134: Exposing Wall Street's $1 Trillion Real Estate Blindspot w/ Ben Miller

27:23We got revised lower over two months. That is material, right? That is very material. And so I think it's the Fed's duty to put employment before what could be inflation at the moment. And to your point, yeah, I think, you know, fast forward three, four, five years, we'll look back on this and say, okay, maybe it wasn't what we thought it was. Yeah. And I've got two takeaways that I want to add in and piggyback off of ben i think 100 you and the team at fundrise is spot on with the build for rent communities because right now the whole narrative for the last two three years is that it's a renter's market it's cheaper to rent than it is to buy and the numbers back that up but then the flip side of that for someone like me who's been in real estate for 30 years everyone's been questioning for months and months why are you buying so much real estate right now because I've been buying a lot of single family homes because I believe for the long-term, the appreciation will be there.

28:17But also because it's a renter's market, I can either flip the house or make it a long-term rental and either way I win. So I think you're spot on and that is just where the numbers lie. But I do agree with you that we are going to see a real estate boom. But where I think people are wrong, everyone is sitting on the sidelines saying they're going to wait for rates to come down. The problem with that thesis is when rates come down, just like 2021, 2022, it becomes a seller's market, not a buyer's market. And then everyone is in this race to buy that specific property. They're going to pay 50, 100, 150 ,000 more than they would pay for that same property right now.

28:58We've seen that all over Florida where a house from two years ago that was 800 ,000 is now 650 and people still want to wait and see on rates. rates could take two more years before they come down a lot. And I think people are making a mistake by waiting. And so, Ben, I feel like you have a front row seat to the future of real estate, considering the billions you have in assets under management and the hundreds of assets you already own. So walk our audience through what are you most excited about in real estate? And is there anything that the average person themselves can do relative to your big ideas?

29:37Well, I mean, I'm most excited about AI. It seems a bit tangential to real estate at first blush, but this is a mistake people in real estate made over and over again. I mean, I was literally like my father built malls in the 80s and 90s and no one who built malls thought that Internet mattered to them. Right. I mean, like now it's obvious that e-commerce destroyed malls and like industrial industrial was like the least sexy thing in the world. and because e-commerce drove so much. I mean, you have to, you replaced every three square feet of retail you got rid of, you had to replace with one square foot of industrial because you had to get those goods to people's houses.

30:17And then work from home shifted people from the office to their house. And that drove a huge amount of demand for housing, more space, different kind of housing, commutes. And so once again, we're on the cusp of a huge technological revolution. and I think AI is, I mean, I know AI is because I'm up to my elbows in it and there's just so many different ways to play it that it's like, you know, you could have a whole podcast series about, you know, how it's going to reshape every single thing you do. And it's funny because I find that most people have, it makes them really anxious. They're worried that it's going to get rid of their job.

30:55Most people aren't using, you know, ChatGPT or Anthropic like every day, but it's like an opportunity. It's a threat and an opportunity and it's going to reshape real estate. So two or three examples of, so we, for the last few years, have been rebuilding all of our operations around software and AI. The team has 100 software engineers and we shifted to rebuilding everything with software. And you'll see we'll have some things to debut in a few weeks. Radical change. I mean, we're going to blow the real estate industry's mind when they see what we've built. They've never seen anything like it.

31:33I mean, it's incredible. I could talk about that. I come back, what I call it. But once you guys see it, it's going to blow your mind. So we're having Ben back on the show here. Absolutely. Everyone's minds get blown. You got to see this thing, Robert. You're a real estate guy. Ben 2.0. I can't wait because we love being the guys that are ahead of the curve and bringing all the best information. That's why we enjoy having people like you on the show. So this is exciting. We'll definitely have to have you back once our minds are blown. It's so exciting. I mean, it's so exciting because it's like, I think I'm an AI optimist.

