Real Estate Investing with Jody Nabors

[00:00:01] Speaker A: Hello. Welcome to the money adjustment. I'm your host, Doctor Mark Kramer, DC. I am a chiropractor who loves investing and trading. Are you interested in what's moving markets and your money? Great. Two, let's get started. Today's guests. I'm looking very forward to interviewing and I've been looking forward to this for a period of time. Now for context, this is a gentleman that I met through a group that we are both involved in. It's a real estate group. His story is very interesting. He is a professional computer programmer and he's been doing that work for 25 years. But recently he started investing in real estate. Now, if you've been following me for any period of time, I am interested in the stock market. I like investing in the stock market and trading. I have invested in real estate in the past, but I've had mixed experience in real estate. And one of the things that I realized as of late is I had a single family property and I felt comfortable owning that in that I could do it by myself and just have the property versus involving partners and getting other people involved. But what I've come to learn is, is that the bigger real estate deals are the ones that are easier to manage. Oddly enough, if the deal size is large enough, then you can hire a management company. So the challenge arises in that most people don't have the resources to purchase a deal on their own, and so they usually involve some type of partnering or groups to purchase real estate. And one of the things I've learned is that the number of doors you have is what seems to inspire people to continue on their real estate journey. So if you're a trader and an investor, the number that you're looking at is your profit and loss ratio, or your profit loss, your p and l. And that gives you a sense of your performance as a trader. But if you're in real estate, there's certainly a number of metrics that you can follow, and rental income is probably one of the big motivators. Cash flow is a big deal in real estate and there's a lot of advantages that real estate provides that other types of investment vehicles don't, cash flow being one of them, write offs being another. And so there's other variables involved in real estate that some people favor to being in the stock market. A lot of people have both to diversify their portfolios. But it seems like a lot of people that I know that do real estate are happy with the process. I think the people who might get the most out of this interview today are the people who own single family properties, and they may even own multiple. But like I was saying before, what I've come to realize is that is a very long way to play the real estate game, which is, there's no problem with it in that regard. It's like you're playing the game that. That's great, but you could actually accelerate your cash flow and your number of doors and actually meet a lot of great people and do some networking if you open your mind to the possibility to getting into these larger groups. So that's how I'm starting off this podcast. That's the frame of mind for this particular episode. So it will be a real estate episode. And specifically, my guests went from zero to 400 doors in a year, and that kind of blew my mind. So without further ado, I'm going to introduce you to Jody neighbors. Hey, Jody. How you doing, man? [00:04:16] Speaker B: Hey, Mark. Doing well, bud. It's been a. Been a busy day. It's been a good day. I guess I'll put it that way. [00:04:22] Speaker A: It's a good day. You're out in Texas, right? [00:04:25] Speaker B: I am, yeah. North side of Houston. [00:04:27] Speaker A: Okay, cool. Yeah. Cause I'm thinking of all the people in Florida right now, like, a lot going down. You were going to go to the real estate event, right? [00:04:37] Speaker B: They announced that they're postponing that till first week of November. [00:04:42] Speaker A: Right. So did that mess with your, like, scheduling and flights and things like that? You. [00:04:48] Speaker B: I need to read. I'll need to redo it. Rebook that. And my daughter has potentially has something that weekend, so I may end up on a red eye from California to Florida. [00:04:58] Speaker A: Oh. [00:04:59] Speaker B: Which is exactly what happened the last time they had a real estate summit. [00:05:02] Speaker A: Oh, my gosh. So wait, you're going to be on a red eye for your daughter? [00:05:07] Speaker B: Yeah, she's. They may have a scrimmage, her first water polo scrimmage out there. And so we'll go out there and see that, my wife and I. Then the summit is now going to. Instead of being a Tuesday and Wednesday, it will now be a Sunday and a Monday. [00:05:22] Speaker A: Okay. That's in November. [00:05:24] Speaker B: Whatever the turnberry has available. [00:05:27] Speaker A: Gotcha. That's where was that? Where it was originally scheduled, at the turnberry. Yeah, I got you. So before I had you on, I did a introduction for you. Normally I do the introduction while the guest is on. Before I even hit record, I'll even do like a preliminary, but I'm not going to worry about all this stuff because I can always edit it and post, but since you got on, um, I'll reintroduce you so you can kind of know how I framed what, uh, how I introduced you, and then, uh, we can just riff off of that. How's that sound? [00:06:02] Speaker B: Are we doing video or audio? Just curious. [00:06:04] Speaker A: Uh, I'm doing video because I do the video for promotion, but when I publish the podcast, it'll probably just be audio. [00:06:12] Speaker B: Okay. [00:06:12] Speaker A: So you don't have to sweat it. Yeah. Either way, it's. Yeah. You look great, man. [00:06:16] Speaker B: You're handsome today, man. [00:06:17] Speaker A: Yeah. You're so handsome. So, um, the way that I introduce you, and you can correct me on any of this, but you and I belong to a group, a real estate mentoring program. And you struck me. Your story struck me, which is what prompted me to invite you as a guest on the podcast, which is you went from essentially zero to 400 doors in the time span of about a year. Is that correct? [00:06:55] Speaker B: 800. [00:06:57] Speaker A: 800. Okay. So I knew you got to 800 eventually, but I didn't know if that was still within the eight. So you almost doubled from, like, when I first heard the 400. You're, like, at 800 now. I can't even begin to wrap my mind around this. And before you get into it, I just think I want to give context for the people listening. So, one of the things that I said in the introduction was, a lot of people will start off. This was something that I real. This is like, a real, like, realization that I'm coming to is that some people will start off with this single family mindset, and we'll just think, I just want to get into whatever I can afford. And usually what the individual can afford is a lower income, not lower income, but they can usually afford single family versus a multifamily unit, or the deals that you're probably getting into, which is large apartment buildings, and that's how you're accumulating doors so quickly. But. But I think the reservation for people, and certainly was, for me, was like, where do you come up with the money to do all, like, when you think in the size and the scale? Because I have friends that they own a lot of single family properties, and they're kind of comfortable with the doors that they're at and that they have, which is. I have one. I mean, I don't want to call people out on this, but I. I have somebody. He's been. He's been doing real estate for three years, and he has. Or not three years, 30 years, and he has three doors because he doesn't. You know, he's not partnering with anybody. And I don't think he even has any interest in doing beyond that. But I'm kind of thinking from his mindset, what's the mental shift from that mentality to get away from the thinking of the smaller units to get into opening your mind to the idea of having more doors? [00:08:51] Speaker B: Yeah, you know, I didn't have any doors. That was my big thing is we, my wife and I, we had talked about it from the time that we had one door 18 years ago because we leased our home after Hurricane Katrina when we were in New Orleans and we knew we wanted to do it again. But one, we didn't have the capacity from a fund standpoint to buy another home, and we didn't know what we were doing because we had somebody else self manage. It took care of everything for us. I think the reality is if you're, if you're, you got to look at it from a true wealth standpoint. Single family homes, they provide good cash flow. Then you go down the road and you're, you know, you'll be that single owner and you'll get that, you know, whatever appreciation and the value that you hope you're going to have. Right. In a couple, in a few years. When it comes to multifamily, the reality is you are truly building wealth. There's a few things you got to think about. If you're in real estate, you're always looking at cash flow, right? You're looking at rents that you're going to get every month. And the other thing is you're, you know, if it's, let's, let's keep talking multifamily, you're going to look at it from, you're going to get the value if you refinance the property, where you'll get those proceeds that are come back. If the, if the property is appreciated in value through many factors without getting into real depth on that piece, or if you sell the property, which is basically the kind of same way that you're only going to make a ton of money on a single family is if you sell it or if you refinance it. But multifamily, obviously you have that multiplier of the doors. Now, what you don't have with single families that you do have with multifamily is your ability of one, depreciation and then also you have, which is your tax benefits, amongst other things. There's additional if you're a real estate professional, which is another complicated topic. Not complicated, it's just more information. But the big thing that I