From Tech to Real Estate: Tips to Building Tax-Free Wealth

So today we have Eric Sue on. It was a segment that the two of you did it limitless. Yeah, that was awesome. So this guy's a digital marketing genius and he's buying up media companies and he is just on a role. Well. I think the interesting part though, is is this was supposed to be an interview where you were interviewing him. But he did a lot of interviewing. Well. It's funny because he comes from the Silicon Valley space, right, and he's into these tech startups and he's done extremely well. But the thing about. Most Silicon Valley tech guys is that they pay a lot of tax. According to him, Yeah, and he said, we don't even think about it. We just grow these businesses and we exit and we pay a lot of tax. And so he's learning about real estate. So he started to get very curious as I started to tell him the big question, which is the purpose of a business is to own real estate? That kind of blew his mind. It did his mind, and I think that he just didn't understand that, you know, he's paying so much tax and he doesn't have to. And I think a lot of high end employees don't realize that right, Like doctors and surgeons and lawyers like, they don't understand that you can offset your tax burden through real estate. And that's why a lot of people that make a lot of money are in real estate. Well that's why we have four thousand plus people on our investor list, because there's. A lot of people that yep, absolutely, So check this episode out and let us know what you think. Yeah, So my name is Eric Sudis. Is Ken over here obviously he's the mastermind of all this, And so I have a podcast. One's called Marketing School, the other one's called Leveling Up. So we're gonna talk about busines. We're gonna talk about marketing and hopefully you guys get a nugget or two. And I'm sure Ken's got a ton of wisdom here and I'm gonna go ahead and get started. So here we go. Can I got a question for you? You're eight hundred million dollars in. Debt right now. What's going on? Well, we're, as I said yesterday, you know, we're in the fifties LTV. So we're not very levered, right like we which means that we have you know, probably forty five percent equity right. So, so so when you have that much debt, you know, even even during the pandemic, like when we shut down and we were like, oh my gosh, our our tendant's. Going to pay. You know, in April we shut down and everybody went home and then we were like, man, April we'd already collected. And March or May we were sure of we were like, okay, you know, we only needed I think we checked like sixty or seventy percent occupancy to be able to cover our debt and our expenses, you know what I mean. So, so that's what that means. So there's only a couple things in the in the stack. One is debt. Let's say that's fifty five percent, and then you got your expenses and then that's what we call you your break even occupancy. So you just have to collect that much to cover expense. There'll be no there'll be no distributions or returns or anything. But so that's that's uh, that's one thing that you know, we we did intentionally, We're not. It also gives us opportunities to to be able to scoop that equity later through cash out refies or seconds or maybe even a recap or something like that. So so we never were we've never really been. In a position or wherever. Actually that that that I could remember that we you know, that was in jeopardy. Though. The thing that's killing people now is are the interest rates, right so even if they're not heavily levered, the interest rate, you know, like on our construction projects, we started our construction projects in the in the fourth like two years ago, three years ago, you know, and now they're in the nines the same project right, like, we haven't done anything different, Like we're even on budget, and uh, you know when your debt costs almost double, that's actually. That you know, even low loan to value and all that kind of stuff. So the interest rates are a big deal right now for most people. Yep. And I want to come back to that in a second. But what is it that banks don't want you to know about the stuff that you're doing? As an example, well, the banks, so here here's the thing, like you when you do a loan, like a lot of people will probably realize, there's these loan covenants that are all inside of the loan documents, and loan to value is one of debt service coverage. Is another one, and there's a whole bunch of things about cash and cash reserves and things like that you're required to. It's like it's like all the fine print, but it doesn't really come up very much. You know, until times like now. So what happens is and the debt service coverage is probably a really important one to discuss. So people call it the DSc. What that means is, let's say your net operating income is a million dollars. Well, what they're going to want is like a one point two or one point three ratio, so that you have essentially two or three hundred extra thousand dollars in your NY to be able to cover your debt. I mean, that's a simplified way of saying it, but the real reality is it's like an insurance policy. So when the debt service coverages are one two, one three, even one four, let's say, and in really good times they might bring them down to like one one. I've seen them lower, but that's actually what's what. So that's a trigger. So the bank now can come after people and go, you're not hitting your debt service coverage requirement and and that then they can open the you know, open the hood, take a look inside, and they you know, so there's all these covenants and that's what the banks. Are afraid of. Right now. What's really interesting, actually the most interesting if you look at what people paid and you look at where they should be, and there's assets actually going back to the banks. But what they're doing is they're keeping it on their balance sheets. So it's the equivalent like the like like the like the like the fed. You know what I mean. There are unrealized losses. So they're just sitting there. So so let's let's say let's say I borrowed from you and my property is not worth the loan. You take the property back. You just set it on your balance sheet. Now it doesn't go out to sail yet, and so nobody knows what the price is that. You know, I've taken a loss, you know, I've lost my equity, all my investors have lost, but you're just sitting there waiting in the asset management category. So there's a bunch of assets that are sitting on these in this asset management category by big companies like m F one and Arbor. And because I said, well, let's I'm gonna start an asset management company, you know, to start managing these assets, so I have first first crack at them. Uh. But I wasn't the only one to think about that obviously, so uh. Anyway, now, the the interesting part is the equity's gone. But and uh they only have to realize those gains if they sell them, right. So anyway, so we're in this limbo period of time. Yeah, well, I mean that's you're you're still hot doing deals right now. Right, you just did a deal recently, I heard so, Yeah, yesterday at dinner, I heard it was ninety. But maybe you did another one at fifty. Yeah, we have another one that we're gonna do at fifty