debate that we have passive versus active real estate investing. So I love for you to wear your passive hat because you've done both right? You've been on the active side, and now you're on the passive side. So why did you end up there? Taylor: So, that's an interesting question. So I'm a little bit in a in a hybrid state right now, to be honest with you. But, you know, I think most people when they start real estate investing honestly, myself included in this, our familiarity with real estate kind of is limited to flips, which we see on HGTV, and buying single family rentals, and you know, the one up the street and rent it out. There's nothing inherently wrong with either one of those. But the reality is that both of those strategies take a lot more work than we really think they do from the outside. Now, if you buy a single family rental and put it use a property manager, you can turn that into passive income over time, if you kind of do it the right way and buy at the right price and all those kinds of things. Flipping itself is a very active business and after learning about both of those and most of the other real estate, investing strategies. When I was kind of getting started, I just really gravitated toward commercial real estate larger properties. I honestly don't know what it is. Maybe it's aesthetic. Maybe I just I like to think big, just get really excited about big things. But when you're buying you want to buy a $15 million property. Well, you know, I don't want to say too much about myself here, but I don't have all the money for that down payment. I can't put all that money down and I never could write when I was just a guy at college trying to figure out my way in real estate. So eventually I found this path through real estate syndication. I had money saved up from investing in Wall Street and you know, I didn't did alright in that. But wanted to make this shift and started passively investing in real estate syndications, with my eye on getting on the more active side of things, and now I do both and you know, I'm more than happy to have this be my investing strategy, I love it. Michael: I love it. Well give us some insights into who real estate syndication investing is for and who's maybe not a great candidate to be an investor in a syndication? Taylor: Sure, absolutely. So, my mind first goes to and this is most of my investors are high earning busy professionals who maybe have a family they have a job that they work 40-60 plus hours a week, make a lot of money. and maybe have some leisure activities, just want to earn some passive income but don't want to build their own real estate investing business on the side, they want to maybe like I said, say as a lot of harp on this, get out of the Wall Street casino, and invest in real estate, then that may be a good fit because if you're somebody who earns a couple of $100,000 a year, then you have to, I think you should think about what your time is worth in terms of dollars per hour and where you can best allocate your time because time is our most finite resource and I was kind of debating whether I was gonna say this, but today we're recording today is my 33rd birthday and I'm always thinking about the shortness of life, I guess, if you will, and I think, from your investing standpoint, you should think about that we all only have 24 hours in the day, if you do really well in your career, then bear that in mind, when you're considering an investing strategy, that could kind of be another job like, like maybe flipping as often another job for folks more active investors, again, you know, I love active investing, you need to be ready to put the work in, it's, it's a lot of work to invest in real estate, find deals and do deals, especially today when interest rates are going up and prices are at all-time highs and we're seeing some softening in the retail market in particular, which, you know, we have to kind of, we have to work with the market that we're given and we find ourselves in. So you know, if you're willing to put the work in, I say go for it. You know, there's absolutely nothing wrong with that. I like putting the work in on my deals and everything. But really just think about your time how you want to spend your time and what your time is worth for you both in terms of what you want it to be worth, but also what it is actually worth, if you're working. What are you getting paid now and think about that for your real estate investing… Michael: Yeah, I think that makes a ton of sense. I think it's a really great way to be thinking about things. Well, first and foremost, Taylor, happy birthday. Thanks for taking the time on your birthday day to hang out with me, this is awesome. Taylor: It is my favorite thing to do. So no problem… Michael: Well give us a little bit of insight into how you coach your investors or how you coach folks that think about the returns and the return on their time because I think that makes a ton of sense and thinking about, okay, how much is your time worth. But I can pretty clearly calculate, okay, if I buy this property as an active owner, this is what my return is going to be this was my cash on cash is going to be this is what my hopeful eventual exit price might look like versus about up to a syndicator like it's in your hands and if they screw up, well, then that that's a bummer for me. But I don't have control over that. So are the returns going to be stronger as with this indicator? Are they going to be not as enticing, but I have to do as much work kind of give us an insight into how people I should be thinking about that? Taylor: Sure, of course, I want to be careful what I say in this regards and you know, every deal is different and past results are not an indication of, you know, future performance and all those kinds of things. You know, in my experience, both in an active real estate investment if you're doing your own deals or investing in real estate syndication, either those strategies can do very well and either while either one of them can lose a lot of money, I think it's a, it's a matter of weighing pros and cons and to kind of get back to the question about if somebody is considering if passive versus active makes sense to them. If you're somebody who can't imagine giving control of your money or your investment over to a syndicator, no matter how experienced they are, maybe they have several 1000 units under their belt and several billion dollars in assets u