REI180: The Intersection of Education and Real Estate w/ Kevin Clark

25:02Unless you're a coder and you don't... Unless there's some reason why what you're doing does not require or it doesn't benefit you at all. And I actually can't even think of an example of this. And why do you say that? Is it because the discipline isn't developed? You don't develop the discipline at a young age? I think discipline is certainly part of it. I think that I, certainly for me, and I think most people are like me, you're way more disciplined when somebody's watching what you're doing, right? You're working from home, you're doing your laundry, you've got the TV going, you're doing whatever.

25:34And I think that's natural, normal. You go to the gym, you get a cup of coffee, and all of a sudden, it's a two-hour lunch. At the office, if you pull a two-hour lunch, you're going to get... Somebody's going to ask you where you are. That discipline and the problem with that being the... And by the way, as an employer, I think that discipline is to pretend that COVID eliminated that need for us to watch over people's shoulders is, I think, a little bit silly. But I don't think you even need to go to that point where you say... Because that implies you have to micromanage people. And I think that that's...

26:09I agree with you. You agree with the notion that you shouldn't have to do that if you have good employees. But I do think there's a check and balance system that is naturally in place in a work environment. But I think it's actually more than that. When I was... I think the opportunity for... Let's go back to the Massey NACL example that I used. If I would have been doing what I... If Massey would have given me a computer, giving me a high-speed internet access, giving me a phone and said, Kevin, here's your territory. We've done your training. Go to work. And I didn't have that sort of immediate feedback loop of information.

26:43I couldn't have learned in that first one-month, six-month period, I learned more in that period of time than I could have learned in six years probably at home on my own. Would I have gotten there? Sure. But I don't think it's fair to say that there was 100 % benefit for me to be in that situation. The other thing that people don't... And I do believe what's going to happen is I think there's going to be a work from home and a work from the office track. And so if you want to work from home and you want to be hybrid, you are essentially putting yourself for many of these jobs, you're going to be putting yourself in a position that says, yeah, Kevin's, we value Kevin as an employee, but he doesn't value us necessarily.

27:27He values his lifestyle. So we're probably not going to pay him as much. He's definitely not going to advance as quickly. And he's not going to be the person we go to when we're putting out fires and we need. And so when you're not putting out fires at a company, you're not learning. You're not involved in the sort of C-suite decisions of where that company is going. So I think it's going to be a limiting factor for people who want to value their home life or work balance or whatever that is. We call that mommy tracking, which I hate because I think... And I deplore that statement. But it's true.

28:04If I wanted to be involved with my kid's life and I was an attorney, I could go to my company and say, hey, I'm the primary caregiver of my kids. It means that I can't be in the office past 6.30 and I can't get into the office until 8. and the weekends I've got to be available and you can't send me on a document discovery on a moment's notice. And all of those things I did as a 22-year-old. I was 22. I turned 23. My first job in New York, I turned 23. I got a job as a paralegal thinking I was going to go to law school at a corporate litigation white shoe law firm. And I went to the office and I proved myself as being a valuable employee on day one.

28:43And it was this crazy contract case where we were working, I was billing most weeks between 100 and 115 hours a week of billable time. That's how much we were in the office. And it was this crazy contract case. We represented the company that invented the airbag module. And there was a contract dispute with the company they licensed the technology to. And our company was going to go out of business, our client was going to go out of business if we didn't, we had to sue essentially to enforce the contract. And then I was, because of that work that I did, I was not the lead paralegal in the case.

29:17There was a guy ahead of me who was technically my boss. But when they decided they needed somebody on the trial team, they went to me and said, you're on a plane in three hours to Phoenix for the weekend. And I ended up staying for three months. Now it helped. I was 22. My girlfriend, who's now my wife, was not taking care of the house, but our apartment was... I couldn't just leave my apartment. Somebody was living there and had to pay the bills and all that stuff. But the point is, is that experience, I couldn't gotten that experience work from home. I could have done almost everything I was doing as a paralegal at home, but I would never have been shown my value in any way.

29:54So I do think something is lost for work from home. And I anecdotally, because I'm not a workplace sociologist or anything like that, but from a brokerage standpoint, I have gotten multiple calls from companies that you would think would be work from home advocates or remote work advocates who, these are web three type companies, cryptocurrency type companies. And they're looking for amazing office space in Brooklyn, which is a high dollar market in a great location in Brooklyn. And their idea, there's three things that were said to me. One, office is going to be a differentiator. We're going to get better employees because we have this amazing office space.

30:38Two, work from home is not efficient. Everybody can pretend that they're getting as much work done. It's not that they're not working, but they may not be working. And frequently, we're finding they're not working on the right things. Whatever the thing they need to be working on, because there's not enough information being transferred back and forth, they're working, but they're not necessarily working efficiently. And the last one is that they just don't get as much done. Even on the things that they're supposed to be doing, they're just not as... And at the end of the day, if you have a job where people want to work, there's an attitude that I don't have to work for you, so you have to make me happy.

31:16And I think that's a really interesting... I'm a Gen Xer. When I came out of college, there weren't a lot of jobs. We had a smaller population, so that was part of the issue. Baby boomers were not retired yet, so there weren't as many jobs available, and the economy wasn't doing well. So I'm used to a situation where I had to interview for jobs where I don't want to say we were a dime a dozen, but we were less valuable to the company than maybe graduates are today because baby boomers are retiring. There's a lot of people. The job market's slightly different. The issue is, I think, we are going to get into an economy where there's going to be less leverage on the worker side.

31:55So they're going to need to go to the office. At least I hope so. I mean, I'm a believer that that's a better, professionally, that's a better work environment. And I don't sell office buildings. I don't really care what happens. I love cities and I'm long cities. So if work from home stays a thing, it's going to be rough on cities. But I think it's going to be a better environment for everybody. It's going to be interesting to see how it all unfolds. Yeah. I'm glad I don't own any office buildings though, because I don't know when it's going to happen. Let's take a quick break and hear from today's sponsors.

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34:44The course covers 10 different sections, beginning with the basics of what a stock actually is and how the stock markets work, to strategies to optimize your retirement savings, how to pick great companies for the long term, what to look for in ETFs, and how to monitor your investments, plus so much more. To 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. We talked a little bit earlier before we started recording about a tweet that Moses Kagan posted about his idea was like, it would be great to interview a lot of very successful commercial real estate brokers and talk to them about their first year in the brokerage business, tips for success, how much you can expect to make those kinds of questions and then compile it into a book.

