MI330: The Real Estate Private Equity Playbook w/ The Real Estate God

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22:17To begin getting smarter about investing, just visit theinvestorspodcast.com slash get started with stocks. That's theinvestorspodcast.com slash get started with stocks. And for a limited time, you can use code stocks15 for a 15 % discount at checkout. All right, back to the show. So at what stage did the light bulb for real estate come on? It didn't sound like you had any real estate background in college or took any real estate courses or anything like that. When did the light bulb hit that it was like, this is what I want to do? It didn't really. It wasn't one of those... And to this day, I'm not that passionate about real estate.

22:55If you told me... I was actually asking this question. I was at dinner with a few other really accomplished real estate guys. And everyone asked, look, if someone gave you a billion dollars, would you keep doing real estate? I was like, I wouldn't touch it ever again in my life. And a few of them were diehard guys. They're like, look, we would be there the next morning. I was like, you guys are out of your minds. So I've never been huge on it. It's a vehicle for making money. And I think it's a very efficient vehicle for making money. It's probably one of the easiest just because of the fragmented nature, the tax treatment, pretty much the leverage you can get, the risk reward of the deals.

23:29I would argue it's probably the best way in the country to actually make money just given the way the US is set up. So I think that's really the main reason I'm in it. But it wasn't like a light bulb came off and I was like, I need to be in real estate. It was just, look, I want to be in private equity. This is probably the easiest backdoor in without having to do what everyone else did. Because at that point, all my friends who were better grades than me were more accomplished than me. They had to do two years of banking to get in. And I basically skipped that entire thing. So I never went through the banking gauntlet.

23:52I just skipped straight through and kind of ended up in a really good spot, which I think was part lock, part skill. But that was kind of the main appeal for me is like, it was like, look, I can shorten my career right now. I'll be done and be at the associate level when these people are pretty much kind of coming back in to do their first stint in PE. So when you worked a couple years at doing PE, at what stage did you, and you mentioned the $30 ,000 that you lost, but when did you do your first real estate deal? Was that, that was while you were working, right? My first deal that I actually did was a, it was probably like the first year.

24:26I would have to see if it was the first year or just after the first year I started working there. I don't need to check the timeline, but basically it was a 200K triplex. I had, once again, had no money at the time, right? I basically scrapped together 2 ,500 bucks. And you had lost the 30 grand already, right? I had lost that 30 grand already. Yes. I'd lost that already. Or did I, I need to double check, but regardless, I had no money, whether I'd lost it or just didn't have it at the time. I had no money and the basically at$2 ,500. So I knew I had to raise it all. And look, I think a lot of people think it's easy to do in the beginning.

25:00If you, even if you come from, I would say my background's a little bit better than most, but it's really not. Like at the beginning, you're just begging people for money. That's all it is. And you're not going off the deal. You're going off your reputation as a person for the last 20 years of your life. And I think that's one of the biggest things people don't get is they're always like, oh, like, how can I pitch this person? Like, I don't know. It's like, it's your friend. Like, why do you, why do you not know how to pitch? Like, why do they not want to give you money anyway? They've known your entire life.

25:26So I've always been so, I think that's one of the biggest red flags is when I get that question, and someone's like, oh, no one will give me money. That is a really bad sign. That means no one in your life trusts you. And it doesn't need to be a lot of money. You just need to piece it together. We ended up having, I don't even know how many investors in that deal. I had to bring in my business partner because I couldn't raise the whole 200K by myself. So it took a while. We were begging and pleading with people. But there's also people who wanted to give us money because they trusted us, because they'd known us their entire lives, or I'd known them through college or whatever.

25:54So yeah, I think people kind of make that part a lot harder than it needs to be, because all that groundwork should be done by virtue of who you are as a person. Or if you're a trustworthy person, you've been trustworthy your entire life. Like I have friends who easily right now, they've never done an investing role ever. And if they said, hey, can you shoot me 50 grand for this deal I'm doing? Say yes immediately. You know, so I've always found that a huge red flag when people are like, oh, I can't find anyone. That's actually on you. That's not anyone else. Yeah, that it's an issue. It's a huge issue.

26:26I mean, it really is. It's like no one trusts you. Yeah. Yeah. You had some really, you had a good tweet on having a W2 and going out on your own and just some strong beginner moves that I wanted to talk about. Can you share a little bit about your thoughts on that and just how you handled it? Like when you ultimately went out on your own, talk about that process. I think it's a funny process because I think actually, if I had run the numbers on what would happen, I never would have left. And I think a lot of people kind of think the same way. You almost need to have that sense of naivete where, oh, like, look, I can do it.

26:56We'll make it work, blah, blah, blah. But if you actually go through it, it's hard to do early on. So I think you learn so much across the board. I think one of the biggest things you learn is just how much time you waste in a W2 job. Almost everything's wasted. If you actually wrote down, even as a salesperson at a W2, which is probably the highest level of generating revenue for the company, how much time they spend on actual sales versus BS, it's insane. When you switch from that to, I can spend 100 % of my time every day to making money, you realize making money is not that difficult. It's really not.

27:27It just depends. What does become kind of an issue is your time is so directly correlated to making money in the beginning that you feel really guilty when you're not working because you're like, look, I just missed out on whatever it is, a hundred grand on this deal or five grand on that. It's just all these things sort of add up and you kind of feel those like those pens of guilt by not working. But overall, that's one of the biggest things you learn is it's not that hard, right? The fundamentals are actually really simple. You're basically, if you're selling a service, right, is basically, look, you have an offer, you just need leads, right?