didn't realize you think about is it is a inflation proof investment, because as inflation drives the prices, the price of properties up, your value of your investment is also going to go up. So if you, if you put in $100,000 into a property, not to get real technical, but your cap rate, which is the value of, you buy the property at one level and then it increases in value. So the higher, the higher the value is, actually the lower the cap rate. [00:11:46] Speaker A: But, you know, I'm going to stop you right there. Can I stop you for a second? Yeah. Because you brought up the word cap rate, and that's one of the terms. When I bring up cap rate to my friends that invest in single family homes or smaller properties, they don't think. I think in terms of cap rate. They don't. They. That's not something that figures into their evaluation process. So I think that's one of the, is that, I think one of the unique experiences when you start getting into these higher levels, when you're buying larger properties, that is the valuation metric. Right? Is the cap rate. So I'm still trying to wrap, even, I'm trying to wrap my mind around this concept of cap rate without getting into the, the equation of it, but just to think about it conceptually, because that's where you were starting to say, oddly enough, the higher the cap rate. What if the cap rate is higher? [00:12:50] Speaker B: The lower the price of your property. [00:12:53] Speaker A: The higher the cap rate, the lower the price of the property. And so what does that mean? [00:13:02] Speaker B: So the cap rate really is a product of other things. It's your purchase price, it's your net operating income. And that's really it. Like I said, there's so many other factors that lead to those two different. Two things. [00:13:20] Speaker A: What is the equation? Now, since I brought it up, I should know, right? We just like a term we use all the time, and every time I have to look up cap rate. [00:13:28] Speaker B: So you. The easiest way to figure it out is like, if I told you I wanted you to buy my property for $10 million, and your cap rate, your net operating income was 500,000, you would divide your 500,000 by the purchase price. So your noi, divided by your purchase price gives you your cap rate. [00:13:55] Speaker A: That's the simple equation is net operating income, how much you're actually bringing in from the property, divided by the price of the property. And what is the range on cap rates. [00:14:08] Speaker B: So usually what you're going to find is you're the lower the cap rate, the better the property you'll either have a brand new property or you're going to have a really nice class a property that, you know, it's fairly new, there's no issues with it. And so I can give you an example for Houston. Usually you're going to. So I had a broker gave me information on all sales. I think through July of this year, there were 25 class A properties that sold. All of them sold between a cap rate roughly of five and 5.75. So usually a class a would be a cap rate of about five. A class B property would be in your sixes, and then a class c is around seven. And then the class D's, which is where most people don't want to deal with, those are higher than that. So the lower the cap rate, the more valuable your property is right now. [00:15:08] Speaker A: Right. And so, does this create confusion? First off, just to. I think people can interpret what the classes mean by the way you described it. But basically it's a grading system for properties. And class a is like you would imagine, just a nice, located on the beach. Like you said, a modern property, something that's highly desirable. A lot of people are going to want it. And then you work your way down through the letters, and then as you work your way down, you're getting a higher cap rate. Because why. [00:15:42] Speaker B: It is, it's all about value. So if you think about it, you have a different valuation of your property and you want to sell it for ten. I'm thinking, no, man, I was like, based off. So you get valuation based off a property, the condition of the property plus the location, those two things. You can have a class C property in an a location, which is fantastic for you, because you just have to, when you fix it up, it looks nice and everything when you sell it. So there's your going in cap rate that we're talking about, right? I'm not sure if your video is working, but you're going in cap rate and your exit cap rate, whether it's through a finance or sale, you want your exit to be lower than your entry point. Okay? Because you think about it in a math situation, you want your exit. [00:16:27] Speaker A: What do you want to be lower in your exit? The cap rate. [00:16:31] Speaker B: Cap rate. [00:16:32] Speaker A: You want it to be lower on the exit. [00:16:35] Speaker B: So if you take your. So you take that formula we talked about earlier, your noi over your purchase price gives your cap rate. Well, if you take your noi, you divide by your cap rate, that's going to give you your purchase price, right? So simple math. The smaller your number, your, your, you know, your denominator, and you divide that number, it's going to take more to get. You're going to, it's going to cause you to have to cycle through more and it's going to increase the value for your purchase price. Okay, so if I say, mark, I think your property is actually a b and it's a six captain. So I'll take your $500,000 or 500,000 noi and I'll divide it by a six cap. I'll come up with whatever price that. [00:17:22] Speaker A: You feel would be a fair value for the property that's calculate. [00:17:29] Speaker B: Right. And so with that $10 million valuation, you're like, no, I think it's a five cap. That's what you're saying. So the difference in this situation between a five and a six cap on a 500,000 noi is about $2 million. [00:17:42] Speaker A: Oh, wow. Okay. So I'm still. I cannot believe how many times I've heard cap rate. And I'm still. Do you find yourself, like, still wrapping your mind after 800 doors? Are you, like, now when you are, you sleep, eat, sleep, drinking cap rate? Are you just like, just like, could just do it off top your head? [00:18:07] Speaker B: You know, it's a simple calculation, and if you focus on it, it's simple, especially when you draw it out, because we're not. [00:18:15] Speaker A: The equation is easy and it logistically makes sense. And I'm sure through repetition, if you just do a few calculations a few times, it's going to sink in. Did you do that when you started out? Because you said you went from zero. So when you were at zero properties, how familiar were you with the term cap rate? [00:18:34] Speaker B: I knew nothing. You know, I knew zero. Like, I knew that I wanted to. I wanted a business that was existing at my age. I'm 47. I knew that I wanted something that was existing that I can take and I could either improve or leverage with another business that I would buy. And even when I was looking through that, I still didn't hear the cap rate term, so I knew nothing about cap rate. [00:19:00] Speaker A: So before you got involved in the real estate, were you more interested in purchasing a business or getting a business and then the real estate made more sense or. [00:19:11] Speaker B: Yeah, I'm self employed through my computer programmer career, and I was trying to find something where I could leverage my experience because I could go out and build the software and stuff like that. I didn't have the patience, nor did I have the time to do that the right way. I was part owner of another company that was outside of the. Outside of both these industries. Technology can always leverage any business. Right? Technology and language. They always amplify your business, open markets for you. But I did not know any of that. Just didn't know it. [00:19:49] Speaker A: Yeah, I mean, I guess it's hard. It's hard to go into the conversation without actually talking about the group that we're part of without making it the main focus. But you stumble across grant cardone's material. Yeah. Or were you checking anybody else out? [00:20:06] Speaker B: My wife and I, we had just sold our house last year in May, and our youngest, we have two kids, our youngest about to start college, so we're gonna have two in college. And we retired sinking money into it. It was a 1980 house that we were in. We loved it, loved the location. We're still in town. Just, I didn't want to sink any more money into it. We had stepped out, and we're like, okay, what do we do? What are we gonna do now? Where are we going to live? We had actually bought some land. We thought maybe you use it to set up a Airbnb or something like that, which was a bad purchase. We're actually trying to sell it now. But that was two weeks before I saw an interview with that Robert Kiyosaki and his wife are doing found on YouTube. Because I'd read rich dad, poor dad, and I knew that real estate was the play that we needed to be. I just didn't know what my entry point was. That was the big thing. I just like, okay, I can understand that, but I'm like, you need a bunch of money. I don't want to over leverage to buy a single family home, which is a single point of failure. Right? And so this interview he was doing was somebody that I didn't recognize. And I remember in the conversation, he's like, hey, I think that anybody that's starting in real estate, you get a single family home, you take that, then you leverage it, you get another home. You can. You grow from there. And he was interviewing Grant Cardone, and Cardone, I had never heard of, and he said, I think you should go big. I think you should start with 32 unit apartment complexes and go from there. Now, once I found out his name, I was like, oh, that triggered. I'd seen an Instagram ad that he had done. So going back to when we were in New Orleans and wanting to do that again with a single family home, at least I knew that we needed to educate ourselves, and that's what he was doing. And that education was