Speaker 1: 0:03

Hello, ryan Garland, I am your host of the Paradigm Shift. I cannot wait to expose the true inner depths of institutional wealth building and how to dig deep into real estate investing. Hello, ryan Garland, I am your host of the Paradigm Shift. I cannot wait to expose the true inner depths of institutional wealth building and how to dig deep into real estate investing. Alright, ryan Garland here. Founder and chairman of Paradigm, I am honored today to be able to have Jordan Belford here. We are going to do a podcast to kind of share with you guys a little bit about what it is I am diving into, get his ideas on our investment strategy, but just kind of start from scratch and see where this ends up taking us, to be honest with you. So this is exciting. So, jordan, thank you very much for having me my pleasure I really appreciate it.

Speaker 1: 1:02

Alright, so to kind of dive in, let's talk a little bit about your history and kind of where you were raised and, you know, just kind of give a little background on yourself before you kind of end up where you are today.

Speaker 2: 1:11

Sure, yeah, so I mean, I was born in New York City, one of the suburbs, queens Bayside. I grew up in an interesting family in the sense that we were like a lower middle class, right. My parents were highly educated, brilliant, hardworking and broke. They are professionals, they are both CPAs and I am like what the fuck? Like I didn't take long. I was under 10 years old and I am like I just think my parents should be making more money because, like you know, they are really smart, educated, hardworking people and there were some things that you know I think I probably came a bit later what was causing them to sort of struggle financially, but it didn't take long to start linking up that.

Speaker 2: 1:53

There were a couple of things missing from their own life strategy, and one of them is they were completely risk averse. They were depression, error, mentality. They refused to even buy a place. They rented an apartment and back then you could have bought a house of $5,000 back in the end when they were looking for houses, right, but they just never took risk. And they also were really anti sales and marketing.

Speaker 2: 2:19

So like, for example, they are both CPAs, right, then as a CPA, you can work for someone else and get a wage or you can also, you know, do people's taxes and books, you know, on the side and make extra. And you know my parents could have made a lot of money doing that but never did because they thought that the idea of putting their services out there and soliciting in some way was, if not evil, simply not ethical right. So what did they do? They worked for other people and they got paid a wage and eventually, as you know, as I got older I mean my early teens I was always entrepreneurial, with paper routes and shoveling drawers at the snowstorms and I did everything all sorts of odd jobs, magic shows, I did. But I hit it big for the first time and I was 16, selling ices on the beach and I, you know, went down there with one cool the first day and sold it out, you know, and no one was doing it back then.

Speaker 1: 3:06

I had this regular ice ice cream. Ice cream.

Speaker 2: 3:09

Ice cream ice cream and Italian ices and chip witches and fudgicles, frozen fruit balls, milky waste things with dry ice on top and a styrofoam cooler. And I came up with the idea because I was on the beach with Jones Beach in New York, which is massive and a hot summer Sunday, there's a million people on the beach, right, and everyone's bitching and moaning is that they take this long walk to the concession, which is a solid 300 yards away. It was not close, or 200 yards away, right. So I'm like I wonder what would happen if I just, you know, loaded up a cooler with ice cream and stuff and went down to the beach and, sure enough, I sold it out the first day and I made I think it was 120 hours in one hour. How?

Speaker 1: 3:44

awesome.

Speaker 2: 3:44

And then that was 1978. Wow, now just to give you some context here. Right, I'm old, right. So next day I went back with four coolers and sold those out and made almost $500. So on today's dollars, $500 is probably like $2,000 in a day. Right, it was a massive. So at least $1,000 more than that, you know, $1,500, right, and that first summer I made $26,000. It was more than my parents were making, it was more than anyone my neighbors parents were making. I mean, it was a ton, a shit ton of money.

Speaker 2: 4:17

Right, next summer I went back and made $50,000 by having three kids walk behind me selling costume jewelry, you know. And so I did all that stuff as a kid, right, and I think my upbringing really showed I realized that if you want to go out there and be successful, you know you're not going to really do it by working for someone else for a wage. So here's the one example. That one exception is if you're going to be, if you're in the investment world and you know you get a job at a really great investment back in the Goldman or one of the others, jp Morgan I guess you can make millions of dollars. But it does take time. It takes time, but because in that situation you know you're leveraging off of a huge capital base they have. So there are advantages and the brand equity behind those investment banks. But generally speaking, it's very difficult to become wealthy, truly wealthy, working for a salary.

Speaker 1: 5:10

Yeah, no, absolutely. And you know it's kind of cool that you're going down that road, because when you ended up kind of moving into Wall Street, you dove into sales, which is completely opposite, and then you're the way your mom and dad kind of looked at scaling their business.

Speaker 2: 5:24

Well, I think that you know, when it comes to beliefs, about life and taking action, and you know what's right, what's wrong, either you end up adopting sets of beliefs that are very much like your own parents or the exact opposite. You know, I went the exact opposite way. So to me, you know, I embraced it and also I was good at it, naturally. So I think that you know you try something and it works for you. You naturally great at it and it feels good, so you do it more and then you start to practice and maybe you read a couple of books about it back then. Now you go on the internet, right, but for me, I was a natural born sales person and it felt great, you know, just, and also the hustle of that thing. You know all these early experiences I had, whether it was, like you know, knocking on doors to expand my paper route, you know, putting an end in the paper to do magic shows when I was 13, shoveling driveways, knocking on strangers doors when I was 11 years old, right, ultimately, the beach, which was just literally hard work, entrepreneurial stuff, right, but I linked up. I'm like you know, if I work really fucking hard and I do it for myself, by my own boss. I want to make a fortune versus getting a job as a catering company for $1.13 an hour, which is what my friends are doing right, which is like insane making $40, $13, making $150 an hour. So like, how do you compare the two?

Speaker 2: 6:42

So you know, those are some of the time I emerged from from a graduate from college. You know I think it was cemented in my belief systems that you know I need to work for myself, be my own boss, I need to get rich like that, as opposed to the way that, like when I was growing up I don't know if this is so much a thing now, but when I was growing up in the 70s and 80s, in public school and high school and stuff, it was like the path to wealth is get a good job, go work at a big company, you know, work your way up to corporate ladder. You know you're gonna have a pension when you retire and they'll give you a nice gold fucking watch and you'll save a little money in your IRA and all that will be enough, including your social security, to live a nice, happy retirement and the fact is that this day and age is probably enough to pay for your diapers when you're in a nursing home, if that right you know so it's not really a path to success or wealth.

Speaker 2: 7:30

I don't think it ever was. I think it was a big lie for most people not to say that. Listen, that the world is mostly consistent people that work for others, and that's fine, there's nothing wrong with that. But if you do that and you're designed to be wealthy, you're gonna have to take the money that you save and put it to work, whether it's in real estate, which is a very good way to get rich. On the side, you'd have some side I don't wanna call it a side hustling, that demeans it but multiple streams of income, whether investing in the stock market, wisely investing in real estate, maybe even a side business, a franchise that you, whatever it might be. So I think that you can certainly succeed working with someone else there's nothing wrong with that. But if you're a desire to be really wealthy, well, probably not the best path.

