September 3, 2025 • 51 mins
What does it take to pivot from a collapsing business model into a thriving, future-proof venture? Sisters Palmy and Nancy know this story firsthand.
In this episode of the Wealth Wisdom Financial Channel, host Brandon Neely sits down with the duo who transformed a $2,000 fashion startup into a $4 million company, only to reinvent themselves again after losing their biggest client. Instead of letting that setback define them, they shifted gears into real estate investing, flipping properties, and ultimately scaling into apartment syndication and multifamily ownership.
Their journey isn’t just about dollars; it’s about resilience, strategy, and building a foundation strong enough to weather economic storms like COVID-19 and the uncertain future of work driven by AI and automation.
You’ll hear how Palmy and Nancy:
✅ Transitioned from labor-based income to income-producing assets
✅ Built investor trust through transparency and integrity
✅ Raised significant capital—even in uncertain markets
✅ Leveraged their unique strengths (“superpowers”) to scale faster
✅ Emphasize why community and collaboration are essential for financial growth
This episode is packed with real-world wisdom for entrepreneurs, investors, and anyone ready to shift from hustle-driven income to lasting financial freedom.
00:00 Welcome to Wealth Wisdom Financial
00:35 Meet Palmy and Nancy: From Fashion to Finance
02:32 Starting Small: The Fashion Business Journey
05:40 The Big Shift: From Fashion to Real Estate
07:55 Navigating Real Estate During COVID
15:21 Raising Capital and Building Trust
23:59 The Importance of Integrity in Business
26:40 Setting Ambitious Goals
27:00 The Power of Exponential Growth
28:07 Raising Capital and Building Confidence
29:01 Leveraging Superpowers in Business
30:37 The Importance of Team Support
32:41 Financial Management and Decision Making
37:48 Navigating Economic Challenges
47:38 The Future of Labor and Income
49:47 Final Thoughts and Community Invitation
💡 If you’ve ever wondered how to bounce back stronger after setbacks or how to make the leap from hard work to smart wealth, this conversation will inspire and equip you.
👉 Subscribe to the Wealth Wisdom Financial Channel and join the conversation about building true financial freedom.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Hey guys, welcome to the WealthWisdom Financial Channel,
YouTube podcast, all the things.
Um, we've been, um, doing a lot ofinterviews lately, and as you can
tell, I'm in my, uh, home office.
Uh, it is summertime, so thatmeans that, uh, you know, if,
if you have kids, you know.
(00:23):
Sometimes they're here,sometimes they're not.
They're all kinds of things happening.
Uh, and so I love the fact that I get tobe, um, working from home, uh, and still
doing the amazing stuff we get to do.
So today though, I get to interview, uh,a new friend and you're gonna see why.
Um, I had, you know, uh, we get lotsof requests, um, but um, when you
(00:48):
get some people that are like similarto you, uh, you start saying, Hmm,
maybe we should ask them their story.
So, um, I am, uh, interviewingPalmy and then her sister Nancy.
Uh, they are in business together.
Um.
They are apartment syndicationexperts, entrepreneurs, real estate
(01:09):
investors, and uh, they also usedto be in the, um, fashion world.
And they left that, um, well,because similar to why we left.
Probably the coffee world.
And so they're how trying to helpothers break free in the financial
world just like us and, and buildtheir own financial framework.
(01:31):
So, um, they do a lot of great stuffand, um, has a, have a similar.
Journey that we do, um, justinstead of coffee, they're in
the, or in the fashion world.
And, you know, you talking aboutfashion, I mean, seriously.
Look at me.
Am I fashionist?
(01:51):
You're a fashionista.
No, I mean, the, the closestI've gotten to fashion is
we've been watching Emily and.
Uh, France or Emily in Paris.
Um, and we've been watchingthat and, and all the fashion
things that are happening there.
I have no idea if it'srelated to the real world.
(02:13):
If it's any close to the real worldof fashion, um, you would probably
know more than me, but, um, but yeah.
Tell us, take us to the way back machine.
Uh, you and your sister started your own.
Thing.
Yeah.
And, and now doing your own thingnow, but, but it was different.
Yeah.
So, um, we were originally,um, outta school.
(02:36):
We started in the fashionbusiness and it started small.
We, in fact, uh, we, Nan had$2,000 and that was our seed money.
Um, so we started like very small.
I don't know if you know what are $2,000.
That's, that's a whole lot of money.
Well, I mean.
I'm just kidding.
Compared to today.
Yeah.
So basically, um, I don't know if you knowwhat Rhinestone appliques are, so they're
(02:59):
like fancy crystal stuff on shirts.
Mm-hmm.
So we started out trying to sellthose to brands and um, we would
literally, we were just talkingabout this the other day, like.
We would, they would test us and theywould just give us something super crazy
and we would, she and I would just switchturns putting these little rhinestones
on, like, like thousands of them on thisone applicate just to submit us samples.
(03:20):
And so, um, we kept doing that for awhile and then we got one order and that
became, um, multiple orders and we startedproducing clothing for the same brand.
And then it kind of like, um.
It, it kind of like just snowballsfrom there when one small thing became
something bigger, basically with thatbusiness is like, it's all about building
not only the trust with the, the brandthat you can do things, but also building
(03:43):
relationships quickly with the suppliersand the factories so that we can be
the person who kind of bridge that gap.
So we did that for probablylike five, six years.
And then, um, Monday ourover the, over the, um.
I saw an article that says our customersshutting down all their stores.
(04:04):
So we were, at that point, we were, we'vebuilt up like a, like $4 million business.
Mm-hmm.
Which is from 2000 to4 million that, yeah.
Like, that's what, uh, I wanted to get to.
Like you didn't have arich relative to start.
You started from, uh, hustle and thenyou grew it to 4 million, but then.
(04:26):
Then that happened andyou're like, oh my gosh.
Who?
Yeah, everything.
Everything happened so fast because it'slike, we felt, and I think this, this,
like a lot of people may not be fashioned,but they feel this in their inside, but
they don't take the action quick enough.
It's like, like your coffee, your, um.
Coffee business, same thing.
It's like you start seeing like somesort of pattern and you think your
(04:46):
mind, okay, if I have a little bitmore time, just gimme a little bit
more time, then I'll figure it out.
But it's never, it neverworks out that way.
It always happens before you're ready.
And with us, we like 95% of ourbusinesses like vanish overnight.
And, um, and so we had to really quicklydecide what's our next thing, because
(05:07):
for sure we were lucky that that clientwas actually like a, a very, um, what
do you call it, like a very ethicalclient, so they'll pay you on time.
But in the fashion business, it'svery cutthroat, it's very dirty.
It's not, and probably like yourmusic background as well, like
it is not as prestigious andbeautiful as the final product.
(05:27):
There's a lot of scums.
Discover and you know, so like we, we feltlike, okay, we need to get outta this.
Like, if we keep staying in this,we'll make money, but it's not gonna
be, um, healthy or sustainable.
So we then got into flipping inLA was, we live in Los Angeles
and, um, flipping was good.
We, we made like, you know, in LAat that time we were making probably
(05:49):
about, uh, 150 to 200 K per flip.
What year?
This, when you, when you lo left.
Oh, this was 2017.
Okay.
Yeah.
17, 18. So it was like at the place wherelike prices are still relatively low, but
there are definitely people who can affordmillion dollar homes that we were selling.
(06:10):
Um, so we did that.
We started doing that.
My sister Nancy, she heard on, on what,she saw an ad on Facebook about, Hey,
invest passively in multifamily apartmentsand you, you'll save a lot in taxes.
And so she basicallydragged me to this event.
And so we, we listened.
We started passively investing andthen like the flipping business
was just really a drag because it'slike the contractors, even, even the
(06:32):
same ones, they're never reliable.
Yeah.
And there, there's always excuses.
There's always reasons whysomething isn't done and everything
keeps becoming more expensive.
And then, um, the building andsafety department are very horrible.
Audi, I don't know about in yourarea, but like here they're like.
One day they can tell you do this, andthen the next time an inspector comes,
(06:53):
it's a different inspector though.
They can tell you literallythe opposite thing to do.
Yeah.
So we're like, this is not fun.
And then during COVID it got evenworse because yes, we were considered
essential, but a lot of things weremoving really slow and we're like, oh
man, I don't wanna do this anymore.
We had one last property under contractitself and we're like, okay, that's it.
We're not doing this anymore.
So we, um, we were already started gettinginto multifamily, but we fully got into
(07:17):
multifamily basically around that time.
Nice.
What have you seen happen postCOVID and now, now you've, you've
done a. A business you've beenable to exit from that business.
Um, start another one that, you know, Ihear things all the time with financial,
being in the financial world of if Ijust get to this, then I'll be happy.
(07:38):
If I just get to this, then I'll be happy.
Yeah.
And now, now you've kind oftransitioned to where you're at now.
What, what happened duringCOVID years, post COVID years?
Yeah.
For your real estateThat, and we're still.
In a weird, uh, spot, right?
Yeah.
So like right during COVID it was, itwas tricky because like we, that was, we
(08:01):
purchased our second property, we closedon our second property April, 2020.
So, um, we were had it under contractexactly when COVID started happening.
And being in Los Angeles, we couldn't,we couldn't sign the loan in.
We wouldn't have signed in person,but we couldn't go to like a,
a to sign the loan at a notary.
(08:22):
The notary had to come to myhouse in front of the garage, San
sanitize, like sanitize everything.
It was really interesting.
We couldn't go to the, theapartment because we couldn't fly.
And so we took over the property andit took like maybe five more months
before I actually went to the apartment.
Um, you know, like interest rateswere very low at that time because
(08:43):
the government were really trying to.
Ensure that the economydidn't sputter too much.
So in fact, for real estate investors,it was a really good time to buy.
Yeah, because we werebuying stuff at like 3%.
Maybe three a quarter to threeand a half percent interest rates.
And, um, things were amazing.
So we bought, we went from ourfirst property we purchased in 2019
(09:05):
before COVID was, uh, 6.9 million.
Our next one during COVID was 6.7.
We've sold those two.
The next one jumped about 16point 16 million, almost 17.
And then, um, the next one was, uh.
In the thirties, another 30 million.
Basically we bought like awhole bunch during that time.
Yeah.
Um, the last one we closed was a 77million apartment that we bought.
(09:28):
So, um, but that one was, um, as interestrate was rising, so that time was a
really good time to be a real estateowner because stimulus checks were
coming in, a lot of money were floatingabout, and so people were paying for, um.
Apartments at whatever price basicallyit was, it was really amazing.
As interest rates starts increasing,then there's downward pressure on,
(09:50):
um, mortgage, you know, costs, um,labor costs, inflation, supply chain
disruption, stuff like that, whicheveryone's navigating through right now.
Yeah.
Yeah.
And I think 2025, it becomes like a, sortof like a, the, the, the peak of that.
And then, you know, right nowafter that, I think we're gonna
see a totally different reality.
Yeah.
And, and, um, what's fun is when youwere sharing your story, like March
(10:15):
13th, 2020, that's when I bought my firsthouse closed on my house that day, which
was the day that the world shut down.
I think that weekend.
Everybody remembers March 13th, and I'mlike, uh, did we just make a huge mistake?
Or is this really good?
I don't know really.
(10:37):
It was really good decision.
Um, but, but at the time you'relike, um, how are we gonna pay
our mortgage if we can't work?
Um, and so you probablyhad the same situation.
You're like.
Uh oh.