35:42I interviewed Matt Lasky, which I told you, and we kind of went into that. But I wanted to hear... You've kind of touched on some of these points, but I wanted to hear a little bit about tips for surviving your first year, how much you can expect to make, how to find a great mentor, things like that. If you could touch on some of the... I threw a lot at you there, but if you could touch on some of those. I think Strip Mall Trent has a really strong opinion about mentoring. And I think he's not wrong. I would argue that this is going to sound wrong. And I don't mean it to disparage what he said.

36:12But I think that's somewhat of an entitled position because there really aren't that many great people who are available to mentor people. Tell me his position on mentors. This is about a year ago. He did a great tweet on how to get started in the brokerage business and the real estate business is find a mentor. And a way to find a mentor is to be somebody who a mentor wants to mentor. I think that that is fantastic advice. And if you're in the position that you can get that, like if you have a personal network of people or family network of people that can mentor you, but many people are not in that position.

36:45And if you want to get into... There is a lot of opportunity in commercial brokerage, commercial real estate, if you want to put the time in to working really hard and working smart, and you may not be a person that has the ability to get a great mentor. So I'm not a huge believer in that being a path. If you're lucky, if you're lucky that that works out for you, then great. I think the way to think about brokerage... I think the first thing to understand is real estate markets are really cyclical. And we've been in a period of 13 or 14 years of nothing but sort of up. There were some questions in 2018, 19 in New York.

37:24We were certainly softening. We were hitting a correction point in New York, but the broader market was not. And that makes sense. New York's typically about 18 months ahead of the rest of the market. But then COVID hits, incredible fiscal and monetary policy keeps us out of the ditches, but also is a huge driver of investment in real estate and extra capital available to pay rent and all that stuff. I think that the key things for success in real estate in any market is, or any cycle, any period in the cycle, the first is you got to be passionate about what you're doing. If you like retail, focus on retail.

37:58If you like land, focus on land. If you like multifamily, focus on multifamily. But generally speaking, unless you're in a crazy active market with incredible deal flow, it's really hard to add value to the market if you don't have real expertise in the thing that you're selling and real passion about the thing you're selling. Because ultimately, if the market's really hot, you can be active and not really add a lot of of value. Meaning you get enough phone calls out there, you get enough listings, the listings sell themselves because everybody's interested in real estate. But those type of brokers tend to lose out in periods like today when the market softens and all of a sudden, you were a meat grinder, you were a butcher or whatever.

38:46You're just pushing product out the door. Longer careers are built in, from my perspective, if you can add value. And adding value is information. It's advice. It's putting your client's interests ahead of yours. I had a client who, this is a couple, this is maybe like 2019 time period. COVID hadn't happened yet. Interest rates were really, really low in the US, but also even lower in Europe where this person's from. And he had a small fund that was trying to buy assets in New York. And we found a great asset. And I was essentially running the due diligence process also. And in the due diligence period, we found that there was a pretty significant issue with the rent roll.

39:31He could have done the deal and it probably would have been okay. But the reality is there was fraud in the rent roll. They essentially funded prepayment of a lease and there was no way we'd be able to repeat this lease. And so we pointed it out, we discovered it, we had to get bank statements, we figured out what was going on. And ultimately, the recommendation for me was, hey, we either retrade or we don't move forward. I had no vested interest in... It harmed me significantly not to do that deal. I didn't earn a commission on that deal because my advice to him was not to move forward. But he also looked at me and said, I believe everything you say from now on, because you could have gotten your$100 ,000 commission off this deal and everything would have been fine for you.

40:16And I would have in 17 months or 16 months when that lease burns off, I would have a vacant office and no way to repeat this revenue. And the point of that story is to say, I will make 10 times as much money from that guy because of this than I would have made on trying to close that deal. And then him looking at me and saying, hey, why didn't we realize that there was something funky about this. Because there was something funky about it. We don't need to get into it, but it was just obvious there was a problem with this lease on the physical inspection. Going back to your question, it's like, add value.

40:48When somebody calls you and they're asking about information, and one of the ways to do that is to provide free market reports. One of the reasons why people send out market reports is because it's marketing material for the agency. A lot of the market reports aren't great. But if you're a specialist in multifamily in a certain region, and you send out quarterly reports to people and say, hey, this is where things are happening. And they pick up the phone and they say, hey, I'm on your mailing list for some reason. I own six buildings in your market. I'm not really a seller, but I like what you just said about this.

41:21Can we talk more? And then you end up having dinner with them, you have coffee, whatever you go out for drinks, and then 18 months later, they are a seller or they're a buyer. Hey, we just have a 1031. We're trying... In another market, we want to reinvest. Do you have anything interesting? That's where you really gain. And it's the adage in social media. It's like, are you adding value or you're not? If you're not adding value, it's much harder for people to listen to you. Those are good points. I wanted to talk about Cryptilla. That's your Twitter handle. And I wanted to get into understanding it a little bit more, how it's going.

41:53I know the pandemic put a little bit of breaks on the project, but I wanted to hear what the idea is, how it's going, what your plans are for it. Sure. So Cribdilla was, for all intents and purposes, it's on hold. I don't know if it's permanent hold or not. The idea with Cribdilla is, the fancy way to say it is it's disintermediating brokerage on rental apartments. So the idea is that instead of an owner not knowing that their tenant is going to leave or not renew, and then they find out maybe 15 days before, or in fact, Sometimes they find out a couple of days before the lease expires. Tenant leaves, landlord is in a situation where they have no information from the outgoing tenant, and they now need to market a unit that's going to get something between 15 and 45 days of vacancy.

42:40What we did is we provided a platform where a departing tenant could contact us. We would help them list the apartment on our platform. And effectively, it was a listing platform for apartments that were going to become vacant over the next one to six months. And so anybody looking for an apartment in that timeline could have an early look at the market to lease that apartment before it's effectively vacant. And the way we set it up is we paid the departing tenant effectively a third a month of rent to contact us to tell us that they were not intending to renew, and then being available to provide access to searching tenants who were coming to look at the apartment.

43:24So effectively opening a door, letting them look around the apartment for three or four minutes, and then leaving on average showings about five times. And so you're talking maybe 15 minutes or 20 minutes of work, and they would make about$1 ,000 on average. It's essentially removing the need to have an agent walk and open a door for you. And the idea... On paper, it's a great idea. Meaning right now, on average, a market rate apartment in New York turns over once every three years. Nationwide, it's once every two years. So you're getting somewhere, you're losing anywhere from 45 to 60 days, essentially, per vacant apartment.

