102. The Big Beautiful Bill Is Law – What It Means for Investors - Drunk Real Estate

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Breaking news.
So this
isn't part
of the big bill
that we were just
talking about.
But just a couple hours
ago, FAA,
the federal Housing
Finance Administration,
or whatever
that stands for announced
that as of now that,
rent payments

(00:20):
can now
be used
as part
of your credit score
when qualifying
for mortgages
with Fannie and Freddie.
Welcome to Drunk
Real Estate.
Grab a drink
and enjoy the show.
Hey there.
Welcome to episode

(00:40):
102 of Drunk Real Estate.
I am Kyle Wilson,
Ashley Wilson's husband.
And I got the gang here
all together.
Mauricio looks like he's
on a beach
or on the moon
or something.
Where are you at right
now, buddy?
Dude,
this is my first episode
up at the ranch.
This is your new house,
right?
Yeah, it's a new ranch.
And, I don't know.
We'll see how it goes.
It's the first time

(01:01):
my house is,
under
complete quarantine,
so I can't
get in the house
I'm doing outside.
So.
So what makes it
a ranch, exactly.
As opposed to.
Where's your cowboy hat
and your your boots?
Don't
you have to wear
one of those,
like, leather?
Like, like.
Ties with the
two strings.
The hanging down.
And, what makes it,
I don't know,
there's a bunch of horses
around here
and goats, and,
I mean,
I don't know,
trees, farming.

(01:22):
I mean,
do you actually have
those things
on your property?
Horses and goats.
I just freaking got here.
No, no, but,
we're going
to get a goat,
and then we're getting
some chickens.
I took some notes
from Tessa
when I was at the house
a couple months ago.
And, we'll eventually
get some horses
and we'll.
We'll get some.
We'll get some
animals by.
Heidi wants a. Cow.
At some point soon,
it'll be a ranch.
You got to talk to

(01:43):
Ashley Care.
She's got
a family of goats
living on her.
Property,
and they need to
go around their
little lawn mowers.
There don't
totally lawn mowers.
You know,
they rent them out.
Did you know that
you can rent,
like, ten goats
to just go
on your property
and cause it cost,
like a crapload
to get this thing
landscaped?
I'm like,
why don't
we just get some goats?
They'll eat it,
they'll graze
and just basically
take care
of the landscaping.
There's like a service,

(02:03):
you can hire them
and they bring in
like 100 goats.
And they
they're done
in like four. Hours.
Yep. Exactly.
It's amazing
what they do.
So yeah, I kind of
want to get some goats.
I mean,
what like
how do they have to like,
stand on their back legs
to use the
trimmers on the,
the big bushes, like.
They have harnesses.
They put them
on their backs.
You just put them
on their backs.
And then you can
control them
by remote control
from your house
and just do it that way.
Yeah, it's pretty cool.

(02:23):
Got it. Nice.
What is?
They,
Is there
any alcohol
on the ranch yet?
No, there's
nothing around here.
So in order
to get anything,
I've got to drive,
like, an hour
to get something.
But I did get something.
I went to
the local store,
which is again,
like an hour away,
a little.
What am I drinking?
I'm drinking,
Sonoma cutter
wheel, Sonoma
cutter action today.

(02:43):
Cool.
J how's it going, man?
Good.
Good.
Had a birthday yesterday,
so I'm old now.
Turned 39,
and it's a 58, 39, 39.
I'm getting old.
Yeah, I got me.
Yeah.
Your hair is kind of
thinning out
a little bit.
You look a little bit
older.
Yeah.

(03:04):
My hair has been thinning
for a long time.
Yeah.
Thanks for reminding me.
The all is good.
I'm going to disappoint
you guys a little
bit tonight.
I decided,
now that I just,
reached
another year older,
I need to take
care of myself
a little bit better.
And, needed a little bit
more serious
about the eating healthy.
And.
So I'm not
drinking tonight.
I'm sure I'll return

(03:24):
next week.
I'm sure I'll return
next week.
But for tonight.
For tonight, I'm just.
I'm just going
with the coffee.
Kyle,
you going to put up
with this?
No. He's joking.
He's not like he
all of a sudden decides
the day before
our podcast he's
going to start drinking.
And then what?
Tomorrow he's going
decide he's back on it.
No, he's he's kidding.
He's he's
just brought a coffee
and then he's
got something
off to the side.
Yeah, I'll, I'll surprise

(03:45):
you mid episode.
What are you waiting for?
I'm waiting for
the joke to drop. I.
No joke, I'm
drinking coffee tonight.
Did you see.
Not going to drink.
And you,
you're not going to talk
about real estate.
Like what's the point.
I don't even have
a topic tonight.
I do,
I don't remember
the last time
anyone was drunk
on the podcast like.