32:05I think you're going to shed most of the crappy work to the AI and keep most of the good work to people because AI is not going to replace people. It's going to augment people. Then in terms of real estate investing, that's why I think it's the 90s again. Internet drove productivity. Computers drove productivity. Computers drove all sorts of positive. I mean, computers. I mean, people think good computers take it for granted. But like computers didn't really exist in the office until the late 80s. You know, most people who are like my dad's age, I mean, he didn't even he never used Excel spreadsheet, doesn't know anything about it.

32:38So AI is going to be like that's going to drive so much growth. Growth is good for real estate. It's good for certain, especially cities that are part of that technological trend. And then the heart of it all is data centers for real estate. We've been investing in data centers. And what's interesting about data centers is that I think they're mispriced. I mean, most people can't. The two public data center rates are not what I'm talking about, and I'm not recommending them. They're actually like, I think they're in trouble. We can talk about why they're in trouble. But an AI data center is something totally different, and they're totally mispriced.

33:12And we've been investing in them, and it's been phenomenal. And I can sort of walk through that. But up and down, anything that AI touches, I think, second order and for shorter consequences are going to be phenomenal. Can you explain how they're mispriced? When a new asset class gets created, money doesn't know how to price it. They don't know how to price it. And the way that everything's always priced is on historical performance. And when something's new, they have no historical performance. And so they put a risk premium on it because they say, like, oh, something's uncertain, it's risky.

33:47Which is funny because the tech people, old things are risky and new things are rewarded. But in real estate and finance and securitization markets, it's always the opposite. So data centers that we're talking about, which is, it's a mistake. There's three kinds of data centers. There were data centers built for telephones. There's data centers built for internet. There's data centers built for clouds. And there's data centers built for AI. And so there's just a mistake to think of them all as one. They're super different. They're absolutely unrelated. A data center built for a cloud might need to have 10 megawatts and be, you know, 500 ,000 square feet.

34:25And a data center built for AI is going to be a couple million square feet and be 300 megawatts, a gigawatt. Totally different infrastructure, totally different power, totally different heating, totally different cooling, totally different everything. Everything's different. There's nothing. They're unrelated. They're just both called data centers. And so the market basically is pricing them as if they're super risky. but underneath of them, if you can get at the right ones, you're like, you have a Microsoft lease. You have a meta lease. You have, you know, a Google lease. You're like, okay, so there's a AAA rated lease underneath of this thing.

34:59It costs them$3 billion to build it. It's in infill Atlanta. I can get a levered 15, 20 on like a triple B rated paper or something. I'm being a little technical, like that's insane. Like you to buy Microsoft's corporate credit, you'll get like a four. But if you buy that through a data center, you can get a 15 or 20. I mean, it's just, it's, it's so mispriced. I usually don't like talk about it, but Wall Street people, you know, aren't going to be listening to us. People, real estate people are worried as a bubble and tech people are worried that it's like a desert. It's total scarcity. Now, before we ask Ben, And our last question, let's hear from our sponsor, Blossom.

35:42Investors, have you been itching for some in-person events? Well, you're in luck. Our awesome partners over at Blossom Social are hosting their third annual investor social tour, where hundreds of DIY investors across North America meet up in person for an evening of food, drinks, networking, education, and fun. And they'll be hitting seven cities this year on the tour. That includes Los Angeles, Vancouver, Calgary, Chicago, and Montreal. and Toronto, that'll be hosted at the Rogers Center, which is where the Blue Jays play. And in New York, it's going to be hosted at the NASDAQ Center in Times Square.

36:18We all know what the NASDAQ does. That's pretty exciting. You guys know how much we love Blossom as an online social network, and they're all about connecting investors online. Well, now's your chance to see what the community is all about in real life at these events. They've even hooked up our listeners with an exclusive 15 % off coupon. So use coupon code RICHHABITS15 at checkout. There's a link in the show notes below or visit blossomsocial.com forward slash 2025 investor tour. Robert, are we going? Should we go to this tour? Sounds like fun. We definitely got to hit a couple of the cities.