44:03And you don't really have a way to plan for vacancy or know when people are leaving or renewing. And the reality is the tenants themselves typically do know that they don't intend to renew. A couple of reasons why it hasn't worked are... I mean, COVID certainly put the brakes on it big time. Because we launched in New York and Boston. The COVID ended, did a couple of things for us. The first is market turnover stopped. People didn't really move or they stopped paying rent. There was about 30 % vacancy. So for us, it really works when you have an occupancy rate of 96%, 97%, 98 % where you're really just relying on market turnover.

44:44So in really dense markets, it works very well. We just didn't get the turnover in New York. The other issue is, and a larger sort of business issue, is everything looks sort of great on paper and does look good on paper. And it makes sense. Landlords make more money, departing tenants make money, and brokers, we essentially were a brokerage firm without any agents. So we could scale, truly be scalable, because the agent is effectively the departing tenant. So we could have an infinite number of agents. The problem though is, and I think this is a common problem in prop tech, is you're really in trouble if you're trying to change behaviors in any business model.

45:21And if you're trying to change one behavior, that's tough. We were effectively trying to change three. The departing tenant contacting us instead of just ignoring and leaving whatever they wanted to. Searching tenant had to know that we were a listing platform for them to search. Because as soon as we start adding listings to StreetEasy, it becomes economically impossible for us to do it because our average lead time was around six months. So we couldn't list an apartment for six months on StreetEasy. We would literally spend all of our marketing budget on the apartment itself. Only the profit we would get, we would go to marketing budget.

45:56Landlords had to change their behavior and the way that they communicated with tenants, the way they communicated with brokers. For those three reasons, I think it was a heavier lift than I anticipated. I still love the idea and I still think it works. We did some really interesting things, got approval from the city of New York or the state of New York to pay tenants as brokers, essentially. And I still think it's a model that could work, but I also have to pay the rent. Yeah. And you're a busy guy. I mean, you've got a ton going on. We haven't even touched on it yet. Yeah. I'm glad I did it.

46:26I put a lot of time into it. I spent a lot of money on it and I learned a lot. I did some accelerators. I learned the startup business and I'm glad I did it, I'm not sure it's going to be the thing that buys me a Bugatti or anything like that. Not that I want a Bugatti. It's a great idea. And then you would monetize it by the landlords paying you because you're saving them 40 to 60 days of lost rent? Yeah. The idea is they're already spending the money. Most landlords already pay. In New York City, brokers get paid by the searching tenants. So we would either get the money from the searching tenant or from the landlord.

47:03And the landlord pays on average about a month of rent for whoever's doing the releasing. If it's an agent, it's an agent. If it's a property manager, it's a property manager. But there is the cost. So there is a time savings there and an efficiency savings, but there's also the cost is the cost. We weren't changing. And that was the problem, I think, maybe was that for it to work, you need network effect. You need enough people to be in the system for it to work because you need to have listings to get... It's a flywheel that has to have inventory. It's a marketplace. And so we spent a lot of time.

47:38And I think we contacted tenants in the markets that we were operating in and convinced them to list with us. And we got a bunch of listings. But the issue was, you need to market those listings in a way that makes sense. And it's a money proposition. You have to spend a lot of money to get the inventory. and then you have to spend money to make that inventory reachable, right? That it's not because you're competing with Zillow, Trulia, StreetEasy, apartments.com. But once that network effect kicks in, I think it's something that could work. And the issue is it can work in any market. And it's better, arguably, it's better outside of New York because you have the turnover rate outside of New York is actually higher than in New York.

48:19But it's also a function of the market. I mean, if you look at it, devil's advocate, you look at it the other side, we would never have anticipated the rent spike that we experienced in COVID. Let's say we were, if you released your apartment four months in advance, you would have missed out on that opportunity. So yeah, you wouldn't have lost the 45 days of income, but you would have missed out maybe on the opportunity to boost your rents 15 % or whatever. Arguably, the type of landlord that we would be dealing with wouldn't have experienced those types of rental bumps because I think they would have been more on top of where market rents were.

48:52But hey, it's a great... Like I said, I think it's an interesting idea. And it also shows how hard it is to work in the prop tech space because there's this idea that real estate investors are stupid and they're just waiting for you to come along to solve all the problems that they never figured out. And I can't think of a single example of that actually happening in real estate. I mean, co-working certainly has proven that it's not going to solve any real problems. keyless locks. I mean, you go through the list of PropTech ideas, and there's a reason why... I mean, maybe online payments, but marginally, that's not really...

49:31Not a lot of people are making much money doing that because you have to have a huge volume to make that work. And there's a bazillion competitors. And that's not to suggest technology hasn't changed real estate investing. It has changed a lot. I mean, look at Nick Huber's business and how they've moved overseas. a lot of their workforce. They're doing a lot of stuff automating. You're using cameras and keyless entry and all these things. Yes, absolutely, technology helps. But I think this idea that an outsider is going to come in with a... But those savings are just saving him money. I don't know how much the businesses that help him, what their business model is.

50:08You're not going to come in and change real estate all that much with a little marginal change in operations. I wanted to switch gears a little bit. We haven't even touched on the fact that you teach at NYU, I don't think yet. But I read that you have taught negotiation classes and you do negotiations. And I heard in an interview that you said you would never use an agent or you would never try to sell your own home. You would always farm that out to an agent to handle the negotiation. And I was really interested in hearing more about that. The fact that you do teach negotiation. You've done a lot of negotiations.

50:43Why would you not handle your own transaction? When we sold our apartment in New York, I'm not a residential agent. And we had a co-op in Manhattan. We sold, we moved to Brooklyn. I knew immediately that I would not be able to market it the way a residential agent could. And for a couple of reasons. One, you're too emotionally attached to it. I gut renovated that apartment. Every single inch of that apartment I planned. And you just can't... From my perspective, it's very difficult to get top dollar and be that emotionally attached to a discussion, to the right value. The other thing is, is selling commercial is very different than selling residential.

51:25So if I was a residential agent, I think maybe my opinion would be slightly different. Although the other thing about negotiation is the way to win at negotiation is it's not emotional. And I think if you're emotionally invested in an outcome, the way you are with something you own personally, it's much harder to remove yourself emotionally and make rational decisions. Most of what we do as brokers... I mean, I was just involved in a... I tweeted about it, so it's no secret, but I just sold a 20... Or represented the buyer of a$23.5 million office building in Irvington, New York. And I would say that at various times in that transaction, I was essentially the buffer between the seller and the buyer in their emotional outbursts about things that were said, perceptions of things that were done.