Um, yeah, we actually had, okay, so withthat apartment, what happened was, um, and
you know, like I know you, you became areally good at like financial models and
(11:01):
stuff like that, you know, very impressivetoo, coming from your background.
So I think on that side, like we havevery similar experience of like going
from not knowing any of this stuff to likehave becoming immersed and expert at it.
So with that apartment, originally wegot it under contract before COVID.
So we had assumption likeit's income producing, so
we're assuming rent increases.
(11:21):
Mm-hmm.
We're gonna remodel, we're gonnaincrease all these things that are gonna
increase the value of the property.
But as it was under contract,the world shut down.
So we had two options.
We already had money.
Investors already started wiring moneybeforehand, so we had two options.
One was.
Uh, just leave.
Just leave this deal.
Similar to how you bought your house.
Like we had earnest deposit thatwas non-refundable, about 300,000.
(11:45):
We would just have tolose it, just walk away.
Or the second option is go back tothe seller and negotiate a different
term, which they were now happywith because they kept telling us no
rent's increasing every single month.
Occupancy is really high.
Don't worry about the thingsthat you're hearing on news.
It's not happening on the, on the ground.
Yeah.
But we couldn't rest on that.
Right.
So we, we negotiated several things,which was really tense and there was a
(12:08):
lot of, um, cursing at our broker for it.
First thing we negotiated was, um,we need to pay, we need to have a,
because, um, this was a Fannie Mae loan.
So Fannie Mae required us tohave a larger escrow deposit.
It's like 18 months mortgage interest.
Um, uh, insurance and property taxthat all had to be 18 months worth
(12:31):
of that upfront had to be put in anescrow so that they can ensure that if
we get this apartment, we're not gonnalose it because we can't afford it.
Um, that was a, so what we negotiatedwas the seller actually lent us money.
So that we didn't have, um, interestfree until we sell the property, we
won't pay him back, um, so that wecan, um, sufficiently cover that.
(12:51):
So that was a really big win.
The second one was he had to guaranteethat rent will stay at the same level as
a April, 2020 for the next six months.
And if it goes lower than that, hehas to reimburse us up to $500,000.
Mm-hmm.
And the third one, um.
Third one, I don't remember whatthe third one was, but it wasn't
as important as these first two.
But that was like a really big win.
(13:13):
And that was the reason why we actuallychose to continue, because otherwise
we would've felt very, um, uncertainbecause like how you said, you didn't
know if you can, like, where canI find income to pay the mortgage?
For us, we were thinking,will the renters pay rent?
Yeah.
Who's gonna rent?
Who's gonna pay the mortgage?
So those were the, the things that wehad to, to do in order to get that done.
(13:34):
Yeah.
Well, and, and as the listeners are,are listening, one of the things
that, um, that I want you guys tohear is she knew her numbers right.
And a lot of times people go into realestate and they just think it's gonna
be a quick, um, fix or quick Yeah.
Uh, thing.
(13:55):
But you, you had other contingencies setup, um, but you, you came into the deals.
Knowing your numbers, right?
Yeah.
Um, that probably I would thinkwas something that you had to know
in your former business, right?
(14:15):
To know when to, to stepaway, when to make a switch.
Yeah.
And, and that, um, muscle, um, hastransferred and then the, uh, what do
we call it, the surroundings change.
Yeah, whether it's wire leave orwe have COVID, um, things change.
(14:37):
Right.
But yet you're able tohave a good foundation.
Uh, yeah.
We sold that one.
So we sold that one in 27 months,no, 24 months, and got like a, like
1.7, something like that X returnin that short period of time.
So it, it worked out really well forthe investors who were like, yeah.
(15:00):
They, I mean, I have to give all thecredit to them because they had the, the
faith to continue with us when everything,when everything told them not to.
Yeah.
Yeah.
How did you keep them?
Um, I don't know.
Staying on there.
What, what did you do?
How did you keep your coolin the midst of chaos?
(15:21):
So basically like, um, there areseveral investors, probably like
a, we were raising about $3 millionand so like a million plus wired
their money before the shutdown.
Mm-hmm.
And then more were asking for wireinstructions and we told them, don't,
don't wire yet, because it wouldbe like, we would have to, we don't
know if we had to wire it back yet'cause we were still negotiating.
And, um, it was basically us communicatingthe entire time what was happening.
(15:43):
And we were very transparent.
We told them, look, this was the originalfinancial model that we presented you.
And you agreed to, and you, you,we wanted to invest with us.
You signed the subscription document,the investment documents, but the
new reality means that all that'sgone, and this is the new set of, um,
financials that we are projecting.
And, um, we understand if you want toor don't want to do this, you, you are
(16:06):
complete under no obligation to continue.
We completely get it.
And we were just honest andsomehow for some reason they,
they chose to stay with us.
And so, um, the return originally,I think we rejected like 1.7
and we got 1.9, so it was.
Already more than what they expectedin a shorter period of time.
And how did you, so I have several friendsthat are, are fund, are raising money.
(16:29):
Yes.
And for, for various projects.
How did you start from $2,000raising capital for $3 million?
Like what do you, do you like knowrich people that you're like, Hey, let
me go hang out in your living room.
We did the, we did the thing that likemost people suggest at the beginning
(16:51):
when we didn't, we didn't knowpeople, we went to real estate events.
So we connected with a lot ofpeople and we just talked to 'em and
just told them what we were doing.
Um, that's how we got ourfirst, for our first apartment.
So this one was a continuation of that,just like continu networking with people.
Um, it was really just sort,sort of like hand to hand.
Yeah, meeting people, nothingonline or anything like that.
(17:13):
And like that, that is nowconsidered a very small raise for us.
Like the last raise we did was39.4 million on our last apartment.
Um mm-hmm.
So the thing that, like, I, Ifeel most people may, may think
like, Hey, it's 3 million, or, itsounds like a lot of number, but.
We raised, like ourminimum is about $75,000.
It started out 50.
(17:33):
Our minimum to invest with us now was 75.
Mm-hmm.
But typically, people who invest,they'll put in about 150 to $200,000.
So if you break it down intolike, okay, that means that, let's
say it's $200,000 and you need3 million, you need 15 people.
Yeah.
Are there 15 people with $200,000?
Yeah, there's a lot of them.
And so I think like if we break itdown that way, it makes it easier.
(17:58):
That's how I kind of approach it now.
And then did you have, like, likeagain, I, I have friends that
are like, Hey, I wanna do this.
Did you have papers, like, uh, a goodplan to show these people and say, Hey,
here's, I want, I want you to invest.
Yeah.
Million into this.
Like, like did you just do a handshakeor, or what did you do to get them
(18:21):
to say, Hey, I believe in Palmy?
So basically we're having like, likeinsurance, we're heavily regulated.
Mm-hmm.
So we're under the SecuritiesExchange Commission.
Um, there's an exemption that allows usto raise money privately and, um, not to
bore people, it doesn't really matter,but basically we are, we have, um.
Attorneys who draft secure, um, pro,uh, private placement memorandums,
(18:46):
which are basically a set of documentsthat we use to inform our investors of
everything they need to know about theinvestment from the people involved,
the property, the financial models, um,business plan, uh, projected whole time.
All that stuff is in the, is inthat document, and they have to
read it very carefully before they.
Commit to us.
(19:06):
So the order is, like, for instance, likeright now to this morning, I got a draft
for another PP, it's called PPM that I gotfrom our security, um, SEC attorney that
we have to read, uh, for another project.
So we read through that at the same time.
Um, primarily it's my job on, on theteam to create the, the financial
deck that we present to our investors.
So we just go through andgather information as best as
(19:27):
we can present the information.
Very matter of fact, uh, we don't.
We don't use like, sort oflike scarcity tactics or like,
um, twisting people's arms.
My philosophy is like, if you wannainvest with us, you will invest with us.
Yeah.
And if you don't want to, it's also okay.
So, um, normally we'll do, we'll havethe PPM ready, we'll do a presentation,
(19:49):
and at the end of the presentation weprovide a link and they, if they wanna
do it, they go and fill out the link.
Um, and then we wire them, emailthem wiring instructions, they wire
the money, we confirm the position.
Other people may do something different.
Like hound them, call them, harass themuntil they like, basically like give in.
But for us, we don't.
It's like if you wannainvest, you will invest.
(20:11):
And how many presentations whenyou did your first swee into this?
I guess, yeah.
Um, how many presentations did you do?
Um.
The first one, the first deal, very firstone in 2019, we did one presentation, um,
which it was like a group one where itwas like over zoom and then a whole bunch
of investors joined, and probably like nomore than a couple more from that because
(20:36):
basically the, the first one was enough.
Um, and because like, like the way Iexplain it, I don't really, um, maybe
it's a good thing, maybe it's a badthing, but like, I don't like follow
up if they don't express interest.
Of course, if they ask questions,I would definitely hop on a call,
but if they just join the webinarbut they didn't take action, I
would just say, okay, I'll check it.
It's like, okay.
They don't wanna be init and, and that's fine.
(20:57):
Yeah.
So I don't do too many, even now wedo maybe one basically presentation.
Is it a good list?
Like do you find a realestate investor group that.
That.
Yeah.
Like now my list is notbased, the original list.
Um, I, we, I still have investorsthat come from that list, but
I, my list have become basicallymore repeat, more referrals.
(21:20):
Mm-hmm.
So the people that we sold threeproperties, we, we have 10 that we've
bought, and of that we have three.
Um, and that 10 includes thedevelopment that we're building,
so we haven't sold it yet.
So basically like.
We have deals that have gonefull cycle, three of 'em.
So we've had people who havegotten really good experiences
and so they do a lot of referrals.
Yeah.
And the dollar amount also has increased.
(21:41):
Um.
Like, because we started out 50,000,most people invested 50,000 back
then, but now it's closer to 200 plus.
Yeah.
Like there's who invest a few million,my next deal, there's someone who's
gonna put in like 3 million something,so the dollar amount increases.
So it's like, it's not about, and thenthat's why I go back to like, it's not
about having a mass list, it's abouthaving the right people on the list.
(22:05):
Yeah, yeah.
Yeah.
Which is, uh, true.
And that's, that's again, where sometimespeople, but you have to ask one.
Yeah.
You gotta make sure youask, uh, and be present.
And, and if there's, if, if you're notgoing to an event that has people, well,
then you gotta get in a room that does.
Right.
For sure.
Um, and then I, I think about that,that idea of going to full cycle,
(22:31):
like I've, one of mine that I did, um.
It happened, now I made itand now I'm gonna do more.
Right.
Um, same idea, right.
As a, as a buyer, right?
Yeah.
Um, and so if you do what you say you'regonna do right, and you follow what you
(22:52):
said, then more people are gonna be like,oh, but I want to do it again then, right?
Yeah.
It's so natural and it's like themost important thing about this
business is like you have to.
Care more about protectingtheir money than, than they are.
So it's like you're lookingout for their best interest.
Some people we will tell thempoint blank that you're not in a
position to invest with us right now.
(23:14):
Don't invest with us.
Um, we can do this again.
We're not going anywhere.
So it's like, um, every day, everynight, when, when we go to sleep is, I
tell everyone all this time, and it'struly my belief, like, I would rather
lose my money than lose your money.
Yeah.
Yeah, I would do whatever in mypower to protect your money, that you
put your trust with us, because youcould have chosen just about anyone.
(23:37):
And I believe in this business, likethe reason that you chose to invest
with us is 'cause you trust us.
Yeah.