Speaker 1: 8:11

You know, and I think it's so much easier to scale and open up a business, even if you have a W-2 job, to be able to go out and find another. In essence, side hustle, but whether it's, like you said, a franchise, invest into stocks or real estate. What have you, I feel like, with all with the internet and data, and you can pretty much find pretty good investments if you do your research. But, everything's at your fingertips for the most part, much more now than it was back in your era, when you were investing.

Speaker 2: 8:37

Right. So I mean the answer to that is 100% true. However, on the flip side, though, you need to be very careful, because there's a lot of shit and bear traps on the internet, a lot of bad advice. So if you're going on Instagram or TikTok and you have these shawlt and still, oh, take these five hot, these coins are gonna moon, or this is the next great hot stock these fucking nonsense people don't know what they're doing there. People that get rich from that are the people that are giving the advice, and even worse is Jim Kramer on CNBC. If you follow Jim Kramer, you'll end up with financial whiplash. The guy changes his mind like the fucking wind blows right. So I mean, like there's a lot of what you're saying is 100% true. The ability to succeed right now, I think, is great, and it's ever been, and all the information you need to succeed is out there. The question is, how do you filter out the bad information from the good information? How do you get to the real stuff versus all the bullshit?

Speaker 1: 9:31

Let me ask you this that's perfect segue into this, because that's really one of the questions I want to ask you anyways what would be if you were to look at an investment firm that you want to invest into? Let's say, you're just looking out the internet, you're like, oh, I want to invest in stocks, invest in real estate, whatever. Something pops up on a Google search, right, and you start looking them up. What would be the determining factor for you to want to look into them further and what would be kind of an ideal in essence firm?

Speaker 2: 9:56

structure. So let's separate it out from like this. So it's real estate, which is a very unique thing into itself. It's a separate asset class, right? So let's put that to the side. Then let's talk about equities, stock investments, investing in bonds or whatever. Right? Small cap, big cap. I just actually wrote this book. You see this book right here. It's called the Wolf of the Best. I just wrote it. I had to promote my book, but I just wrote this book. It was a best seller, right? It still is.

Speaker 2: 10:20

And when it comes to investing in the stock market, it's so stupid simple to make money in the stock market, and the reason for that is all you have to do is go and buy the fucking S&P 500 and hold it Like the best investment in equities. If you investing in the stock market, which should be a very large portion of your investments, okay. Trying to pick individual stocks, trying to time the market, is a suckers game. Some people can make money. Very few buy in large unless you're a professional investor and, by the way, even all these professional investors. Now. If you're a professional investor working for yourself, you got a shot. If you're really, really good, most people can't beat the S&P on a consistent basis. But if you're looking to give your money to a money manager who's gonna charge you 2% management fee, 20% of the profits expenses on the fund, it's the ultimate suckers game. Because after you deduct the fees and commissions and everything else and the trading fees and the tax inefficiencies that come from that because when someone is managing your money they have to show activity but they can't just buy and hold you say what the fuck am I paying you for if you're just buying the S&P and holding it right? So that's why I would strongly advise and all the data is there to support this Every study that's been done in the last 75 to 100 years that's been in studies, like academic studies right.

Speaker 2: 11:38

The best investment in equities is simply to buy the S&P, hold it, reinvest your dividends and then make frequent contributions and use long-term compounding to do the heavy lifting for you. That's the stock market. So, like anything else, to me it's like it's odd that Wall Street or say financial services like stocks. They don't add value. It's like the one. Everything else you do, like you're gonna go by real estate. Right, you better have someone in those fucking real estate advising you or you're gonna get your head handed to you, you will.

Speaker 2: 12:10

There's a million things to know, a lot of variations, when to buy, what to buy, what to look out for what areas is very you know. If I was I'm not an expert in real estate myself If I was gonna go out and invest in lots of real estate, I'd bring in an expert to be my partner. Right, that's smart. Same way, if my pipes broke in my house and I had to leak in my house and they're flooding, I'd call a professional plumber and pay his fee to fix my pipes. If my electricity shorted out, I wouldn't try to fix my own electricity. If I kill myself with an electrician, right, I'd call an electrician right, who would know how to do it and they get a better result Right. Same things with medical care. If I'm sick and I have to get my appendix out, I'm not gonna operate on myself for a. Hey, bro, you want to operating on me, right? No, I'm called fucking doctor, who's licensed, an expert who's gonna do a good job. Right, and I'll pay his fee.

Speaker 2: 12:58

So we go through life and this is the trap and we've been trained, and properly and rightfully so, to seek out experts, to find experts, to get the best results possible on the things that we need to accomplish. The one exception that's fucking Wall Street. They don't add value. They do not add value in the sense that if you hire an expert to manage your money, you're not gonna get as good a result as if you just put it into an S&P 500 index one and hold it. That's been proven over time. And here's the thing you have a few amazingly successful money managers right that can beat the S&P. There are a few, very few. But there are a handful of rock stars, guess what. They're not taking your money you can't give them. They're not accepting money from people like you or me, if that matter. They're not accepting money from anybody. They're training their own money and maybe a couple of few multi-billionaires right, but they're not gonna go out there and take money from the average person. But then the rest of the hedge fund managers are bathing in the afterglow of these rock stars. So people are like, oh my God, this is the hedge fund. No, they're mostly fucking sub-par performers. That and this has been proven again many, many times over. So that's stocks.

Speaker 2: 14:07

I just simply and that's what I wrote this book about that about. It explains to you really in detail how you go about building a world-class portfolio without having to hire a money manager who's gonna charge you fees and rape you and put you into short-term training, things like that. That's a suckers game, right? Sure, now, that's not to say that Wall Street doesn't create massive value. They do the public offerings, they finance companies, they finance debt, they make the financials to go. So this is how you extract the value, your share of the value that Wall Street creates, but don't get caught up in their suckers game letting them manage your money, right? Sure.

Speaker 2: 14:40

But now you want the real estate. Very different. I think real estate is an amazing asset class. I have so many friends of mine who've gotten super rich on real estate. It's one of the great ways to accumulate massive wealth, right? A lot of tax advantages as well, right? So in that case, very different. Now you're back into where you is. Hiring an expert is a very smart thing to do until you know enough yourself and you can find your own properties and whatnot. So I think real estate is a phenomenal way to build wealth.

Speaker 1: 15:09

Most of my investors currently. They want to. In essence, they're high-touch. They don't wanna just give it to a manager and let them manage their capital right as far as like stocks and so forth, right. So what I'm seeing, though, is that a lot of my investors are baby boomers and they believe in real estate. They wanna be kind of high-touch. They wanted some liquidity and short-term investments. They don't wanna be in a fund for too long or in one deal for too long, and if so, then at least they have some sort of liquidity event and they can get some principal back, some sort of dividends.