36:55So we'll keep you guys posted of when we're going to be and where. And we'll see you there. All right. Back to our interview with Ben. That's fascinating. And I want to keep going on this because our next question is more around like the private credit side and the venture investing that you guys are doing. So like the way you're talking makes me think that, you know, with the lease, I mean, is this some sort of, you know, private credit arbitrage that you guys are sort of seeing right now? How are, you know, walk us through how a fund rise has diversified away from in the beginning, congrats, you're an investor into an apartment into now these, you know, triple B rated tranches or whatever the heck's going on here behind the scenes.

37:34Yeah. So we transitioned to private credit or added to private credit. When interest rates went up, actually at first, the best thing to invest in was credit because high rates, you could just get really high yields. And we shifted in September 2022 to start buying credit. And it was phenomenal. I could talk about that. And then we expanded into venture capital. It's so valuable for so many reasons, like just a few. One is that it gives you much deeper understanding of like I understand real estate better by understanding credit better I understand real estate better by understanding tech they're less correlated so like real estate's down but tech is up so I think our investors are better off with a diversified portfolio neither one you can really get access to I mean to invest in asset-backed securities of a data center you have to have a hundred million dollars of liquid securities not net worth liquid securities like it's like a quib a qualified institutional buyer.

38:26So it's like a really high standard to access it, but it's been phenomenal. And then, you know, obviously our venture fund, our initiative into tech, we created another market. I mean, there was no such thing as a public venture fund that anybody could invest in before us. We went to the SEC, took us two years to convince them. And now, I mean, it's going to be, it's going to become a sector. Like it's going to become a thing 10 years from now, 20 years from now, like it'll just become normal, like an ETF, like a mutual fund. And we ended up building a portfolio that is like, I mean, world class, like the majority of the top 10 private companies in the world.

39:01Since it's just, it blows my mind. It's exciting. It's certainly exciting. And you are, I mean, I've got some equity in the venture portfolio that you guys have built. I think Service Titan was a recent major winner for you guys when they IPO'd. So it's really cool to see that you guys are democratizing this asset class to the masses. When I first announced it, we got a lot of skepticism. And I was trying to explain to people, we were fundraisers, millions of customers. We have built mobile apps. We've built websites. We've built APIs, all of the back-end servicing. We had our marketing budget, our digital marketing budget was in the tens of millions.

39:36But we really understand the tech. And we've been building with AI. And so how we got some of these great companies is we were a customer. I think it's something like 80 % of the companies we invest in were a customer of. We would go to them, say, hey, we're a customer. Can I talk to the CFO, CEO? They'd say, yeah, of course, you're a big customer. Seven-figure customer sometimes, right? It's how we got the conviction on some of the technology. Is this technology a great technology? And so we understood the tech in a way that I think that our customers didn't appreciate. And also venture people, I don't know how many venture people you have.

40:15They're not as technical as you might imagine. Like, not all of them are software engineers. They're mostly finance people. There's nothing wrong with finance people, but they don't got anything on us when it comes to technical understanding of the products. Yeah, I mean, and we were lucky. I remember delaying the launch of the venture fund so that we didn't launch it at the top of the tech market. We launched it at the bottom of the tech market. That was some luck and some, like, restraint on our part. and we just bought and invested in, we got the names, we got the best companies. And I think that the best tech companies in the world, the best investors in the world today.

40:55I mean, hands down. Well, Ben, we appreciate you stopping by. We have been sharing Fundrise with our audience for a very long time. We love it. We invest alongside you guys. And we just really appreciate you coming on the show, enlightening our listeners, keeping them updated, and really just giving us all your best stuff So we really appreciate having you on. And we look forward to getting our minds blown and having you on for 2.0 once you do the other launch. So again, thank you for stopping by. Yeah, thanks for having me. And if you want to learn more about Fundrise and all the fun things they're investing inside of, and of course, Robert and I are massive believers in this platform, go check out Fundrise.com.