priceless for what I wanted to do, because I've been looking for that for 18 years. [00:21:59] Speaker A: Yeah, I hear you on that. Because I think it really cracks a shell psychologically, because I had similar experience to you. I had owned some real estate. It was a single family, and it served its purpose, but I just couldn't see myself growing past it because I didn't have the skill set to leverage it. And it's kind of like once I had all my money in one asset, I didn't know how to really just capitalize on that. And some people probably do, but I didn't have that education. So now I'm re investigating the real estate market, because I have a friend, like I said, he's been actually doing real estate for a number of years, and he doesn't have. He's not interested in the stock market. He's interested in real estate. When I talk about the stock market, he glazes over. He's like, it's too volatile. Not my cup of tea, to do something like that. I currently have a lot of my assets in the stock market, and I do trading. But what bothers me is that with the trading, it's inconsistent at this point. It's like I'm up big and then I'm down big, and then I'm up big. And I think cardone would call it being like, a junkie. You're like a junkie. It's just highs and lows, highs and lows. And one of the things I like about the stock market compared to real estate, but it can be seen either way, is the liquidity aspect. I actually like the liquidity that the stock market provides me. But I feel like the downside to that, and the argument for the real estate is it's that illiquidity that allows you greater appreciation over time. And even in the stock market, if you are not as liquid, if you hold it for longer periods of time, you will do better. Like the research has shown. It's just, you just, you do better over longer periods of time. So that's why they say you need time. So I'm even thinking with you, with real estate, you need time to feel the fruits of your labor. So, like, when I hear zero to 800 doors in a year, like, my face is red even just saying the words, because I'm like, I don't even even begin to know, like you said, where's the entry? Where's the entry for someone? Because I'm still working on my first deal, and I don't have any doors yet? And I'm even, to be honest with you, I'm still like, part of the reason I'm having this conversation is I'm like, I can see the vision, but I can tell something inside of me hasn't fully adopted the mindset. [00:24:42] Speaker B: Yeah, that's the important thing, Marty. We were looking for this. This is exactly what we were looking for, my wife and I. And so we're very intentional about what we wanted to do. I knew the education. I knew that this is what I wanted to do. I knew that through this group, there was a network of people that were trying to do the same thing, people who were also looking to invest in other deals. People had their own deals to invest in. And so it became a matter of who do I want to do business with? Right. And so, and that goes into vetting everything. Not just a deal, not just a location, but it's also vetting the people that are going to be, if they're going to be the people that are operating the property that's most important, you need to vet them as well. And so the other thing is, you know, you talk about going back. I'm going to shift back here for a second. You talk about stock market, obviously, any kind of capital gains. There's that taxation as well. With real estate, you also have what's called a 1031 exchange, also another big term that you'd have an hour to hour discussion on. But basically, you defer those taxes down the road, you can deter those taxes indefinitely on any capital gains that you have on those properties. And so, like, if we talked about earlier entry and your exit, so you bought, say, I did buy your property at 8 million, but I sold it at 12 million, but I didn't sell it. I did a refinance when I exited. So basically there's a $4 million gap in between there. Let's just subtract all the fees. But when you distribute that to all of your investors, that is a non taxable event. You're actually not taxed on that. Plus, the way we do our deals, you remain that your ownership in that deal once you're done with it. So you can keep doing that over and over and over on the same deal going forward. And you don't have the same situation. What do you mean? [00:26:40] Speaker A: You could do it on the same deal? Yeah, yeah. I have a few that, like, a few things came to mind, and I don't want to go too divergent because I think in the stock market they have like tax loss harvesting. So you can sell your losers to offset the gains of your winners. So it's a little bit different. I mean, so, and I do know that real estate is known for having better tax advantages over the stock market for one of the reasons that you just mentioned. So, so you're exiting, but you're not always exiting. You're not selling. Exiting doesn't mean you're selling the property. Exiting could mean you're refinancing. Oh, this is what I was going to ask you because you said it was the same, you could keep doing it again and again on the same deal. Can you go into that? That was the part, that was the part that I had a question on. [00:27:25] Speaker B: So you have, you know, you have different business plans, right, when you go into a property. And this is, this is something that we need to touch on before we, you know, we end. This is knowing who you're doing business with. But you can have a business plan where, hey, it's an older property, you know, it may be 50 years old. Well, guess what? It's only going to get older, right? And so it's going to have problems, stuff like that. So if you don't want to hold it, your main exit is to sell the property at the end of five, seven, whatever makes sense from a debt standpoint. But hey, it's a class a deal. You're not looking for a big jump in your cap rate difference as you go through. You're going to have slow, steady growth on a class a deal for the most part where you're going to hang on to that deal. So after a few years, you'll refinance that. You get a piece of chunk, you know, money, whatever. And then you're just gonna keep going because on average, real estate has done nothing but go up in value over time. It's driven by inflation and other factors, obviously, and then the depreciation. So it, that is only going to help the property grow in value. So why would you exit out of that property if you know that any big capital expenditures, roofs or, you know, air conditioners and things of that nature, and you plan for that stuff. So you have a good business plan, you prepare for that kind of thing and that allows you to stay in that deal. And the thing about this going all the way back to the beginning about mindset, this is long term, this is a growth, this is a wealth mindset. This is not a fix and flip. You're not looking to do that. People are looking to do that. I'm not interested in those types of deals, there's too much risk to them. And so that is what I'm trying to do. I'm trying to find proper, you know, properties where I can have my money. They can be insulated from inflation. They will grow that value in a safe manner that we can control. Because all these deals are based off of how well you do them. Because they are businesses. They are multi million dollar businesses. They're not a single family home. You know, they may be an Airbnb, those are businesses, but these are massive businesses where your goal is to take care of those residents and make sure it's the best living experience that they could have while they live on your property. [00:29:56] Speaker A: So I'm coming at this from the angle that I, that I know to come from it from, which is, which is I have capital in the markets that I'm looking to possibly reallocate towards real estate. But some of the areas that I find that I get stuck are when I think about taking care of tenants, especially the more doors, the higher the probability of the issues coming up. I know when you get into bigger properties, you can hire management and these tend not to be as big issues, but there is still even the networking when you're talking about working with partners and things like that. One of the nice things for me about the stock market is that I just consult with myself. Like, not that that's always a great thing, but I don't have to ask anybody if I make a trade. Like if I make a trade, it's on me to make the trade. And I think with what, with regards to what you're saying with fix and flipping versus long term investments and in the sense of building wealth, I associate that with the stock market. Like I have long accounts or accounts where I do basically a buy and hold, like in my Roth IRa and things like that, tax deferral accounts. And then I have a trading account. And it's the trading account where the, where it's like the fix and the flip where it's. Where it's like I have a certain amount of money in there and my goal is to try to get something quick that's almost at this point, just more of an addiction than any. And it's much smaller. It's much smaller because of that. Because that account shrinks fast. But the other ones are growing nicely. But when I think about reallocating resources towards real estate and then I think about, heres one other thing. And this is kind of personal issues to me, but Im thinking for like a larger audience, if there were people that were on the fence about getting into real estate or if theyre doing kind of the smaller scale real estate and need that psychological shift to get into the bigger deals, theres certainly a learning curve on that. Like it took me about ten years to get comfortable with the market. So to get into real estate, Im just imagining this huge learning curve, which there is, theres always a learning curve. Youre admittedly still on a learning curve, but youve done so much in a short period of time. And I keep still trying to visualize in my head, because when I manage a stock or trade, I