Speaker 1: 15:39

But what I'm seeing, though, right now, in this current market, that a lot of investors really want don't really know what to get into right. So they're like well, we're a little more comfortable in real estate. We don't know much about stock. We definitely don't know much about crypto. A lot of it seems like a lot of my clientele are really leaning more towards real estate, because it's something that inflation. It's always been real estate when you have a recession, so I feel like a lot of people have a lot of fear and they're going well, okay, I'm gonna pull back. Everyone's moved to a cash position Out of their 401ks, iras, stocks. Everyone's pulling money out, looking for tax advantages as well, like, oh, I'm gonna go into real estate. What are your thoughts on that? Do you think that's kind of? Are you seeing that happening right now as well?

Speaker 2: 16:21

Well, I think that you have to look at it in more of a percentage terms. So I would find it odd that a truly wealthy person, let's say with a net worth of over $100 million, that they're gonna have money in the stock market.

Speaker 2: 16:37

Oh, for sure, so it's not like they're gonna say I'm selling all my stocks, I'm gonna sit in cash. No one sits in cash Because if you're sitting cash, you're just getting destroyed because of inflation, right? So when you talk about like people are saying, well, I'd rather be in real estate, I would say, yeah, that makes sense. But it's like. So let's say, normally they'd have 10% of their cash in real estate, 20, whatever that number they feel comfortable with. Maybe they'd move that to 30 or 40%, but it wouldn't be.

Speaker 2: 17:02

I couldn't imagine a very smart investor saying I'm taking all my money out of the stock market, all my money out of the bond market, I'm gonna sit in cash and try to deploy in profit. That makes no sense. What you would do is relatively what you would wait at. You would wait your portfolio more heavily towards real estate, but you certainly wouldn't concentrate in one asset class. It doesn't make any sense, but especially because you wanna have some capital gains as well, some gains that offset tax deductions from real estate as well. So I think it would be the rare person who would say I'm out of everything. I mean, sitting in cash is just nonsensical, at least right, and that means-.

Speaker 1: 17:40

Well, if they're gonna move to cash, they're already got an eye on another investment. But they're looking at either some sort of deferred sales trust or they're looking at some sort of tax advantage or some tax benefit to move money out because they're going into some sort of taxable event, but they're gonna go okay. I just want so you're right a lot of people who are going into 30%, even 40% of their portfolio, but they still wanna be diversified.

Speaker 1: 18:02

So they're not gonna put all their money in one deal. They're gonna diversify maybe geographically different asset classes, apartments, single family. What have you right?

Speaker 2: 18:11

I mean, I think that right now and again, it's always like about when you're looking to allocate money right. Diversification is always a good thing.

Speaker 2: 18:19

It really is. I mean, I guess it all gives me. Well, there are some schools with what it gets them, but generally speaking, diversification is very smart, right? So I think that you'd find that people that were more frightened of the market right now, they would just simply reduce their exposure but not eliminate their exposure. And also, that whole thing also goes against smart investing, meaning like if someone said to me, wait until the S&P's gonna go this year, I don't know, sp last was up 25% last year. I wrote the book two years ago. It came out last year. I look like a genius, like, oh my god, I said put your money as some. But that's a, that's bullshit like I didn't know the.

Speaker 2: 19:03

Oh, it's just simply. The SFB goes up on average 10.5% a year. Right, some years it goes down, some years it goes up 25% overall.

Speaker 2: 19:13

How do you so? How do you know what she's gonna be the good year bear? You fucking know right. So you have to hold for the long term. So, but, but.

Speaker 2: 19:19

So it's very difficult to try to say, well, I'm getting nervous about the stock market right now. Well, guess what, if you're nervous about the stock market means he's probably going up, like it. Most most of the time people are wrong and people have the worst fucking timing, sure, okay, generally speaking, you know when everyone is scared of the stock market, it's what it's probably about the roar and go higher. When everyone thinks the stock markets oh my god, market, so hot, it's great is when it's about to go down. That's just you know, broadly speaking. So I just think that human beings, buy-in-large, are really bad stock pickers. They're really bad at timing. That you let your emotions rule when you're gonna buy or sell.

Speaker 2: 19:51

I I think a far better strategy is like so we buy it, hold it and just don't even fucking look at it, and be in a position when you have, with the amount you have exposed, you can, you can pass what I call the sleep test. They know, can you sleep at night? The mark goes down 25% one year are you gonna be in panic? Oh my god, no, you know, I got my other, I got my bonds. I have real estate as well. So it's really all about you know. You know what percentage in your asset allocation makes sense. Now, yeah, I mean, if they get it, start weighting heavily towards real estate, that's great, I think it's smart. But you know, right now and again, this and again it goes into timing, but I think where this is pretty poignant is, like I think this major fundamental issues right now a commercial real estate.

Speaker 1: 20:32

You know? I think you know yeah.

Speaker 2: 20:34

I think there's some asset classes that are in trouble right now, and for a number of reasons. One is that you know a lot of the loans that were taken out when interest rates were low coming up in the next you know it's starting next few months and up for the next 20, for 18 months. I think there's a lot of Money that's gonna be their balloon. They have five year loans, whether they were right, and Interest rates are now much, much higher than they were. Those properties suddenly are gonna be upside down Cash. Well wise when you know the rent rolls not gonna cover the payment anymore and a lot of these people Are gonna default or walk away from their property.

Speaker 2: 21:06

That's one aspect of commercial real estate and even worse I think Equally problematic is this shift that we have right now of people no longer working in offices, which is still. You know, even myself, which I was like, I hated this idea virtual. You can't deny the savings of from, from virtual employees and and and they, once you learn how to manage them, they can be very productive. Now it's obviously this major advantage that people in the same place and some companies are making people come back to work, but they still. It's you can't. There's a trend, yeah, towards virtual and that's reducing the need for office space and whatnot. I think those two things combined are making it very, very problematic.

Speaker 1: 21:45

Well, so we're seeing two things. So I think I was sharing with you before. You know, I manage a hundred million dollar debt fund and that debt funds for first-trusted mortgages, short-term loans in and out, groundup construction, fix and flips. What was happening with, like, small regional banks are there lending money to guys that are building homes, tearing down houses, doing groundup construction. Fixing flips would have you, or even larger commercial multifamily you know, pick a number of fifty million hundred million dollar projects. The biggest issue is when, let's say you, you when the rates were low, you borrowed money at six and a half seven percent for a construction loan. When interest rates spike like that, the bank typically has a line of credit that they're going to release the draws for construction To the borrower as they are finishing each phase Right. The issue is is that those, all of those lines of credit are typically on a floating rate variable.

Speaker 1: 22:33

They're not fixed a variable right, so as those as rates climbed cost of building gets higher. Well, not only the cost of the cost of money we got went up.

Speaker 2: 22:40

So what happens? Cost of building, right yeah.

Speaker 1: 22:42

So that now the line of credit for the bank has gone above and beyond what the note rate is that they gave to the borrower. Yeah, so now, now, as the borrowers borrow, you know, asking for a draw, the bank is going to issue them a draw for the construction and the cost went up for the capital for the bank. And now they're saying we don't have any money to release. Yeah, that's a big issue right now. Special was smaller regional banks or even some other private lenders. They just they would lean on a line of credit or some sort of facility. They, you know, they they were issuing loans two, three years ago for six and a half, seven percent, and now interest rates spike up to ten, eleven percent to be able to even keep that fund at any way at par.