41:34As always, Ben, thank you so much for hanging out with us. Can't wait to have you back. And this was great. It was great. What an insightful conversation with Ben. I feel like we have these guests, if it's Reed, if it's Ben, if it's Harley, if it's whomever else, Candice, we have these awesome guests that come and join us from all these really interesting platforms and they're able to give us the insights. I mean, Ben has billions of dollars of assets under management at Fundrise. Like what he was talking about with how the paper is, you know, priced differently with the AI data center versus like that stuff is so cool to learn about.

42:08Count me in. And their venture capital firm. I mean, the guy's got an insane portfolio with OpenAI and Anthropic and Databricks. All these companies have 2, 3, 4, 5x over the last 24 months. So they're building some really interesting stuff at Fundrise, helping investors that are focused on alternative asset investing, if it's real estate or private credit or venture investing. I mean, they are knocking it out of the park. Yeah, I really enjoy it because I feel like we're giving our audience kind of the inside scoop on everything that's happening behind the scenes with these big companies. And it just really makes me feel so proud of what we built with the Rich Habits podcast.

42:44And I love it because I learn from these guests every single day and I've been in the real estate world for a long time. And so I just think it's phenomenal that we're able to get these types of guests and share all of their insights with our audience. So this was a really good one. And for any of you looking to learn more about private investing and real estate investing, this is an episode that you have to watch all the way through and make sure you share with any friends in the real estate world because this is a game changer and we love Fundrise and what a great episode. So with that being said, let's now jump to our Q &A section of the episode.

43:21We've got a couple of questions coming in from Instagram specifically. I've just decided to take them off from over there, but don't worry. Our email friends, don't forget, richhabitspodcast at gmail.com. We definitely answer those as well. But we're giving some Instagram followers a little bit of love in this episode. We've got three good ones teed up. Our first one coming from Carson. Carson says, hey, Robert and Austin, I'm 22 and I'm moving to Charlotte for work. I'll be working at Vanguard Group and making$48 ,000 a year. Rent is not cheap in Charlotte and I'll be paying about$1 ,400 a month.

43:51With that already being a big dent in my monthly budget, I just totaled my 2019 Honda Civic. I'm now in a really tough situation where I will need to get a car. What are your recommendations as far as vehicle selection and financing? Thank you, Austin and Robert. You guys are the best. Robert, I'll let you pick this one off. I love this, Carson, and I would not sweat it one bit. Right now, car dealerships of all kinds are offering these incredible lease deals with zero money down, zero money up front, and really cheap payments because after COVID, auto manufacturers just made too many vehicles.

44:27And right now, dealerships are putting you in the driver's seat, wink, wink, because there are so many good deals out there. You can check out Honda right now has some really, really good deals. Volkswagen, Toyota. I looked at a recent lease deal for someone I was helping. I would go lease something, get a three or four year lease, zero money down, do 12 ,000 miles a year, maybe 15 ,000, and you'll be able to get a really cheap payment, get a brand new car with full warranty, and it'll be very little out of pocket. That's what I would do. I would do the opposite. I don't think you need to lease a vehicle making 48 ,000 a year at 22 two years old, already talking about how your rent is going to dent your monthly budget so much, I would one, figure out exactly how much I'll get from my insurance.

45:13Maybe it is, well, I looked up on Grok here, assuming your car is in decent shape, you should get 10, maybe$12 ,000 from your insurance. I would take that 10 to 12 ,000. I would go find another car exactly like the one you had. Maybe it has less miles. Maybe it's another trim. Maybe it's a different color. Maybe it's got a different radio, whatever you're into. And I would just go buy another car, just like you had no car payment, make it easy, use that monthly car payment or what would have been a lease payment and invest that. There's no reason in my opinion for a 22 year old to be driving a brand new car.