27:58Then you just need fulfillment. That's the business, right? And it's the same thing even on the real estate side. Like, it's not that hard. You're piecing together a deal, right? You need a deal, you need equity, you need debt. There it is, right? Like it just, a lot of this stuff is not difficult. And I think a lot of people really overcomplicate the process, but that's one of the biggest things I learned almost immediately. Because I would say I was able to replace my income. Even when I was at my job, I was making a ton of money just on the online side, on the deals I was selling out of. And I was just like, why am I staying at this job?

28:27It's a total waste of time. I probably could make, if I left today and replaced all this time I spent at the morning brew meeting, whatever it was, making money, I'd be in a 10 times better spot in a year. And I was. I had the same experience with my first job out of college. I literally could have done the work in two or three hours a day, realistically. To your point, it just frees up. If you leave, It just frees up this huge amount of time to just focus on whatever, entrepreneurship, real estate, a bunch of other things. You've got some ideas. We were talking about Wall Street Playboys earlier, and I was a big fan of those guys in the blog.

29:02Talk to me a little bit about them. What was it about them that some of their ideas and thoughts in their writing that you enjoyed? I think I enjoy everything. I think they really don't get the credit they deserve. And speaking to a lot of kind of younger entrepreneurs, I know a lot of them just when you actually start talking, I'm like, yeah, I actually followed them too. You know, there's a lot of that going on. So I think they kind of nailed everything on the head. The biggest thing I think is really just their emphasis on basically starting a side business, scaling it up and leaving your job and the way they structure that in a way that actually the risk reward is better than anything you could ever do, right?

29:37Because you basically build it up while you're at your job, which is what I ended up doing kind of on both ends. I had the online side with my Twitter account and I had the real estate side that I did at the same time. And that's, by the way, that's another thing that I just, I can't take seriously is when people are like, oh, I can't do anything. Like I'm working 50 hours a week in my job. It's like, look, like you can, right? You just don't want to. And that's fine. Right. But don't pretend that you want to do it because when I was doing it, I was, I was probably working 60 hours a week in my private equity job.

30:04I was buying deals that were doing really well. And then I was running the online side too. And look, I'm not going to say it was easy, but it was doable. Right. And everyone always acts like it's this impossible thing just because their priorities are out of whack. It's like, if you want to go to every single social event, yeah, it's impossible. You're right. If you want to actually be done by 30 or early 30s, you're going to have to give some stuff up, right? It's not going to be fun. And I think a lot of people have this idea that they can kind of do both paths and you can. Well, they've got a book, I think it was called Efficiency, which was a really good one.

30:38I forget the other one too, that was also very good that I think anybody should order, get, read, and implement. They had that one. I think they had Triangle Investing too. That's it. Yeah. Triangle Investing. That's it. I honestly thought their blog, which is now defunct, I know we were talking about that earlier, is better than all that stuff. Just a lot of it, their framework, how they approach things on the business side, what businesses to focus on, I think that helps a lot early on. Because a lot of that does save the... I know I talk about the trial and error period, but you also want to be smart about trial and error.

31:06You don't want to be doing it a billion times. And it's easier to be focused when you have those suggestions off the bat. So I think a lot of that helped too with what to get into. I think one of the underrated things that they are extremely good at actually, and probably the best I've seen at is spotting long-term trends. And I think that's actually how they've made the majority of their money is just being at the right place at the right time, which is really just kind of like a macro investing thesis, but they take it to a micro level on what they choose to spend their time on. And I think that's kind of very impressive for what they've been able to accomplish there.

31:36So let's go into that a little further. What are some of the macro trends that you're seeing that you are interested in, intrigued by, want to focus on? So like, I would say in general, from a very wide angle, that would be the most helpful for most people is I think having a W2 job is just going to get more and more squeezed as we go forward. Not even like a sales pitchy, like you need to get into real estate scenario in that, look, the labor pool is getting more and more global every single day. I personally, I have a virtual assistant. She's like a law degree in Europe. I pay her like$2 ,000 a month.

32:07She's better than US employees because I have US employees too. It's coming, right? And I think a lot of people don't realize that. They think they're very good at what they do. They're not. Almost every employee is replaceable. And I think people are in for a really, really rude awakening with that. So what I always try and push people into from just a very wide macro perspective is like, look, you need to be developing a skill you can either use to run your own business or to invest. That's it, right? Anything that's W2 is eventually going to get squeezed. I think even the high-end jobs in the tech sector, a lot of those are going to get absolutely hammered as time goes on.

32:37I think one of the only ones that's safe is a strong sales skill set. And if you can make other people money, you always have a job. But everything else, I think, is in really, really tough shape. And I think that's only going to exacerbate going forward unless the U.S. kind of enacts some legislation to stop it. But I just at this point, I don't know why you'd hire an American employee when you could find someone way more qualified across the country for literally one tenth the cost. So I think that is probably the biggest macro trend that I see. And the other thing that's actually a really big positive of that is as the world gets more and more financialized and as there's a bigger, bigger buyer pool for assets, like the entire move is not to be basically an employee or not to be mostly buying the assets unless you're really good at flipping it, but just start the business and sell it to them.

33:19You have all these businesses now that would be unsellable 15 years ago that are now really, really sellable. And if you can get a business to a decent multiple, decent EBITDA, you sell for a decent multiple. And it's not that hard, right? I think getting a service business, for example, to 300K in EBITDA is doable for almost everyone in the country over a five-year time span, right? And you could argue what that would be sold for and it depends on the business, but you assume it's sold for around a million dollars. And that's a better outcome than almost anyone would get anywhere else. Not to mention, if you're actually able to do it right, you're selling, you're got the EBIT up to a few million, you're probably selling for a way wider multiple.