see my p and l for the day, or I can just look at the graph on a chart and I can see that its going up. But when I'm thinking about 400 doors or 800 doors and all of these moving pieces and business partners and meetings and looking at the property and doing a lot of things on site, so like, that's another thing. I also work remotely, so the stock market is convenient for me because I can just have my computer on. But when I think about the real estate, these are like psychological hurdles that I have in my own mind that keep me from going all in at this stage. [00:33:06] Speaker B: Well, there your goals are really what's going to dictate your comfort plus the education. And so, you know, you have, you have a very comfortable knowledge of how the stock market works on a daily basis and things of that nature. I don't have that time capacity. To me, that's another job. I don't want it to do it. Then again, this is something else that I've always wanted to do. But the reality is, if you're going, so do you want to be, when you get into real estate, do you want to do something small? Do you want to get a duplex or a quad or an eight unit or something like that? I mean, that's one thing. But if you want to get into the big properties, you're not doing this by yourself. And one of, when I got started, I knew, one, I needed education. Two, I knew I needed somebody that's going to be on my shoulder and say, hey, you don't want to do that. Or hey, you may want to look at that. That's exactly what you want to handle. And so you go back to the network, the knowledge and the network. I was actually interviewed by Grant, some of his people a couple of months ago on my growth, and that was, they asked me and say, hey, which one's more valuable? And I said they're not, they're not one's not more valuable than the other. They. They go together perfectly. At least they did for me, because my first perfectly. The growth and the knowledge and the network. [00:34:40] Speaker A: The knowledge and the network are the knowledge and the network, right. [00:34:45] Speaker B: And even if you're a limited part, even what you do, you know, you get into the stock market, you're still having to educate yourself on the company is the stock, what are the trends, what's the market itself doing, what global events are happening, things of that nature. All that factors in. Same thing with real estate. But with real estate, the difference is people still have to live somewhere. They're always going to live somewhere. It's been the most consistent investment vehicle for the last 50 years, ever since World War Two. Rents have always gone up. They've always gone up, which is the primary driver on value of the property. So when you educate yourself, you may not have the network yet to own your own deal yet. So what you'll do is through our network, we've found other people that have the knowledge. They've been operators. They know how to handle these deals. They've started, they've bought and they've exited in some form of fashion, or they're still operating. And so they're looking for what are called limited partners. Basically, they're passive investors. People says, here's my money, go make money for me and then pay it back to me later on. And so I always joke that a drunk monkey could be a limited partner. Here's what, I'm just gonna do something with it. But the more you educate yourself, the more you're able to vet your partner, vet the operators, vet the property and things of that nature, and the more you invest. Some of the best advice I got from folks in the network was the more deals you're in, the more you're going to learn, because every deal is different. Even the same people within a deal are going to be different because they have to react differently to that deal. And so my wife and I, our first investments were as limited partners, and they're varying. I have various types of multifamily investments from our first deal as a mobile home and rv park. And after three months, it started paying distribution, then it's still paying distributions. We'll get another one probably next week. And so that's consistency. But those people were very experienced. The other thing that we were looking for that was paramount to what we did was we wanted to do business with people who had character, people who were out there, people who were able to share their successes, share their failures. And have time for it now, not everybody has time for you, but they, they're open into, you know, certain events, say, hey, come here, let's talk. Let's go be part of a bigger group. That's the kind of people I was looking for. And the people that we invest with first, they had only set up, you know, a small timeframe where we could meet here in Houston. We were only get there, able to get there about my wife and about 15 minutes before they were supposed to be done, well, they stayed and answered questions with us for 3 hours. You know, who does that? That's the kind of people I want to do business with because they're not running off. They're not like, well, just here, just send us your information and, you know, here's some information. [00:37:38] Speaker A: They're passionate. Real estate people tend to be passionate people. I also think, I think anyone with an investing mindset has some degree of passion either side you're on. [00:37:51] Speaker B: And so the more I got into it, the more I realized that, hey, the true wealth in real estate is to be an operator or what we call a general partner. And so, so my goal in the while we were looking for the right people to do business with, we're going to still be investing in other deals and also evaluating those people that we may be general partners, but the biggest thing, because we didn't have any knowledge, we didn't have the experience, we were looking for them more than they were looking for us. Until I found someone who was looking to do scale, to scale their portfolio into Houston. And they were, they were looking for my knowledge of the market they were housing for their knowledge of real estate, period. And through the network and through events that we had been to. It has been a fantastic relationship that we formed over these last nine or ten months. And the reality is today there's a potential we haven't announced yet, but two more deals which would increase my door count by another 600 doors. I'm sorry, another 340 doors. [00:38:55] Speaker A: So I feel like I could go so many different directions with you and I just want to keep, there's so much to it. [00:39:03] Speaker B: I mean, literally last week was my one year anniversary of being in real estate and not even being in my first deal, which was really cool to be. I was at an event at Grant Cardone's headquarters with a small group of people and I was able to share them. I've only been here a year and this is the success from you people. [00:39:24] Speaker A: How common is your story? How common is your story? I know that like 80% of people fall out of almost everything that they do. But to get from zero to 800 doors, like, I haven't heard anybody else say that. [00:39:40] Speaker B: Well, it depends. There are other people that are out there that have done it. I don't know them personally. Some people have backgrounds in real estate, some don't. I didn't have any. And so, like I said, when people talk about doors, you got to ask them, hey, is that as a limited partner or is that as a general partner? Like, you're getting into ownership and stuff? And a lot of people that come from where I am to being a general partner with no background, experience, I don't think there are as many, but it doesn't mean I'm not special. I mean, anybody bust their rear end can do the same thing I did. You just find the right partner, and you're good to go. That's. That's the biggest thing, Mario. [00:40:24] Speaker A: General partners. Are you a general partner? So now you are on more recent deals, I would imagine in the beginning, you said you started out as limited partnerships. [00:40:35] Speaker B: Yeah. So I'm a. We're a limited partner in just over 500 doors, and we're a general partner in almost 300 doors. And so together, it's. I think it's 792 doors total. [00:40:47] Speaker A: How many deals? How many deals? [00:40:51] Speaker B: We did six deals in eight months. [00:40:53] Speaker A: Okay. That gives it a little bit more context. It sounds awesome. Which is kind of. Not kind of. It goes to the broader theme of what we're talking about here. If you have the mindset of that single door mindset, then when you start talking hundreds and hundreds, it's like. It's kind of mind blowing. But when we bring it back to some kind of, like, something people can wrap their minds around, some people like me, I think, okay, that's six deals. So you had six deals that you went through. How many deals were you looking at before you found the ones that you actually went through? [00:41:30] Speaker B: So part of looking at deals is to educate yourself. Right. So there's two ways to look at it. You're looking at deals to educate yourself and maybe do on your own in the future. And then there's also looking at other people's deals to educate yourself. And you're going to compare it against what you just looked at somewhere else. Right. You're always looking at different markets. You know, we get into markets. Some markets are better than others. Right now. We were looking in Florida. Probably not going to be looking in Florida for right now. Hope everyone's okay with Hurricane Milton. But there are certain cities and states that are more friendly to deals. Right. We're not, we're not going to be looking for deals in New York or New Jersey or California. They're just not landlord friendly. Texas is a great one. As you go through those deals right now with the debt, the cost of debt, meaning interest rates are so high, the frequency of a deal that makes sense, meaning can you cover, does your net operating income also carry the ability to pay you down your debt and to pay your