Speaker 1: 23:20

Right, so now that cost of capital went through the roof and as they draw, they can't, they're upside down, we're, they gonna make their money. So a lot of issues are broken projects. So you have a lot of, in essence, distressed assets. It's just you're not seeing it on on the news, right? And then you have a lot of smart investors that were, you know, went through the 2008 crash and Lost everything, or going hey, I'm going to a cash position, I'm gonna wait until I identify some assets.

Speaker 1: 23:44

Sure but they've already. They've already figured that out.

Speaker 2: 23:48

There's no doubt that if there's gonna be a massive you know problem in commercial real estate, it also creates a massive opportunity in commercial real estate, right? Because it just means that you know those properties, no one will make sense at that price and if people stop paying their their, their loans and those properties you know get foreclosed on, they go back on the market, price will come down and you'll be able to scoop up these properties at at at prices that where it makes sense in the new paradigm. Right, that's the idea, absolutely. A company good one.

Speaker 1: 24:16

I don't think you even need to talk about that. But yeah, so that's one issue there. And then we know we we had quoted out of Nashville and there was a lot of office like Amazon was building, I think, like a two million square foot office building, and they closed about 50% down and went to multi-family. So you're seeing a lot of office convert to multi-family and so a lot of banks are offloading those assets for, you know, 75, 80 cents on the dollar because they're on default.

Speaker 1: 24:39

Right so you have kind of guys that are in the multi-family world going hey, we're gonna go do a value-add deal, we'll pick this up for pennies on the dollar in essence, and we'll just convert it into multi-family and stick people in there. But that's still a hard, a hard pill, depending on your location. You need to be in high-dense areas more than anything and you need to be able to get in the right price and still consider Some sort of rate adjustment and or rent adjustment and have rents come down a little bit.

Speaker 1: 25:03

I think, a lot of people are expecting that rents are going to continue to go up. Some data does show that, but it's usually the mass migration areas. You know people going into certain areas in Texas or Tennessee or Florida that those rents will still increase because you demand. Right but if you, if you're not, if that demands not there because office is slowed down and not a lot of people want to drive into the city, that can be an issue, right, so you got to be careful with your rents.

Speaker 2: 25:24

Yeah, I think these are all like the things that you know would trip up a novice, which is why you really need to be advised, you know, prudently, by something really knows the business, not just someone who's like read a book on how to get Richard Mills Totally.

Speaker 1: 25:39

Yeah, and that's a thing, and I think, for for the most part, you know, I think I think there's certain, there's certain data points that show that we're gonna have a soft landing. I, I don't see that. I'm actually probably I rather be safe than sorry, kind of like I rather be prepared than not prepared, because in 2008 I literally lost everything. So I can have a different perspective. I'm a little more, a little more conservative in my approach. I'm looking at more of long-term plays, like you and I were talking about land acquisition, entitlements, planning, design, sell the builders that type of stuff. But that's also good because, god forbid, if something happens we go to war, market crashes, I own land, I Just have to go on the land. Well, man.

Speaker 2: 26:16

I think a big issue you know, I anything, whether it's real estate, stocks, crypto, whatever it is leverage is. You know your exposure in terms of how much leverage you putting into your portfolio. So, at the end of the day, the people like if you would have went through the whole financial crisis in 2008 and warrant leverage. You came out great things, bounce back and made new highs, but if you were in a position where you couldn't maintain the debt, right, you just doing a position where you're upside down and the cash flow is hugely negative and you're over-leveraged or in your fucks. I think that the lesson you know, I've always learned, is that you know leverages a double-edged sword. It's great on the way up, but not so good on the way down. And if you, if you have leverage, you need to make sure you also have, you know, sufficient cash flow coming in From multiple sources to make sure that you can, you know, service the debt good builders, good developers, are looking for non-recourse loans.

Speaker 1: 27:09

Right, because what they went through in a way, but not all banks, especially in this market, are giving non-recourse, it's full guarantees. Yeah that's income for other assets and so forth. So that's where I, that's where we are looking at just things a little more conservative. When you see bottlenecks like that in the market, in the debt space, you can kind of start seeing there's some guys that are that are moving a lot of money around there, kind of making. They're seeing things that we're not seeing too.

Speaker 2: 27:29

So what do you think of the best areas right now in terms of like? You know if you were looking for raw land, or you know Apartments that had been foreclosed on, or you know multi-families Well, so you'll dig this this is my, this is our forte.

Speaker 1: 27:42

So I actually were them the largest man cave developers now in the country. So we basically build man caves for millionaires, guys who want to put their cars in there.

Speaker 2: 27:50

I just saw this like online that goes on Instagram post about man caves, you know it probably was us, but yeah.

Speaker 1: 27:56

So basically we're the largest man cave developer. Now, what's the cost of building man cave? So all of ours are steel bills, all steel buildings, but, like one of our largest ones right now are 28 by 60 feet deep. Okay so, 28 feet wide, 60 feet deep. I'll show you some pictures afterwards, but we're building those for $89 a foot. We're so on the ground.

Speaker 2: 28:14

Yeah, you're not building. Not building here, because it's on the ground.

Speaker 1: 28:17

This isn't I. We have most of our developments right now in Arizona. So Lake Havasu, arizona, we're looking at stuff in Lake of Ozarks, we have stuff going up in Austin, texas, and then we're looking at stuff that's gonna be outside Nashville not Cherokee Lake but Old Hickory so we're looking at building there as well.

Speaker 2: 28:32

So what's the cost to build a man Like a world-class man cave?

Speaker 1: 28:34

right now Our cost is $89 a foot. Now that's. Everything is going to be a little different depends on how luxury we want to go, considering who are in users or envires are going to be right now with with acquisition planning, design, entitlements, the whole thing. I'm at $89 a foot but I'm selling these for 175 a foot. So for my investors, they love it and we're doing it in cash. We don't do any debt leverage. So I'm building them in phases. So I'll use this as an example.

Speaker 1: 28:59

Right now I am in phase I'm sliding into phase four, but I'm in phase three of a project right now in Lake Havasu 225,000 square feet. First phase we sold out at 175 a foot. We thought we were going to sell them at 145 a foot, 36 units gone before we even our certificate of occupancy. So that just kind of gave you an idea in demand. But we also went up a lot higher in our cost Right sales price. So there was actually six and a half million dollars more in profit than we expected. So that was great to be that was a total.

Speaker 1: 29:27

So total capital stack on that. Our total cost to build on that's 28 million. But I only raised nine million and that nine million is only going into acquisition.

Speaker 2: 29:35

Rest for pre sales and stuff.