33:54And I think a lot of those things wouldn't have been possible a long time ago. And I think that's always odd when people complain about the current business multiples, like, oh, I can't buy anything. It's like, okay, then just obviously everyone's overpaying for stuff, create some crap, sell it to them and call it a day. Or like, why are you complaining? It's a perfect opportunity. There are people who are willing to overpay, create something that they'll overpay for. What about real estate specifically? I know you're kind of agnostic in what you invest in, but I wanted to hear about, are there any trends that you see unfolding that, whether it's office or distressed office that might pique your interest later on down the road?

34:27I think in general, the way to make money, I think there's going to be two ways to make money in real estate going forward. Ignoring the asset class angle, which I think is a little bit more difficult to parse through, but I think you're in kind of smaller fragments in markets and seeing one-off opportunities that you can find a few of those a year. And I think that's always going to be the case. There's always going to be inefficiencies. People are always going to need to sell for one reason or another. And that's always going to be there. So that's basically what I do. I don't want to have a ton of AUM.

34:53I don't like scaling. I don't like managing a ton of employees. I just want to do really good deals, put a lot of my own money in and just be in and out pretty quickly. I have no wish to have this huge organization that I have to deal with every second. The other angle is you go the AUM route, which this is actually probably the better risk reward in all fairness, but you just raise a ton of capital. You basically market by deals that are okay, you use moderate leverage, and you just make money off asset management fees. And look, that's what every big private equity firm is doing now. They all make a ton of money.

35:21Personally, I think it's really boring, but it's probably the best risk reward you can get out of any business in the world, honestly. If you say you lever a multifamily building 50%, with fixed rate debt, that thing's not going under unless you're a moron. So basically, all you need to do is just keep that thing kicking. You just say, hey, look, our fund's going to be an evergreen fund, and we're just going to keep it in there forever. and you just have asset management fees for the rest of your life. And I think that is, on the high end, that's kind of what institutions are all doing now, because it's very hard to find an edge in the institutional space with all the sophisticated actors.

35:50But on the other side, you also have those kind of fragmented markets on the low end. So I'll call it the sub$20 million space, which I think will always be there. And I think those are really the two ways I would say to make money. I think there's this kind of purgatory space where you raise like under 100 mil. You can't really pay your employees well, Your AM fees aren't that good. The opportunities are kind of difficult because you're trying to buy deals in the$50 million plus range. I think that's like kind of like a dead space. And if you're in there, you really want to scale up into the make money on asset management fee space before anything else.

36:19So that's kind of how I look at it from a macro sense. And I do think there's going to be a ton of opportunities, but I'm seeing them right now too, because I deal with people all the time, whether clients, friends who are kind of seeing these opportunities. And I've seen a few in the past two months that were actually very good as well. So I do think the opportunities will be there. So let's go into your thesis a little more. You focus on tertiary markets. It sounds like you really learn the market that you really better than anyone in the area and wait for a deal to come up that's mispriced.

36:48Is that somewhat accurate to say? Essentially, yeah. I mean, it's a very simple method. And really the reason why it works is because when you're in these type of markets, it doesn't make sense for institutions to be there because they can't get scale. Those AUM fees that they really like, those asset management fees, they don't come in right? Because there's only$200 million worth of assets to buy in total. And obviously they're not going to buy all of them. So that's basically the idea is that you're in these markets that are fragmented. You know it better than anyone else. You basically pick the markets.

37:18The way I pick markets, I think is incredibly unique because I think most people look at it from a statistics perspective, right? They basically say, what's the population growth? What's the economic engine in the area? What's the unemployment rate? What's the crime rate? And look, I'm not going to say those things aren't important, but that's not how you make money in real estate, right? Mathematically, how you make money in real estate is getting your stabilized yield above the market cap rate. It doesn't, the stabilized yield doesn't care what the crime rate is. Neither does the market cap rate.

37:42So I always find it funny how people like have this like third derivative and they're like, oh, like the crime rate's doing this. That's sure. But if I stabilize at a 20, do I care what the crime rate is? The answer is obviously not. And I think a lot of people just, they don't realize that they're the metrics they're using are one step removed from how you actually make money. So the way I look at it is I look at markets, I canvas them, when I'm first qualifying market, right? And I'm canvassing the markets and I'm just looking to see markets where I can regularly stabilize above the market cap rate.

38:08Because that is a market you can make money in just mathematically. That's how you make money. It's not possible to make money if your market cap rate is above your stabilized yield, just not. Right? So that's how I look at it. And obviously I look at the statistics later and I'll kind of filter through that. But I think everyone else really misses out because they go into it from a statistics perspective first, when that's not how you make money. It just, it just not. It certainly plays a role, but it doesn't directly lead to you making money. You can have the best market in the world with population growth, everything like that, and still lose money immediately.

38:37When you're making a purchase, are you looking for stuff that you can do a value add on? I mean, the funny thing is like, ideally not, right? Ideally, you're just buying at so much price, you don't have to do anything. That's not always possible. But what I will say is usually what I'm looking for is there's a few different types of adding value, right? In one sense, it's actually executing renovations, right? And bringing it up to the renovated market rent. To me, that's actually the worst way of doing it, right? What I like to see is, and I think of market rents in two capacities, right? You have the unrenovated market rent and the renovated market rent.

39:11And the unrenovated market rent is still a thing. And I think a lot of people skip over that because all they do is look at the renovated numbers and see what you can get on the top end. But if your property is currently renting for 800, the unrenovated market rent's 1000, and the renovated is 1200 or whatever, you can put in$0 and get up there. So what I'm usually looking for is I want markets where I can actually not renovate. And that we're below the unrenovated market rent that requires zero work, all you're doing is changing the number on a lease, and you're 100 % going to get there because you're still the lowest number in the market, right, you're still kind of the lowest end rent.