that we actually just put it in scrow that we haven't even done a business lan on. But yeah, we're in due diligence. But yes, we just closed on one in Las Vegas, three hundred and forty seven units and we got fifty two million in debt and then put the. Rest up in equity. You know, with with our investors, we love that one because it cash flows on day one. We bought a below replacement costs, so. We're a builder too, so you know it would have cost us probably three three twenty three twenty five to build that exactly property and we bought it for two sixty wow, and brand new. So it has and then it also has some it has some room in the operations, mostly on the on the on the income side. It's really hard to like. But if people if people say you. Could save on expenses, you should just you just build the brokers just bullshitting, you know, like that's it's never gonna happen. Like everything's going up, like interest rate, our insurance is going up, property taxes are going up, utilities are going up, like costs are going up. So you're not going to get a lot of cost savings. It's really going to be in the rent role. And so there's some there. There's there's definitely some room to grow the rents to market in the rent role, not not future rents. So we like the deal a lot, got it? And what I mean with the night emailing, I mean, no, this is a two seventy deal. It's just call it that, right, So how are you structuring these deals? And you know, can you give us a little more details on the deal too, like price per door? Yeah, of course. Yeah. So so we're right at two hundred and sixty thousand a unit, and and then we got an agency agency alone, so fixed straight loan. We locked, you know, like you never know, like what the treasuries are going to do, Like we locked at five point seven and then they went down. The next day. Like it's like, oh, like you know it, but whatever, you know, we're still cash flowing and uh yeah, it's it just cash flows. I'm going off a memory, but I think like maybe maybe four percent in year one. So it's not it's not great, but you know it has u we will obviously, you know with it within a matter of six or eight months that you know, we'll be kicking off more cash. But it's it's a it's an underperforming asset that's poorly managed, that's well built. Ye got it? And what so how do you I mean, you do a lot of these deals, right and just kurisous because we're talking about this a dinner with with Steve and it was like yeah, so you know, we're like, yeah, how does construction are these deals in general? Because every deal is different. Yeah, so how do you think about these What's a good question. I always think about the investor first, so and I'm I'm in that deal a million a million dollars, My partner's in for a million, and you know we have investors in for a lot more. And so it's just like anything else. Like if you're gonna give me a million bucks and that was sitting in a treasury and make it four and a half, you know, that's a hurdle, right, You're safer in the treasury. So so there has to be a compelling story for the investors. So that's we always start there. So and it can't be I'm gonna sell it for more than I bought it for, Like, that's not a story. That's you know, that's gambling in my opinion. So so you have to you have to have a story inside of the asset itself. There has to be And I'll give you another like the one we're an s grow on now that we haven't. Put out yet. It was built in the eighties. It's right next to the Phoenix Zoo and the Papago golf Course, which some people don't know that area, but it's right in the heart of town, five miles from the airport, right next to Arizona State and it's untouched. And so what we'll do is we'll go in and we'll do. Ten percent of the units, will renovate them, We'll see how far we can push the rents and we should get maybe one hundred and fifty more let's say on those on those units. That's called proof of concept. Now you've proven that you can renovate some units and push the rents up. That's a story. Now you can do that on the whole project. So now if we could sell it, actually at that point you could do ten percent of the units, do proof of concept, we can actually. Sell it for a lot more than we bought it for. Or if the rates are cooperative, you know, maybe we'll refinance and you know, do and renovate it and you just choose the rest of the project hold it for a cash floor. So we're gonna have kind of two well, two roads to go. And that's what I mean by a story. So every deal so it cash shows on day one as is that's really important with fixedtrate debt, like you know, not floating debt, and and expense expense growth of maybe three four percent, like you have to really say tenses are gonna go up, and and you know, you have to be really diligent on the way you're underwriting it, and then there has to be a story around that. So so that's that's what we do. And so that's gonna be a really nice value add. The one in Las Vegas, it will be a really nice value add. And so that's what people are always looking for, the tax benefits, the cash flow and then the future cash flow. And what we always like to do, Eric is I prefer not to sell. And in fact, my whole career has mostly been hold and we have properties, like we have several properties in Dallas here that we've refinanced three times, you know, and we just keep harvesting and. That's that's that's uh tax free. So when it's like if you put a if you put a loan on your home refinants, that's a cash out refi. You don't pay tax on that because it's debt. So if we can, like this project that we have, if we can grow the value significantly and put new debt on it and be able to do a cash out refi and distribute that to our investors, that's tax free because it's debt. Now, if we sell it, we have a capital gain. But because if we don't. If we just keep harvesting it and just keep brief doing cash out refis, then it's forever a tax free event. And so so you can kind of go down both roads, and we prefer to hold. And is that the infinite money glitch? That's the Yeah, infinite money is when we give one hundred percent of the equity back. And we have a lot of properties like that where it used to work better in the old days. Right like you know, when we were buying. You know, prices are really high right now, and interest rates are really high right now, and expenses are really high right now, and cap rates are really high right now. So everything's going the wrong way. So it's a great time to be looking to buy because there's disruption. But it works like in new construction. So new construction, we have several new construction deals that we're doing. We have one almost least up. We have one and we just started. And you're building for wholesale costs, you know, so we'll you know, we're building for you know, let's say three hundred thousand unit and you know, if and this is a big if, if that thing has worked significantly more than that, then you go back and you pay off the construction debt, you do a cash out refie with with Freddy or Fanny. And then that money gets distributed to the investors. But the whole idea from the beginning, and you know, because I'm in every deal I'm invested, is how do we get that money back tax free? And then when we get to the