Speaker 1: 29:36

Yeah, and once I sell each unit just like home builders, you sell each phase you rotate that capital into the next phase. Same concept, but we're not doing it with debt and the reason why we're able to make it so profitable is not only the demand for the asset and Location. You have so many people coming out of California and it's a huge retirement community and you have a lot of, you know, it's kind of a Palm Springs, palm Desert kind of area, right, just kind of a couple hours from there, so you have a lot of snowbirds that want to go there and get away from the cold, so it really is a year around location for right just to go out razors, go Whatever you want to do, but so, but yeah you know, so explain.

Speaker 2: 30:13

To find a man cave, Okay, so think I'm intrigued, you know yeah.

Speaker 1: 30:17

So I mean I have guys that are building like golf simulators in there. Guys have high-end old cars. Guys, you have like high-end luxury cars right now.

Speaker 2: 30:25

Yeah, I mean.

Speaker 1: 30:26

I have a guy right now that's building sleds and putting high-end cars on the wall. You know I'm talking about where you actually like they show up. Yeah yeah, yeah, that's guys who like to tinker and, you know, build stuff. They'll have a whole shop in there with lifts.

Speaker 2: 30:38

I mean it's like a sign no women allowed outside, like you know. Basically right.

Speaker 1: 30:42

Yeah, mezzanine, jeff, guys, they're actually putting like cigar lounges in there, and I mean literally the list goes on. And think about a box that you just want to make your own and just man cave it. Tvs everywhere.

Speaker 2: 30:54

Whatever you want to do, a lot of guys you're using them as a Throughout my life I've had all these things in different point, like I had I've tried, like I had the golf simulator, I had all the TV. I've had little elements of man caves throughout, like different to my house is throughout the years, but I never really had a dedicated man cave, you know so you'll like this.

Speaker 2: 31:15

So on my phase one, I tell everybody the story room where you'd like a rubber on the wall so you could bounce off the walls. You know I brought my boat.

Speaker 1: 31:22

I was gonna bring some creditors with me.

Speaker 2: 31:23

Okay, so if you have any, we'll do some right now.

Speaker 1: 31:26

You can't find those anymore right, exactly God.

Speaker 2: 31:30

Yeah right, all right, I'll be like 20 for seven years, but I do one right now. Yeah, I.

Speaker 1: 31:35

Think the first time we met. You're like I have been so clean for so long and I'm gonna stay right here.

Speaker 1: 31:39

Yeah that's cool. I do a quite little, all right. So think of it this way. So I have guys right now that are that are actually buying them Side by side and tearing down the middle wall because they have their friends and so they want to open up and have one big shop I had in my first phase. I looked at all my buyers on my first phase, like as far as like on my purchase contracts, and I'd say probably 40% of them were women and some of them are friends of mine. Yeah, a hot, older husband wife. I called one of them and I said hey, I said why did you buy this huge man cave? In essence, it's really just a big storage unit right for boats and RVs and people store all kinds of stuff in there and she goes. Well, ryan, you know, we retired and my husband and I haven't, like, lived in the same house all the time together, for he's driving me fucking crazy, I'm driving me fucking nuts yeah so I need to get him out of the house and get my garage back.

Speaker 1: 32:28

These women are literally shoving, shoveling their husband's.

Speaker 1: 32:34

And so that's gonna lead me into this. So what's what's kind of cool is that? Not only do people kind of go there and take her, it's a community and you know you have a garage up, that's kind of your invite for everybody else. It's in the community 225 units of guys that have million dollar coaches and RVs. I mean some of these, I mean some of them. I got one guy does off-road like Baja truck racing. He's like one of the top guys. He's selling these things for a million bucks. He's building these things in there. Yeah, guys, they build high-end marine motors that are doing offshore racing. You know stuff that you see out here all the time.

Speaker 1: 33:03

I mean, you have some pretty cool Owners, so these guys are all motor heads or what have you, and they all kind of open up the garages and invite each other in and Spend some time together, and I think that's really healthy too, because I'm big into men's mental health, that's like my thing. So I love that community feel. But I want to ask you something, sure, so I'm gonna go, I'm gonna go into my finance structure and I want it because you're so good at this. I want to see what your thoughts are. But what we did was and before I go into that, so these units, my, my broker comes to me and says hey, about 60% of our inquiries, we're looking for financing because you can't finance these. Well, now we do. We found it, figured out how to do it, but you couldn't finance them because you don't have residential tied to it either.

Speaker 2: 33:42

So it's a, in essence is an industrial building just put it on your, on your property, though, right.

Speaker 1: 33:46

Yeah, so you own, you own the unit.

Speaker 2: 33:48

I guess you'd finance it with a home equity loan or something. That's where people do it.

Speaker 1: 33:51

So a lot of people are getting a home equity line and then just using that out of their home and buying them, because some of these units Only 300 grand right so depends on what you want to put into them.

Speaker 1: 33:59

An air-conditioning would have you, but yeah, so they're not. So they're not very expensive, so most people can find the cash to buy these. But what happened was is a lot of people were also Inquiring if they can live in them and we're like, no, we can't. So one of the biggest movements right now are barn dominiums. Have you seen like the design that people are like love moving into a barn? They're kind of like the barn design. Have you seen those?

Speaker 1: 34:19

Yeah it's a big movement right now across the country. You know you can literally go online and find like some sort of barn to many of them that you can order, go plop it down on some Lot somewhere across the country and people can live in these things. And these, some of them are 3500 square feet and they're built like homes so you can't live in the man cave because there's no electricity?

Speaker 2: 34:37

What, no, no, it's fully a full plumbing, full electricity.

Speaker 1: 34:40

I guys that are putting boss or what is it.

Speaker 2: 34:42

It's just, it's the way it is no, that's not so. There's no co correct.

Speaker 1: 34:45

Well, you have a certificate of occupancy but it's just zoned industrial so you can't. So it's all about entitlements. Right, you can re-entitle something, change the zoning. The ones that we were doing is it was just zoned that way and I was just playing on. So. So what I did is I learned from some of my buyers.

Speaker 1: 35:00

My buyers are saying, hey, ryan, I want financing, which means if I have an ability to finance 60% of our inquiries, or can you finance, sure, and a lot of people Are asking if you can live at them. So, obviously, going into building my next ones, I'm gonna try to hit that mark. That's an important now data point. So I'm like, well, let me see if I can do that. So I'm buying the 18 acres right next to the project I'm building right now and I'm basically designing the exact same floor plan as my, my storage units, now as far as my man caves, but right above them I'm actually building apartments and we're converting them into townhomes, but designed as barn dominiums.

Speaker 1: 35:33

So, in essence, you have your man cave. That's 28 by 60. In some cases will be 30 by 85, so they're big, you know. Some of these are, you know, almost 3000 square feet. And then you have, you know, a 1500 or 2000 square foot house on top of it and there are condos, so you can actually finance them and you could live in them. But you can buy these things for 550 grand or $600,000. So you have guys that are going hey, I want to just be able to come, because this is like kind of the snow one floor this is just it's two floors, so you have your big garage underneath, and it's just like a town.