39:44So I guess to answer your question, yeah, we do look to add value. But in general, we're trying to do as little as possible. And in, for example, that deal we just sold, it was like six months ago, we only renovated eight units and it was a 5X because the unrenovated market rent was so much higher than where the rents were that we just didn't have to do much from a renovation perspective. So it's a matter of buying rate. So this is the thing in real estate too, is that everyone always talks about operations. it doesn't matter. If you look at a stabilized yield formula, 90 % of it is your purchase price.

40:20So you can try and flail around and figure out that last 10 % as much as you want. It's not going to matter. If you buy wrong, it's over. There's no point in trying to be the operational genius. There's no point in being like, oh, this is what we do. We're the property managers. We do this and that. The deal is done. You just cut your losses and move on at that point. So it's all about the acquisition. And by the same token, if you buy right, you could literally have a monkey you operate the property. It just doesn't matter. And if you buy right and you're going to stabilize high, it does not matter.

40:47It is nearly impossible to mess up. I'm sure someone can do it. So I won't say like it's guaranteed, but it's nearly impossible. So what's generally your exit strategy? You mentioned Evergreen portfolio, but I don't think that's what you're doing. You're generally selling these in what kind of timeframe? I'm generally targeting like a three-year timeframe, but if I can do it quicker, I do it quicker. Honestly, if ideally I'm selling everything just after a year, just so I don't have to pay short-term capital gains. But I'm trying to get in and out as much as possible. I know a lot of people don't like doing that.

41:16They're big on the tax advantages. To me, every single time in my life, I've made a decision based on taxes. I've ended up losing way more money on the back end. So I'm just, I'm very fine with paying the taxes. Not that I obviously would like to not do it, but it's just what I've learned over time. And that kind of allows you to be very quick in and out with these things, which is the other thing too, a lot of people don't realize is they have this idea they're going to hold forever. And it's like, you have a lot of expenses that come up when you're running a business, right? You have, especially when you're running a real estate private equity business, right?

41:46So like, just to give an example, right? So you're buying$5 million deals and you're doing three of them a year, right? And you're putting in, let's say the equity is, just to make the numbers clean, you're putting in 1.5 mil of equity into those deals. You're 10 to 20 % of the equity. Usually I'm 30 to 40 % of the equity with my business partner, but let's say you're 20 % of the equity, right? That's 300K you're putting into every deal, right? You buy three deals a year, that's 900 grand. It takes two more years to actually get the money out of that first deal. So by the time you're done, you're into it for 2.7 mil, just on what you're investing into the deals, not to mention you're paying taxes, your life expenses, just everything, right?

42:24So I think a lot of people have this idea, we'll just hold forever. It's like, we need money in the door, actually, in the beginning. You need a lot of money in the door. Otherwise, it's going to be really, really difficult. And you'll be like, living on ramen, which I don't really like doing. So I'd rather pay the taxes upfront, have a lot of fun, spend the money, and whatever. You make it up on the back end. There's a lot of directions I could go right now. You had mentioned triangle investing. When you do liquidate and you exit a deal, do you consider a triangle investing approach for yourself?

42:52Are you only focused on plowing it back into more real estate? Or do you have other aspects that you're investing in? Yeah, that's a good question. I mean, I look at a lot of stuff now. I think in general, basically, if you're really good at what you do, right? And on the real estate side, you don't even actually need to be that good at what you do just because you're our general partner. And if you think about the fees you get on a standard deal, if you're any bit good, you're making a three to five X on your money, right? Any bit good. And just to run you through the math on that, because I know some people will be like, oh, you're lying.

43:23It's honestly simple math. Say you buy a deal for a million dollars, right? 750K debt, 250K equity, you're putting in 10 % of the equity as the sponsor, right? So you're putting in 25 grand, you charge a 1 % acquisition fee, which is honestly probably low for that, you could probably do 2%, but we'll say it's 1%, right? That's off the bat, right? That's 10 grand in your pocket, right? So you already made, what is that? A percent of your money back, right? Then you have asset management fees of 2 % of the equity, right? For five years, let's call it a five-year hold, right? So 250K, that's what, five grand a year.

43:58So that's another 25K. So at this point, you've already taken 35K back out. You get your other 25K back out, right? Because that's your principle. You're already over 2X your money, not even counting profit in the deal, right? You get any sort of profit in the deal, it's a 3X easily. And that's, that goes as you scale up in volume two, obviously the math is the same. So when people ask me, hey, do you put your money in the market? It's like, why would I do that? I can't outperform a 3X in the market. It's insane. You'd have to be an insane person to actually put your money in the market instead of just making a 3X on a very mediocre real estate deal just with your fees.

44:32So what starts to happen is your opportunity cost becomes so high that it's really hard to put money anywhere else aside from another business. So I look at a lot of other businesses and I'm looking at actually starting and buying a few right now, but that's the only thing that could possibly hit the same return hurdle. And even then you really have to think about it because the risk you're taking on a multifamily deal that you know really well is really low. So you basically have a, I'm not going to call it a risk-free, but a very low risk three to five X. And if you outperform, it's way, way harder than that versus going into a field, you don't know well stuff you may not be able to control.

45:07It's like, well, why would I do it? Yeah. So you, you're looking at a couple businesses right now. Are they service-based businesses? What are they mismanaged? Like, what are you looking for? What's your kind of buy box you're interested in? A lot of service-based stuff. Really, actually, there's one thing I will go into on that. I think what a lot of people, what I've actually didn't know in the beginning when I started running businesses is just how much of it is based on revenue, right? Obviously, you think there's a lot of it is based on how you run it, your fulfillment, your operations, everything like that.