point, sometimes it takes two Sometimes it takes to cash out refuse. Uh. Probably that's probably. More likely in today's today's world, but still it's these are long term holds. These are five, six, seven, eight, nine, even ten year holds. We have properties here in Dallas that we've owned fifteen years. Let me ask you a political question. Yeah, how does your calculus change with the unrealized capital? Oh? Man, I'll get crushed. Man, Like Like, I don't know, man, I mean, just think about everything. Think about like your car, like I've got some old classics and some you know, some fancy cars, and even on my house, like I've got massive gains you know, from what I paid on my personal stuff. I don't have any debt. Oddly enough, like everything I own personally I have, I don't do with debt. I only I only do that with the ones that the tenant to pay off, you know, but there's a lot of I have a lot of unrealized Yeah, a lot, Yeah, I would it would be uh, I would have to move to Cuba. I love it. I do want to come back. I mean just you know the way I think obviously, can you hear me? Okay, yes? But so you know what what's interesting to me. I've worked a lot software companies. I mean you're you're price testing, are you're experimenting, You're seeing what works, then you roll it out. So I guess I mean, let's just stay on them. The acquisition side of things for a moment. What is in your deal box? Like, what do you look for when acquiring? Well, the very first thing is mark it. So you know, we've had a lot of migration. You know, we've had a lot of change in where people are, where they want to be. Political environment is huge. The the people that can work from home moved, the people that can move. Do you know? There are lots and lots and lots of thousands of stories of people. One are the really cool things you can follow. One of the things we follow, it's quite simple. It's like rider trucks you haul and United Van lines one way moves like this is all track. You just go online right now and it shows like if somebody moves from Seattle to Phoenix one way, well, it's probably means that they're moving, you know, and they're not moving back. And so there's all this it's really crazy. That's just one way. There's out of state driver's licenses, and there's all these ways. That the US kind of tracks where you are. Cell Phones are now obviously the big one, and and so they can kind of see where people are going. That's extremely important before we do anything. So you always want to be where people are going. And then what it does is it it puts a lot of pressure on the infrastructure for that town. So it puts like. Like I live in Scotts Sale, Arizona. It's like impossible to get a restaurant reservation and I've been there for twenty some twenty five years, Like is it really Yeah, it's crazy, man, Like it's like, wow, all these people, where's where's all this traffic coming from? Where's all the you know? And it's just because there's a lot of people moving to Arizona right now. Paradise Valley and Scottsdale and other places because the political environment is decent. I guess and say, if it's warm, it's pretty reasonable price. It just happens to be. But the same thing is going on in North Carolina, Florida, Tennessee, Texas. A lot of areas in Texas. So that's where you start. Then, but there are areas that you want to stay away from, right, So that's a state. But then you start to look at towns, and you start to look at some markets, and you start to get really really focused. Like in Las Vegas, we're in Green Valley, which is the affluent area of Vegas, and it's outside of the strip. It's where you know, the homes are eight hundred million dollar homes the average price next to a Whole Foods, you know, so you start to look at those some markets. Really really Uh that's really important. And there's if you really want to shortcut this whole process, just go far where you know there's big companies doing the same thing. Like Whole Foods is a great example. Whole Foods is going to plant a store in an affluent area. That's where we want to be. That's where we want our apartments to be because you're going to have, you know, a higher demographic. And now there are also people that do the opposite, right, they go after the low income housing, which is totally fine. I've done a bunch of that. So it's very different strategy. We're we're we're going after the people. What we want is a big, big delta between rent and mortgage. So a million dollar home is going to have a significant mortgage where our rents are two thousand dollars, you know, So there's a big gap. And and then what it does is they want to be in the area. It's a nice area, and but the them being able to move to that neighborhood is So we start with all of that, right, then you know that our buybox becomes really small, you know. What I mean. And then from there we have our acquisition guys who are here actually and and they just go at it. So what I'm hearing is you're largely looking at traffic flow at the end of the day. Yeah, yeah, you know, it's interesting because uh, you know, my my software friends, other business friends, a lot of people are like, yeah, you know, we don't touch debt, we don't know how to leverage debt. But then you look at someone like you, it's like you've gotten very comfortable with it, right, So what would you say to people like that? You know, we're yeah all the white po people, Yeah, I know who are both in white po. You know, I don't like my wife. I'll tell you, she's got a number of real estate deals. She actually this is a this is a great debate in our home. You know, she's she she doesn't like that. She she uses it to buy stuff, but then she pays it off and she just doesn't want any where. I'm like, if it's covered with. My tenants and I have I own the management company, so that gives me a you know, that's that's that's I came up through the management business. I do understand how to keep a property full. So that's kind of my secret sauce I would think is I'm not afraid of fifty two percent debt or fifty three I think for our Vegas deal, because I only have to keep that property basically seventy five percent occupied, you know, and it's it's it's like ninety seven to ninety eight percent. So things really have to unwind for me. Where people get in trouble is where their their debt plus their expenses are so high they have to keep the properties so occupied, and they have to have so much cash flow to cover that debt that's actually with it, like sixty seventy eight percent, oh yeah, or even higher. Yeah yeah, I've seen. The worst I've seen is one hundred and four percent. So imagine what that means is the guy has to be one hundred and four percent occupied, which of course can't happen, which basically means that somebody gave him so much money his expenses plus his debt, there's no possible way he can ever cashual. He basically, if. He's one hundred percent collected, he's got to write a check for four percent every month or every year. I was like, man, dude, you're in big trouble, and that's not how you want to buy real estate. So that those two, those two things are really we call it the break even point, and then anything after that is cash flow. Yeah right, yeah. So and you can say, I don't want