Speaker 1: 36:05

think of like a three-story townhome or a two-story townhome Right, you have your living quarters upstairs and you have your garage underneath, right, so we'll have an elevator, we'll have it all. I mean, it's a full house, so it's all stick built on top but steel down below, which is actually more desirable for building and then we're gonna, in essence, wrap it all in steel and it'll design like a barn. To me, I'm high-pitched roofs, modern finishings you would never even think about it so or how nice these things can turn out. So we're actually building 150 units of those is our next slug, so we're really looking forward to that. But what do you think about that? Do you think that's something that'd be interesting?

Speaker 2: 36:41

Well, I mean, let's listen, you know if you're seeing demand for it. I mean, right, that there's a trend towards it. I think, listen, I think financing if you can get financing, that's the key it's gonna be. Let's say, okay, you said you had 60% of your inquies wanted financing, right, correct. So how many inquiries did you get altogether? I?

Speaker 1: 36:58

mean we've had probably a couple thousand.

Speaker 2: 37:00

Yeah, I mean somebody. It's a huge number of people right, so yeah. I mean it should, it should do really really well.

Speaker 1: 37:06

So if we convert them in townhomes living space and you can build them in the right way where you can get insurance right Like a regular homeowner's policy, then you can finance these through an FHA conventional mortgage. What have you?

Speaker 2: 37:18

So how many? So okay, so still have to visualize it right. So how big is the actual one at the house? How many bedroom?

Speaker 1: 37:25

so you have. We have three different floor plans, design. We may go into a fourth, but you have some that are like one bedroom, one and a half bath, so smaller, like studios, all the way up to three bedrooms, three and a half, okay. So they're a little bit larger units, but the largest one we have right now, set up for 1680 square feet house the house. Okay, and then?

Speaker 2: 37:41

just the residential, and then below that you'd have the garage.

Speaker 1: 37:44

You have a whole garage. It's another, let's say by a 28 by 60 is 1680 square feet, so you can have 1680 square feet below and you have another 1680 square feet above. But what I'm doing is I'm building a can of lever patio cover so you have outdoor living space too.

Speaker 2: 37:59

So how is this different from like just a basement?

Speaker 1: 38:02

First of all, the cost. Go down subterranean. It depends on soil and how much you have to put in footings and concrete and all that it's gonna add up.

Speaker 2: 38:09

Right.

Speaker 1: 38:10

So, but out here, out where I'm building, right now, well, you can't go about it.

Speaker 2: 38:12

There's no basements here in Florida, no, in certain areas.

Speaker 1: 38:15

It's just not common, or?

Speaker 2: 38:17

normal, but mostly it's because of the cost. And you grew up, I grew up, everyone had a basement.

Speaker 1: 38:19

Yeah, no, out there, you don't so cause you know it rains what? Three inches a year, maybe the next out there you know it's just kind of it's not that environment, but yeah, so it's pretty neat to see that I love it that thing's great, Right yeah. So what we're? I want a man cave I mean, and most people want a man cave.

Speaker 1: 38:35

They definitely put a golf simulator in there, so imagine if you had a man cave that like, for example you know I have a lot of friends and they have family and they all kind of go out there. It's a family oriented environment, so a lot of my friends are going. Man, I can buy this for half the price. Cause out there for you to buy a new house, a decent house. You're in a million and a half $2 million out there. It's not cheap.

Speaker 2: 38:51

Like Havasu area. Like Havasu area right. Where exactly is that?

Speaker 1: 38:55

So you're about two hours. You're about two hours from Vegas and about two and a half hours from Phoenix.

Speaker 2: 39:00

Okay.

Speaker 1: 39:01

And you're about, I'd say, in two hours, in from like Coachella, palm Desert, hop off from LA, from LA, you're a good five hours. Most of it has to do with traffic, but you go up the.

Speaker 1: 39:11

You basically take the 91 to the 15, come on, you get to the 91 or five or 10, it all kind of parallels, right. It goes east-west and then you hit the 15 and go up through the home pass Like you're going to Vegas, and then you just peel off from Vegas on the 40 and you go out. You go more east, got it? Yeah, so it's about two, about two hours from Vegas, but yeah so, but it's a big lake life town, so it's Everyone's got a boat.

Speaker 1: 39:32

So when the pandemic hit, you could imagine how many people were getting out of California with their families to do the recreational thing. And it exploded. And not only has it already been exploding, because the data's there. So, for example, baby boomers so RVs and boats aren't just single generational meaning. You know, a lot of baby boomers are the ones that we used to think back in the day, that we're all buying RVs and boats. It's not that way anymore. You have people that are living in vans now, that are millennials or Gen X or Gen Z's or what have you, but so you have multi-generational now that are buying boats and RVs and so you're seeing a huge uptick in acquisitions there. Then the pandemic which drove that asset, and then you have people that are going. Well, I want to get out of California.

Speaker 2: 40:16

Who were you doing the pandemic?

Speaker 1: 40:17

I was in California.

Speaker 2: 40:18

Where.

Speaker 1: 40:19

In San Diego area Temecula.

Speaker 2: 40:21

Yeah, it was fucking it was San Diego's baddest LA. I was in LA. La was worse.

Speaker 1: 40:25

San Diego wasn't as bad. We were actually in Riverside County. We're about an hour north of downtown San Diego, so we're kind of like LA's here, San Diego's here, we're kind of inland. We were in Riverside County and they didn't shut. Well, a lot of people shut down, but they weren't forcing shutdowns.

Speaker 2: 40:40

So anybody?

Speaker 1: 40:41

wanted to shut down, shut down, no problem. But they weren't forcing the shutdowns like they were in LA or San Diego. There was still stuff going on. It was really controversial, but you know, we were able to still go to the gym and kind of have a little bit of a life, but it still wasn't normal. So we ended up going. You know, we ended up kind of going out to Havasu every weekend or stay there for a couple of weeks at a time you know, and what was it like there?

Speaker 2: 41:00

It was just totally-.

Speaker 1: 41:01

Oh man it's great, everybody. There wasn't a mask in sight. There wasn't one mask in sight. I'm telling you, it was almost like if you go and wear a mask-.

Speaker 2: 41:06

It's like Florida. It's like Florida. Yeah, just like Florida.

Speaker 1: 41:09

And that was where I kind of opened my eyes because I was nervous. I mean, I was where I have a family. You know, I was getting nervous on how the PR that was going out and all this stuff that was happening. And I got to a point where I'm like let's first of all from a business perspective. We're all thinking 2008 again. So in fact, I was actually about to break around an office. I shut that down Cause I had a big 10,000 square foot office. One story total like Google hangout. I had TVs everywhere. Super cool, we were racing it was cool.

Speaker 1: 41:38

And. But we had to shut that down and at one time we actually had a curfew, and so I'm going well, we don't want to have a $20,000, you know, just for the lease for this place. If everyone has to work from home, I can start shaving this down. So I started, I started making decisions quick when the pandemic hit, because I'm like I'm thinking, oh, wait again. And I, you know, I don't have a lot of leverage, I'm definitely in a different spot, but I didn't want to have so much burn. You didn't know how bad it was going to go. You'd never seen anything like this. So I'm thinking worst case scenario, act now. But what happened was is this asset class exploded? Because now what you're seeing is people don't have one toy, they have multiple toys RVs, razors, dirt bikes, couple boats, jet skis, cars. It's just exploded.