45:39And meanwhile, if you have a good sales team, you're going to be the richest guy in the world. It doesn't matter what you're selling, right? If you knew how to create a sales team, you could be selling TVs, you'd be selling jacuzzis, You could be selling real estate, private equity deals. It does not matter. So that's the entire thing. And that's how people get really, really rich is they create great sales teams. That's how people do it in business. And I think that's one of the things that really just started hitting home to me in the last few years. So it's really about, I'd say my focus now is all on the side of generating that revenue and figuring out whether it's one, you're bringing the leads in the door yourself or two, you're buying leads and you're able to convert them in a way that makes sense at scale.

46:14And those are really the two things. And once you crack that, say you crack being able to buy leads for your business, right? And that could be call center leads. It could be email leads. It could be whatever, right? It doesn't matter. Once you're able to crack that and you just know your basically your return on cost of every single new customer, it's done, right? Like you could be selling anything. And I think that's one of the hardest things to crack. I'm not going to say it's an easy process. Once you do that, that's how people become really, really rich, right? That's it. You need to find a business where you can either generate a lot of leads or you can buy a lot of leads and you just scale it.

46:45So that's what I've looking at most recently. Let's take a quick break and hear from today's sponsors.

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50:12All right, back to the show. Your background really was as an analyst, but evidently you've obviously got really strong sales skills as well. Where did you develop those? I have no idea. That I think I just kind of, I learned over time. I think a lot of that too is I did do a lot of pitches as an analyst. And I think you realize how you kind of, you just, you mess up so many times with that. And even like when I was pitching people in my first real estate deals, my first pitches were horrible. And I'll even get that now. Like when I'm pitching someone on a new deal, I'll think about it afterward.

50:45I'm just like, what am I doing? Or like, why do they pitch it like this? And it usually takes a few iterations to be like, okay, like, here we go. This is actually the right way to do it. But I do think that that loop becomes quicker and quicker every time. And once you kind of understand the process, what you're selling, your demeanor. Because a lot of it is just the confidence level. And then a lot of it too is once you get to a certain point, especially this happens on the real estate side a lot now, we've done so well for people on deals that you don't really need to sell much. If anything, a lot of the time you're just talking about the risks.

51:13So people don't hate you later on if it goes bad. Because they think every deal is going to be like a 5X again. You're like, well, pump the brakes. And obviously you think you're going to do well, but you just want to set expectations. So I think a lot of it turns over to that. What I think has been humbling is I've actually taken... And on the online side, basically my coaching business and all of that, I've tried doing a lot of the sales calls. And I think it's humbling when you realize you're not as good as the salespeople with that. And it's one of the only things that you can directly track the metrics of.

51:44And I remember I was just looking after one month. I was like, all right, let me check my metrics. It was just horrible, just total crap metrics. And I was like, all right, literally no one will blame but myself. you know and in a in a really good way too it allows you to delegate then because you're like look it's not even like i'm better at this like i'm gonna give it to someone who's better than me that's fine and just gonna let them do it i think stuff like that was pretty cool too because i've always been like oh yeah i could do it like i'm gonna be really good at it and like i'm good at it i'm just not as good as the people who are great at it you know so you might as well just have the people who are great at it do it yeah let's get into that further your whole twitter persona, real estate guy, and creating content and writing.

52:23I've been, like I said, a really big fan of your stuff. There's several that I like. There's creating your own yacht, which I want to talk about. There's engineering luck and creating your environment. But I want to first touch on Twitter. When did you realize the power of Twitter and what it could do for your career? That was a while ago. I think I got on four or five years ago. I don't know the exact date, but I think that honestly might have been from following Wall Street Playboy's Twitter account and then going on from there. I don't know if I would credit them with the whole like everything else because I think I did a lot of the rest that are organically but I think they were kind of the first reasons why I went on there because I've never been a social media guy.

52:59I have zero personal social media. Like I just think the whole thing is so embarrassing but I think once you learn what you're doing and you understand distribution and this is kind of what I was talking about before with sales cycle right and understanding how to get leads. It's one of the most effective ways in the world to get leads. And if you look at the people who really crack it, and this guy, Andrew Tate, I don't know if you know him, he obviously gets a ton of hate. He is easily one of the best business people we've seen in the last 10 years. What he's done on the organic side of marketing is just, I think it's unparalleled.

53:32And regardless of what he's selling, he could be selling whatever. But the way he's been able to do it, I think is insane. And when you look at people like that, they've been able to scale their leads to such an extent that the business is like, the mode is insane. The mode's insane. Everything's insane. It just, it becomes such a crazy good business. So I think that's one of the things you learn pretty quickly too. It's like when you have this distribution channel, you can use it for whatever you want. And whether that's, for example, like I'll tweet, I'll be like, Hey, look, I'm looking for deals, send it over.

53:59Right. Or, Hey, I'm trying to get clients for my coaching business or whatever it is. Or even half the time, I'm just like, hey, look, I have a bad insurance quote. Can someone help me out? Just basic stuff, right? Or I don't know this market well. Can someone help? Or I'm going here. Does anyone know someone who knows that? Just the network you get and the distribution you get, it allows you to do so many things. And I think that's what really brought me to the space when I realized that. Let's get into some of the articles that you've posted on Twitter. Talk to me about creating your own yacht.

54:27You mentioned Aristotle Onassis. Can you talk about that story a little? Yeah, honestly, that happened to me. I was reading his autobiography, or maybe not autobiography, but his biography. And just the whole concept of how he ran business was so insane to me when you compare it to how people run it now. And basically, everything he did was just bringing people to him. He basically ran the business from the yacht. Just the idea of that every time you stepped onto the yacht, you're basically completely seeding any sort of position you have over to him. right? You're just like, you're totally in his territory.

54:59Everything's on his terms. And I think the way he was able to do that was so brilliant. I think it works so well too, because he was in the shipping business, right? So it paired really well with that. But basically that entire concept is like, look, you're bringing people to you. And once you do that, a lot of things start happening simultaneously, but you don't have those kind of boring interactions or low level interactions that most people have where it's like, hey, who are you? Whatever. Where'd you go to school? What do you do now? What do you do? That doesn't happen, right? Because everyone knows who you are.