to answer this, but of all the deals that you've done, what percentage haven't worked out? Oh? Really small? Like we probably bought. Three billion, I know exactly the few deals that haven't worked out you know, I did a condo conversion deal in Scottsdale that we sold two hundred of the three hundred units, so that did work out. That was in the condo conversion days. We've done a lot of that. We take apartments in convertam you know, and and you know it happens, and that was twenty years go. But still it's painful, you know, when when you have to sit down and I had money, Russ and I had half a million each. We had investors and sit down with them and walk them through, and then you're dealing with the bank and you don't really here's what I learned, Eric, You know, you don't learn almost anything when you're making money. Like you learn it when you have to pull the loan documents out and the joint venture agreements out and you sit down and you that's when you learn. You're like, oh, okay, this stuff, these pages are real. They come to life, you know, and then you sit down with the lenders and the investors and and you kind of walk them through, and you know, it's it's it's a painful process. If you were to consolidate the lessons from all of the deals that didn't work out, what were the patterns that you saw. Future future growth, future value is going to be more like even in the condo business, what happened with us, and it was with the when when when you buy something, When when anybody buys anything, they will want it to be worth more later, right, And you have to have a strategy that allows for when that doesn't happen, right, and that that's that's a cash flow strategy. So if you could have a cash flow strategy that hedges value, that that the people that are that are doing fine now are the ones that have enough cash flow to support the whatever's happening, and they don't have a predefined exit. So the pre defined exit is. Let's say, let's say you give me money and you want to back in three years. That's a pre defined exit. You're like, listen, three years is it? You don't get a fourth So those are the things that you learn. And so in the condo conversion business, what happened was this two thousand and eight time frame, the investor loan business what stopped completely. If you remember we had a fall out of the single family housing market. Well our exit was single family housing, you know what I mean? So when you don't have people buying single family or condos or whatever it is. Yeah. Uh, and there's no loans for it. It just turned it literally turned off overnight, and so we were left with we had we had twelve million in profit towards the end, plus inventory that we didn't see. Got it now? Should I've debated this a couple of times. Actually, so my my podcast co hosts and I so Neil, he's got a nine figure business, and we've talked about how we've invested in real estate or people's funds or like all these you know, angel investing all these things, right, And what we found at the end of the day is nothing grows faster than our own business. Yeah. And and so we're like, okay, you know, yesterday with with Steve over there, we're talking like, in my mind, I'm just like, should if you're an entrepreneur, should you even bother investing in real estate? Because my argument is like no, because you should just focus on your main thing. I keep the main thing, the main thing. So I'll challenge you a little bit here because obviously I'm a real estate guy, but I believe that the purpose of a business is to buy real estate. Wow. So let me just explain what I mean by that, like, and the reason is it's a tax reason. So if you look at the model of let's say McDonald's, you know you asked, like Ray Kroc has said multiple times, he's not in the hamburger business. He's in the real estate business. Now, the what if you look at the real wealth of a lot of those early franchise you know, it was all in that in the real estate. And so I think that if you're going to have a I think like I work with a lot of doctors, dentists, chiropractors that you know are growing practices and when they retire from their practice, if they wanted to shut it down, A big piece of the wealth is because you think about it, they're they're transactional. You know, I call, I call like my friends or doctors, so I could I'm like, dude, you're working for tips, you know, like you know, like literally like you're just you're seeing patients so fast, like and you're generating cash. But you know you're just working your ass off for and and you know that's that's if you and if they bought a building and they're paying rent to themselves, which is the right way to do it. You buy a building, you pay rent to yourself, and then you're paying it to somebody at the end of your career. I have a I have a good friend out of Florida. I think they've got six or eight clinics now and their eye doctors. They're crushing it. You know, every clinic is worth I don't know, three four or. Five million bucks and and uh now that's a big part of their net worth. And so when they decide to walk away from they can sell the business. I had another friend that did this, uh a wife yogay out of San Antonio. He started rehab clinics. So he was an addict and he's a phenomenal story. It's called Warrior's Heart. I invested in this deal with him. But he started rehab clinics and then a private equity company came in and he sold the business and kept the real estate and just did long term leases, you know, and so he's retired. Then he bought a big ranch in San Antonio and he created a whole new business called Warrior's Heart. But the point is the cash flow from that, you know, from the businesses are you know, got him through that period. Of time while he was grown his next company, and he didn't because he also had the cash. Right. So I always if I if I exit something, I want to keep the real estate because I want that passive income. Right. So here I'll give you a potential set up here. So in the agency business, which I'm in, So let's let's give simple numbers here. So let's say an agencies doing five million year in profit, and then it decides to buy a platform or become a platform where it starts to buy other agencies. He can buy, you know, two million here in EBITDA five million heere Ebita. You stacked the Ebita. But then you're multiple goes up fifteen to twenty x. Right, So you can sell it for a lot if you wanted to sell it, or you can have an exit year every year twenty fifty million dollars or whatever. But if you do exit it for a couple. Hundred million or maybe billion, maybe a potential model is I don't want to learn real estate, right, maybe I just put money into your fund. Is that a model? Well, yeah, you could. So here's the thing. First of all, that's similar to what you're doing. But I think for I haven't paid tax in I don't know how long, A long time because legally because I get such a big tax break for proding housing, and there's all kinds of other reasons. You get vote appreciation, cost segregation, you know, and of course straight lined appreciation, and there's all kinds of tax benefits the government gives you. So I'm you know, we're we're we're making lots of money. Actually my account's here, and I I just we just bought a