investors a good return? That's the biggest thing is you're paying your, you want to be able to pay your investors well. You've got to take care of all those other things first. Right. And so to go through that and to be able to check all those boxes right now in this current market for about the last year, it's been kind of rare. That's what I've been told. Going back to, you know, Covid, you know, that affects the market. You had more deals that made sense. But I, you know, we were told about a deal today where they bought it in 2021 at 10.75 million and they're about to sell it for 8.5. Because the way the debt and the markets working out, they're in a bad spot and they need to limit, they're not going to make money at all, obviously, but they're just trying to limit their losses as well. So you've got to look through a lot to find a deal, but also to educate yourself at the same time. [00:43:30] Speaker A: How many deals are you reviewing on a daily basis or weekly basis? Whichever is easier to wrap your mind around. [00:43:38] Speaker B: I have deals that come through on a daily basis from different brokerages. I don't go out and try and drum up business, but I look at probably 20 to 30 a week personally just for Houston. And then the team that I've joined forces where Athenae with here over the last few months, it's probably hundreds. [00:44:05] Speaker A: Hundreds per week or per week. Yeah. [00:44:09] Speaker B: Yeah. Between all the different folks that we have, we have folks here in Texas, we have folks in California, Oregon, all the way to Florida, all the way up to Maine. And it's just we're growing to be able to scale more people, more hands to help with more deals. But also those people in those locations, like some of them are not in, like I said, deal friendly states. And so they're looking for a place to be able to be parts of deals now in good locations until their, their areas become more favorable. And so when they do, guess what? We've got somebody that's on the ground over there. So it's a great synergistic relationship between two of us. The thing about it is we are, when I say we want to network and we want to do business with people that have character, we, we want to do business with people that we enjoy being around and, and willing to listen, your opinion has value and things of that nature. So that's another thing we could talk. [00:45:02] Speaker A: About in the future. Again, kind of goes to the people aspect of real estate and so many layers to that, I think to myself, because when you said it's a business, I remember when I was getting into the stock market that some of the early books that I read, it's like you have to look at it as a business. You have to have discipline, and you have to see it as a business business in order to make money. Because I think theres this maybe false mindset that we have sometimes when we get into something and we think, okay, im going to buy this one stock and its going to make me a millionaire or something of that nature, especially in the cryptocurrency market, thats a whole other animal where people are just, ill just get into the next bitcoin and ill be a multimillionaire or something like that. But what you realize with any kind of capital interest is that you always have to reallocate capital. So I guess what I'm thinking is, like, if I have $100,000 to invest in a property, and like you said, the best way to start is like a limited partnership. So I put what would be like a best case scenario for someone like me, if I put $100,000 into a deal that was presented by someone, that the deal made sense, the cap rate was good, the not operating income, like I always hear Grant say, it's about the deal, all about the deal. You're looking for good deals. That's why I have to look at a lot of deals, because not every deal is a good deal. So it's getting the education to understand what the good deals are. But let's say I'm fortunate enough and I have $100,000 and I'm in a limited partner in a good deal. But now I'm thinking that was my $100,000. Am I wrong? You're laughing, but that's what I'm like. That's it. Then I'm out. How many more doors am I going to buy? [00:46:56] Speaker B: That's, I mean, no, I'm only laughing because I've had the same thought of the people. [00:47:00] Speaker A: I bet a lot of people do. That's why I'm curious how you work through that. [00:47:05] Speaker B: So I guess the question is, you gotta. You gotta ask. The question is, what are your goals? Again, we go back to, what are your goals or your goals to just be a limited partner and, you know, have that money, work and return, have a better return on your investment than a stock market or some other deal that you can have. Right. Because that's all you're always comparing it to. You've got to compare it to something else. What is the best thing for me to do with my money? Is it real estate? Is it stock market? Is it crypto? I can't answer that for you. That's up to you. Right. What risk are you willing to do? But if you're like me, I used the money that I had, and we'll get into what, you know, what's an attractive deal for you? And that's subjective, but you want to get into it, and you want to become a general partner. And becoming a limited partner gives you an opportunity to see the inside of a deal. Right. Just a little peak. Right. [00:48:02] Speaker A: Almost like an apprenticeship or something. Not an apprentice. It's like you could passively just give your money. You could. I mean, I don't want to get too into this part of it. You could buy a writ or something and just have your say, oh, I'm in real estate because I'm in this paper asset. That's a, you know, it's a collection of properties. [00:48:19] Speaker B: But then you lose all your tax benefits because you don't actually own that asset. [00:48:22] Speaker A: You own the pay. Right? [00:48:24] Speaker B: So there's some. Some folks in here that know that stuff so well. So. Well, I mean, I know touch points on it. But when you become a general partner. So there's the different thing. A general partner and a limited partner. Yes, you do. A general partner does all the work. They are the people that find the deal. They're the people that find the debt. They work the debt. They're the ones that are going to raise the capital to buy the deal. They're the ones that are going to want to close. They're the ones that have to manage the asset for the life of the deal. Okay. And so when you. And that's what we talked about being vetted, you're in bed, you're. You've got this marriage not only to the property, for whatever your business plan, five, seven years, but you're also married to these people that are in the general partnership. [00:49:09] Speaker A: Right. [00:49:09] Speaker B: You're vetting, you gotta pick your partners, correct? Right now I say that, but on as a general partner, there are different, there are deal structures, they're all different, but there's opportunities of acquisition fees, management fees, disposition fees, things of that nature, depending on how the deal is structured. Is a joint venture, is this a GPL 80 2070 30 deal, 50 50 deal, whatever makes sense. And so there's still, every deal is completely different. And so once again, another topic to talk about. But a general partnership is where you're going to build wealth. Now, we invest alongside our investors. We put our money, and so we're, we're in the deal as an LP as well as well as being a general partner, because we want to show our investors, hey, we're right there with you, so we don't want to lose our money. And so we're not going to lose your money either. Want to get the best returns on it. So going back to what you said, if I'm going to be an LP, I've got $100,000, I would personally, what I was told and what helped me was getting as many deals as possible with that hundred thousand dollars. I literally asked Grant Cardone this question in a group setting. I said, Grant, I said, if you have one deal and you have $150,000 and it has these specific returns, is it better to be in this one deal, or is it better to be in three exact same deals, but with only 50k in each one of those with the same returns and the answer from him and from the other people getting all three, because it lessens your risk. You don't have all your eggs in one basket. [00:50:49] Speaker A: I was going to say it's diversification that way. Right? [00:50:52] Speaker B: Is that it is a diversification, but it allowed me to learn so many different things. Like our first deal was a mobile home rv deal. The second one was actually a commercial retail, which is different. I just. They had an investor fall out. They were looking for someone to feel, and I was like, hey, let's, let's give it a shot. Sounds like a good investment. Third is a build to rent construction deal, which is going to be duplexes, quads, town homes. Fifth deal was so one, two, three. Next one was a, another rv deal. Then there's a last two have been multifamily. And so all kind of different situations that go into that, all kind of different cap rates depending on that type of investment product for that, that type of family. And it allowed me to learn while earning is really at one point learning and earning. [00:51:48] Speaker A: So. So let's go. Let's say I have, let's say I have the 150 because that's an, it's going to be easier to divvy things up here. So let's say I have $150,000 and I take $50,000 and I put it into three different deals. So now I took the only money that I had, which is that $150,000 to invest in real estate, and I put into three different deals. How do I get to the net? How do you, how do you get to the next door? Like, how do you like, all right, I'm out now. I'm sitting and waiting. Cause it's, that's the part that gets me, too, because it takes time. So it's like, I think you kind of get where I'm going with this in terms of like, how do you, what's your answer to that? [00:52:36] Speaker B: Someone asked that very question of grant at one of his events, and he