45:42Well, there you go. Two different sides of the fence, two different options. I think they're both great alternatives. So Carson, best of luck and keep us posted. So our next question comes from Mark S. Mark says, I'm 45 and I have a five bedroom house worth$410 ,000. I also have a 401k that's a traditional 401k. It's got$20 ,000 in it. I also have some cryptocurrency, a little bit of Bitcoin, about$4 ,000 worth. Now here's the kicker. I took out an HEI loan of$40 ,000 to pay off all of my high interest debt. So I'm now debt-free, except my house and this loan, of course, and the HEI loan does not have to be paid back for 10 years.

46:20With that loan, I spent$10 ,000 to pay off the high interest debt, and I don't have to pay that off for 10 years. So I was thinking the other$30 ,000, I could use that to grow into$100 ,000 by investing it maybe into a Roth IRA or some other retirement account. Can you guys give me some guidance on how to set that up or what you would do with the$30 ,000? I also make$90 ,000 a year at my job. Thank you for your help. So Robert, what do you think now about Marcus taking out this home equity investment loan,$10 ,000 of it going to high interest debt and the other$30 ,000 to now invest in the markets with?

46:56Is this a plan? Is this a strategy? Is this a wealth building strategy or is this a get rich quick strategy? Yeah, this is a tricky one because these investments, just so everyone is clear what an H-E-I is. Basically, these funds come to you and they say, hey, we love your house. We'll give you$50 ,000,$100 ,000, but we own part of that home now. So it all sounds good because you get this money. You can go out and do what you want with it. Maybe you're going to remodel the kitchen. You're going to go buy some Bitcoin, whatever you're going to do because there's no payment. But the problem here that most people don't understand is in the fine print of these contracts, you're going to have to make sure everything is upkept perfectly because they now you have a partner in this home.

47:42So we're going to make sure that the water heater is great. Everything is up to snuff. The roof is kept up. All the landscaping is kept up because you have a partner now to answer to in this home. So that's one of the big issues. Secondarily, they're betting on the upside of this house. They're not just giving you the money because they like you. They're giving you this money because they want to own a piece of the upside in the house. So keep that in mind. If you live in an area where your house is appreciating 8, 10, 12, 14 % a year, and you're giving up a big chunk of that to get this money to me, then it's a get rich quick situation.

48:18And I wouldn't do it. I think There's better ways to find money to be able to do further investments and pay off high interest debt. So I'd be very careful. Or if you're going to do this, just get the amount you need to pay off the high interest debt and no more. Now, here's my follow up for you. Are you saying he returns the$30 ,000 and just lets it appreciate? Like, let's say he had to do something with this$30 ,000. What is he doing with it? Man, I don't know. I mean, you could go invest it, but you have to realize. if you go invest it, let's say you're an average investor and you make 10%, but your house is appreciating 14 % a year, you're actually giving up money for the future because somebody else is getting a part of that appreciation, not just you.

49:02So you just have to weigh all the odds here to make sure you understand the numbers and all the fine print in these HEI loans. They're very prevalent right now. A lot of people think they're awesome, but you have to understand the totality of the numbers and what you're giving up by taking this money against the equity of your house. Now, as I think about, you mentioned that 14 % appreciation. As of August 2025, the U.S. housing market showed modest growth compared to the post-pandemic boom. National prices year-over-year increased by 4.7%, with the best appreciation being in Rockford County, Illinois at 9%.

49:42Medium home value is 185 ,000. So it seems like that eight, nine-ish percent range is the top 10. We got some in Mississippi, some places in New York, some places in West Virginia, Texas, and Georgia. So maybe, right, just kind of like using real data here, if I had to do something with this 30 ,000, yes, you want to invest it. You don't want to just let inflation erode at it. We saw what Jerome Powell recently said. And so I would imagine that either one, inflation is going to reinvigorate and or because of lower interest rates with the Fed cutting these interest rates, mortgage rates will begin to tick lower.

50:18The 10-year yield begins to lower as well, which could likely drive up prices around the country. So regardless, you need to get this money working for you. You can't just let it sit in cash. That is not what we should do. I would probably max out the Roth IRA. I'd make sure I'm doing all I can when it comes to maybe my 401k at my work. You mentioned you only have about$20 ,000 inside of that. Maybe you had good autonomy over that. You can ensure that that money gets invested correctly and is growing for you. Maybe, though, get yourself some gold. You already got a little bit of Bitcoin. Maybe buy a little bit more of that.