building and we exited another one. And I'm like, Eric, I need a meeting in October. You know, we need some year in tax strategy to see where, you know, how exposed we are. And and I think that. You know, I have I have friends that have done what you've done, you know, because I'm in YPO, right, I have friends that have exited big companies. And the problem is is they you pay a fair amount in tax. And so the option at that point, Eric, there's actually real estate sophisticated, very good groups that are actually trying to aggregate people to go into opportunity zones. So opportunity zone money. You can take a capital gain and invest it into an opportunity zone fund and then defer that capital gain. So so for me, it's all about trying to mitigate tax even if I'm exiting, you know, and I actually was. We were we almost sold our business to Blackstone and we were in an NDA and and that was my big issue was, Okay, you sell off a big piece. Man like they wanted the real estate. So we have so much appreciation we capture and so you know, there's so much so some such a big tax piece and a lot of people so why would I Why would I want to give up thirty of. Whatever i've whatever I've made even more, you know. So so for me, I think it's a I think it has to be a part of that growth strategy. Yeah, I mean that That's another thing I talk about with a lot of founder friends or YPO friends. It's like if you if you're loving what you're doing, is continuing to grow, like, why would. You sell it? Right? Yeah, No, it's a fair question. I think at some point there's a lifestyle. You know, we all get addicted to growth, right, so I have and and then there's a you know, kind of a balanced lifestyle and what what that looks like. I have friends that sold big companies. One one guy in my forum started a company called LifeLock, if you guys know what that is. He sold it for over two billion, and you know, he like tried to start like multiple companies, you know, like in that first few years. I'm like, dude, yeah, like like it's in your blood, you know, and you just want to keep trying and and I'm like, just relax, you know, just just go hang out. But after a while it gets boring too, Like, you know, there's some momentum and there's some things you want to be connected to, whatever it is, and even if it's like philanthropy, right, and and so that's actually what It's not really the money at that point, right, It's it's you know, it's the joy of it. I'm curious that did and maybe this is forum confidential, but did did his things work out after? Oh? Yeah, well some of them? Yeah yeah, yeah, for the most spart I mean, you know, these are smart guys, you know, yeah, it was. It's just fun to watch. You know. We have a rule in our forum that if you sell your company, you can't invest or do anything. Or start anything for one year. Oh wow, Like that's I mean, what if you do It's a loose rule. But but we're like, dude, knock it off, like you know, because because you know, once you get all that cash, you want to just redeploy it right away and you want to just you know, you're used to that. Sorry you're saying. The rule is the loose rule is you've got to sit on your cash, don't do anything with it, and don't try to start anything. Just emotionally settled out right, like you know, like you think, cause you're like throwing money all over the place investing. In things, and I'm like, yeah, you just just relax. I'm curious, Ken, So what do you think your superpower is and who are the key team members that kind of make up for your weaknesses. Yeah, So for me, it was my property management background. So you know, I started property management, so I really understand the operations. And so when I look at a d like the deals we just got, I'm it's so I just I could see how property runs just by looking at the financials. Before I even show up. I'm like, oh my gosh, this is great. Like literally in five minutes you can see it. You start to see patterns, you start to see mismanagement, you start to see expense control or or income issues right inside of the rent road, right inside of the financial and that's actually where and then that is probably it. Then I'm like, yes, this is a go, let's go look at this. And sometimes that plays out. Sometimes it does it and then for me, like. Like in Vegas, I haven't seen the property yet. Actually I haven't any I haven't been doing it. Yeah, so like but my team has and literally my head head of property management is here, my head of operations, Shannon. She flew in yesterday. We took over the property Tuesday. She flew in yesterday, se ALTI is Friday, so yeah, a couple of days ago. And you know, so that's you know, you got to build a team out, one that could find it, one that could do the due diligence. You know, I'm involved in the equity and the debt at the ownership level. You know, the the legal. And and the numbers, and obviously I look at all that stuff before we do any do any work. But I haven't physically been to the building, so you would say, I mean I'm hearing a couple of things, right. So top superpower might be you're good at identifying the right deals and then when it comes to structuring it the details that's also you yeah, got it? Yeah, okay, So who are the key members on your team to make up for I get so many? We have three hundred people. So our you know, we have our our CIO Charlie, our CEO Brian or you know, head of ops Shannon, you know my partner Ross, our our CFO Freddy, and we have our and then I mean we have heads of construction, and like there's so many, and and we we do We run our EOS, so we run on the us AND which is an entrepreneur operating system, and the whole company runs on it, and and and we manage all that ninety minutes a week through our L ten and it's superstructured. So so essentially I run the whole business, not about ninety ninety minutes a week. And then all the other noise that comes in through emails and stuff like that if we're not in the closing, all goes into Tuesdays at eleven o'clock and then we do an investment committee meeting the same way. And so there are operations meetings that I have sometimes on sometimes out on if they if we have a problem and we have plenty of them, I'll jump. In a new one, you know. So like we have we have that stuff for our property management company, we have that stuff for our asset manager company. So those meetings are going everywhere, but I'm not in all of them. So you're you're playing free safety where you need to. But then there's one standing meeting you have, which is the L ten yep. The L ten and the Investment Committee, because that's that's a big one. The Investment Committee is essentially the acquisitions guys are out, they're meeting with the brokers, they're bringing we have deal flow coming in, we're underwriting stuff. And then I'm looking at maybe two or three a week. And how many inbound are you getting per week? We'll look at five, six, seven hundred a year okay deals, Yeah, and what percent are you swinging on? We make offers on maybe three or four a month. Okay, that's it, got it? And then well we get zero I would. Say, I mean, you know, like in the last three years, I only bought two deals and uh, and so you know, because the prices were really high. Now things are really like