said you need to go out and figure out a way to make more money. [00:52:43] Speaker A: Right. I knew it was going to be. [00:52:45] Speaker B: That was really what he said. [00:52:46] Speaker A: But honestly, that's right. So I just going to stop you here for a second because part of my interest in real estate is that I do the stock market, so that supplements my income. I'm fortunate. Like, my wife is out of school now, so she went back for her degree and so we were doing the single income and she's getting through school. And I was fortunate to be in a position that I could carry for a minute or two. Yeah, four years. So then after that I'm thinking, like, I'm kind of capped with because I work with a physicians group and I don't control it. And so I just have interest as the group grows. I have like profit sharing and I have my 401K. So Im growing in that way. But I feel kind of capped in terms of capped, not cap rate, but I feel like capped in terms of how far I can go with it. So then I started doing the stock market and its been hit or miss, quite honestly. Some weeks are good and some weeks are bad. And so I dont like the inconsistency of it. So when youre talking about goals, like, if I had a goal for real estate, my goal for real estate would be cash flow. I could even picture grant saying, you got to make more money, man. You just got to make more money, which then gets you into a different kind of hustle because it's like, well, I wanted to do the stocks because I wanted to make money and that became its own thing. And then I want to do real estate because I want to make money and that became its own thing. And now I still need to get more money. Where do you find, like, the balance of time allocation of resources? And I know you're right, it's subjective. Each person's got to have their individual goals and figure out what's right for them. But in our example, where it's like, it's 50,000, 50,000, 50,000. You, you did it like, you did it in my mind, because you, you had whatever your number was. You had a number that you had. How many deals could you get with the number you have or you like, just like sitting on piles of cash? [00:54:44] Speaker B: So when you. One thing you look at is, you know, we talked about business plans, so you're going to evaluate those deals based off of when are they going to return, what's the equity multiplier? How much your money going to be multiplied? How much cash on cash are you going to get now? I didn't want my money tied up in long term deals like a class a. You're looking at getting a refinance within markets with debt and stuff like that. You put debt on it, you get next two or three years, if we get the race going down like they should, you'll get a distribution back, but we'll take that little bit, stick it in something else. But what you're talking about as an LP, you want to get in something that probably every one of those deals that I told you about, our six deals, they all are staggered when it comes to their returns, their business plan, their time frames, because the, the, you know, the retail center was a pure management play. We go in there, we redo the leases, we get the, you know, right people in place, we pretty it up a little bit and then we're getting out. You know, that was going to be like a two month investment. So that way within two years, I'll be able to redeploy that capital and then the construction deal is more of a three year play. So I've always got that money coming back to me. I'm always putting it to work as I go. So that went into the factor of what I did with, in your case, that 150k. So it's just a matter of when do you want that money to be returned, what level of risk do you want to take? But also not having fomo for missing out. Right. I should have put it there. I should put it over here. Well, that's, that's a risk that you take. It's not necessarily the risk that you're, you know, in that deal. It's the risk that this deal may not be as valuable as that deal. So that is how I. I'm going to answer your question, because it's still a personal, you know, it's a very subjective answer. [00:56:47] Speaker A: Yeah. [00:56:47] Speaker B: Now, if you're going to be a general partner, now, there are, there are opportunities where being a general partner, you can, you know, you may not have that cash, but through an acquisition fee that's usually, you know, charged by a general partnership group, you can take that money from your acquisition fee and invest it as your lp money once that, you know, once that the property is closed and you take ownership of it. So that's another potential way. But that is being a general partner from a limited partner. You have what you have. [00:57:19] Speaker A: Right. Yeah, that's very interesting. I feel like there's a lot of roads that we could go down. When you say, yeah, I know it is. There's so much. It's like drinking from a fire hose when you're first getting into it. No, I didn't like, I didn't like it. I don't like it, but I get it. I totally get it. I think that's where I go back to the stock market, because I think I can evaluate a company and I can choose between which company I want to invest in and which industries I want to invest in. So I like tech, I'm just interested in tech and I understand the movement of it. And I kind of, I'm a futurist. I like to think about where things are going and what the future might look like. And that's a way to speculate on the future is through tech, tech companies. But you could, maybe you're not comfortable with the volatility in the tech industry, or your background is in finance or something, and you're maybe more comfortable investing in banks or something of that nature. So you're deciding, you're evaluating businesses when you're looking at the market, if you're looking for long term strategies. [00:58:31] Speaker B: We also think about this. What kind of, what level of ownership do you have as a shareholder of a stock? You have your. Have a vote, or you're gonna have a prop, you're gonna give up via proxy or something like that, but you're not gonna be able to call those folks up and say, hey, you guys. I mean, yes, public information stuff. Hey, what are you guys gonna do? I really think y'all should go over here. You tell me with these deals, I mean, you're looking at some investment. Some of these deals, I mean, general partnership groups, maybe as small as two people, three people, depend on the size of the deal. And you're gonna. As a limited partner, you'll have access either through like a monthly quarterly newsletter, somehow manually, if they. I don't know if they're scared to tell you about stuff that's going on, but you're gonna have more access to those people that are actually doing, using your money to provide value. And so that's another thing for me, not that I can control it. Obviously, as a limited partner, you don't really have a voice. You just have the money. You trust those people. That's part of the agreement. But as a general partner, obviously you have a voice, and there are avenues to become a general partner. If you so choose to do that. [00:59:46] Speaker A: Which is what you've done, you become a general partner. When did you do that? Through this process? [00:59:54] Speaker B: So I got started October of last year, and by December, I joined a different group within grants ecosystem, which was more of a valuable network of people who were intentionally doing deals. Like the. The first part was just kind of educating yourself, what we talked about, but then the network was kind of a, you can still network with the other, but this is like focused. Like, these are people that are focused on doing deals every week, people that are taking stuff down. And so I connected with some folks at one of his events in December of last year, and not to talk their program, but it was. They had a program where they would train you to be a general partner, and they not only would they train you to do that, but they would also bring you into a deal where it's almost like learning by immersion, because their goal is to do business with you long term. And that's what I was looking for. I don't want to jump around from deal to deal with a different group of people, because that just means you've got to vet more people. Right. You want to do business with people. [01:01:06] Speaker A: It sounds exhausting, honestly, to do that. Yeah. [01:01:12] Speaker B: And because they wanted to be doing business where I was, and they had a track record, a very successful track record. That meant a lot to me, and they were willing to answer any of my questions. And I am a very. Apparently, I'm a very inquisitive guy. I ask lots of questions, and you've been asking great questions today. I appreciate that. It helps get the information out anymore. Constructive manner. I mean, within my first month of joining their. Their team, I was in a deal as, you know, as a smaller percentage of the general partnership. But I was exposed to, you know, calls about, you know, doing due diligence on the property, you know, debt and capital raising and all those things. I'm like, whoa, this is blowing my mind. I had no clue that this is the stuff that you had to do when you took down a deal. And so it's been just that one experience has been invaluable. But I had to go through all those other things to get to where I was and very humbled by that opportunity that they, they vetted me before they invited me. They don't just invite anybody. And so they're very intentional about what they wanted. They saw that I was very intentional about what I wanted, our goals aligned, and we moved forward. Now, there's some people that their goals are. Their goals don't align with ours, and we may not. It doesn't mean we'll never do business with them, but just not right now. We're not going to force something to happen that's not going to happen naturally. And so that intentionality and the desire, and we had the same goals, Mark. That's the other thing. We had the same goals, but I got my