55:28Everyone's already impressed by you and everyone wants to meet you. And it doesn't mean you have to do it in a gaudy way. I think he was definitely a bit of a showman. I think there are a ton of different ways. And I know I talked about that in the article, how you can do it in a more effective way that's value-add for everyone. But basically, the concept is like, look, instead of meeting them as a Joe Schmo, you meet them as someone, right? And you meet them on your own terms because they're coming to you. And you basically engineer situations where that's the case. I think you may have mentioned this.

55:53the example you gave, Moses Kagan comes to mind in creating Reconvene. It's a perfect example of he's the guy, you know, and people are coming not only for him, but largely, you know, he's the guy that's in charge of the thing and it's a great benefit. Exactly. Right. You just kind of, and it doesn't even need to be that extreme, right? Maybe you're just in like an extremely low level example. Maybe you're just holding a Superbowl party every year, right? But just as long as it's on your own terms, people want to meet you, engineer the event in a way that is tasteful, you end up getting a lot of meeting a lot of people and generating a network that you wouldn't normally have generated.

56:27And I think you obviously can do it in a way better way than a Super Bowl party. I think that's a low level way. But even something like a social media account, just the amount of inbound you get from running something that has a follower base is really pretty insane. And the way I look at it is you want to engineer as many situations as possible where it's on your own terms. And I think almost no one does that in life. I had Zieva Kaczynski on the show a couple of weeks ago, and he met Sam Parr, had a book club when he was like, nobody knew who Sam Parr was of the hustle. And he just started a book club and Ciavier Kaczynski showed up at his book club, met him.

57:01Tim Ferriss shows up later on down the road. It's just like, and Sam was the guy leading the book club. Anybody can do that, but not everybody takes the time to organize it and do it. The benefits are huge. And like you said, it could be anything like it could be a simple Super Bowl party. It really could be anything. The whole thing is you're bringing people together who wouldn't have been there and you're bringing them together on your own terms. And that's really the crux of it. Obviously, there's higher levels to it. Like I said, reconvene is probably on the higher end. I think a social media account is probably on the higher end just because the scale you can reach is actually infinite essentially.

57:34But yeah, anything you could do, any situation you can engineer like that, it helps. Let's get into a little bit about the real estate guide, university acquisitions bootcamp. Talk to Tell me a little bit about that and what you've been up to lately with it. Yeah. So acquisitions bootcamp is basically to take a step back on how I created the program is I think the way a lot of investing is taught right now is completely wrong. Right? Basically, you get handed a book of like what Warren Buffett did like 50 years ago. And you say, here's how to invest, which I don't think makes sense for a lot of reasons, but mainly because every person is different, right?

58:08Every person is looking for, they have a different risk profile, they have a different skill set. They have different goals. So all those things mean that what I would tell someone to do who's 65 is not the same thing I'd tell someone to do who's 25. By the same token, someone who has a 10 risk tolerance, I wouldn't tell them to do the same thing as someone who has a 5 risk tolerance. But in conventional sense, they're all taught the same way. When you go to an MBA class, no one's taught differently based on the risk profile, which to me makes no sense. But that's kind of how I created the program.

58:38And basically what the program is, it's eight weeks. You're working one-on-one with either me or my business partner. We don't like far but out to anyone at all. And the first week is all about understanding who you are and creating a business strategy that will work for you specifically in real estate, right? So week one is we understand all those parameters, right? Your risk profile, your skill set, your goals, everything like that. And we basically create a personalized strategy for you that makes sense for you to best make money in real estate moving forward. And I think no one's ever really done something like that before.

59:07to some degree, I think because it's hard. But in reality, once you kind of get the process down, I don't think it's that hard. And I think it also ends up helping a ton because you end up, I mean, I've dealt with so many beginners at this point and people, even non-beginners who are trying to switch over from certain other asset classes or switch from single family to multifamily, whatever it is. And the biggest mistake they make is they spend like two years not knowing what to do because they don't plan. So I always think the first thing you do is you create a plan. Second thing is on the underwriting side.

59:34So that's week two. Week two is all about underwriting. It's about underwriting the right way. I think a lot of people focus on like 30 different metrics. That's just not what I do, right? Basically, I'm looking at two things. One is on your in-place income, we're looking at the DSCR just to make sure you can source bank debt. On the stabilized income, we're looking at basically your stabilized yield above the market cap rate. You really have to simplify it. Obviously, we get into depth with full models and everything like that once we get into the program and everything. But that's one of the biggest things I've seen.

1:00:05And based on how many clients I've dealt with so far, I would say less than 5 % of people, even people who have real estate experience have underwritten directly. Everyone always has some big mistake in there, which just goes to show, I guess, the complexity of which is taught right now for just no reason. Week three is really all about picking the market. So understanding how to pick a market the way I explained earlier in the call, where we're not just running around looking at statistics for no reason. We're trying to find places where you can actually make money, where the stabilized yield is above the market cap rate.

1:00:34And that day one, you're walking into it making money. Week four is just understanding the closing process. And basically what that is, is due diligence checklist, lender checklist, closing timeline, everything like that to really make you and really get you to the point where you can do it yourself because that's the point of the entire thing. And then weeks five through eight are all just out in the market, underwriting deals and trying to find a deal. And that's the goal of the program is to get you a deal. So that's really how it works. Basically, mechanically, there's content released every week for the first four weeks.