52:15Nobody wants to be retraded on. If we agreed to$28 million and now we're at$23.5 million, and you're really, really angry about that, you're going to say things that you don't mean, or maybe you mean them, but they don't need to be heard. So I can hear that. And when my buyer says, well, what did they say? And I say, oh, well, they're not really happy. They didn't need to hear that they think you're an a-hole or whatever, right? Because you hear that and then the discussion becomes, I'm the a-hole. Wait, you're the a-hole because the reason we had to retrade was X, Y, and Z. And this actually is not an actual thing that happened in this.

52:49I just want to say that. It did happen. What did happen were internal negotiation between the buyer and seller, the brokers act as buffers. And so these are not shrinking violets. These are two successful business people who've made a lot of money. It's just an inherently emotional business. So I think when you're emotionally invested in anything, it's really hard to negotiate. And negotiation is... At the end of the day, I mean, Voss says this. Voss is the guy who wrote Never Split the Difference. And he's an FBI negotiator, probably the best... It's not a real estate negotiation book, but there aren't many good real estate negotiation books.

53:24But his thing is arguably, in my opinion, the best real estate negotiation theory. And the issue is real estate negotiation is it's a one-off negotiation. So if you buy my house from me, I'm not going to turn around and buy your house from you. Our transaction is almost always one of one. In the most active markets in commercial, sure, I might do four or five deals with somebody, but that's a lot. And so win-win and starting with no and all these sort of treatises on negotiation, a lot of them are about making sure that there's enough meat on the bone for both people that when you have to come back and renegotiate that union contract, there's not so many people upset that it's going to harm a future negotiation.

54:09Well, the reality in real estate is if I rob you today or you rob me, there's going to be almost no opportunity for me to get back at you. And so Voss talks about this idea of keeping everything, you not be emotional, but you make everybody else emotional. Well, it's hard to do that. It's hard to do that when everybody thinks their baby is beautiful. Does he have any recommendations on how to make others emotional while you stay calm and placid? Oh, yeah. I mean, most of the time you're reacting to somebody trying to make you emotional. It's really just sort of stepping back. And so somebody...

54:42I mean, a big one, a big trigger for people is you underwrite a building and you think it's worth 3 million bucks and they want$5 million. And that's an immediate trigger. You get angry. I just wasted all my time underwriting this. You're insane. Well, you can't say somebody's insane. And oftentimes, that's a response. You're crazy. No man's going to pay that. You're stupid. And a great response in that example is, well, tell me how you got there. That's interesting. That would be fantastic if we could get to that number. Explain to me how that number makes sense. Oh, well, it's the guy down the street.

55:14The guy down the street, he's... Well, yeah, he's listing it. It's been on the market for a year. Is there anybody else that... Let's talk about your building. Let's talk about the income. Okay. I see you have this income now. Do we see an upside here that I'm not seeing? Are we getting somewhere in the next year that can make... Because I'd love to make 5 million work, but how do I get there? Okay. Well, why are you selling? Let's forget about 5 million for a minute. Forget about 3 million, 5 million. What problem are we solving in this sale. You don't say that necessarily, but everybody is selling for a reason.

55:45Either they think the market's so high that the time is to get out, but that's usually the last reason. Usually it's, I've got debt. I'm sick and tired of this. I want to move to Florida. I want to do something else. So how can I help you solve the problem you want to solve? And the way to do that is to get you talking. But if I'm selling my apartment, I'm just trying to get top dollar. I don't care what you... If you think... It's just hard. And the other thing is, the reality is, is the minute you start dealing with somebody who owns an asset, the broker is there to be the bad guy. The broker is there to be the bad guy.

56:19I'm there to filter the information from one side to the other. And in this particular transaction, the broker on the sell side stepped away. They were still there, but they weren't dealing with the process. So I was talking to the owner and I was talking to my buyer. And it was like, you're just running interference. I'm just interested because I'm in the middle of a reverse 1031 exchange and selling two houses, two rentals. And how I've typically done it is I list with a flat fee brokerage. And I know the house really, really well. I enjoy the sales process. I enjoy the marketing process. I like showing the homes.

56:57So I just pay 300 bucks to get it listed on the MLS. It shoots out to Zillow and Redfin and all the platforms. And then I do the showings and handle the sale. But I'm just wondering if I'm possibly making a mistake doing that. No, I think the difference... There's a couple of differences. I think one, you said you're in Columbus, right? A single family home in a market that's a little bit more commoditized than New York. I just think there's more ways to... There are more places to put a valuation metric on what you have than what we were doing. We were in a pretty small, very custom co-op. And the marginal difference between...

57:41I mean, there's almost no way that I'd be able to do a direct sale. A buyer would come in and buy directly from me without an agent. So I was going to pay 3 % no matter what. And then so I'm really looking at the 3 % difference. Do I get more out of that with somebody who is active in my market, can sell this apartment for top, top, top dollar on a price per square foot basis, much higher than any of the comps around because we had done a custom renovation and our co-op fees were really, really low. And there were lots of reasons why I needed somebody to put lipstick on this pig in a way that as a seller, I mean, as an owner, it's much, much harder to do.

58:19I think if I had... It's an interesting question. If I had a sixth family that I wanted to sell today, I probably would do that. I probably would sell it myself because it's in my wheelhouse. I know the market. I probably... The way I would sell it is the way I sell stuff now, which is I know who the buyers are. 50 % to 75 % of the time, the people who are going to buy that a building are going to buy it, whether it's... You know what I mean? If I price it right, they're buyers. If I don't price it right... So I don't necessarily think it's different for that. I do think it's different though.

58:51Let's hypothetically say your family owns a 20-unit building in Columbus and your bread and butter single family home rentals is basically what you just said. Let's hypothetically say your market is single family homes, but your family owns a 20-unit building and it's got to be sold because it gets left to the estate. I would argue that you should hire the best broker in that market for that type of asset, because it's not an asset you know or understand. And in this, I don't know what you know and don't understand, but I'm just saying something that's way outside of your wheelhouse. It's land or something.

59:25And that's, I think, the conversation Peter and I had, because he's very against agents. And I think, listen, I think there's a lot of crappy agents. I think there's a lot of, especially in the residential side. I can't go into too many specifics, but I had a conversation with a residential agent over the weekend. And they were talking to me about a development deal that they're investors in. And they didn't know. I said, oh, I know that block. I have actually sold in that. There's a three block area on that strip of road that I've sold about six buildings in the last six years. I know that market really well.