mentor, I got my folks, you know, a group of folks that have been successful. They wanted something, you know, that I could help provide from a market understanding and analysis and being the point on some of this other stuff. And they were able to provide me, like, hey, this is what I got. What do you think? You know, like, well, we don't like this, and this is why we don't like it. And that has been. I didn't know that I was looking for it, but I. But it's exactly what I needed to get from, you know. Yeah, like I said, you can be an LP, but to get from zero to where we are and where we're going, I couldn't have done it any other way. [01:03:40] Speaker A: Yeah, how does that show up, like, on a balance sheet? Like, how does that. Do you have, like, spreadsheets now, is that. I see these increasing levels of complexity, and I kind of go back to the stock market. Cause that's my frame of reference in terms of investing and building capital over time and building wealth. But. But, like, I can see on a computer screen, everything's graphed out for me. I can just pull up statements. It's like, it feels somewhat automated. I do do things personally in my own spreadsheets to manage my trades, but outside of that, it's like I can just visually see what's happening. And this is like another sticking point for me personally is like I'm trying to visualize with real estate just such a larger, seemingly more daunting responsibility in terms of having all of those properties and you're just growing that. You're just stacking properties on properties. And the other thing I think to myself is you've been doing this for a year and you have 800 doors and you're just getting started. God knows how many doors you're going to have the next year. Like really compound ten, exit? For sure you haven't because things take time to unfold. So it's like even if I took a whole bunch of stock positions right now, I'm not going to see the fruits of whatever. I need some time to pass for the prices of the stocks to go up. So in the meantime, you're growing. I mean, this is the business aspect of it, right? I mean, you're growing, but you're. But, but you have to still manage what you're managing, which now is 800 doors, but you're not managing it, but you're managing an aspect of it and certainly how it relates to what money you expect to receive and when. And like you said, you have things staggered and kind of timed out to figure out what you need from these deals as they accumulate. [01:05:38] Speaker B: Trey, you go into your goals. I thought of a few things as you were talking, and everything you said is stuff that I've said on my own. Right. And a lot of it goes into when we talk about goals. I think that's a nice way of saying how much control do you want over the situation? And ultimately, the bigger your business, the less control you have to a certain extent, because the scale, even Elon and all these other guys that have these big, huge, successful businesses, well, at some point in time, they had to delegate to other people on their tenant teams to do something for them to go and be brilliant and go and negotiate or whatever and stuff like that. And so it's the same thing with multifamily. Could I have done this through a normal network, people that I knew and stuff like that? Absolutely. But joining that grants ecosystem and almost like incubator, it was just, it grew much faster. And that's what I wanted, because at this, you know, stage of my life, I know if I'm going to do this right, I need to do it right without any mistakes, which was huge. Last thing I wanted to do was look over my shoulder and make sure that my business partners were doing what I expected them to. And so that's the control aspect. There's some trust, there's risk mitigation, vetting of who you and I keep, I keep saying the same things over and over because there are so many different areas within a deal that you've got to review and you've got to be comfortable with, but ultimately, you're still going to have to pull the trigger. And when I got started, one of my big things is I hear you talking about, you know, you are a guy that knows how to do analysis. And my, I did a strength finder test a few years back, and my number one was analytical. Kind of helps us being a computer guy. Right. I realized that I could have overanalyzed everything that we're doing right now. And so for me, it was a bit of a leap of faith. But if I'm going to take a leap of faith, I wanted to do it with people who had experience and who had character and had a track record that I could trust. So that was, that was the big thing for me, was I had to let go of. I'd like go the rail and do my bungee jump. [01:08:04] Speaker A: Yeah. There is that leap of faith, and there's so many mechanics in terms of places that you can get involved, especially when you say partnership. So it's like finding your strengths. What can you bring to a deal? In a lot of your early deals, your location was what you brought. Just your knowledge of the market that you're already in was useful to people that were looking to get into that market that may have had other resources that were useful to you. Knowledge being one of them, to have the experience that you can gain. And then you brought value to them through your knowledge of your, the area that you're in. [01:08:38] Speaker B: And the crazy thing, Mark, is that the two deals that I'm in as a GP are not in Houston. One's in Arlington, Texas, one's in San Antonio. [01:08:47] Speaker A: Okay? [01:08:48] Speaker B: So I'm feeling, and on those, the way we, the way our group, our team does it is you can be on any aspect of a deal now as a general partner, you have to have some role over the life of the deal. Right. And so, meaning there, there is asset management, basically. You can't really be doing anything else. That's going to be almost a full time job for any kind of asset. Right. And then, you know, none of the deals that we are in, the smallest deal that we're in is 100 9100, nine units, which means that we're able to manage the manager or hire a property manager for those deals, which we have, but there's financial analysis every month, every week that goes on. You can automate that, things of that nature. I'm on the investor relations teams. I like to talk to people. It comes naturally. I grew up in Louisiana. We do people well. We know how to talk, have fun, you know, and so that's, I don't necessarily relate to people, but I talk a lot. And so it's, and that's what, on deals that are not here, it worked. It makes sense, right? And so there's a, there's, there's a guy that joined our team recently. He's from Maine, and he's like, you know, jody, he's like, I need to know if I join your group. He said, and I appreciate his question. He's like, how am I going to provide value to you guys by joining your team? I said, well, I say you got to think about it a different way. Is in Maine, what would you be able to do without us? There are plenty of things you can do without being a, what's called a quote unquote boots on the ground person, someone that's in that market. Like I said, there's a lot of coordination. There's a lot of phone calls, all that kind of stuff. You don't necessarily need to be there all the time. And even if you did, you wouldn't have to be there every day if you're hiring the right property manager. So there's, there's another one of those rabbit holes. [01:10:54] Speaker A: But that's good to know because when you, because that got my mind thinking, like, where do I get involved? And like you said, I, I'm a people person. I'm a chiropractor by profession, so I'm good with people also. But I like, I think the part of my brain that I like to use is the analytical side. So one of the things I like about the charts and the stock trading is the technical analysis component of it. So I'm comfortable sitting at a computer screen and then gauging, based on the data that I'm seeing in front of me, what the strategy is in terms of how to manage my risk in a trade and then look for a price target using trading as an example. But so, like, when I think about getting into these deals, I have a harder time visualizing myself, like boots on the ground, going into each of these properties, looking at each of these properties. So, like, that's where you said a limited partner is a good place to get your feet wet, because then you just put in the capital and you could see what's happening. I mean, you must get like some kind of monthly statement or something in terms of this is what's happening with the property and, or, I don't know, like you said, a newsletter. Even so maybe like quarterly or something. There's a newsletter and then monthly. And I guess the big thing is, like, when I think in my mind, if I wanted to create cash flow from an investment, I can either buy a stock that pays dividends, so im getting monthly income from that or whatever. Theyll pay quarterly and some pay annually, or I can put my money in real estate and then get the rental income from that. But I guess for me, and this is just me being, trying to like get to the honest part, is it seems so much easier to just forget it's a personal thing. It just seems easier for me to get a stock and just wait for the dividend to come in than to have all of these other variables that I have to consider to get the cash flow. [01:13:01] Speaker B: It depends on if you want cash on cash. That's what you're talking about, a cash on cash return. How much money you put in, how much cash you get back, or do you want to build true wealth? That is the thing about it. When you own a property, we talked about, we touched on tax advantages, but that's something that you can pass down to your family years later and they can benefit from that. Yeah, you can pass along stocks and stuff like that, but are they going to have the knowledge to make the same decisions that you do? [01:13:28] Speaker A: Yeah, that part really freaks me out is that I'm like, I can't, I can't inherit my brain. I can't like