1:01:03And you basically complete the assignments. It doesn't take long. It's around probably 15 minutes a day. And then weeks five through eight is really all on the sourcing side, underwriting deals. And we're trying to get a deal under contract. That's the program. It's done great so far. I actually really enjoy doing it too. And I'm just excited to keep doing it. That's awesome. I've had several of my early guests on. I've mentioned Casey Miracle. There's several others that had done your early, early on, it was called what? It was like real estate god university or you had a community, right? And they said the value of it was just immense.

1:01:34And this is not to blow smoke or anything like that, but truly they said it's better than anything else out there, better than a university degree that takes four years in real estate, whatever. This is compressed time. It's so, so useful and actionable and all of that. So pretty cool what you've created. I appreciate that. It's pretty funny you say that. I was actually, one of my friends is in business school right now and they had a case it was actually a harvard mbk study that they were just doing and he was like hey you mind helping me out with this and it was one of the dumbest things i've ever seen in my life so like i don't know what they're doing in college right now but it just it seems like it's just so useless and i know from the people i've talked to who have gotten their masters in real estate and stuff like that all of them have said like it it doesn't teach them anything like they were just like it was it was like a waste of time aside from the networking so i do think it's pretty cool to be able to deliver what i think is a superior product for a significantly lower price across the board.

1:02:27Right. And do it in eight weeks or whatever. Exactly. Yeah. You try and compress the entire timeline from two years to eight weeks. And the community is huge. I imagine like everybody's kind of talking, sharing what they're up to. And, you know, so many people talk about the importance of having a mastermind and community, like the growth, the exponential growth that takes place when you put yourself in those situations is massive compared to just you on your own trying to do it alone. 100%. I think that's one of the biggest things too is once you actually want to start making money, it's being around people who that's what they do is they make money.

1:02:59Because most people don't make money. That's not what they do. They don't spend time thinking about it. They don't spend time doing it. But if you're around people, that's all they do. And what I've always said too is like, look, if you lock yourself in a room for 16 hours a day for 365 days a year, you're going to make a lot of money. The hard part isn't actually making the money. The hard part is finding, getting the ability to lock yourself in a room for that long. So I think people really complicate what's difficult and what isn't there. But if you spend all your time making money, you're going to make money.

1:03:27You just will. And I think that's kind of the same concept is once you start dealing with the people who make money, they kind of have that same mentality. It really helps. Yeah. You've got so much going on. You've got, you know, the acquisitions bootcamp, you're working one-on-one with people. You've got your own deals going on. Like talk to me about just the habits in your daily schedule. How do you prevent work from like bleeding over? Cause you could work 24 hours a day, right? I'm in the same situation and I'm struggling with this actually. How do you structure your time and your life? So you're not working all the time.

1:03:58I don't think I'm the guy to talk to for this. I think I'm pretty much out of my mind with this stuff, but I'm pretty much always working. I don't know if I've taken that many days off. I'm very bad. I would say the whole work-life balance thing. And usually what makes me, I think uniquely bad at it is I'm very prone to like sprints. So I'll regularly go through a period where I'm literally doing nothing but working. And then I'll go through another period where I just don't touch anything for a while and just am doing whatever. And then you just have to switch back and forth to which I think drives my business partner someone insane sometimes.

1:04:28But I don't think I'm the guy to ask for this. I don't have a schedule. I'm not really good at that stuff. I'm very much like a ride the wave type of guy, which I think helps me a lot in a lot of ways. I think it's really useful when you're in a deal business where it is sprints, right? Basically, when you're closing a deal, it is all about sprinting. But I think in a lot of ways, it probably hurts me on the operational side of a lot of things. Just setting up systems and stuff like that, I think is definitely not my strong suit, which I'm trying to be better at. And I think that's one of the things as you try and scale, operations are really important.

1:04:57Just being able to set up those systems, like I was saying, and really on the sales side, it's like, how can we get leads in the door? How can we convert those leads? And that's every single business. It's really all you're doing, all you need to figure out. And then you have the fulfillment side, but fulfillment's almost never the hardest part of the business. And I think a lot of people are always like, oh, like when you buy the deal, like the work starts. No, it doesn't. Like the work starts, the work is done if you bought a great deal. Like that is done at acquisition. That was the hardest part of the deal was buying something for 2 million that was worth 5 million.

1:05:25That's by far the hardest part. After that, like I'm happy to work on like hammering nails, but that's not difficult. Like that's going to get done. So that's kind of how I look. And I think it's definitely a bit of a different, a change in mindset when you kind of move over to that operational side, specifically of really bringing in revenue more than anything else. So what's the end game? Do you have like a X number? Like once you hit X, I'm out, I'm done. I'm going to go surf or whatever. Or do you like the game? Do you see yourself continuing to contribute to this community you've got going and doing deals and buying businesses?

1:05:58I don't think I'll ever stop. I think what I do will probably change a bit over time. I don't think I'll ever stop buying real estate. One, I think I'm very good at it. And two, I think it's almost impossible to replace just everything I've said before with the returns I get, the risk reward, the tax benefits, all of that. But I think in general, I'll probably end up switching through a lot of things as time goes on, just because I get bored just whatever I'm doing. And I think I'll probably... What's appealing to me is just being able to, especially these deals that I sell out of pretty quickly, is you can choose to change direction at that point.

1:06:30Whereas if you build a really large organization, you can't really change direction. You're on the Titanic, right? It's going to take forever to turn that. And I think a lot of people, I've talked to a lot of people who run private equity firms of a kind of medium scale, and they feel a lot of them feel trapped because you can't really get off the ship. You can't really turn the ship. And you're just like kind of stuck making money that you like, you really wish there's a little more, but you can't do much about. So I'd like to avoid that. But yeah, basically how I look at it is that there's a few other things I'd like to do.