1:00:02What's the address? And they did not know the address of a building they've invested in. They had to look it up. And I was like, I do. I mean, it wouldn't be the first time I've listed stuff where I couldn't remember the address. I mean, I know the building intimately, but just the number wasn't popping. And then I was like, well, tell me about the deal. Tell me what you're... And they had no idea. And this is money they had written as an LP. That to me is typical of a residential agent. There's not a lot of love. It's just money. It's like, oh, everybody's doing this. if you find a residential agent who's really, really good and really successful, there's a differentiator there that probably adds a lot of value.

1:00:41I can tell you there's a lot worse commercial. I mean, I have... About eight years ago or nine years ago, I started talking to an owner of a building in Brooklyn. And I drove by the building today... Or not today, over the weekend. And there was a for sale sign out front. Now, I hadn't talked to this woman in five years, but it was a property I really liked. We were looking at maybe putting an office in it and just a great unique asset. And I was like, oh man, I didn't recognize the brokerage firm, the name on it. So I know that they don't operate in Brooklyn or they're new or something, which is fine.

1:01:14But I didn't have the list price, had no idea, wasn't on Google, couldn't find it. Found it on their website. They're a Manhattan brokerage firm trying to sell something in Stuyvesant Heights, Brooklyn, which is crazy. And the price is about 2x what is reasonable for that market in 2021. Not today, 2021. And it turns out this woman has passed away. This is a building that's like a historical building in that market from the business that was there and the owner, it was there for like 50 years. But the building is a great building. But completely, it's a tragedy, quite frankly, that this family that needs to sell.

1:01:52Death in the family, they're no longer running the business. And it's a great asset that would have... I mean, they would have buyers out the wazoo if it was priced correctly, but it's literally priced at about two times what it's actually worth. And it's just going to sit on the market. And it's either one of two things. Either the agent is just going to give up and they have a six-month exclusive and it's just going to sit there. Or they've got some other plan in place where they are working with somebody and the person's going to lowball them and they're going to just convince the person to sell.

1:02:21And it's just how they got to that agent. I have no idea why they hired that agent because there's probably a half a dozen agents that work that market who they have gotten mail from and are active and would know how to price it. And it's possible that they talked to them and they said, your building is worth this. And if we go out any higher than this, it's just going to sit on the market. And this other broker comes in and says, oh yeah, we'll list it for whatever you want. So it might be on the seller. But those are the worst kind of things in commercial because you look at that and you say, at the right price, I'm a buyer of that asset eight days to Sunday.

1:02:53But at the wrong price, it's just going to sit there and it's going to burn and burn and burn while you look at that. It's really, really frustrating. And what happens is everybody blames brokers and they should. They should blame the brokers. But most of the time, it's a few bad apples. Well, unfortunately, it's a lot of bad apples. I wanted to get into one of your more controversial opinions on real estate Twitter. and that is that real estate is not an inflation hedge. This completely goes against conventional wisdom for most people. So I wanted to hear about this. I listened to a little bit of what you said about it, but for our listeners, I'd like you to explain why you feel that way.

1:03:30I know you've got some empirical evidence to support your case. This comes out of when I was in grad school, I did a study on this and trying to answer that question is, is any real estate? And if it is, what makes it an inflation hedge. And the conclusion that I came to, and this is from reading a bunch of stuff and also looking at how we invest and why we invest in real estate. And if we understand that real estate is a levered business... And when I'm talking about real estate, I'm talking about investing in real estate for income, not for... Well, no, income or appreciate. Investing in it as an asset, not as a domicile, not as a place to live in.

1:04:07Okay. I do feel though the same way about houses. Houses are not... The only thing about real estate that is an inflation hedge or has inflation hedge characteristics is fixed rate debt. And explain why that is. Right. It's because your payments are fixed. Let's say you get a 30-year mortgage on a house and your payment is$1 ,200 on day one or payment one. Payment 360, presuming you do not do any refinancing, cash out refinance, whatever, if you don't change your debt, your dollar payment in payment number one is going to be exactly the same dollar payment in payment 336. And your$1 ,200 today are definitely worth more than$1 ,200 in 30 years.

1:04:53Okay. So that is the hedge though, is the fixed rate debt. It's not the real estate. The real estate can go up or down in value, depending on the supply and demand characteristics in that market. And one of the questions we had today was, how'd you get into real estate? And my dad was a college professor and we moved to Charleston, West Virginia at one time. And we lived there for about six years. Charleston, West Virginia was... It's the capital of West Virginia. He worked for a university. I had a suburban experience in West Virginia. It wasn't Appalachia. But Charleston, West Virginia was the corporate headquarters for two chemical companies, Union Carbide and FMC.

1:05:32When we lived in West Virginia, Union Carbide in Bhopal, India had a massive chemical leak that killed tens of... I think it was tens of thousands of people. And it cascaded into Union Carbide shutting down the plant in Charleston, West Virginia. That was the major employer in Charleston. My parents owned the house that we lived in... The years I lived in Charleston, they owned that house for five years when we lived in Chicago. There were no buyers at a market price that was sustainable for my parents who had a mortgage on the house. So they had to rent it out. They had to decide how much they were willing to take a haircut on, on a home that they bought and renovated in Charleston.

1:06:11It was a beautiful house that we did a lot. I mean, it was a wonderful place to live. Our neighbor was a West Virginia senator. It was a nice neighborhood in a great part of town. But the issue was when the major employer of a place, even the capital of West Virginia, if the demand drops like a rock, that real estate values plummet. If FMC and Union Carbuy didn't go out of business, but they expanded operations in Charleston, real estate values would have gone up significantly. My parents' fixed rate debt though, sure, that was inflation hedge. Their payment didn't change. They didn't refinance.

1:06:45There was no equity to pull out. So they just kept paying their mortgage. So those dollars every year went down relatively speaking to the amount of money they were earning or the buying power really of those dollars was lower in future years than it was the first year. So yes, that has an inflation hedge characteristic. But the real estate functions as a supply and demand metric. Rents go up because demand goes up. Rents go down because demand goes down. Prices go up, asset prices go up for two reasons. It's supply and demand driven, but it's also interest rate driven and cap rate driven. And cap rates are fundamentally about long-term interest rates in the economy, expectation of rent growth, which is a supply and demand metric, credit of the tenancy, which is an economy driven thing primarily, and real estate taxes.