pass my brain down to see how man. Yeah, right. I know. Well, these days with AI, who knows, you know, there. [01:13:47] Speaker B: And, you know, you can also do, you know, self directed Iras and which is one of the things that we chose to do as well. So, you know, whether it be a Roth or traditional account, there, certain custodians, you put your money to, and you can invest that money in real estate. Now, you don't get those dividends. They don't come back to you because that would be leaving your account. You'd have to pay tax on it. But it'll go straight back into your IRA, your self directed Ira, whether it's traditional Roth, and you don't get taxed on it until you take that money out years down the road. [01:14:20] Speaker A: Right. So you can use your Roth Ira to leverage real estate. Is that, am I interpreting that correctly. See, that's interesting. I think people, those are some eye opening things for me because I'm in my 400, I have my Roth Ira, and I'm thinking to myself, those are just static and they'll sit until eternity. But now I'm starting to wrap my mind around investing. How do I take investments that I already have and then use them to leverage into other investments? [01:14:50] Speaker B: Well, one of the things that aggravated me and made me really unhappy and kind of shoved me into doing this a lot faster was I looked at one of my IRA accounts and my investment accounts, and over the last 14 years, it had earned 1%. [01:15:07] Speaker A: Oh, geez. [01:15:08] Speaker B: In value over year, over year. Now, the thing you got to think about, you know, you get a stock, if you get a, you know, use your portfolio, increases in value, let's say you get a 10% return, which is not bad. Well, you actually have a net of 6% because of inflation, right. Your dollar is not going to be able to buy that much because euro year you, inflation is two to 4%, whatever you want to call it. So you lose that buying power. So the more you hold on to it, it's, you know, you look at your cost basis on your investment and stuff like that, you think it's going to do that, but it's actually doing that because that's your level of inflation. So you're actually going to have this part, not all of this piece. Right. Right. And so you've got, you can't take any certain factors, like your cash on cash and things of that nature. It's got to be all of it. It's got to be taxes, got to be buying power. It's got to be the wealth opportunity. Like, you take your stock and I'm not trying to buy, I'm just using that as a contrast compare. This is because that's how I came to my conclusion is if I have $100,000 in my investments, even on a good year, I'm making 15%. So at the end of year one, I'm at $115,000. And then year two, you go ahead and compound that, but you're not going to get, in five years, you're not going to get probably more than 160 or 70, whatever percentage, maybe up to 190,000. You may get close to two x in your money, but maybe not. But if I put it in real estate, so my $100,000 investment is going to pay me. Let's just call it a 6% cash on cash. That's the minimum that I look for. From a cash on cash, and it's usually a class A deal, and I'm not as prone on a class A deals, so I'm making 6% over those five years. So I'm going to make. I'll have value of 106,000, and at the end of year one, so on and so forth. So it may be smaller than what we talked about with your percentage there, but especially if. But I'll have tax advantages. I'll have. We'll have desegregation studies where we'll do it. Accelerated depreciation on one deal. Like last year, I had accelerated depreciation on our first deal, and it was $16,000, which means I could write off taxes on $16,000 worth of my passive income. You can't do that. You're going to do a capital gains tack on some of your stuff that you talk about with your stocks, but not only that, with that $100,000 in real estate in year three, we refinanced it, and so they were able to pull out $50,000. They were able to return $50,000 in my investment. So I got $50,000 in my pocket now as a non taxable event, because that's money that's coming out of debt based off the value. I'm still earning my 6% cash on cash return because I still haven't lost my position in that debt. Well, what I can do is I can take that 50,000. I can go throw that in another deal. Brian. [01:18:19] Speaker A: Yeah. That's the part that excites me, is those kind of opportunities. And you said you've already seen that type of opportunity even within the one year that you've been doing this. So you've actually cashed out of in one year. And something that's. [01:18:35] Speaker B: Well, there's not any of the deals that. There's one. There's one is act one of those six deals. So two of them are still waiting on because they're fairly new and they had a lot of value add. For the six are cash flowing. Okay. For the six are cash flowing right now. And two. Two of them are ahead of the game as far as distribution starting, which has been good. So that means we've been doing our due diligence. Right. The other thing, the last part of that example I was going to. I was talking about is after you do the refinance, the thing about it is that value of your property, without seeing it, is going up. So when you. And that was part of the refinance you know, if nothing changed, right. If nothing changed in the market, it your property and the value of the dollar was going to where it was, your increase in value is going to go up through either rents that are going to go up through inflation, stuff like that. That's just organic. That's going to happen. It's been happening. It's not anything that we're driving, it's just a product of the market that we're in. And so we are insulated on the devaluation of the dollar based off of inflation. That is me. [01:19:56] Speaker A: Yeah, that makes sense to me. It's, I really appreciate your time, Jody, because you spent a lot of time with me. I was like, we'll do like 30 minutes, really, hour and a half. I'll see how much I actually get through on the podcast. But I look forward to, I appreciate having you in my network of people that I can know, that I can consult with on something like this. And I'm building my own community with this podcast because I have small business owners and entrepreneurs and other investors and traders. And you're actually my first real estate guy. So I was excited to have you on because I wanted to explore all the areas of where people could allocate their resources. And one of the things that I've learned from you and from the group is the networking aspect of it, surrounding yourself with quality people that can recognize a good deal and take advantage of opportunities as they arise and evaluate them as such. [01:21:03] Speaker B: Well, I appreciate the opportunity. I'm happy to help other people as much as I can. If I don't know it, I'll find somebody that can. That's my big thing, because I couldn't. This whole reason that we're on this podcast is because I was held by a bunch of other people. And so it's not necessarily, it's not even paying it forward, it's just doing the right thing. That's just, that makes me happy to be able to help people. [01:21:25] Speaker A: If someone's listening to this, I hope somebody's listening to it. But for anyone who's listening to this that wants to get in touch with you, how, what's the best way to reach out to you? [01:21:36] Speaker B: They can shoot me an email. My name's on the screen. Jodyneighborsotmail.com. that's jodynadors otmail.com dot. [01:21:45] Speaker A: Okay. And do you feel like, do people reach out to you? I mean, I reached out to you. You were, you know, one of the first people. You reached out to me actually, initially, which was great. You were really friendly. We had a nice little interaction, and then we didn't talk, I think, for like a month or so. And then I saw you on that call and I heard your story and I was like, oh, my God, I gotta, I gotta dive into this and understand this better. [01:22:08] Speaker B: Yeah. People reach out. That's the thing about a network is, is if you reach out to expecting something in return, you're probably doing it the wrong way. But if you're looking to reach out to help somebody fill a need, it's much better off. I have people reach out via Telegram, WhatsApp, email, cell phone, things of that nature. We're happy to help. And if we never do business together, it's okay. If I can help you do. Like, there was someone that came up to me in an event recently, like, hey, Jody, I knew that you were part, I know you're part of an rv deal. I have someone that has 300,000 that wants to invest in an rv deal. And they're like, do you know who I need to contact? Well, I wasn't, I had two deals that I was part of. They're both multifamily. I said, but yeah, I know this other person over here that has one. I'll get you in touch with them. And so I didn't try and say no, won't you take your money and put in our deal? That wasn't what they were looking for. So we're happy to do that kind of stuff. And that's the kind of ecosystem that we're part of where people are just trying, trying to help people. [01:23:09] Speaker A: I love that. And we'll end on that. People just trying to help people. So thank you so much for coming and being my guest this week. I'm looking forward to doing another show with you at some point. Catching, catching up and see where you're at with the doors and kind of what you've learned through this process sometime in the future. Absolutely. Yeah. I really appreciate having you. I'm just going to say goodbye to everybody that was listening. And Jody, stay on because you and I will just a little debriefing afterwards and see how things went. And I hope you enjoyed it. I really enjoyed talking to you and everybody else. We'll see you next time on the money adjustment. Thank you for watching this episode of the Money Adjustment. If you want more, like comment and subscribe, you can follow me on X Arcramer. Until the next episode, stay healthy and wealthy.