And we're not gonna let that, youknow, we're not gonna, we're, we're
gonna take that very seriouslyand we're not gonna let you down.
And so I think like when we approachit that way, they can sense it, the
investors can, can feel that that'sour sincere, sincere approach.
And so, you know, that's all you do.
(23:59):
Uh, I think that's again, why Iwanted you on here is 'cause I,
as we had our con intro call Yeah.
That the same kind of,uh, conversation, right.
And there's a lot of people who are doingsyndications or other things, but, uh,
but I know some of them, I'm like, Hmm.
They're a little sleazy.
Um.
(24:19):
You know, you, you've seen them,uh, and some that you're like,
uh, the, what do you call the,the bs, um, leaders going off.
Yeah.
Um, and, and for me, I, I, whatI have is my integrity, right?
And as we do what we do, and I, I'm in theinfinite banking space, I wanna have that
(24:40):
regardless of if I make as hell or not.
And that's what I, I definitelyknow I'm gonna keep that.
Um, and so that's been, uh, fun.
And then also as, as we grow, like,and this is probably you guys, those
numbers, they just kind of shiftand you're like, oh my gosh, I can't
believe what we're talking about now.
(25:03):
You know?
I mean, you probably are,are thinking that too.
Like, oh yeah, just $34 million.
Um, that was.
More than what our business was worth.
Right.
Um, right.
Has that shifted you or have youbuilt more confidence over time?
Yeah.
Um, what has changed in you personallythat you're like reflecting and saying
(25:28):
from, you know, upon me maybe 10 yearsago to now, what would you be telling her?
I mean, like the, the thingthat is so amazing is like.
The numbers don't really matter.
Like, um, they're justlike zeros with commas.
And so, like, for me, when, whenI, I would not have known 10
(25:49):
years ago that we would be in thisbusiness at all because my, my, my
vision was so, was so shortsighted.
I was just trying to survive like the nextday, next month, next week, next year.
Like, I couldn't thinkfurther beyond that.
But when we're in the, um, the real estateor just investing world now, it's like.
There's so much wealth out there,and like if you're timid and you
(26:12):
stay small, you're gonna continuebeing, you're gonna, you're,
you'll grow as big as your courage.
And so like, yeah, forme, I just felt like.
I, I trust my, myknowledge, I trust my team.
I trust my partners.
I trust my myself to knowthat, like what I can handle.
If it's, if it's too big,I wouldn't do it either.
Um, I, I have a strategy where my mindsetis like, I wanna go grow fast, but I
(26:38):
wanna grow fast in a sustainable way.
Yeah.
And so like, like now, my next goalis to have a $10 billion portfolio.
And I have a path to, to getting there.
And it's, um, and it's somethingwhere it's like, have you, I think
we talked about this, the book 10 xis easier than two x than parties.
So it's like, we talked about it,but I've read it and it's amazing.
(27:00):
So basically like the, the concept of likelinear growth versus exponential growth
is you can grow faster by doing less, byfocusing very, um, having very mindful.
Focus on only a couple thingsthat will get you that growth.
Yeah.
Everything else becomes a distraction.
And so every single day you have toask yourself like, are the things that
(27:22):
I'm doing giving me exponential result?
Because at the topthere's less competition.
Yeah.
When you, when you settle for lineargrowth, there's a whole bunch of
people there and my experience is like,why we've grown fast is we leverage
figuring out how to grow exponentially.
It's, it's kind of bizarre or like.
Impossible for a lot of peopleto think like when you have zero
(27:43):
family, zero background in realestate, to have 400 million asset
under management in six plus years.
It's like, how is, because we reallyhone in on that when you probably,
because you didn't know the industry,you had no idea what the ceiling was.
Or, I mean, like I, I. I see, I see.
(28:07):
Like other people, like for instance likeBlackstone, I see how massive they are.
Mm-hmm.
And I read about how they started withlike $200,000 in the seventies and it
was so hard for them to raise that.
And I al and then I, and I thinkI can raise that easily or I hear
about how Jeff Bezos was strugglingto raise a million dollars.
For his, um, for Amazon whenhe first started and how much
(28:30):
equity he had to give away.
And I'm like, from day one, Iwas able to do that already.
So that gave me confidence that eventhe best of the best in the entire
world, they started at a point whenthey had to raise money and that
they couldn't do what we can do.
And so I then it gave me confidenceto see that I can do that as well.
Did you, uh, so, so somethingI've been thinking about with that
(28:54):
10 x is easier than two x. Yeah.
And this linear versus, um, exponential.
And, and I've been thinking about ita lot lately, um, in that you just
told me what your like superpower is.
Um, you know, as far as raisingmoney and doing that kind of
thing, it, it's just a natural.
(29:15):
Flow for you.
Right.
Whereas other people, maybe it's,it's not, or, or your sister
probably has different skillsets.
Mm mm-hmm.
Um, different superpowers.
Yeah.
Have you seen where your, yoursuperpower and her superpower
has been able to amplify?
Yeah.
(29:37):
Yeah.
I, in fact, like I would say likewhile we're both, we, we are both.
Very good at capital raising.
We're good in different ways, solike she's very good as like, um,
have you seen the Japanese cat?
Where is that cat?
I don't think it's here right now.
So there's a Japanese catand it goes like this.
It's a little cute cat.
The white cat that waves all.
(29:58):
Yeah.
Yeah.
So that cat is like a welcome cat.
So they put it in stores 'causethey're like, it's like welcoming
customer, sort of like a, A thing.
Right.
He based live in Chinatown, so, yeah.
Yeah.
So that is kind of like mysister, she's amazing at like.
Building really fast rapport withpeople, like very, very fast.
And then like I can come in and, and um,explain even more in depth what we're
(30:22):
doing, what, what the projects are.
Give them insight and thenlike, then they feel confident.
'cause it's like two different styles.
Yeah.
And that's important point.
When, when you're doing this, whateveryour specific skill set is, there's
someone out there that needs it.
So like how we grew so fast is, likeI said, we partner with the right
people, our very first project.
(30:43):
And Nan, my sister, met the personthat, that she invited us to the deal.
So basically we bought a 76 unitapartment in Phoenix, Arizona.
We had zero experience.
Um, the person who invited onto the team,her name's Elisa, we met her at event and.
I told her at the timeI could raise money.
I just told her 'cause I didn't,I wanted to be on a deal.
(31:03):
I, we didn't, we didn't livein Phoenix, we didn't live in
Dallas, we live in Los Angeles.
We didn't have theability to source deals.
So the only thing I thought we cando, um, to position ourselves was tell
people, tell everyone we can raise moneythough we've never raised any money.
Yeah.
And then like, she invited us on the deal.
We actually did raise money andthen, um, we figured it out.
(31:24):
And then like Nan saw, my sister saw herlike three, four, uh, beginning of June.
And she, and she said, she asked, Nanasked her like, why did you believe us?
And she's like, no, I always, I knew youguys can do it and you guys can do that.
I'm like, well, that's amazing that,you know, other people had had that
belief even before that you, youstepped into your own confidence.
(31:45):
Mm. And saying that, and thensomebody believed in that.
Uh, confident.
Yeah.
Right.
And so having a team that supportsas maybe we're not, uh, I've
been thinking again about thisa lot, is we're not fully us.
And as a business partner or a team memberor whatever, it's to help each other
(32:08):
become the better version of themself.
Yes.
Whether you're part of a round table,like I'm a part of Perry Marshall's round
table and, uh, other communities, and ifthey're pulling you down, then that's not
a, a healthy community or relationship.
Mm-hmm.
But if they're helping you strive andthey see what your like superpower is and
(32:29):
they, and you're able to step in that.
That's.
That's where that 10 x thing happens.
It's like they have to have your, theyhave to believe in you, but you also
have to believe in yourself as well.
Yeah.
Um, like every time we raised moremoney, it's not like I don't get nervous.
Like the first time we raised, um,the big amount that we raised the
(32:50):
first time was like 33 million.
And before, before we did it, I was like.
Hmm.
That's a lot of money.
How are we gonna do this?
And they're like, we, we talkedabout it amongst ourselves.
We're lucky we can do this.
And um, and we did, which wasamazingly, and that happened right
as interest rates started increasing.
So it was kind of interesting.
(33:10):
It's like three years ago now.
And, um, but one thing that oneof my mentors said was like.
You can borrow, like we canborrow his belief in us before we
develop that belief in ourselves.
Mm-hmm.
And that's kind of the same thing, likethe partners have to, you have to believe
in their ability to execute, but youalso, you don't wanna let them down.
(33:31):
So you figure out, and like one of thebiggest things that we always talk about
is like, grow your wings on the way down.
Because if I'm.
If I have to prepare and becomelike a hundred percent ready for
something, I would never get started.
And, uh, Alex from O once recentlysaid that the difference between
people who are successful and whopeople who are very successful
(33:52):
is their speed of implementation.
Mm-hmm.
Like, you get an idea, youexecute as fast as possible.
Sometimes it works, sometimes it doesn't,but you get to know it really fast.
A lot of us we're stuck with like thebest idea and we hold onto it for 20
years, never doing anything about it.
I call some of those the entrepreneurs.
Mm. Uh, they just wantto be entrepreneurs.
Yeah.
Uh, or, um, as my, my wife, uh, she'sbeen like learning some of this, but um,
(34:18):
she's a five on the Enneagram, so shetakes in information and wants to get it.
Uh, right.
And so as we've been, and and youmentioned this, you said my mentor.
Yeah.
Um.
A lot of people don't have mentors.
They don't even know.
And, and sometimes your mentorhelps see what you don't see.
And so, uh, as we were in some ofthis, these, um, masterminds, they're
(34:43):
like, yeah, this is what you're doing.
And so that speed to move mm-hmm.
Uh, is sometimes both a,a. Strength and a weakness.
Mm-hmm.
Uh, and so like, you know, youdon't, you don't wanna like
go haphazard into a bad deal.
You wanna Yeah.
Make good number decisions.
Yeah.
But then you have to know.
(35:04):
Yeah.
It's like, make good decisions,but just make 'em faster.
Yeah.
Yeah.
That's the point.
Like.
Probably what the way you guyshave done it is 'cause you're
tracking your numbers regularly.
Yeah, absolutely.
I bet you, I, I don't know.
Well, you, I mean you well, but, um,I bet you, you could pull out your
(35:26):
wine a or your budgeting softwareand probably make a decision because
you have it pretty organized.
Yeah, absolutely.
So every, every single, so thisis how our structure works.
We have, um, our property managementcompany, third party, we hire for every
single property who runs the day to day.
They also handle the backendfinancial, so they report to us on
(35:49):
a monthly basis, the full financial.
So we'll have like a, um.
Profit and loss statement,which is a T 12.
We'll have the rent rolls,we'll have our general ledger.
We'll have, um, other, otherfinancial variance before a
whole bunch of different reports.
They send that on a monthly basis, butbefore that happens, we also have monthly,
uh, weekly updates every single Monday.
(36:10):
There are certain KPIs that we track,occupancy collections, delinquency,
um, any things that, any in expense,big ticket expenses that are
coming up, um, maintenance reports.
Ultimately all those factor intolike, very simply, we can see like,
is this property trending mm-hmm.
Up or trending down.
(36:31):
And especially like, uh,NOI and like net cash flow.
Those are probably like two of the mostimportant numbers because like if you
have the net operating income, at leastas expected or going up, that's amazing.
But if you have below the linecosts, that's eating at your
cashflow, that's, that's gonnashow up in the net cashflow number.