the blue is off the rows, you know, so we've seen a big correction on pricing and and we'll see where our interest rates go. But if that makes sense today with interest rates where they are, you know, we're buying. So you're you're optimistic. Yeah, the cut's coming. Cool. So it's it's you got two deals out of thirty six out of seven hundred. Yeah. Yeah, So no, I mean I think a lot of people and I made a mistake in the beginning where you just swing on, like after looking at a couple of deals. Yeah, just you gotta look at a lot you do. Yeah, yeah, And you set up your team that way, you know, just you give them the parameters that you know, we always start with cash and cash start with the investor. You ask that great question, that's where it starts. And then so if they bring me a deal that doesn't cash flow, I'm like, yeah, next, you know, like I don't even look at those and so it makes it simplifies the process and they do all the work. So what I'm looking at is maybe. Twenty to thirty deals a year, and then you know, and then by that time, you know, it fits all our parameters and so we're actually now we're in the loy stage. We're saying okay, and then you know, how far do we want to stretch on this? So we have a we have an offer price, and then we have a maximum price, you know, and then there's a process to that, right. No, I kind of want to nerd on nerd out on the investment, the time investment you're putting into YouTube, because you do have a unique metric that you're optimizing for there. So can you speak to like what it was before and after, because it's it seems like your YouTube is actually driving good deal flow now or not deal flow investor flow? Yeah, yeah, that that's been a real surprise. I well, I would have never done any of it if I wouldn't been for the pandemic. I don't know if you knew that. Like yeah, I was like, why would I go on the internet, like, you know, like we had a whole business, and now I'm sitting at home and Jerry, who's over here somewhere, I we went. I went on Craigslist, like we need a video guy come to my house, started doing videos and didn't know. What I was doing. Terry Yeah really yeah wow? And I was like man, and all of a sudden, we uh. I did a video that went viral because I'm like, Wow, this is easy, and everybody's home like watching so so the and then the best part was it was connected to a bank account because I didn't set it up and I didn't even know you made money on YouTube, Like the money was going in his bank account. And one day somebody asked, Hey, how much you're making on YouTube? I go, what are you talking about. They're like, oh, you make money on those I'm like what. So I had no clue, and so from there I was like, well, this is We had a fair amount of money in there at that point, which was super surprising. I'm like, oh, so now I can hire a team like and so that's what we did. And we've never I've never actually taken a nickel out of it. It's always been like, how do we educate more people with this? And again back to the model. It got away from me. I was like, oh my god, this is like. A whole other job. So then I went to Monday, so I do all filming Monday. I have meetings in the morning, we have a meeting on with the team, we have would do a live at eleven, and then I do a couple things in the afternoon and that's it. I do nothing, YouTube, nothing, social media at all all from basically Tuesday on. So just just Monday. So I've dedicated Monday to the to the channel. It's eight Yeah, probably more like six, but yeah, and then that's worked out really well because everybody and then Josh comes, you know, Josh's Josh really helped our channel. Yeah, and and so he's helped It's it's really it's really something that I'm I'm trying to understand, like it's it's a foreign world for me. It's interesting because during the pandemic, right everyone's watching, You're getting a couple hundred thousand, if not maybe million plus views for video, and then it really really went down, you know, it didn't we a lot, maybe like one hundred thousand views a month or whatever. But and then now you're back up to a couple of million, and they're long form views which are more valuable. Wow. Right, But the key thing that I'm like just explain to everyone here is it's like you're you're actually driving business value from it. So what is the metric that you're optimizing for? Yeah, So it's interesting. I've always I said, listen, no selling, like it just has to be like let's just talk about what we're working on. And then Josh figures out like and then. That's easy because I have we got to do construction, We've got property management, We've got asset management. You know, we've got deal flow, we got you know, we got all this stuff going on. We're doing loans, we're doing refives, we're doing recaps, and so there's never a shortage of going to properties or anything like that. And so for me, it's a great way to highlight my team and and and also just to tell what's up and tell the truth. So this is what I'm seeing, this is what's going on. It's actually been great, you know, and and it makes the team sharper. And uh, it's funny like when you're talking in front of a camera, you don't really I see it here, like I had no idea, Like you know, it shows up at like a limitless right. People are like, I love your channel. I was like, you know, so you look at views are just like, you know, oh that's cool. You know, I need to go out more. I guess, so. Okay, but you're I mean, I think you were getting like a you're looking for investor applications at the end of the day. Right, I think now that your YouTube channel is growing again, I think you're getting what five to ten times more. That's been a really cool thing. Yeah. Yeah, I started just teaching, right, you know, I got the books and stuff that I've written, and we have a we have a whole division. We have a full time director of philanthropy and our company we have a whole division for philanthropy. And so all the books and all the stuff that I've been doing in the past has been all kind of going toward that, going toward charity. And so it kind of started off with, oh, this is a great way for me to, you know, teach online because there was a lot of girls online. I was like, I don't know, just bad information. So I was like, okay, I want to be the guy that I don't want to be that guy, so and so. And then it's turned into trust online, which has been really cool. And then that's been driving deal flow and we've had a lot of investors and all of that has been a blessing. Yeah. Yeah, I still think YouTube is the biggest opportunity for the next decade. So and the thing is, now it seems like you've maybe changed the strategy a little bit, and I want to come back to the deal stuff in the moment, but you are. I was talking to Josh. He's like, Josh is like criticizing me on my channel. I was like, dude, why don't you just talk about your business? Right, And so it seems like that's what he's done to you, Like what are you talking about mostly now? Yeah, well it depends like most of the time, like if something big happens, then I try not to be like I hate the clickbait stuff, you know, But but I unfortunately and I'm not in control of it at all. They are there are people there that like that want that, but