1:07:33So let's talk about those four. Interest rates go up, cap rates go up, asset prices go down. Why do interest rates go up? Primarily to combat inflation. Inflation goes up, interest rates go up, interest rates go up, asset prices go down, real estate goes down. And real estate has two fundamental value metrics. There are two things that make real estate an investment, real estate for income and investment. One is annual income. So that's NOI after expenses, cash on cash return, whatever you want to call it. There's also underlying appreciation of the asset itself. If you buy an asset that its underlying appreciation goes down because inflation is rampant and interest rates are going up and staying up, you've just lost your ability to get 50 % to 80 % of your income, I mean, of the investment value that you invested in just disappeared.

1:08:27If we think about where from 2010 to 2020, rents went up something like 40%, which is fantastic. Great. Rents went up a lot, okay? Pre-COVID. Underlying appreciation of assets went up well over 100%. And that was primarily from cap rate compression. 2010, cap rates were 6, 7, 8, 9. 2020, they were 3s and 3.5s and 4s. If as we enter a period of high inflation, cap rates are going to go up because interest rates are going up. So it's hard to say, well, my asset prices are depreciating, but I should buy more and more real estate because of inflation. Most of the argument was, well, I'm buying in anticipation of inflation.

1:09:10I would argue now is the time. Once we're in inflation and cap rates have expanded significantly, now is the time to buy, but not because of inflation. It's because at some point, inflation is going to end and interest rates are going to go back down and you're going to get cap rate compression. So if anything, you want to buy counterinflation real estate. You want to double down when inflation is high, not because you're going to get high rent growth. You're going to have at least the opportunity of buying in a cap rate compressing environment. And if you buy at a three and a half cap, I don't care who you are.

1:09:40The only way you're going to get any appreciation in that asset is from rent growth because cap rates are not returning to three and a half percent unless we have some crazy event like COVID again, which was not just low interest rates, but it was a crazy amount of fiscal and monetary policy to drive interest rates lower and get money into the economy. And that was a hundred year event. The thing is, is if you look at, And the other point of this is if you read why real estate is an inflation hedge, every single... Now, I have not read every academic paper. Okay. I will say... And people send them to me and I read them.

1:10:17And every single one that I've read ever says, well, there's all of these reasons why real estate is an inflation hedge. But real estate rents tend to increase over time. Therefore, it's a real estate hedge. By that calculation or that metric, the stock market is an inflation hedge. The stock market tends to go up over time, sure. But nobody in their right mind would say, if we're into a period of inflation, is the time you ought to double down on the stock market? No. In fact, you may want to divest of your stocks, buy bonds and other things that are going to perform better, and then get back into it when the recession hits or whenever the stock market corrects 20 % to 30 % or whatever, then you get back in.

1:11:01The other issue is a lot of this academic research is done by economists who are not real estate professionals. They're looking at real estate data and saying, oh, well, we're able to measure this. Therefore, the correlation is almost one, yada, yada, yada. Okay. Oftentimes, they're focusing on NACREF data. NACREF data is internally reported REIT return data. And if you remember why LIBOR kind of blew up, it was because the banks were gaming LIBOR because, of course, if you have a vested interest in the outcome of what LIBOR is, you're going to self-report something that is favorable to you. It's one of the reasons why I just tweeted and said, you shouldn't rely on cap rate data from CoStar because it's reported.

1:11:44CoStar calls up the agents who are involved, the brokers involved, say, oh, tell me about that cap rate. Well, if I'm operating in that market and I know that cap rate is a six, but it was more like a five, then I'm going to say five because when I go to somebody else and say, hey, look, I just sold a set of five cap. This is where the market is. I'm self-reporting. It doesn't mean I'm necessarily lying, but I'm not telling the truth. I'm not saying, oh, well, actually, if you really use buyer metrics and really reasonable expectations of expenses, and I don't discount the CapEx expenses that we're going to have to expend every year, and oh, yeah, I add that number, that line item that every broker likes to forget, which is called management fees, then, oh, the cap rate is a five or a four.

1:12:23The point is, is I'm self-reporting information. If it's really a six and I want it to be a five, if it's really a five and I want it to be a six, my vested interest is going to come through in that data. And that's what the problem with NACREF is. NACREF, they're relying on appraised data. They're relying on some transaction data, but it's not really operating data in, oh, if I actually sold this building in the market today, what is that cap rate right now? The data itself is not 100 % reliable. The other issue is real estate is a backward looking transaction. We rely on trailing data. Anything that's sold today, the decision to sell that property has aged significantly, nine months, six months.

1:13:07They start listing it, it goes into contract, and then it's in contract for three to six months before it closes because of due diligence periods, financing periods, whatever it is. So we're looking at what the market was six months ago when we see a transaction close today. The problem with that is we knew, I mean, when did the first inflation numbers get reported? Middle of 2022, right? We're not 100 % lined up because middle of 2022, we're closing on stuff that was December of 2021. Well, December of 2021, inflation hadn't really kicked in yet, or it had kicked in, but it wasn't measurably kicking it.

1:13:42All of these things intuitively, you step back and you say, okay, supply and demand. And by the way, everybody says to me, you're bearish on real estate. I'm actually super bullish on real estate right now. I think now is the time to buy. If you can find a product that is appropriately priced at a high cap rate with high debt in place, you're hitting a home run because you are going to get cap rate compression at some point in the future. If you're buying a seven cap today, cap rates will compress from today. You're also borrowing at a... I mean, you're buying at above your borrowing rate. So as long as you're getting positive leverage there, so you're buying at a high cap rate, which is a relatively low dollar amount, lower dollar amount than you would if you're paying a four cap, even if you're getting positive leverage out of four cap, the problem is that cap rate compression is not going to happen from a four to a three or a three to a two or a two to a one.

1:14:29And by the way, we heard that. That's the other thing. When cap rates were super low, and I was like, guys, where are we going to get cap rate compression out of this? The argument or the discussion points on Twitter were, well, interest rates are going to go negative. And it's like, okay, well, they might. Sure, Switzerland has negative interest rates, but do we want to be Switzerland? And by the way, you can't borrow in Switzerland to buy real estate assets unless they're very specific types of real estate assets. It's not like houses or whatever are trading at those numbers. The point is that intuitively, if you look at it and you say, okay, prove it, it's very difficult to prove that it's a hedge.

1:15:04And what it comes down to is sure, and rents tend to grow over time, yes. But asset prices fluctuate widely during those periods of time. And I would much rather buy in a period where I'm not overpaying for the asset to get a very, very marginal return because on a risk-adjusted basis, I'm never going to be able to catch up.