So having those two numbers, justthose two, even with, regardless,
(36:54):
whatever else I told you, if youknow those two numbers, you will know
that property is doing well or not.
And I, I think as I talk to real estateinvestors, they don't know their numbers.
Or they can't go.
And, and so you just, you know, said, Hey,by do, doing that, and, you know, um, I
have other people that help manage those.
(37:14):
Yes.
Um, that's their, their superpower.
Um, but for, for me, I wanna make sure,Hey, are we in the, the black or the red?
Yeah.
Um, pretty simple.
If we're in the.
In the red.
That's a problem.
We need to fix things.
Right.
Um, and we're in the black and thenthe goal is to always be in the black.
(37:37):
Right.
Um, however, most businessesor even deals mm-hmm.
Run in the red all the time and we'relike, well, we'll just keep it this way.
It'll be fine.
Uh, how have you, asyou've raised money mm-hmm.
Um, not been in the red world.
'cause you in the financial.
(37:58):
Fundraising.
Mm-hmm.
It seems like sometimes it's always about,well, I just need to raise more capital.
If I raise more capitalto solve the problem.
Yeah.
No, I mean, you can't really use thatbecause like our investors have different,
uh, have like a certain, um mm-hmm.
Return expectations.
The more money you raised, themore diluted their returns are.
So a, a lot of times, likesome deals it may start out in
(38:21):
the red, but that's expected.
Like we knew that was gonna happen.
We have to do certain thingsto the property to just
for it to be in the green.
So you raise enough money for it.
Um, the couple ways that we do this islike, we have a, we wanna always have
like a hefty, um, capital reserve.
Mm-hmm.
For like our, for our,I'll give you an example.
So for our construction project,we're building 118 town homes.
(38:44):
Right now we're in the middlevertical construction now.
So that's a, um, the construction is intwo phases, horizontal and, and vertical.
The horizontal was like, Ithink four plus million dollars.
Within that we had, um,a $500,000 contingency.
Beyond, beyond like, you know, whateverthe construction budget is, we add 10%.
(39:07):
Like beyond that, we hadthis extra contingency.
We ended up not using itbecause it was under budget.
Now we're in the vertical phase.
We're the, we're about $2 millionbelow budget on the construction
cost so far, knock on wood.
And then we have likea $2.5 million reserve.
Like a rainy day fund on top of that.
(39:28):
So that's four and a half million.
And on top of that we have like aninterest reserve of a million dollars.
So just on the vertical constructionside, we have $5 million of
reserve for our construction.
Yeah.
The liquidity that, that's, um,something that I think that, uh, as
we were talking in the beginning Yeah.
Um, when.
When we get into this world ofentrepreneurship or business
(39:49):
ownership, we're taught investin other people's business.
Yeah.
Put in your 401k uh, liquid.
Having money and savings is, is stupid.
Um, but, but you just said,I have a lot of lazy money.
Yeah.
Um, just in case.
Just in case.
Uh, oh crap fund kind of a thing.
(40:11):
We have to, especially in development,but what we, um, what we do, uh, not
in this case, but in other deals, is weput it in like a, a cd, a rolling cd.
So it, we cannot legally put it in a moneymarket account just due to the structure.
A lot of banks don't allow it.
But what we do is we money that weknow are sitting there in our savings
(40:32):
account, we put it in a rolling cd.
We will do it in tranches, some six monthsexpiration, some three, some one, so that
we always have 50% of that available.
Yeah.
In case something happens.
Um, but like it's, so in construction,especially new development is so important
because what if costs overrun happens?
Because it can, and like we cannotraise more money, so we have to raise
(40:55):
for us, we try to raise everythingupfront, all at once and um, yeah.
And the most important thing is like whilewe finance, we do the financial model,
assuming the the best case scenarios.
Okay, we're gonna rent it out forthis much, we're gonna refinance.
We also do very, very detailed, um,what are called like sensitivity tests.
So that's like sort of likebad worst case scenario.
(41:17):
What happens if this isdoesn't go as planned?
Yeah.
How long should we survive?
And then we then build in, you know,reserves to make sure that we cover those.
Nice.
And I think that's, that's one of the coolthings is you did the, um, having that
liquidity, um, I might say, you know, asa shameless plug, um, whole life insurance
(41:40):
properly designed, uh, can act as a cd.
Um, I, I think that works forprobably like personal, right?
And I think they should dothat actually, to be honest.
Like if they're doing a project,they should put money in
something that's earning money.
Yeah.
And if they need it,then they can pull out.
That's the best way.
I totally agree.
It's basically the same thing.
(42:01):
Might be able to do otherthings like business too.
Really.
It was different.
Yeah.
So I like to personally haveit on my personal balance
sheet versus the business.
Yeah.
But there's other ways because youare the greatest risk and so whereas
CD doesn't have a death benefit.
(42:22):
A, um, life insurance does.
So then if something happens, let'ssay you, you use that 50,000 anyway.
It's just another way of Okay.
Of using leverage.
Mm-hmm.
And, um, and having itdo two things at once.
Yeah.
Um, so, um, yeah, it's just one ofthose things where I think for you,
(42:45):
it's like having that liquidity is huge.
Most people don't even think about that.
Right.
It's like you don't need ituntil you need it, and then
you're like, you can't get it.
Um, it's so like, it's such apeace of mind, like navigating
through this kind of crazy timethat we're in to know, like, okay.
Um, we have a five year ratecap on a three year construction
(43:07):
project, so interest rate willnever go higher than this for us.
We will never pay morethan this during the hold.
Um, we have all this extramoney just sitting there just
in case something happens.
So it's like.
Because like I said, it's soimportant for us to protect our
investors' money, so mm-hmm.
There will be black swan events thatwe can't predict, but to our best
(43:27):
ability, whatever we can anticipate,it's our job to, to do this.
They, we are their fiduciaries.
They trust us with their money.
We have, we are expected to beprofessionals and, and have that,
um, my friend is in a, an investmentwith a really prominent developer
and he's invested, he said, in 2018.
Uh, they're, they're doingsimilar, like a new development.
(43:49):
They haven't, they haven't done anythingyet because when they raised the money,
they were raising it to buy the landand the cost of construction has gone
up that they cannot afford to build now.
Yeah.
That's like a, that person's moneyhas been stuck there for seven years.
That's, do you see that?
Um, so, so I was told just recentlyabout, um, uh, the economy.
(44:16):
China in, in China wheresomething happened, um, where
there's all these half-built.
Yeah, I, I say that a lot.
Um, so basically what happened with thoseis like the way they do their financing
is not the same as United States.
First couple days in China.
There's a culture of saving money,but there's also very few investment
(44:39):
vehicles they can put their money in.
It's very difficult forthem, for instance, to invest
in the stock market there.
So a lot of people pour intheir money into real estate.
What?
And what happened is that.
Um, companies like Ever Grande, oneof the largest, um, how they were,
it was almost like a Ponzi scheme.
So for instance, you, you wanna buypart a condo in building a, yeah.
(44:59):
So you put in a deposit, you may, you putin a deposit and you're paying mortgage.
They take the money that theywere gonna use for building a and
they start building, building.
And then they, people who putin money billing B, they do that
same thing to C and it keepsgetting, getting bigger and bigger.
The problem is the Chinese government,a couple years ago, they revamped
their financial system to have thisthree line test to make sure that
(45:20):
the businesses were solvent becausepeople were just borrowing like crazy.
And because of the new rules,the, these companies no longer
can afford to borrow more money.
And that's why, that'swhy everything fell apart.
That's completely differentthan the United States.
We are, are like, thankfully,after 2008, our financial system
is significantly healthier.
(45:40):
Yeah.
But also the rules in placemakes it so much harder to
just willy-nilly borrow money.
It's, it's not really possible now.
So like that's, that's what'shappening and that's also happening
with their electric vehicle.
That's a new thing.
That's a new tick time bomb.
I think that that is where there'sneed for making sure we don't like
cut, cut everything, and there'sno checks and balances, right?
(46:03):
Yeah, sure.
Um, and that you are held to astandard, hopefully, uh, to where
you're, you're not, oh, I'm, I'm gonnaborrow from the, or get money from
the investors and then go to Tahiti.
I mean, it's really,is it possible, I mean.
It possibly can happen.
(46:24):
I luckily it doesn't happenvery often in our business.
Yeah.
Um, it's obviously very, youcan go to jail for a long time.
You steal people's moneylike that, but like, yeah.
So let's not do it because thisis the thing that I, I told
someone recently and it's like.
Uh, there's a very small differencebetween someone who goes down a criminal
path and someone who becomes rich.
(46:46):
The person who, it's like they havethis ability, but they chose to use it
towards something nefarious, like stealpeople's money, sell drugs, all that
stuff because they don't, they didn'trealize that actually making money
legitimately was easier and you know,you have a longevity and you don't go
to jail and you don't or you don't die.
Yeah.
If they only realize that all these.
Smart criminals would probablybecome just wealthy people.
(47:09):
You know?
Like that's a distinction.
It's like, why would I wanna stealyour money when if I do this long
enough, I will make way more than that.
Yeah.
It just, doesn't it?
Yeah.
Well, anything you wanna leave?
Leave?
Um.
Our listeners with, uh, any, like, I knowyou've already dropped so much wisdom
here, but, um, anything you wanna makesure we share that we didn't share?
(47:34):
And how can people find you?
Yeah.
So one of the things that I, um, I'm kindof like, I dunno, the word is concerned,
but basically it's one of the biggestthings that I'm really thinking a lot
about is like the post labor world.
Mm-hmm.
People can, people can.
Acknowledge it.
People can stick their hand inthe head in the sand and not
(47:55):
pretend it's not happening.
But humans are being replacedby AI and humanoid robots
that's happening like right now.
Mm-hmm.
And the people who rely on wages as away to earn income will be decimated.
The most important thing rightnow is you need to find a way
to become to own property.
And property in this case does notmean that you have to necessarily
(48:17):
only do apartments like us.
You can have life insurance policy.
That actually produce income beyondthat, that is separate and completed
is distinct from your labor becauseyour labor may not be there.
Uh, the Bureau of Labor statistics saysthat by 2030, which is just basically
four and a half years from now, 30%of American jobs will be eliminated.
(48:39):
This is not just like bluecollar minimum wage work.
We've already seen that happening.
You have a finite window rightnow to become the owner of.
Property.
You can do that through some sort ofbusiness that doesn't rely on your income.
You can do that through some sort of, um,infinite banking strategy that allows you
to earn income without you working on it.
You can do that through real estatesyndication, all that stuff, but
(49:02):
trust me, in five years yeah, that'sgonna be something that you're
gonna look back and be like, wow, Ishould have done something about it.
So like, it's so important that we all.
Spread this.
Like we cannot ignore it.
It's happening.
You can like it or notlike it, it's happening.
So make sure that you stay onthe side where wages isn't the
only way of earning income.
And for us, if you want tolearn more about us, we have
(49:25):
a free community right now.
There's a waiting list.
But um, as soon as we let peoplein on that waiting list, um, you'll
be able to join a free communitythat we talk about all this stuff.
All the time, and it's a way for usto communicate and connect with a
whole bunch of people that, that arelike-minded, that are, are ready to grow
wealth beyond them, beyond just what youmake so that you have a lasting legacy.
(49:46):
Yep.
And that's a, a great mic drop there.
Here's a link to her community, uh,as you notice, wealth Beyond Me,
similar to our community, and that'swhy they're very similar to us.
Um, and I do do believe what sheis saying is the divide with AI and
what's happening now is happening.