typically I think people just blocking and tackling just real basic stuff like these are some of the things that we're doing. These are some of the things that we're seeing, and I just want to stay in my lane, you know, I don't. I've seen guys try to be like news hosts or whatever, and like I'm like, that's just not who I am. Like I'm I read all that stuff, you know. But also if I if I'm trying to whatever, sometimes I'll have really great conversations with people, and sometimes I'll talk about those you know, like behind the scenes, like we had a I had a great conversation with They had a Capital markets for Bricadia, you know, which is a big company. It's Warren Buffer owns this company and he works for Warren Buffett. And I was like, you know, I'll have maybe an afternoon with him and then I'll talk about that, you know up you know, just being able to like say, this is a stres this is what big money is thinking like that stuff, you know, those are kind of behind those are the boardroom meetings and without being you know, breaking confidentiality. In that video he's anonymous. Yeah, yeah, yeah he Maybe I'll ask him. I'll say, hey, it's okay if I mentioned your name is like no, no, or yes, you know, but I always I think that's the stuff people a lot like, you know, and it's it's straight from you know, straight from her. Yeah, it says, and I got a question from Steve over there. I actually have two questions for al so you can wave O dybone and Steve so he and you talked about the ninety minutes per week. So he says, you're famous for running your company on ninety minutes per week. Tell me the downsides of being an absentee owner. What are some horror stories when you get it wrong? And also walk me through how to build a company culture that allows you to being engaged owner. That's a lot of stuff in ninety minutes a week. Yeah, Well, first of all, you have to have a facilitator, you know. So we we have somebody that got us on the platform, and that was a huge piece. So it didn't it didn't start off with ninety It starts off with two or three day full day meetings with your top team and analyzing your organizational chart, your direct reports, Uh, what their priorities are, their quarterly goals they're so so what what we had kind of my partner and I had goals like everyone for the company, but they were sometimes they're not adequately pushed down and so that tightened all that up. So what we had was had our C suite all in there, and so you could. Take whatever is in your head and and hand it over to you know, the people on the c suites. Take your goals and give it to them, make them quarterly milestones or whatever. Maybe maybe it might be a one year or two year goal, maybe it's maybe it's a ninety goal. But whatever it is, we took all that stuff. And then once once that's like out. Of your head into those folks, then you just kind of drop in like I have like one, I have one one ninety day goal that you know, I used to have five, you know, but and then went to three and then you know, down to one, and they all have three or four or five. And so I get on there and I'm like, okay, where are you? You know, you're there on track or off track, you know, as you know, like so boom boom. And so what I was able to do is I was able to take all the stuff that's going on my brain and transferred down and we all have to agree on it and and what's what's most important. And and so once you're able to do that with my partner two ross, because we got construction deals, We've got acquisition goals, we got equity goals, you know, we got refinanced stuff. We're looking on our whole portfolio, we got operational issues. There's so many things. And and then once you get all that into the proper scorecard and the KPIs, it actually becomes quite easy. You know. And and the the big mistake a lot of entrepreneurs make is they want to do it themselves, you know, and and so that's that I always want to jump in, right, I always want to solve, like always like and that's, uh, that's a huge mistake because you don't really they don't give them the ability to learn, right, right. Uh, if you're solving all their stuff. So so that was that took years to get to ninety minutes. But now now we're at that point, like literally it's okay, we know how many deals we want to close this year. We know we want to buy a billion dollars in eighteen months. I mean, that's you know, all agreed on before I did the video. I made sure everybody was on point with that, Yes, we can do that for development, construction and nuke acquisitions. So then you just basically work backwards. You know, what does a million units look like from you know, eighteen months? Work backwards? How many do you have to have an scrow? How many you have you. Know, including fall and all that stuff, and you just basically put math on it. And then we know how many deals we've got to close each quarter, and you know how much equity we need, and you know we're we're we're already working on twenty twenty five, you know. I mean, that's what we're talking about now, you know. And so once you metric it down, that becomes easier. Yeah, you back into it, and you know, we've kind of gotten away from the whole annual planning thing. Now it's a three year thing and we've kind of just work in quarters. Yeah, it seems like that's been easier. But so here's another question from Steve. It was a deep one who at the at the end of their life or at their end of life, people often say family and health matters most. I'm young and I really care about wealth creation. What are some tips you can give me today as someone focused on making money that can help me mature my mindset around family and health. Oh, it's a really good question. So I went to a mentor once. I've had a lot of them, and his name was Charlie dunlap Ed. It was a hypo thing actually, and he had a business plan that he he brought and it was a it was a business plan for his family, like a full business plan. Him and him and his wife would leave for three days a year. They would two nights, three days. They would go usually in like Sedona or Flag seven, Arizona. He's from Arizona. And he's like, you know, he has five kids, and he was like, you know, like we do business plans for our businesses, for our real estate deals and all that stuff. We like really think a lot about like all this stuff, but we never do it for our family, for our faith, for our health, for our kids. Or like it's it's just like, oh yeah, yeah, we'll get to that. So I went to this thing for him and he's like, he's like, you know, he had the wives and the husband's there, and he's like, what would you guys rate your marriage? You know, and and the wives were like a six or seven and the guys are like a nine. And he's like every time it's the same. And he's like, there's such a big gap because you know, there's that communication problem. But he's like, and then what happens is because most most people go business kid's wife or spouse, let's say, because it probably need to be careful of that one. So business kids, spouse, and he's like, it needs to be spouse kids business. And so that for me was a big game changer. And there were all these things that I learned back then. And and so for me, what I mean, the changes I made immediately were. If my