Speaker 2: 42:20

You know, I have two books. You print money, asset class and fixed assets go up in price.

Speaker 1: 42:25

I mean like yeah, and that whole SB, that was that business loan or whatever that went on PPP.

Speaker 2: 42:31

I got a lot of money, like over a million, some dollars. Did they ever?

Speaker 1: 42:34

come back to you and ask you to pay it back? No, yeah Well, they asked us to pay it back because we were a financial institution.

Speaker 2: 42:38

No, because I was. I literally, you know my business was fucking touring and public events Totally different. I got, you know, my business was literally shut down. Lucky that I pivoted to online stuff for a while. I saw that I mean I hated doing it but I had to because I used to know what I. Literally my business went from like booming in one day. All my clients every event canceled like in the same time. The first one was like bullshit. I mean what do you mean you canceling the event and stop it. Now we got to put I'm like and then within like that day, you start rolling in one by one. I had a lot of employees, but yeah, so for me it really. I mean I got, I think, a million and a half dollars and plus again the retention money.

Speaker 1: 43:17

And so I got all that. So it was great I got that from my employees.

Speaker 2: 43:19

That was nice, but the PPP.

Speaker 1: 43:21

They asked us to pay it back. Wow yeah, so what was nice is I was warned that this could happen, so I didn't take a lot.

Speaker 2: 43:27

Yeah.

Speaker 1: 43:28

So I was like, okay, we're not going to take a lot, just in case you had to pay it back. And sure enough, they came back to us and said Interesting. You guys were a financial institution. How much did you take? I only took 90,000.

Speaker 2: 43:36

Oh wow, I was very safe. They actually came back to you.

Speaker 1: 43:38

Yeah, my burn rates close to just. I mean I'm a little over 150,000 a month and just salaries.

Speaker 2: 43:43

Yeah, so when I got to, that yeah.

Speaker 1: 43:45

So I was like you know what, like we're doing? Okay, we have some fluff, like again. I just kind of was more conservative, but there was things that were shifting that we can kind of see the market go to. So I'm thinking secondary markets, apartments. I'm thinking, like you know, people need to put a roof over their head. I'm thinking of affordability. Now Right, and that really kind of shot gunned us into what we're doing now. But then at the same time I've been going out to like at my father retired and lives there, and I've been going out there my entire life and I don't know anything else as far as my father.

Speaker 1: 44:15

So I've been going out there forever. So as soon as I saw the demand for units out there and as I had a boat you know many boats I there was a four year waiting list for storages. It's insane.

Speaker 2: 44:25

I know, but not everything. I came there I tried to buy a jet ski. I couldn't buy a jet ski. You have nowhere to store it. Well, no, they couldn't buy them. No, jet skis, it was sold. Everything was like, really weird. Like you know, you couldn't buy a car, the chip shorts, all this crazy supply chain issues. Supply chain issues, you know, I never seen it happen before and it's, I mean it, somewhat sorted itself out now, but still it's. Things are still not quite the way they were before.

Speaker 1: 44:49

And you know I mean, but what the problem was is? It happened so fast and I think a lot of people didn't have time or they just saw again it was free money. Interest rates on cars are zero. You know, go buy this, go buy this, but they're paying a premium for that car, and then you couldn't find any more cars, so you're paying another premium.

Speaker 2: 45:05

Yeah.

Speaker 1: 45:05

You know, I have people that were just max, leveraging everything, and they go to trade in a car. And right now, a couple years later, and they're upside down, and now they increase their lease for the next one, and I'm like yeah.

Speaker 1: 45:14

So what I did was is I actually went in and bought a house right in July of 2020. I was watching people fear dump. I positioned myself. I was able to strike deals on assets because everybody was fear dumping right before it started. Kind of, the real estate market started picking up and everything was doing well. Right before that I got in and started striking deals.

Speaker 2: 45:30

Yeah, that's great.

Speaker 1: 45:31

So I told my wife, I said hey, if things go bad, we want to grab our cash, grab everything, we can pay off everything and just sit tight and just run. You know, I could work at Del Taco if I had to you know, and we'll be fine. I care about putting food on the table for my kids.

Speaker 2: 45:43

Yeah.

Speaker 1: 45:43

So I was literally thinking to that level, like, whatever I got to do, I'm going to take care of my family. So I just we started pivoting and in fact I was able to keep all my employees too, because everyone's like we're in this together, I love you, we're doing it, let's go. So it was nice as that. As the things kind of leveled out, real estate started, you know, picked up. I opened up a couple other departments, started generating more multiple revenue streams for the company, which was great, and we just blew up, you know but it was controlled growth.

Speaker 2: 46:09

Yeah.

Speaker 1: 46:09

You know I brought on, I moved over to founder and chairman, brought on a CEO from Wall Street, former hedge fund guy but really loves real estate. Wanted to kind of dive into that asset class. Knows how to. You know scale companies. Bought another guy in from. He was another shop managing 360 billion at LA. You know bought him as my ops guy. You know just just kind of looking at how can we scale the company and just build more infrastructure and more revenue streams for survival in a sense but not only for us, for investors that's key Right.

Speaker 2: 46:39

So for you, you came out much stronger, much stronger.

Speaker 1: 46:42

Well, but it but it also streamlined us. I think what happened is because we were so diverse. We were like office we. I don't know if you ever heard of Europa Village winery down there in Temecula.

Speaker 2: 46:52

It's a hundred and eighty five million dollar winery.

Speaker 1: 46:54

It's a European themed winery, and so they have French, Italian, Spanish anyways, we came in and basically provided all LP capital for all the equity for the development of that project Really, and and that project was the only one that was really kind of hit during the pandemic because it was restaurants.

Speaker 2: 47:09

Yeah.

Speaker 1: 47:09

You know and so, but they figured out how to create other revenue streams, order out, but their alcohol sales went through the roof. Well, that's what happened in 08. Two so when I was underwriting this loan or underwriting this partnership, I went into it and said, well, alcohol sales went through through the roof. They're already they're already generating 2.2 million a year in profit. Right, I looked at do you have the capacity to really push a lot more weight? They absolutely did so. When the pandemic hit, their alcohol sales went through the roof. They went from. It took them seven years to get like 4,000 memberships as far as wine club memberships. Literally within a year and a half, two years after the pandemic, they skyrocketed like 12,000. Wow, so that generated a lot more revenue.

Speaker 1: 47:48

So it's those little like Things inside each asset that we pay attention to. Go well, things get bad. This should generate more capital. So it's the diversification aspect, for sure. But you know, it did streamline us and, and that streamline was we found a niche. We're building storage units, which aren't that difficult, but people love these things. It's it's kind of right up my, my age group, what I do, my boat, you know, all that fun stuff. It kind of fits my culture. So these are I'm, I'm building, put you know, building Toy storages amongst friends.

Speaker 1: 48:18

In essence, I enjoy this right and I'm helping a lot of women get their their husbands out of the house price, saving a lot of marriages or a little, you know.