(50:08):
And if we aren't understanding or evenkind of being a part of that conversation.
Um, we'll be left behind.
Uh, and so that's something that Ithink is so important that we are the
masters of our own financial destiny.
We start realizing that, uh,almost everybody has a side
(50:31):
hustle now or something.
Um, and don't just wait and thinkthat your job is just gonna eventually
give you a pension or something,that those days are over for.
Those, those days wereover a long time ago.
Um.
But, but it's getting, uh, moreand more challenging and be
the master of your own ship.
(50:51):
So, um, thanks Paul for being hereand I loved having this conversation.
Uh, and we love talking financialstrategies, helping people like be in
there and, and hopefully somebody willcome and say, Hey, I want to talk to.
Poy.
Uh, and I think that that's, uh, powerful.
(51:11):
If they do and they come from us.
Make sure you guys mention Wealth,wisdom, financial and say, Hey, I
heard you on Brandon and Amanda's show.
And don't forget, hit that.
Like, subscribe, share this with a friendand we will see you guys next time.
Hey guys, welcome to the WealthWisdom Financial Channel,
YouTube podcast, all the things.
Um, we've been, um, doing a lot ofinterviews lately, and as you can
tell, I'm in my, uh, home office.
Uh, it is summertime, so thatmeans that, uh, you know, if,
if you have kids, you know.
(00:23):
Sometimes they're here,sometimes they're not.
They're all kinds of things happening.
Uh, and so I love the fact that I get tobe, um, working from home, uh, and still
doing the amazing stuff we get to do.
So today though, I get to interview, uh,a new friend and you're gonna see why.
Um, I had, you know, uh, we get lotsof requests, um, but um, when you
(00:48):
get some people that are like similarto you, uh, you start saying, Hmm,
maybe we should ask them their story.
So, um, I am, uh, interviewingPalmy and then her sister Nancy.
Uh, they are in business together.
Um.
They are apartment syndicationexperts, entrepreneurs, real estate
(01:09):
investors, and uh, they also usedto be in the, um, fashion world.
And they left that, um, well,because similar to why we left.
Probably the coffee world.
And so they're how trying to helpothers break free in the financial
world just like us and, and buildtheir own financial framework.
(01:31):
So, um, they do a lot of great stuffand, um, has a, have a similar.
Journey that we do, um, justinstead of coffee, they're in
the, or in the fashion world.
And, you know, you talking aboutfashion, I mean, seriously.
Look at me.
Am I fashionist?
(01:51):
You're a fashionista.
No, I mean, the, the closestI've gotten to fashion is
we've been watching Emily and.
Uh, France or Emily in Paris.
Um, and we've been watchingthat and, and all the fashion
things that are happening there.
I have no idea if it'srelated to the real world.
(02:13):
If it's any close to the real worldof fashion, um, you would probably
know more than me, but, um, but yeah.
Tell us, take us to the way back machine.
Uh, you and your sister started your own.
Thing.
Yeah.
And, and now doing your own thingnow, but, but it was different.
Yeah.
So, um, we were originally,um, outta school.
(02:36):
We started in the fashionbusiness and it started small.
We, in fact, uh, we, Nan had$2,000 and that was our seed money.
Um, so we started like very small.
I don't know if you know what are $2,000.
That's, that's a whole lot of money.
Well, I mean.
I'm just kidding.
Compared to today.
Yeah.
So basically, um, I don't know if you knowwhat Rhinestone appliques are, so they're
(02:59):
like fancy crystal stuff on shirts.
Mm-hmm.
So we started out trying to sellthose to brands and um, we would
literally, we were just talkingabout this the other day, like.
We would, they would test us and theywould just give us something super crazy
and we would, she and I would just switchturns putting these little rhinestones
on, like, like thousands of them on thisone applicate just to submit us samples.
(03:20):
And so, um, we kept doing that for awhile and then we got one order and that
became, um, multiple orders and we startedproducing clothing for the same brand.
And then it kind of like, um.
It, it kind of like just snowballsfrom there when one small thing became
something bigger, basically with thatbusiness is like, it's all about building
not only the trust with the, the brandthat you can do things, but also building
(03:43):
relationships quickly with the suppliersand the factories so that we can be
the person who kind of bridge that gap.
So we did that for probablylike five, six years.
And then, um, Monday ourover the, over the, um.
I saw an article that says our customersshutting down all their stores.
(04:04):
So we were, at that point, we were, we'vebuilt up like a, like $4 million business.
Mm-hmm.
Which is from 2000 to4 million that, yeah.
Like, that's what, uh, I wanted to get to.
Like you didn't have arich relative to start.
You started from, uh, hustle and thenyou grew it to 4 million, but then.
(04:26):
Then that happened andyou're like, oh my gosh.
Who?
Yeah, everything.
Everything happened so fast because it'slike, we felt, and I think this, this,
like a lot of people may not be fashioned,but they feel this in their inside, but
they don't take the action quick enough.
It's like, like your coffee, your, um.
Coffee business, same thing.
It's like you start seeing like somesort of pattern and you think your
(04:46):
mind, okay, if I have a little bitmore time, just gimme a little bit
more time, then I'll figure it out.
But it's never, it neverworks out that way.
It always happens before you're ready.
And with us, we like 95% of ourbusinesses like vanish overnight.
And, um, and so we had to really quicklydecide what's our next thing, because
(05:07):
for sure we were lucky that that clientwas actually like a, a very, um, what
do you call it, like a very ethicalclient, so they'll pay you on time.
But in the fashion business, it'svery cutthroat, it's very dirty.
It's not, and probably like yourmusic background as well, like
it is not as prestigious andbeautiful as the final product.
(05:27):
There's a lot of scums.
Discover and you know, so like we, we feltlike, okay, we need to get outta this.
Like, if we keep staying in this,we'll make money, but it's not gonna
be, um, healthy or sustainable.
So we then got into flipping inLA was, we live in Los Angeles
and, um, flipping was good.
We, we made like, you know, in LAat that time we were making probably
(05:49):
about, uh, 150 to 200 K per flip.
What year?
This, when you, when you lo left.
Oh, this was 2017.
Okay.
Yeah.
17, 18. So it was like at the place wherelike prices are still relatively low, but
there are definitely people who can affordmillion dollar homes that we were selling.
(06:10):
Um, so we did that.
We started doing that.
My sister Nancy, she heard on, on what,she saw an ad on Facebook about, Hey,
invest passively in multifamily apartmentsand you, you'll save a lot in taxes.
And so she basicallydragged me to this event.
And so we, we listened.
We started passively investing andthen like the flipping business
was just really a drag because it'slike the contractors, even, even the
(06:32):
same ones, they're never reliable.
Yeah.
And there, there's always excuses.
There's always reasons whysomething isn't done and everything
keeps becoming more expensive.
And then, um, the building andsafety department are very horrible.
Audi, I don't know about in yourarea, but like here they're like.
One day they can tell you do this, andthen the next time an inspector comes,
(06:53):
it's a different inspector though.
They can tell you literallythe opposite thing to do.
Yeah.
So we're like, this is not fun.
And then during COVID it got evenworse because yes, we were considered
essential, but a lot of things weremoving really slow and we're like, oh
man, I don't wanna do this anymore.
We had one last property under contractitself and we're like, okay, that's it.
We're not doing this anymore.
So we, um, we were already started gettinginto multifamily, but we fully got into
(07:17):
multifamily basically around that time.
Nice.
What have you seen happen postCOVID and now, now you've, you've
done a. A business you've beenable to exit from that business.
Um, start another one that, you know, Ihear things all the time with financial,
being in the financial world of if Ijust get to this, then I'll be happy.
(07:38):
If I just get to this, then I'll be happy.
Yeah.
And now, now you've kind oftransitioned to where you're at now.
What, what happened duringCOVID years, post COVID years?
Yeah.
For your real estateThat, and we're still.
In a weird, uh, spot, right?
Yeah.
So like right during COVID it was, itwas tricky because like we, that was, we
(08:01):
purchased our second property, we closedon our second property April, 2020.
So, um, we were had it under contractexactly when COVID started happening.
And being in Los Angeles, we couldn't,we couldn't sign the loan in.
We wouldn't have signed in person,but we couldn't go to like a,
a to sign the loan at a notary.
(08:22):
The notary had to come to myhouse in front of the garage, San
sanitize, like sanitize everything.
It was really interesting.
We couldn't go to the, theapartment because we couldn't fly.
And so we took over the property andit took like maybe five more months
before I actually went to the apartment.
Um, you know, like interest rateswere very low at that time because
(08:43):
the government were really trying to.
Ensure that the economydidn't sputter too much.
So in fact, for real estate investors,it was a really good time to buy.
Yeah, because we werebuying stuff at like 3%.
Maybe three a quarter to threeand a half percent interest rates.
And, um, things were amazing.
So we bought, we went from ourfirst property we purchased in 2019
(09:05):
before COVID was, uh, 6.9 million.
Our next one during COVID was 6.7.
We've sold those two.
The next one jumped about 16point 16 million, almost 17.
And then, um, the next one was, uh.
In the thirties, another 30 million.
Basically we bought like awhole bunch during that time.
Yeah.
Um, the last one we closed was a 77million apartment that we bought.
(09:28):
So, um, but that one was, um, as interestrate was rising, so that time was a
really good time to be a real estateowner because stimulus checks were
coming in, a lot of money were floatingabout, and so people were paying for, um.
Apartments at whatever price basicallyit was, it was really amazing.
As interest rates starts increasing,then there's downward pressure on,
(09:50):
um, mortgage, you know, costs, um,labor costs, inflation, supply chain
disruption, stuff like that, whicheveryone's navigating through right now.
Yeah.
Yeah.
And I think 2025, it becomes like a, sortof like a, the, the, the peak of that.
And then, you know, right nowafter that, I think we're gonna
see a totally different reality.
Yeah.
And, and, um, what's fun is when youwere sharing your story, like March
(10:15):
13th, 2020, that's when I bought my firsthouse closed on my house that day, which
was the day that the world shut down.
I think that weekend.
Everybody remembers March 13th, and I'mlike, uh, did we just make a huge mistake?
Or is this really good?
I don't know really.
(10:37):
It was really good decision.
Um, but, but at the time you'relike, um, how are we gonna pay
our mortgage if we can't work?
Um, and so you probablyhad the same situation.
You're like.
Uh oh.
Um, yeah, we actually had, okay, so withthat apartment, what happened was, um, and
you know, like I know you, you became areally good at like financial models and
(11:01):
stuff like that, you know, very impressivetoo, coming from your background.
So I think on that side, like we havevery similar experience of like going
from not knowing any of this stuff to likehave becoming immersed and expert at it.
So with that apartment, originally wegot it under contract before COVID.
So we had assumption likeit's income producing, so
we're assuming rent increases.
(11:21):
Mm-hmm.
We're gonna remodel, we're gonnaincrease all these things that are gonna
increase the value of the property.
But as it was under contract,the world shut down.
So we had two options.
We already had money.
Investors already started wiring moneybeforehand, so we had two options.
One was.
Uh, just leave.
Just leave this deal.
Similar to how you bought your house.
Like we had earnest deposit thatwas non-refundable, about 300,000.
(11:45):
We would just have tolose it, just walk away.
Or the second option is go back tothe seller and negotiate a different
term, which they were now happywith because they kept telling us no
rent's increasing every single month.
Occupancy is really high.
Don't worry about the thingsthat you're hearing on news.