50:47But I think the biggest takeaway here, Robert, is one, to not find yourself in high interest debt again. And then two, if we are going to do this in the future, make sure we're not taking out more than we need to pay off the high interest debt. Yeah, I think that's a great takeaway. way. And I just hope Mark really understands the totality of all the numbers. And I think you made a really good point that'll help us for future episodes. When we're answering questions, always in your question, let us know the city you're in. If you're talking about a property or a business you own or something, give us the full details because it'll help us better understand like Austin illustrated to what could the possible upside capital appreciation be of this house that you own, Mark, because we don't know the market that you're in.

51:35So that helps us better understand the numbers to be able to help you make great decisions. I really like that answer, Robert. Let's now move on to our next question coming from Scott. Scott says, Hey, Rich Habits, quick question. How many brokerage accounts should someone have? Short story is I've ended up with five. I've since consolidated to three, but I'd like to consolidate to one. Is there an advantage to having at least two? If you want to have more than one brokerage account, Don't sweat it. I've got more than one brokerage account. Robert's got more than one. And some accounts I hold the same ETFs inside.

52:07It's not that deep. However, public.com is a multifaceted platform that offers ETFs, single stocks, options, crypto, alternatives, bonds, like all these things on that one platform. So if you do want to try and consolidate, definitely go check out public. But Robert, what's your take on having more than one brokerage account? Yeah, I don't even know how many I have. It's a lot because it might be a brokerage account for specific cryptos that aren't available on public or weren't at the time. It might be multiple brokerage accounts because of different products that I'm buying. And one might be a retirement account.

52:43One might be my daily stock trading account. So I think it's totally okay to have multiple accounts as long as you're not spreading yourself so thin because then you're just, it's more work to keep track of and understand where you're at financially. But as you grow wealth, I wouldn't worry so much of just having one, but just don't have 10. That's my takeaway on it. I think one, two, three, or four is fine and you'll be able to manage it and keep track of where you're going. Yeah, the manage it and keeping track. What doesn't get tracked gets forgotten, and what does get tracked gets invested and figured out.

53:18So make sure you're keeping track of your money, making sure you're reinvesting those dividends or rebalancing when you need to and not saying, oh my gosh, I forgot about this account. It's got$2 ,200 in it from a couple years ago, whatever. So make sure that you're tracking your investments. As always, thank you all so much for joining us on this week's episode of the Rich Habits Podcast. Bearing with me, while I'm sick as a dog over here, you're probably like, why does Austin sound so bad? My head is a brick, so I've got the headphones in so I can even hear myself talk. It's been a lot to get through this one, but we love you guys.

53:47We love Fundrise. We love Ben for coming on the show and talking with us, teaching us all things about real estate, private credit, data centers, build for rent, venture investing. It's so fun to get these unique and sort of inside scoop perspectives on what's going on. And as always, if you learn something from these episodes, please consider leaving us a five star review. We take our reviews very seriously. We only want to be delivering the best top tier content possible to you. And leaving us a five star review is how you can say thank you. And always remember to share the newsletter and the podcast with a friend because you all have family members and friends that need to level up their game in finance and in business.

54:27and in mindset, and we're here to help. So share along. It always helps us grow. And we love the fact that you guys give us those five-star views. Thanks, everyone. And we'll see you on Thursday.

54:58Next up is a little song from CarMax about selling a car your way. You want to sell those wheels. You want to get a CarMax instant offer. So fast. Want to take a sec to think about it. Or like a month. Want to keep tabs on that instant offer. With OfferWatch. Want to have CarMax pick it up from your driveway. You want to get it done to it. You want to do it all. So, want to drive? CarMax. Pickup not available everywhere. Restrictions and fee may apply.