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1:18:40That's theinvestorspodcast.com slash T-I-P dash finance. All right, back to the show. I want to slow down a little bit on this and you covered a lot. You taught a class on cap rates and we've got a lot of beginning and intermediate real estate listeners. Explain to us real simply when you talk cap rate, explain what it is, why it's important, how to understand it when you you think about real estate investing? Sure. So a cap rate is the income on any asset that has some type of income. It doesn't matter what it is. A dividend stock, a bond, right? Has an income amount. The amount of income that you get relative to the price you're paying for it is your cap rate.

1:19:26So if you put$100 ,000 into a bond and you're getting$5 ,000 a year from that bond, that's a 5 % return. It's a 5 % cap rate. Same thing in real estate. The only difference with real estate is you're buying the asset today and you're projecting out what you believe the income is going to be for the next 12 months. Because you don't own that asset yet, but you're looking at the leases that you have in place. You have a rent roll of what you expect to collect. And then you have all the expenses associated with that real estate to get you that 5 % return or 6 % return. And we do it unlevered, meaning before debt.

1:20:03In commercial real estate, you do it before debt because there's no one metric that everybody borrows from. Unlike in houses where most people use the 30-year mortgage, you can be kind of close. In commercial, it's all about the borrower, what they already own, what the asset type is. So it's much, much harder to consider debt as part of the return. So we always look at it on an unlevered basis. Keeping it simple, if you buy a million dollar asset, you have$60 ,000 of income after expenses. That's a 6 % return because it's$60 ,000 divided by a million. But it is that snapshot in time, reasonable expectation of expenses, and expenses are everything above the line.

1:20:41So things like management, maintenance, utilities, real estate taxes, all of those things, whatever's left over, if you bought that asset that at$60 ,000 at NOI and you paid cash for it, that's the money you'd be able to put in your pocket. It's the same as a cash on cash return in year one. The problem with it though is you don't really know what your expenses are going to be in the first 12 months because you're going to start owning it and you're going to start managing it. You may decide to defer some expenses into the second year. You may decide to spend more money in the first year to upgrade things or to spend money on a renovation to get more rent, or you may have leasing expenses that you didn't anticipate, or somebody may renew and you get fewer leasing expenses than you thought you'd have.

1:21:23So the end of year one, that's your cash on cash return. Sometimes it's your cap rate, the same as your cap rate, but usually it's something different. And because of all the business decisions you made as an owner, that's why we talk about something what's called unlevered yield on cost or levered yield on cost. It's sort of, okay, now you've owned it for a year. How much did you really make after all your expenses, et cetera? Okay. So that's a simple definition of a cap rate. And the reason we use cap rates is we can say, I'm projecting a 6 % return for this asset. I'm projecting a 6.5 % return for that asset.

1:21:58I'm projecting an 8 % return for that asset over there. And it allows us to make more of a apples to apples comparison from one asset type to another or one location to another. It's also supposed to measure risk. And what we mean by that is the lower your cap rate is, the lower return for that million dollars you're willing to accept. The higher your cap rate is, the more money you're going to collect for that million dollars. Intuitively, you say, well, I'd much rather get 8 % than 6%. So why wouldn't I always buy an 8 % versus a 6? Well, in real estate, we have risk, right? We have lots of risk.

1:22:37We have rental risk, we have collection risk, we have vacancy risk, we have all these different risks that we have to account for when we think about, are we actually going to get paid? So the lower the cap rate, meaning the less you're getting for that million dollar investment, the more secure you ought to be in your rent roll, meaning a credit tenant like a bank or a national tenant versus a mom and pop lamp shop, right? Mom and pop lamp shop, you may want to have coffee or a beer with them because they're great people. And the vice president of the bank is not a very nice person. But at the end of the day, the credit of the bank is better than the credit of the lamp shop.

1:23:16That lamp shop is barely holding on. In that example, you're going to take less return if your bank is a tenant versus you need more return to justify the risk of the lamp shop owner because more than likely at some point in your hold period, they're probably either going to call you and say they don't have enough money to pay the rent or they're going to need to leave and you're going to have to absorb that vacancy. And maybe you can't repeat their rent because they're paying above market rent or something like that. That's effectively what a cap rate is. It is a return calculation. But when we think through what it is, it's really a measure of, or it ought to be a measure of risk.

1:23:50It's one reason why cap rates in a dense market like Los Angeles or New York City should be lower than a less dense tertiary market like Columbus, Ohio or Allentown. It's not that Allentown or Columbus are bad investments. In fact, they may be great investments, But their underlying market fundamentals from a real estate standpoint are a little more risky, maybe less demand, maybe lower barriers to entry, maybe older housing stock or whatever, that you need to factor in those when you think about what you're willing to pay versus the income you're willing to accept. And then the last thing is, when you think about cap rates, there are four things that make it up though.

1:24:30It's that return, but what does that really mean? And the first is, there's four components. The first is what are long-term interest rates in the economy? So if interest rates are at 3 % or 0 % or 2.5 % or whatever, you can accept a lower cap rate above that 2.5 % because your cost of debt is that much lower. So maybe 4 % is okay because long-term interest rates in the economy are low. If long-term interest rates in the economy are like they are now, which is like 5.5 % or 6%, your cap rates are going to typically have to be higher than that 5.5 % or 6 % because you don't want to borrow at what's called negative leverage.

1:25:09You don't want to pay for money. You want to be earning money on the money you're borrowing, not paying extra for what you're borrowing. That's called negative leverage. There are instances though where you could accept negative leverage, and that's where the three other components come in. The first one is expectation of rent growth at the property level. That means you buy an asset, it's under leased, either because let's say you have long-term leases in place, they're below market, they're going to turn over in a few years and you can get 50 % increases in your rent because that long-term lease is expiring.

1:25:40That's a typical one. A less typical one though, which is what we tend to rely on a lot, especially recently is, oh, under management or the market rents are higher than they are at the property level. That may be true, but oftentimes there's a reason for that. Either the property manager or owner wasn't managing well and that could happen, or there's some reason why that property isn't market rent is$2 ,000 a month for the same unit, but it's$1 ,800 because it's not as well located or it's not as amenitized or other reasons. So it's expectation of rent growth at the property level. That's the big second thing.