It's not happening on the, on the ground.
Yeah.
But we couldn't rest on that.
Right.
So we, we negotiated several things,which was really tense and there was a
(12:08):
lot of, um, cursing at our broker for it.
First thing we negotiated was, um,we need to pay, we need to have a,
because, um, this was a Fannie Mae loan.
So Fannie Mae required us tohave a larger escrow deposit.
It's like 18 months mortgage interest.
Um, uh, insurance and property taxthat all had to be 18 months worth
(12:31):
of that upfront had to be put in anescrow so that they can ensure that if
we get this apartment, we're not gonnalose it because we can't afford it.
Um, that was a, so what we negotiatedwas the seller actually lent us money.
So that we didn't have, um, interestfree until we sell the property, we
won't pay him back, um, so that wecan, um, sufficiently cover that.
(12:51):
So that was a really big win.
The second one was he had to guaranteethat rent will stay at the same level as
a April, 2020 for the next six months.
And if it goes lower than that, hehas to reimburse us up to $500,000.
Mm-hmm.
And the third one, um.
Third one, I don't remember whatthe third one was, but it wasn't
as important as these first two.
But that was like a really big win.
(13:13):
And that was the reason why we actuallychose to continue, because otherwise
we would've felt very, um, uncertainbecause like how you said, you didn't
know if you can, like, where canI find income to pay the mortgage?
For us, we were thinking,will the renters pay rent?
Yeah.
Who's gonna rent?
Who's gonna pay the mortgage?
So those were the, the things that wehad to, to do in order to get that done.
(13:34):
Yeah.
Well, and, and as the listeners are,are listening, one of the things
that, um, that I want you guys tohear is she knew her numbers right.
And a lot of times people go into realestate and they just think it's gonna
be a quick, um, fix or quick Yeah.
Uh, thing.
(13:55):
But you, you had other contingencies setup, um, but you, you came into the deals.
Knowing your numbers, right?
Yeah.
Um, that probably I would thinkwas something that you had to know
in your former business, right?
(14:15):
To know when to, to stepaway, when to make a switch.
Yeah.
And, and that, um, muscle, um, hastransferred and then the, uh, what do
we call it, the surroundings change.
Yeah, whether it's wire leave orwe have COVID, um, things change.
(14:37):
Right.
But yet you're able tohave a good foundation.
Uh, yeah.
We sold that one.
So we sold that one in 27 months,no, 24 months, and got like a, like
1.7, something like that X returnin that short period of time.
So it, it worked out really well forthe investors who were like, yeah.
(15:00):
They, I mean, I have to give all thecredit to them because they had the, the
faith to continue with us when everything,when everything told them not to.
Yeah.
Yeah.
How did you keep them?
Um, I don't know.
Staying on there.
What, what did you do?
How did you keep your coolin the midst of chaos?
(15:21):
So basically like, um, there areseveral investors, probably like
a, we were raising about $3 millionand so like a million plus wired
their money before the shutdown.
Mm-hmm.
And then more were asking for wireinstructions and we told them, don't,
don't wire yet, because it wouldbe like, we would have to, we don't
know if we had to wire it back yet'cause we were still negotiating.
And, um, it was basically us communicatingthe entire time what was happening.
(15:43):
And we were very transparent.
We told them, look, this was the originalfinancial model that we presented you.
And you agreed to, and you, you,we wanted to invest with us.
You signed the subscription document,the investment documents, but the
new reality means that all that'sgone, and this is the new set of, um,
financials that we are projecting.
And, um, we understand if you want toor don't want to do this, you, you are
(16:06):
complete under no obligation to continue.
We completely get it.
And we were just honest andsomehow for some reason they,
they chose to stay with us.
And so, um, the return originally,I think we rejected like 1.7
and we got 1.9, so it was.
Already more than what they expectedin a shorter period of time.
And how did you, so I have several friendsthat are, are fund, are raising money.
(16:29):
Yes.
And for, for various projects.
How did you start from $2,000raising capital for $3 million?
Like what do you, do you like knowrich people that you're like, Hey, let
me go hang out in your living room.
We did the, we did the thing that likemost people suggest at the beginning
(16:51):
when we didn't, we didn't knowpeople, we went to real estate events.
So we connected with a lot ofpeople and we just talked to 'em and
just told them what we were doing.
Um, that's how we got ourfirst, for our first apartment.
So this one was a continuation of that,just like continu networking with people.
Um, it was really just sort,sort of like hand to hand.
Yeah, meeting people, nothingonline or anything like that.
(17:13):
And like that, that is nowconsidered a very small raise for us.
Like the last raise we did was39.4 million on our last apartment.
Um mm-hmm.
So the thing that, like, I, Ifeel most people may, may think
like, Hey, it's 3 million, or, itsounds like a lot of number, but.
We raised, like ourminimum is about $75,000.
It started out 50.
(17:33):
Our minimum to invest with us now was 75.
Mm-hmm.
But typically, people who invest,they'll put in about 150 to $200,000.
So if you break it down intolike, okay, that means that, let's
say it's $200,000 and you need3 million, you need 15 people.
Yeah.
Are there 15 people with $200,000?
Yeah, there's a lot of them.
And so I think like if we break itdown that way, it makes it easier.
(17:58):
That's how I kind of approach it now.
And then did you have, like, likeagain, I, I have friends that
are like, Hey, I wanna do this.
Did you have papers, like, uh, a goodplan to show these people and say, Hey,
here's, I want, I want you to invest.
Yeah.
Million into this.
Like, like did you just do a handshakeor, or what did you do to get them
(18:21):
to say, Hey, I believe in Palmy?
So basically we're having like, likeinsurance, we're heavily regulated.
Mm-hmm.
So we're under the SecuritiesExchange Commission.
Um, there's an exemption that allows usto raise money privately and, um, not to
bore people, it doesn't really matter,but basically we are, we have, um.
Attorneys who draft secure, um, pro,uh, private placement memorandums,
(18:46):
which are basically a set of documentsthat we use to inform our investors of
everything they need to know about theinvestment from the people involved,
the property, the financial models, um,business plan, uh, projected whole time.
All that stuff is in the, is inthat document, and they have to
read it very carefully before they.
Commit to us.
(19:06):
So the order is, like, for instance, likeright now to this morning, I got a draft
for another PP, it's called PPM that I gotfrom our security, um, SEC attorney that
we have to read, uh, for another project.
So we read through that at the same time.
Um, primarily it's my job on, on theteam to create the, the financial
deck that we present to our investors.
So we just go through andgather information as best as
(19:27):
we can present the information.
Very matter of fact, uh, we don't.
We don't use like, sort oflike scarcity tactics or like,
um, twisting people's arms.
My philosophy is like, if you wannainvest with us, you will invest with us.
Yeah.
And if you don't want to, it's also okay.
So, um, normally we'll do, we'll havethe PPM ready, we'll do a presentation,
(19:49):
and at the end of the presentation weprovide a link and they, if they wanna
do it, they go and fill out the link.
Um, and then we wire them, emailthem wiring instructions, they wire
the money, we confirm the position.
Other people may do something different.
Like hound them, call them, harass themuntil they like, basically like give in.
But for us, we don't.
It's like if you wannainvest, you will invest.
(20:11):
And how many presentations whenyou did your first swee into this?
I guess, yeah.
Um, how many presentations did you do?
Um.
The first one, the first deal, very firstone in 2019, we did one presentation, um,
which it was like a group one where itwas like over zoom and then a whole bunch
of investors joined, and probably like nomore than a couple more from that because
(20:36):
basically the, the first one was enough.
Um, and because like, like the way Iexplain it, I don't really, um, maybe
it's a good thing, maybe it's a badthing, but like, I don't like follow
up if they don't express interest.
Of course, if they ask questions,I would definitely hop on a call,
but if they just join the webinarbut they didn't take action, I
would just say, okay, I'll check it.
It's like, okay.
They don't wanna be init and, and that's fine.
(20:57):
Yeah.
So I don't do too many, even now wedo maybe one basically presentation.
Is it a good list?
Like do you find a realestate investor group that.
That.
Yeah.
Like now my list is notbased, the original list.
Um, I, we, I still have investorsthat come from that list, but
I, my list have become basicallymore repeat, more referrals.
(21:20):
Mm-hmm.
So the people that we sold threeproperties, we, we have 10 that we've
bought, and of that we have three.
Um, and that 10 includes thedevelopment that we're building,
so we haven't sold it yet.
So basically like.
We have deals that have gonefull cycle, three of 'em.
So we've had people who havegotten really good experiences
and so they do a lot of referrals.
Yeah.
And the dollar amount also has increased.
(21:41):
Um.
Like, because we started out 50,000,most people invested 50,000 back
then, but now it's closer to 200 plus.
Yeah.
Like there's who invest a few million,my next deal, there's someone who's
gonna put in like 3 million something,so the dollar amount increases.
So it's like, it's not about, and thenthat's why I go back to like, it's not
about having a mass list, it's abouthaving the right people on the list.
(22:05):
Yeah, yeah.
Yeah.
Which is, uh, true.
And that's, that's again, where sometimespeople, but you have to ask one.
Yeah.
You gotta make sure youask, uh, and be present.
And, and if there's, if, if you're notgoing to an event that has people, well,
then you gotta get in a room that does.
Right.
For sure.
Um, and then I, I think about that,that idea of going to full cycle,
(22:31):
like I've, one of mine that I did, um.
It happened, now I made itand now I'm gonna do more.
Right.
Um, same idea, right.
As a, as a buyer, right?
Yeah.
Um, and so if you do what you say you'regonna do right, and you follow what you
(22:52):
said, then more people are gonna be like,oh, but I want to do it again then, right?
Yeah.
It's so natural and it's like themost important thing about this
business is like you have to.
Care more about protectingtheir money than, than they are.
So it's like you're lookingout for their best interest.
Some people we will tell thempoint blank that you're not in a
position to invest with us right now.
(23:14):
Don't invest with us.
Um, we can do this again.
We're not going anywhere.
So it's like, um, every day, everynight, when, when we go to sleep is, I
tell everyone all this time, and it'struly my belief, like, I would rather
lose my money than lose your money.
Yeah.
Yeah, I would do whatever in mypower to protect your money, that you
put your trust with us, because youcould have chosen just about anyone.
(23:37):
And I believe in this business, likethe reason that you chose to invest
with us is 'cause you trust us.
Yeah.
And we're not gonna let that, youknow, we're not gonna, we're, we're
gonna take that very seriouslyand we're not gonna let you down.
And so I think like when we approachit that way, they can sense it, the
investors can, can feel that that'sour sincere, sincere approach.
And so, you know, that's all you do.
(23:59):
Uh, I think that's again, why Iwanted you on here is 'cause I,
as we had our con intro call Yeah.
That the same kind of,uh, conversation, right.
And there's a lot of people who are doingsyndications or other things, but, uh,
but I know some of them, I'm like, Hmm.
They're a little sleazy.
Um.
(24:19):
You know, you, you've seen them,uh, and some that you're like,
uh, the, what do you call the,the bs, um, leaders going off.
Yeah.
Um, and, and for me, I, I, whatI have is my integrity, right?
And as we do what we do, and I, I'm in theinfinite banking space, I wanna have that
(24:40):
regardless of if I make as hell or not.
And that's what I, I definitelyknow I'm gonna keep that.
Um, and so that's been, uh, fun.
And then also as, as we grow, like,and this is probably you guys, those
numbers, they just kind of shiftand you're like, oh my gosh, I can't
believe what we're talking about now.