1:06:57I'd like to run some physical businesses. I think I'd be good at that. I also really, this is the only thing I'd actually want to be an employee for is I would consider copywriting. I think I'd be really, really good at long form copywriting. And I'd like to do that for one of the big affiliates one day, just in like a pure project role where they're like, Hey, look, like you have two weeks, like create a script. Like we'll handle, like, I don't want to deal with any of the media buying or anything like that. I'll have them do it. Just be like, look, like just create it and we'll run it. And I think that'd be really cool to do too.

1:07:26That would be cool. Have you studied a lot of copywriting? No, but I think the way I write is essentially copywriting. It is. Yeah. And when I've written copy for a lot of my own products, I've actually found that I was better at it than the copywriters I hired. So it's something I enjoy doing. I think also if I, if I spend some time actually studying it, like if you just gave me two weeks and like every sales letter, I think I could do a really good job of creating like a killer sales letter for a product. So it's something I'm not going to say I'm going to do it right now, but I would like to just spend a month doing that probably at some point.

1:07:57I have the same kind of thought process. I'm listening to David Senra's Founders podcast. I don't know if you're familiar with that one. It's really good. He just reads biographies and does basically his key takeaways. And I listened to the one on David Ogilvie, the Ogilvie and Mather guy and Confessions of an Adman. Really, really good and inspiring. And his writing was so good. And it's, I don't know, I love to write and read and the two go hand in hand for me, but we'll see. That's really cool. Is there anything we didn't get a chance to talk about that you wanted to touch on? I think honestly, like affiliate marketing side, I think I would really like.

1:08:34I think it gets a little touchy with just how you're kind of always in a gray area. From what I understand, I have a lot of friends in the affiliate space, but I think that would be really fun. I think copywriting would be really fun. I also think doing a true type service business would be really fun, which I'm looking at doing that right now as well. So just kind of across the board. But in general, if you gave me the choice, I would stay in real estate over all those. I just think real estate is just so... Like I said, once you get it and you understand it, it's just so simple. And you're really not taking that much risk.

1:09:05Your return you're getting is really unparalleled. And the tax advantages are unparalleled. So it's almost impossible to give up that income stream just because it is so good. And even like I said, I'm not overly passionate about any of these things. I could go between all of them. But I just think the risk reward there and the money you make is just kind of unparalleled. Right. And what's the alternative? Like you said, it's not going to be in the stock market. You're not. Every time someone gives me an alternative, I run the numbers and I'm like, this makes no sense. I don't know why we're even discussing this.

1:09:35And I'll get someone to be like, hey, have you thought about pumping some of this money into X, Y, and Z stock? I was like, why? So I can have a management team. I don't even know what they're doing. I can't control any of it. And are they going to 3X my money? Almost certainly not. And even if they do, is the risk reward worth it's that versus me controlling it and 3Xing it. It's not even close. Are you a Bitcoin guy at all? I used to own a fair amount of Bitcoin and Ethereum, mostly Ethereum. Had some run-ins with that that we could probably get into, but I lost a fair amount and made a fair amount in there to keep it simple.

1:10:07Currently, I've sworn that off for a bit just because basically what I realized is, look, you can make a lot of money in those spaces and I think those spaces will continue to grow. But when I control my own money, I tend to do extremely well. When I put it kind of in the hands of whatever you want to call Bitcoin, Ethereum, there's a lot more factors at play. So to me, it's just like, look, I could probably make some fast money in that, or I could just keep doing what I'm doing. And if I keep doing what I'm doing, I'm going to make a lot of money. There's no doubt about it just based on the numbers.

1:10:36So why take the risk? Why go into that space when you have a sure thing? My dad had the same advice. He's a real estate guy. And he's like, you make money in your own business that you know well and you lose it when you go outside of your circle of competence and try to make it somewhere else. And I kind of joke, he's invested in the stock market and he'll get emotional and sell it exactly the wrong time. I'm like, just do exactly the opposite of what my dad does and you're going to do pretty well. He's done well in real estate, but nowhere else. And the thing with real estate too, is like, obviously it's harder to panic sell because of the, just because it's hard to transact in, but it's also harder to panic sell because the value is like so easy to calculate for yourself.

1:11:18Like when you have, let's just say, all right, cap rates go up a hundred basis points, but you still have the same 500K coming to you every month, like, or every year, whatever you want to call it. Like, what do you care, right? You're just going to keep taking the money. It's not like a stock where like, yeah, obviously it's operating off fundamentals and there's cashflow there, but it's not as tangible to you, right? Especially if it's a non-dividend paying stock. It's not as tangible. Like you don't really know how the value is being computed as much. You don't see the cashflow coming in. It's not as much of like a real thing.

1:11:45And I think that's where people get tripped up. But like whenever I have a good real estate asset, the market turns. I never care. I'm like, okay, cool. Like the money's still there. What do I care? This is a good place to stop. Real Estate God, thanks so much for your time. How can people find out more about you? Get in touch with you? Learn about your acquisition bootcamp, stuff like that? Yeah. So all on Twitter, it's at the Real Estate G6. Or if you just search the Real Estate God. and then everything's in my bio there. So you can just search from there. Yeah, I highly recommend your stuff.

1:12:13Great content that you're putting out and really a great service to people just getting started and people that have had a lot of experience as well. Yeah, thank you. I appreciate it. I had a great time on the call. Okay, folks, that's all I had for today's episode. I hope you enjoyed the show and I'll see you back here real soon. Thank you for listening to TIP. To access our show notes and courses, go to theinvestorspodcast.com. Follow us on TikTok at The Investors Podcast, on Instagram and LinkedIn at The Investors Podcast Network, and X at TIP underscore network. This show is for entertainment purposes only.

1:12:51Before making any decisions, consult a professional. This show is copyrighted by The Investors Podcast Network. Written permissions must be granted before syndication or rebroadcasting.