1:26:14The third thing is the credit of the tenancy. And that's again, either in a commercial situation, it's the bank versus mom and pop, but it also could be in residential, it could be, it's hard to evict people. In Florida, it's easy. In Texas, it's easy. In New York and California, it's hard. If it's going to take you a long time to evict a non-paying tenant, you're going to have to absorb more vacancy and credit loss in those markets. So you're going to have to pay a little less and you get a higher return, but it's factoring that risk of credit. And then the last one is treatment of real estate taxes in the tax code.

1:26:45Places like New York, Texas, California, we rely heavily on real estate taxes to fund the operations at the municipal level. If that's the case, then you have to underwrite longer term exposure to high real estate taxes. So people in Texas complain a lot about their taxes going up all the time every year, and that's because they have no state income tax. So real estate taxes fund a significant amount of their operations. So if real estate taxes are high, and relatively speaking, expected to grow significantly over the hold period, you've got to underwrite essentially a higher cap rate to factor in the idea that over time, you're going to get your real estate taxes are going to inflate more substantially than just regular expenses.

1:27:28So that's cap rates in a nutshell. So those are the four factors that affect cap rates. You've just given us a mini course in cap rates, which this is great. And I think the really big way to consider cap rates is to understand, and I frequently have this conversation, why would I take a five cap or a 4.5 cap in New York when I can get a 7.5 or an 8 cap in a mall in the suburbs. And what I always say to people is, are you sure it's a 7.5 cap? Because that's a significant difference in return. And if you actually collect that 7.5%, then on a risk-adjusted basis, it might be worth it. But maybe that 7 % return ought to be a 9 % or a 10 % because your releasing risk there is very, very high.

1:28:17So you have in-place leases that give you a 7.5 % return, but they're holding on for dear life. And when they leave, which they will, you always lose tenants. When they leave, how long is it going to take you to replace that income? And if it's a long time because malls are dead, effectively, then your 7.5 % that you just paid for just became a 4%. So the point there is, is actually it should have been a 10 % because when they leave, it'll become more like a seven. That's the argument, at least, is that it should reflect risk. And ideally, and the last thing I'll say, and I don't want to go too long on this, but the last thing I will say is, ideally, from a real estate investor standpoint, when people say, oh, I don't really worry about cap rates, you shouldn't be.

1:29:01Because what you're doing is you're saying, people say, well, do you think about the cap rate environment that you're in? And I say, absolutely. But I don't really care what the person down the street paid for their building. I mean, it may be a guide for me that, hey, hey, if I can get this, that traded at a six, if I can get this for anything around a six, that may make sense. But ultimately, I don't really care. For me, it's I want to pay a seven for something that should be a five. I want something that's mispriced. And that's what it means. You're paying less for the same amount of risk. Because ultimately, cap rates are...

1:29:34They have an inverse relationship to value. The higher the cap rate, the lower the purchase price. the higher the purchase price, the lower the cap rate. So if I'm paying less for the same asset, I'm goosing my return on a risk-adjusted basis. Whether they like to admit or not, that's what every investor says. I'm looking for something that's inefficient or mispriced or whatever it is. Let's jump into the fire round here. I've got several questions here that we'll touch on. First one is, what's been the most impactful book for you? Oh, wow. Do I have it here. This is one of them. Is it backwards?

1:30:08It's Capital Ideas by Peter Bernstein. Peter Bernstein has three, there's three books in this trilogy, and they're all really, really good. But basically, it talks about risk, and it talks about how to think about risk, and how to, are we being compensated for risk? And he talks about commerce and how we were able to expand commerce, and it was really about offloading risk for insurance companies and factoring companies and all these things enabled global commerce. For me, it changed the way I think about real estate because we like to get really, really micro-focused on assets. And we need to make sure we're always thinking bigger.

1:30:50What's the big picture in what we're looking at? Because I got a lot of flack when I kept saying, guys, cap rates this low just historically doesn't make a lot of sense. And we really ought to be thinking about this. So that's a good one. Peter L. Bernstein. He's got three books in the trilogy and they're all fantastic. Yeah. I'll have to check it out. I'm familiar with that. That one's, what, the second or third one? I think it might be the second one. I actually can't... I have them all here. I usually have them on my bookshelf here, but some of them at home. I mean, from a real estate standpoint, the big short is great and it's not really even...

1:31:26And the reason why I love it as a market analyst is all of the information... We like to think that people who make a lot of money in real estate are geniuses or in any financial sector are geniuses. And the reality is the group of people that shorted the housing market, all they did is the first thing is, is they said, there's something wrong. And is it measurable? And A, we all knew something was wrong. If you went to, I mean, the capital markets conferences, NYU has these great capital market conferences twice a year. And at the capital markets conferences in 2007, they talked about, is anybody worried about the housing market right now?

1:32:06And every single one said, the only thing I'm worried about is condos in Brooklyn. Well, condos in Brooklyn, six months later, blew up. So we all could see there was something wrong in the market. Okay. But then they took it one step further and they said, is it measurable? It's not my gut. My gut says, yeah, this is wrong, but hey, everybody else is doing it, so I'm just going to do it. What they did is they actually went and they looked at the loans. That's all they did. They went and they looked at the loans and said, these loans are garbage. And the information is available. They put the work in, they did the work and they were like, as crazy as it seems, it's another great one, especially at Easy Read.

1:32:43Yeah. And great movie, obviously. How about your best investment? My best investment? I'm going to say my education. Yeah. I think that's born way more than I could have ever expected. And I've always looked at it as an investment in myself. I mean, there are other ones I would say that are not financial, which is like marriage and kids are huge. But yeah, I would say the money I spent on my education has returned 30, 40X easy. I've made a lot of bad financial decisions. I invested in a restaurant, which is really dumb. Lost the money there. I've invested in stocks that I really liked a lot and didn't make any money on.

1:33:21I've made good money in real estate for sure. But yeah, education, bar none. Kevin, thanks a lot for your time. I do appreciate it here. It's been fun. For people that want to learn more about you or reach out to you, what's the best way for them to get in touch, learn about the course that you're teaching, things like that? Sure. Easiest is definitely Twitter. Just either at me on Twitter or DM me. My DMs are open. And that's the easiest way to do it for sure. Kevin, thanks so much for your time. I appreciate it. Hey, you too, Patrick. Thanks so much. I'll see you soon. Okay. Okay, folks, that's all I had for today's episode.

1:33:56I hope you enjoyed the show and I'll see you back here real soon. Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by the Investors Podcast Network. Every Wednesday, we teach you about Bitcoin and every Saturday, we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor's Podcast Network. Written permission must be granted before syndication or rebroadcasting.