(25:03):
You know?
I mean, you probably are,are thinking that too.
Like, oh yeah, just $34 million.
Um, that was.
More than what our business was worth.
Right.
Um, right.
Has that shifted you or have youbuilt more confidence over time?
Yeah.
Um, what has changed in you personallythat you're like reflecting and saying
(25:28):
from, you know, upon me maybe 10 yearsago to now, what would you be telling her?
I mean, like the, the thingthat is so amazing is like.
The numbers don't really matter.
Like, um, they're justlike zeros with commas.
And so, like, for me, when, whenI, I would not have known 10
(25:49):
years ago that we would be in thisbusiness at all because my, my, my
vision was so, was so shortsighted.
I was just trying to survive like the nextday, next month, next week, next year.
Like, I couldn't thinkfurther beyond that.
But when we're in the, um, the real estateor just investing world now, it's like.
There's so much wealth out there,and like if you're timid and you
(26:12):
stay small, you're gonna continuebeing, you're gonna, you're,
you'll grow as big as your courage.
And so like, yeah, forme, I just felt like.
I, I trust my, myknowledge, I trust my team.
I trust my partners.
I trust my myself to knowthat, like what I can handle.
If it's, if it's too big,I wouldn't do it either.
Um, I, I have a strategy where my mindsetis like, I wanna go grow fast, but I
(26:38):
wanna grow fast in a sustainable way.
Yeah.
And so like, like now, my next goalis to have a $10 billion portfolio.
And I have a path to, to getting there.
And it's, um, and it's somethingwhere it's like, have you, I think
we talked about this, the book 10 xis easier than two x than parties.
So it's like, we talked about it,but I've read it and it's amazing.
(27:00):
So basically like the, the concept of likelinear growth versus exponential growth
is you can grow faster by doing less, byfocusing very, um, having very mindful.
Focus on only a couple thingsthat will get you that growth.
Yeah.
Everything else becomes a distraction.
And so every single day you have toask yourself like, are the things that
(27:22):
I'm doing giving me exponential result?
Because at the topthere's less competition.
Yeah.
When you, when you settle for lineargrowth, there's a whole bunch of
people there and my experience is like,why we've grown fast is we leverage
figuring out how to grow exponentially.
It's, it's kind of bizarre or like.
Impossible for a lot of peopleto think like when you have zero
(27:43):
family, zero background in realestate, to have 400 million asset
under management in six plus years.
It's like, how is, because we reallyhone in on that when you probably,
because you didn't know the industry,you had no idea what the ceiling was.
Or, I mean, like I, I. I see, I see.
(28:07):
Like other people, like for instance likeBlackstone, I see how massive they are.
Mm-hmm.
And I read about how they started withlike $200,000 in the seventies and it
was so hard for them to raise that.
And I al and then I, and I thinkI can raise that easily or I hear
about how Jeff Bezos was strugglingto raise a million dollars.
For his, um, for Amazon whenhe first started and how much
(28:30):
equity he had to give away.
And I'm like, from day one, Iwas able to do that already.
So that gave me confidence that eventhe best of the best in the entire
world, they started at a point whenthey had to raise money and that
they couldn't do what we can do.
And so I then it gave me confidenceto see that I can do that as well.
Did you, uh, so, so somethingI've been thinking about with that
(28:54):
10 x is easier than two x. Yeah.
And this linear versus, um, exponential.
And, and I've been thinking about ita lot lately, um, in that you just
told me what your like superpower is.
Um, you know, as far as raisingmoney and doing that kind of
thing, it, it's just a natural.
(29:15):
Flow for you.
Right.
Whereas other people, maybe it's,it's not, or, or your sister
probably has different skillsets.
Mm mm-hmm.
Um, different superpowers.
Yeah.
Have you seen where your, yoursuperpower and her superpower
has been able to amplify?
Yeah.
(29:37):
Yeah.
I, in fact, like I would say likewhile we're both, we, we are both.
Very good at capital raising.
We're good in different ways, solike she's very good as like, um,
have you seen the Japanese cat?
Where is that cat?
I don't think it's here right now.
So there's a Japanese catand it goes like this.
It's a little cute cat.
The white cat that waves all.
(29:58):
Yeah.
Yeah.
So that cat is like a welcome cat.
So they put it in stores 'causethey're like, it's like welcoming
customer, sort of like a, A thing.
Right.
He based live in Chinatown, so, yeah.
Yeah.
So that is kind of like mysister, she's amazing at like.
Building really fast rapport withpeople, like very, very fast.
And then like I can come in and, and um,explain even more in depth what we're
(30:22):
doing, what, what the projects are.
Give them insight and thenlike, then they feel confident.
'cause it's like two different styles.
Yeah.
And that's important point.
When, when you're doing this, whateveryour specific skill set is, there's
someone out there that needs it.
So like how we grew so fast is, likeI said, we partner with the right
people, our very first project.
(30:43):
And Nan, my sister, met the personthat, that she invited us to the deal.
So basically we bought a 76 unitapartment in Phoenix, Arizona.
We had zero experience.
Um, the person who invited onto the team,her name's Elisa, we met her at event and.
I told her at the timeI could raise money.
I just told her 'cause I didn't,I wanted to be on a deal.
(31:03):
I, we didn't, we didn't livein Phoenix, we didn't live in
Dallas, we live in Los Angeles.
We didn't have theability to source deals.
So the only thing I thought we cando, um, to position ourselves was tell
people, tell everyone we can raise moneythough we've never raised any money.
Yeah.
And then like, she invited us on the deal.
We actually did raise money andthen, um, we figured it out.
(31:24):
And then like Nan saw, my sister saw herlike three, four, uh, beginning of June.
And she, and she said, she asked, Nanasked her like, why did you believe us?
And she's like, no, I always, I knew youguys can do it and you guys can do that.
I'm like, well, that's amazing that,you know, other people had had that
belief even before that you, youstepped into your own confidence.
(31:45):
Mm. And saying that, and thensomebody believed in that.
Uh, confident.
Yeah.
Right.
And so having a team that supportsas maybe we're not, uh, I've
been thinking again about thisa lot, is we're not fully us.
And as a business partner or a team memberor whatever, it's to help each other
(32:08):
become the better version of themself.
Yes.
Whether you're part of a round table,like I'm a part of Perry Marshall's round
table and, uh, other communities, and ifthey're pulling you down, then that's not
a, a healthy community or relationship.
Mm-hmm.
But if they're helping you strive andthey see what your like superpower is and
(32:29):
they, and you're able to step in that.
That's.
That's where that 10 x thing happens.
It's like they have to have your, theyhave to believe in you, but you also
have to believe in yourself as well.
Yeah.
Um, like every time we raised moremoney, it's not like I don't get nervous.
Like the first time we raised, um,the big amount that we raised the
(32:50):
first time was like 33 million.
And before, before we did it, I was like.
Hmm.
That's a lot of money.
How are we gonna do this?
And they're like, we, we talkedabout it amongst ourselves.
We're lucky we can do this.
And um, and we did, which wasamazingly, and that happened right
as interest rates started increasing.
So it was kind of interesting.
(33:10):
It's like three years ago now.
And, um, but one thing that oneof my mentors said was like.
You can borrow, like we canborrow his belief in us before we
develop that belief in ourselves.
Mm-hmm.
And that's kind of the same thing, likethe partners have to, you have to believe
in their ability to execute, but youalso, you don't wanna let them down.
(33:31):
So you figure out, and like one of thebiggest things that we always talk about
is like, grow your wings on the way down.
Because if I'm.
If I have to prepare and becomelike a hundred percent ready for
something, I would never get started.
And, uh, Alex from O once recentlysaid that the difference between
people who are successful and whopeople who are very successful
(33:52):
is their speed of implementation.
Mm-hmm.
Like, you get an idea, youexecute as fast as possible.
Sometimes it works, sometimes it doesn't,but you get to know it really fast.
A lot of us we're stuck with like thebest idea and we hold onto it for 20
years, never doing anything about it.
I call some of those the entrepreneurs.
Mm. Uh, they just wantto be entrepreneurs.
Yeah.
Uh, or, um, as my, my wife, uh, she'sbeen like learning some of this, but um,
(34:18):
she's a five on the Enneagram, so shetakes in information and wants to get it.
Uh, right.
And so as we've been, and and youmentioned this, you said my mentor.
Yeah.
Um.
A lot of people don't have mentors.
They don't even know.
And, and sometimes your mentorhelps see what you don't see.
And so, uh, as we were in some ofthis, these, um, masterminds, they're
(34:43):
like, yeah, this is what you're doing.
And so that speed to move mm-hmm.
Uh, is sometimes both a,a. Strength and a weakness.
Mm-hmm.
Uh, and so like, you know, youdon't, you don't wanna like
go haphazard into a bad deal.
You wanna Yeah.
Make good number decisions.
Yeah.
But then you have to know.
(35:04):
Yeah.
It's like, make good decisions,but just make 'em faster.
Yeah.
Yeah.
That's the point.
Like.
Probably what the way you guyshave done it is 'cause you're
tracking your numbers regularly.
Yeah, absolutely.
I bet you, I, I don't know.
Well, you, I mean you well, but, um,I bet you, you could pull out your
(35:26):
wine a or your budgeting softwareand probably make a decision because
you have it pretty organized.
Yeah, absolutely.
So every, every single, so thisis how our structure works.
We have, um, our property managementcompany, third party, we hire for every
single property who runs the day to day.
They also handle the backendfinancial, so they report to us on
(35:49):
a monthly basis, the full financial.
So we'll have like a, um.
Profit and loss statement,which is a T 12.
We'll have the rent rolls,we'll have our general ledger.
We'll have, um, other, otherfinancial variance before a
whole bunch of different reports.
They send that on a monthly basis, butbefore that happens, we also have monthly,
uh, weekly updates every single Monday.
(36:10):
There are certain KPIs that we track,occupancy collections, delinquency,
um, any things that, any in expense,big ticket expenses that are
coming up, um, maintenance reports.
Ultimately all those factor intolike, very simply, we can see like,
is this property trending mm-hmm.
Up or trending down.
(36:31):
And especially like, uh,NOI and like net cash flow.
Those are probably like two of the mostimportant numbers because like if you
have the net operating income, at leastas expected or going up, that's amazing.
But if you have below the linecosts, that's eating at your
cashflow, that's, that's gonnashow up in the net cashflow number.
So having those two numbers, justthose two, even with, regardless,
(36:54):
whatever else I told you, if youknow those two numbers, you will know
that property is doing well or not.
And I, I think as I talk to real estateinvestors, they don't know their numbers.
Or they can't go.
And, and so you just, you know, said, Hey,by do, doing that, and, you know, um, I
have other people that help manage those.
(37:14):
Yes.
Um, that's their, their superpower.
Um, but for, for me, I wanna make sure,Hey, are we in the, the black or the red?
Yeah.
Um, pretty simple.
If we're in the.
In the red.
That's a problem.
We need to fix things.
Right.
Um, and we're in the black and thenthe goal is to always be in the black.
(37:37):
Right.
Um, however, most businessesor even deals mm-hmm.
Run in the red all the time and we'relike, well, we'll just keep it this way.
It'll be fine.
Uh, how have you, asyou've raised money mm-hmm.
Um, not been in the red world.
'cause you in the financial.
(37:58):
Fundraising.
Mm-hmm.
It seems like sometimes it's always about,well, I just need to raise more capital.
If I raise more capitalto solve the problem.