kids had a spring break, fall break, summer break, whatever, Memorial Day, whatever, whatever it was, Labor. Day, I took off. So I started right after that. My kids would get out of school, let's say June first, I would take off literally June July, and then and they would go back to school. I literally was with him twenty four to seven those you know, this was years ago, and and that changed a lot of stuff, you know, for the better, right, And so so that was the one big change that that we made. There's a bunch of others, and it just kind of reprioritized everything. Yeah, and and my my buddy said, listen, you know you got to like give your family. Half the money, and twice the time, it's like, yeah, you're right. And so so for me that that was a game changer. And and then you know, I got my my son here somewhere. Oh, he's over there on his phone, so he's really present, and uh uh, you know my other kid is he's watching live right now. He's working back in Arizona. My wife share So I think, you know, I just put my my business at the end. And how long ago do you do that? God, fifteen, probably over fifteen years ago. Wow, And it's still like that today. Yeah, one hundred percent, like like one hundred percent. Like I'll give you a I'll give you a great example that is recent. I was with my wife. We went through the Olympics and we just. Got back. And you know, we got Bobby Kennedy coming, right, So yeah, I'm excited about that. Uh, and I get a tax from Tarl. He's like, hey, we got invited to the Kennedy compound, you know, like sweet when it's like in a week, like with my wife, Nope, sorry, gott to miss it. So you know, and that would have be obviously something we really wanted to do. But I told her, I go listen, you know, I'm not cutting our vacation short. And we're on this thing. And so there are things that always chip away at you, you know that you want to do, and uh, it's just it's those moments, you know, like I I I had us this crazy story. My son wrestled in high school. I'm a big wrestling fan, by the way, I wrestled in college and we went to wrestling in the Olympics, and I had a meeting in Rome, like of all places, right, and I was there for something and I don't know, six seven, eight years ago he had wrestling match, a high school wrestling match, and I had never missed him. So I was like scrambling from Rome right to get home, and I made it. And that's the kind of you know, that's the kind of commitment. I literally, I mean literally just made it like twenty minutes before from Rome. And I think you just got to, Like, so that's that's kind of the point, like you always just have to you know. So I met one of your sons at at an event maybe last year or so in Park City, and I my immediate reaction was, this guy's really humble, he was really driven, right, And in YPO, so we have a third people that are you know, hired guns, the third pe that are entrepreneurs, and the third that are family businesses. Right by finding the family business people, they're either really amazing, they've been raised really well, or they're complete screw ups. And so so I guess my question for you would be, how should someone that does well like yourself, Like, what's your philosophy around raising kids? It's hard. I will tell you. I have so many stories. Like the first thing we did was we again. I said this yesterday. I really believe it's true. The environment is stronger than will. And I think if you know, for me, you know, my parents are great people. My mom was a hairdresser, my dad was in construction. Their circle, we were bumping up to whatever their mindset was, period, their belief systems and all that stuff. And once I kind of got out of that, you know, I grew and you know I was just once I got into bigger circles. I had a wrestling scholarship, I got to college, and all of a sudden it was a different circle. And then you know, they start to be around. And so what happened for me is that just happened again. So I always tried wi Fio has been great for me because I keep my kids don't listen to me, right, so why would they? Uh? And so I just make sure that they're around good people and you know, around other other folks. And also they worked. I taught them. You know, there's a great internet something on YouTube called the Red paper Clip. If you haven't heard of it. We looked. We watched that together and basically the guy the kid. This kid took a red paper clip and ended up with a house all without using money. It's all barter and and so there are things you could do. They had businesses at seven, seven, eight, nine, ten years old. They were selling golf balls, and then they were doing duct tape wallets, and then we had a little marketing company and you know. And so by the time they got to college or high school, they had played the cash flow game. They understood what an asset and liability was, they knew what debt was, and you know, and I also got them into my business and they were cleaning unit. It's you know, painting units and all that kind of stuff. And so it's a process. And so by the time they got to the I never gave him money. I mean like they they always made it. Always my son over here, he had a he was fixing back when you could iPhone screens and making fifty bucks, you know whatever or something in seventy five in college because every kid in college has a broken iPhone screen. And then my other son, same thing. They would buy stuff, sell it for more, you know, from China or whatever. And they were always just you know, creative. They always had money. Yeah, and then. You know, so it's all that small stuff. There's a one hundred lessons like that. So no allowance, nothing like that. No, No, that's a that's like welfare. You know. Yeah, you know what I love. I mean, this is a great place to end that it's you. So you know, oftentimes the kids won't listen to the parents, right and but instead you're like, okay, okay, I'm just gonna surround them with people that have my felt and kind of yeah, the into them. Yeah, my forum. So like what I took both kids to we climb kill him and Jarl. Both my kids turned seventeen. It's like a ride of passage thing. You know, let's go for a month to Africa and you know, and I put the team together and all wipe you guys, and you know, they hang out with So I got their kids and they got my kids, and you know, they're leading them with good information. That's what I mean by environment, you know, And the same thing like I've had them. I've had a couple of my kids go off track, you know, like we all do, and I call them up. I'm like, hey, I need my son to you know, he's like I got you, you know, right, And then I had one kid actually go move to uh work for for one of my friends, and he drove and picked them up in the morning and got him to brow him to work and he did it for over a year and just to you know, beat some sense into him. And so that's you know, that's kind of stuff I'm talking about. Yeah, that's amazing. Well, Ken, this has been great. We went for the full hour. What's the best way for people to find you online? Oh? Yeah, yeah, yeah, so obviously, kenmacroy dot com it's the best way to find me. We've got all kinds of stuff on there. And MC Companies is our investment company. All right, Ken, thanks so much for doing this. You bet man.