Speaker 1: 48:27

You know, potential attempted murder charges, yeah but with the pandemic, all the nightmare stories we heard, right, so, but yeah, so it's been it, but it's, it's been a good run. So this next project, you know we're gonna be building about 350,000 square feet. That'll be in regards to not only boat and RV storage but also the residential component to it. We're gonna have a cool gym. Have you ever heard of lifetime fitness? Yeah, are you familiar with how they're structured? I know well, I won't go too far in my lifetime fitness.

Speaker 1: 48:51

Yeah, I think originally where, and I think they also have a big place out in Denver. I for some reason I thought they were headquartered at Denver at one point, or maybe they start, I don't know something like that. Anyway. So what I love about them is, by trade, they were actually multi-family developers, so they build multi-family. But if you look, if you ever look at, think about you know, I'm lifetime fitness, if you can picture, like the summerland in Vegas, for example, like, or if you look at all those apartments run.

Speaker 1: 49:14

A lot of times They'll either be the ones that build those apartments around them and then they build the lifetime fitness as the amenity package for the apartments. So think about it. You go to an apartment project right now. Do you really want to go to the gym, like a real gym in that apartment? Probably not.

Speaker 1: 49:27

Yeah right, because it's just not, doesn't have all the stuff there. They're just trying it's it's just an amenity to get tenants in there, but no one ever really uses. It's not good enough, you know. So what they were smart was that they're like look, we'll buy land and we'll do a private equity play, we'll separate this gym and we'll go build apartments and we'll maximize the space that we can build units and then give a discount for those Tenants to go to the lifetime fitness, because lifetime fitness has everything right and that's what they did. So and then now they have a proven track record to say, okay, well, if I have a thousand units around this apartment, I can guarantee in essence, through our data and all these other projects we built, that we can put in, you know, we'll have, you know, 40% of members right out the gate.

Speaker 1: 50:07

So it's like you know cash flow. So if you're going to get debt low or get debt financing for the construction of the gym?

Speaker 1: 50:12

Yeah you have guaranteed income because you have a proven track record. So that's how these guys were operating. Well, we're doing for the most part of the similar thing we're building in essence, we're building the community right. So you have 150 units of townhomes barn caves is what we're calling them, right, man caves but we're we're slivering off a parcel and putting the gym there, and the reason I'm doing that is because if I put the gym in there Now, mind you, this is I care about trying to create an affordability component for my buyers, my owners.

Speaker 1: 50:42

If I have like out there and have a suit, people drink and party and get I mean, smashed out. In the heat it's 120 degrees like Vegas. Out by the pool these guys are just getting lit right. So the the insurance that it's going to take for me to get is for you know, the HOA's for that pool and to maintain that pool is so high that my HOA costs go through the roof per unit. So what I did was I said well, I need to figure out a way to bring my HOA costs down. Nobody wants to pay 350,000 or 350 bucks a month for an HOA. For example, my HOA's are 300 bucks a month. Right, but I live in a two and a half million dollar house, you know in Riverside County, right? So if, how am I going to have somebody live in a 550,000 dollar house with $350 HOA? It just doesn't make sense and everybody hates HOA's out there.

Speaker 1: 51:27

So I got to figure something out. So if I carve out that gym, I take the budget that I was going to use to build the gym out and put all the TI's in there and just build the Shell bigger and bring in a big gym, and they just lease it from me. Then I just remove and they maintain everything, the pool, the cost, everything. So I just removed that, that cost from my unit owners as from the HOA's, and then that creates cash flow. So that's what we're doing as well.

Speaker 1: 51:52

So ultimately what happens is I may, but my cost to develop the whole project's the same, but my HOA costs come down significantly. We generate more cash flow because we have a large national tenant, in essence Right, and now we're providing that in essence savings back to our homeowners. Right now I can even increase the sales price if I wanted to, you know. So they're ultimately there's more profit and my investors are pumped about that whole entire structure. So we're, we're, we're, we're planning on popping these down kind of throughout the country. Yeah, but again it's we're tracking Spending habits of baby boomers. They want RVs, they love their boats, they love their cars, they want to enjoy their lives. They don't really care where you know where, where the market goes if they're not thinking about the Lake Tahoe area.

Speaker 1: 52:34

Love Tahoe. I've actually wanted to look at buying and building up there. Definitely different. So, like it, have a sue. It's more. You have, like, a lot of high-end guys. So all the LA guys, a lot of builders that you and I both know from LA. They had gone there building and have a sue. So you have a lot of high. You have the workforce and have us is such a problem because all you have is high net worth guys going out there for recreational. We're building huge homes so they're just not. They don't have enough parkments, they don't have enough affordability. So obviously going down that road for me allows you to Kind of target the city and get some support from the state into the city for building affordability and affordable homes but like that's different because a lot of the money that's going into those.

Speaker 1: 53:12

If you look at what people are storing in there, overall they're really high in toys, super high in toys. You know one guy, you know he's got a million dollar coach in there. I've one guy has a two million dollar skater in there, you know and and a razor and a car and you know there's adults. But when you go to Tahoe you got to remember who your demographic is. You could still build these but it's gonna be a little bit different. These guys may not be putting two million dollars. You can't put it. You can't put a two million dollar 40 footer on the lake out and stand right so.

Speaker 1: 53:41

I have to design that product. Yeah, yeah, to who my end users are gonna be. But I can bring down the cost. I don't need to go. It's extravagant. You probably don't need to do temperature control, except for maybe heating. You don't need to go so hardcore on air conditioning like the desert you do, yeah that brings down your cost.

Speaker 1: 53:55

So I can create it, just making sure that I'm tracking what people's spinning habits are out there, right. And then obviously, migration down to tourism. You know what the what's the, the city generating in tourism and I can identify what kind of asset, how deep into that asset I can build it. So, again, what kind of amenities am I gonna provide? You know my end user, but yeah, so Tahoe is actually a place we've considered. I love it up there.

Speaker 2: 54:20

I live there for a while. Yeah, that's beautiful.

Speaker 1: 54:23

What side?

Speaker 2: 54:25

on the Nevada side.

Speaker 1: 54:26

Right yeah you know all of Tahoe, is nice really.

Speaker 2: 54:29

Yeah, I the altitude kind of bought me a little bit for some reason was very dry, incredibly dry, but it was beautiful. I mean we had a house right on the lake it was. The view is just incredible, so loved it.

Speaker 1: 54:41

Perfect. Well, thank you very much for having me.

Speaker 2: 54:44

I really appreciate it. I really really good to see it.

Speaker 1: 54:48

We have you tomorrow.

Speaker 2: 54:49

Absolutely.

Speaker 1: 54:49

You know how many people I have coming that are just excited to see you. I'm dead serious.

Speaker 2: 54:53

These people are pop and these are my network.

Speaker 1: 54:54

These are guys are coming from a lot of people coming from California to see it. Yeah well, I'm a good time yeah, so I really appreciate it my pleasure Great talking to you.

Speaker 2: 55:00

Thank you, buddy you.