Yeah.
No, I mean, you can't really use thatbecause like our investors have different,
uh, have like a certain, um mm-hmm.
Return expectations.
The more money you raised, themore diluted their returns are.
So a, a lot of times, likesome deals it may start out in
(38:21):
the red, but that's expected.
Like we knew that was gonna happen.
We have to do certain thingsto the property to just
for it to be in the green.
So you raise enough money for it.
Um, the couple ways that we do this islike, we have a, we wanna always have
like a hefty, um, capital reserve.
Mm-hmm.
For like our, for our,I'll give you an example.
So for our construction project,we're building 118 town homes.
(38:44):
Right now we're in the middlevertical construction now.
So that's a, um, the construction is intwo phases, horizontal and, and vertical.
The horizontal was like, Ithink four plus million dollars.
Within that we had, um,a $500,000 contingency.
Beyond, beyond like, you know, whateverthe construction budget is, we add 10%.
(39:07):
Like beyond that, we hadthis extra contingency.
We ended up not using itbecause it was under budget.
Now we're in the vertical phase.
We're the, we're about $2 millionbelow budget on the construction
cost so far, knock on wood.
And then we have likea $2.5 million reserve.
Like a rainy day fund on top of that.
(39:28):
So that's four and a half million.
And on top of that we have like aninterest reserve of a million dollars.
So just on the vertical constructionside, we have $5 million of
reserve for our construction.
Yeah.
The liquidity that, that's, um,something that I think that, uh, as
we were talking in the beginning Yeah.
Um, when.
When we get into this world ofentrepreneurship or business
(39:49):
ownership, we're taught investin other people's business.
Yeah.
Put in your 401k uh, liquid.
Having money and savings is, is stupid.
Um, but, but you just said,I have a lot of lazy money.
Yeah.
Um, just in case.
Just in case.
Uh, oh crap fund kind of a thing.
(40:11):
We have to, especially in development,but what we, um, what we do, uh, not
in this case, but in other deals, is weput it in like a, a cd, a rolling cd.
So it, we cannot legally put it in a moneymarket account just due to the structure.
A lot of banks don't allow it.
But what we do is we money that weknow are sitting there in our savings
(40:32):
account, we put it in a rolling cd.
We will do it in tranches, some six monthsexpiration, some three, some one, so that
we always have 50% of that available.
Yeah.
In case something happens.
Um, but like it's, so in construction,especially new development is so important
because what if costs overrun happens?
Because it can, and like we cannotraise more money, so we have to raise
(40:55):
for us, we try to raise everythingupfront, all at once and um, yeah.
And the most important thing is like whilewe finance, we do the financial model,
assuming the the best case scenarios.
Okay, we're gonna rent it out forthis much, we're gonna refinance.
We also do very, very detailed, um,what are called like sensitivity tests.
So that's like sort of likebad worst case scenario.
(41:17):
What happens if this isdoesn't go as planned?
Yeah.
How long should we survive?
And then we then build in, you know,reserves to make sure that we cover those.
Nice.
And I think that's, that's one of the coolthings is you did the, um, having that
liquidity, um, I might say, you know, asa shameless plug, um, whole life insurance
(41:40):
properly designed, uh, can act as a cd.
Um, I, I think that works forprobably like personal, right?
And I think they should dothat actually, to be honest.
Like if they're doing a project,they should put money in
something that's earning money.
Yeah.
And if they need it,then they can pull out.
That's the best way.
I totally agree.
It's basically the same thing.
(42:01):
Might be able to do otherthings like business too.
Really.
It was different.
Yeah.
So I like to personally haveit on my personal balance
sheet versus the business.
Yeah.
But there's other ways because youare the greatest risk and so whereas
CD doesn't have a death benefit.
(42:22):
A, um, life insurance does.
So then if something happens, let'ssay you, you use that 50,000 anyway.
It's just another way of Okay.
Of using leverage.
Mm-hmm.
And, um, and having itdo two things at once.
Yeah.
Um, so, um, yeah, it's just one ofthose things where I think for you,
(42:45):
it's like having that liquidity is huge.
Most people don't even think about that.
Right.
It's like you don't need ituntil you need it, and then
you're like, you can't get it.
Um, it's so like, it's such apeace of mind, like navigating
through this kind of crazy timethat we're in to know, like, okay.
Um, we have a five year ratecap on a three year construction
(43:07):
project, so interest rate willnever go higher than this for us.
We will never pay morethan this during the hold.
Um, we have all this extramoney just sitting there just
in case something happens.
So it's like.
Because like I said, it's soimportant for us to protect our
investors' money, so mm-hmm.
There will be black swan events thatwe can't predict, but to our best
(43:27):
ability, whatever we can anticipate,it's our job to, to do this.
They, we are their fiduciaries.
They trust us with their money.
We have, we are expected to beprofessionals and, and have that,
um, my friend is in a, an investmentwith a really prominent developer
and he's invested, he said, in 2018.
Uh, they're, they're doingsimilar, like a new development.
(43:49):
They haven't, they haven't done anythingyet because when they raised the money,
they were raising it to buy the landand the cost of construction has gone
up that they cannot afford to build now.
Yeah.
That's like a, that person's moneyhas been stuck there for seven years.
That's, do you see that?
Um, so, so I was told just recentlyabout, um, uh, the economy.
(44:16):
China in, in China wheresomething happened, um, where
there's all these half-built.
Yeah, I, I say that a lot.
Um, so basically what happened with thoseis like the way they do their financing
is not the same as United States.
First couple days in China.
There's a culture of saving money,but there's also very few investment
(44:39):
vehicles they can put their money in.
It's very difficult forthem, for instance, to invest
in the stock market there.
So a lot of people pour intheir money into real estate.
What?
And what happened is that.
Um, companies like Ever Grande, oneof the largest, um, how they were,
it was almost like a Ponzi scheme.
So for instance, you, you wanna buypart a condo in building a, yeah.
(44:59):
So you put in a deposit, you may, you putin a deposit and you're paying mortgage.
They take the money that theywere gonna use for building a and
they start building, building.
And then they, people who putin money billing B, they do that
same thing to C and it keepsgetting, getting bigger and bigger.
The problem is the Chinese government,a couple years ago, they revamped
their financial system to have thisthree line test to make sure that
(45:20):
the businesses were solvent becausepeople were just borrowing like crazy.
And because of the new rules,the, these companies no longer
can afford to borrow more money.
And that's why, that'swhy everything fell apart.
That's completely differentthan the United States.
We are, are like, thankfully,after 2008, our financial system
is significantly healthier.
(45:40):
Yeah.
But also the rules in placemakes it so much harder to
just willy-nilly borrow money.
It's, it's not really possible now.
So like that's, that's what'shappening and that's also happening
with their electric vehicle.
That's a new thing.
That's a new tick time bomb.
I think that that is where there'sneed for making sure we don't like
cut, cut everything, and there'sno checks and balances, right?
(46:03):
Yeah, sure.
Um, and that you are held to astandard, hopefully, uh, to where
you're, you're not, oh, I'm, I'm gonnaborrow from the, or get money from
the investors and then go to Tahiti.
I mean, it's really,is it possible, I mean.
It possibly can happen.
(46:24):
I luckily it doesn't happenvery often in our business.
Yeah.
Um, it's obviously very, youcan go to jail for a long time.
You steal people's moneylike that, but like, yeah.
So let's not do it because thisis the thing that I, I told
someone recently and it's like.
Uh, there's a very small differencebetween someone who goes down a criminal
path and someone who becomes rich.
(46:46):
The person who, it's like they havethis ability, but they chose to use it
towards something nefarious, like stealpeople's money, sell drugs, all that
stuff because they don't, they didn'trealize that actually making money
legitimately was easier and you know,you have a longevity and you don't go
to jail and you don't or you don't die.
Yeah.
If they only realize that all these.
Smart criminals would probablybecome just wealthy people.
(47:09):
You know?
Like that's a distinction.
It's like, why would I wanna stealyour money when if I do this long
enough, I will make way more than that.
Yeah.
It just, doesn't it?
Yeah.
Well, anything you wanna leave?
Leave?
Um.
Our listeners with, uh, any, like, I knowyou've already dropped so much wisdom
here, but, um, anything you wanna makesure we share that we didn't share?
(47:34):
And how can people find you?
Yeah.
So one of the things that I, um, I'm kindof like, I dunno, the word is concerned,
but basically it's one of the biggestthings that I'm really thinking a lot
about is like the post labor world.
Mm-hmm.
People can, people can.
Acknowledge it.
People can stick their hand inthe head in the sand and not
(47:55):
pretend it's not happening.
But humans are being replacedby AI and humanoid robots
that's happening like right now.
Mm-hmm.
And the people who rely on wages as away to earn income will be decimated.
The most important thing rightnow is you need to find a way
to become to own property.
And property in this case does notmean that you have to necessarily
(48:17):
only do apartments like us.
You can have life insurance policy.
That actually produce income beyondthat, that is separate and completed
is distinct from your labor becauseyour labor may not be there.
Uh, the Bureau of Labor statistics saysthat by 2030, which is just basically
four and a half years from now, 30%of American jobs will be eliminated.
(48:39):
This is not just like bluecollar minimum wage work.
We've already seen that happening.
You have a finite window rightnow to become the owner of.
Property.
You can do that through some sort ofbusiness that doesn't rely on your income.
You can do that through some sort of, um,infinite banking strategy that allows you
to earn income without you working on it.
You can do that through real estatesyndication, all that stuff, but
(49:02):
trust me, in five years yeah, that'sgonna be something that you're
gonna look back and be like, wow, Ishould have done something about it.
So like, it's so important that we all.
Spread this.
Like we cannot ignore it.
It's happening.
You can like it or notlike it, it's happening.
So make sure that you stay onthe side where wages isn't the
only way of earning income.
And for us, if you want tolearn more about us, we have
(49:25):
a free community right now.
There's a waiting list.
But um, as soon as we let peoplein on that waiting list, um, you'll
be able to join a free communitythat we talk about all this stuff.
All the time, and it's a way for usto communicate and connect with a
whole bunch of people that, that arelike-minded, that are, are ready to grow
wealth beyond them, beyond just what youmake so that you have a lasting legacy.
(49:46):
Yep.
And that's a, a great mic drop there.
Here's a link to her community, uh,as you notice, wealth Beyond Me,
similar to our community, and that'swhy they're very similar to us.
Um, and I do do believe what sheis saying is the divide with AI and
what's happening now is happening.
(50:08):
And if we aren't understanding or evenkind of being a part of that conversation.
Um, we'll be left behind.
Uh, and so that's something that Ithink is so important that we are the
masters of our own financial destiny.
We start realizing that, uh,almost everybody has a side
(50:31):
hustle now or something.
Um, and don't just wait and thinkthat your job is just gonna eventually
give you a pension or something,that those days are over for.
Those, those days wereover a long time ago.
Um.
But, but it's getting, uh, moreand more challenging and be
the master of your own ship.
(50:51):
So, um, thanks Paul for being hereand I loved having this conversation.
Uh, and we love talking financialstrategies, helping people like be in
there and, and hopefully somebody willcome and say, Hey, I want to talk to.
Poy.
Uh, and I think that that's, uh, powerful.
(51:11):
If they do and they come from us.
Make sure you guys mention Wealth,wisdom, financial and say, Hey, I
heard you on Brandon and Amanda's show.
And don't forget, hit that.
Like, subscribe, share this with a friendand we will see you guys next time.
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