(04:05):
I was last week.
I, I started.
I got I got pretty.
Sloppy last week too,
because I was
on vacation, but, I'm.
Better. Yeah.
AJ, what.
Do you, how you how are.
You doing over there?
Doing good, doing good.
You got a nice
little breeze
in that room.
It looks like, you know.
It's hot here.
It's going to be
the hottest day
of the year,
so we're burning up.

(04:26):
It gets hot in Boise.
And does it does.
So it was pouring
rain and 50 degrees
a few days ago.
Well hopefully
they got some nice ice
cold Diet Coke for you.
Oh they do.
And the red solo cup.
Look, you can even see
the condensation
on that crap.
Oh it's. Sweating.
Oh yeah.
It's like food
pouring right there.
You know. It's good.

(04:47):
Oh I love it.
Well I'm going
since I'm back.
I got my,
got my own
collection back.
And I'm going with
the still ask
still Austin
cask strength
for you, I guess.
AJ, you're
still Austin, right?
I'm still Austin.
116. Proof.
So you're
you're complaining
about people
getting drunk.
This will get me there

(05:08):
pretty quickly.
There you go.
As I have been.
Predicting consistently
since last year,
I might add, the.
SEC looks to bring back
the proposed finder rule.
It will allow capital
raisers to get paid.
I'm just kidding.
I was just
reading Maurice
Yeo's email
that he sent out today.
So we have breaking news.
That today is come out.

(05:29):
The SEC is looking to
bring back the proposed
finder rule.
Now it's not.
From what I understand,
nothing has been agreed
upon yet.
Right, Mauricio?
But this is
just good news
that it's coming.
Especially if you know
what the hell
the finder rule is.
Yeah.
So, I mean,
my predictions
are just coming true.
I mean,
we should do a
predictions episode,

(05:49):
and I'm already
working on
doing like, the pre
like the prediction
from like six months ago
and then the
current prediction
or whatever.
But yeah.
Why don't we define
what the finder rule is.
And what the
challenge is.
And then,
I think people
get really,
really excited,
whether you're
a syndicator,
capital raiser,
receiving money,
or you're
wanting to just refer,
you know,
a couple of your buddies

(06:09):
maybe to, hey,
I know this syndicator.
Hey, I know
somebody who's
looking to put
some money.
You know,
maybe I can
make a referral
and actually
get paid for it,
you know,
which is something
they usually can't do.
So,
so this is actually a
let me just tell you
what the finder
the issues are.
And then we'll,
we'll talk about
what the proposed
rule is and,
and where we are today.
Because I don't want

(06:29):
to get super
excited about it
yet, but it's comments.
So it's really fun.
So I don't know,
your email seemed
pretty excited.
So I yeah,
because I knew
it was coming.
I just didn't think
it was going to come
this fast.
I actually thought
the accredited investor
update
was going to happen
first, meaning, you know,
it'll be easier
to become
an accredited investor
taking the exam.
I thought that
was coming,
and maybe now it's
going to really get fast

(06:50):
tracked.
And I thought this
would get done
before
the end of
the administration.
And so to see it today
that they're going to be,
you know, advancing
and talking about it
in a couple weeks.
And then from there,
I think there will be
a proposed rule.
But the issue
we're talking about
is literally getting paid
to raise money
for other people. Right.
That's generally
considered
sort of broker activity.
Right?
So if I, if I,
if I have somebody and

(07:10):
let's say I know J
you guys have
Kyle's like
blanket on your name.
Kyle.
Like, who are you again?
Kyle.
You guys have a fund?
You guys are
raising money,
and I'm Mauricio.
Have a couple
of investors, and, hey,
I just want to refer
them over to you guys.
I know
you guys have
a great fund,
a great product,
a great investment.
I know
a friend,
a doctor, friend
or whatever.
I'd like to make
an introduction.
I'd like to,

(07:31):
you know, introduce
you guys.
And hey,
if the guy invest,
I'd love to
just get a little,
a little piece.
You know
what might be
a little bit?
Give me a little
piece of the action
and the challenges.
I can't do that
right now.
Right, I can now let's.
Let's be clear
real quick, Mauricio,
because I'm sure
there are a lot of
people out there
saying,
I know a dozen people
who do that now
and they get paid for it
and, and whatever.
I think

(07:51):
the important thing here
is, yeah,
there are a lot of people
who are doing that
right now.
They're raising capital
for other people,
and they're getting paid
to raise capital,
or they're getting a
piece of the deal.
But correct me
if I'm wrong.
In most cases,
they are breaking
the law.
Yes, there's
a lot of breaking the law
going on right now.
I mean,
the rule is
if you want to
raise money
for other people
or make referrals

(08:11):
or introductions
to get paid,
you generally
need to have
a broker dealer
license, right?
Just like
in order
to practice medicine,
you need
a medical license
to practice law
in your law license.
If I'm going to refer
somebody and raise money
for other people,
I need a broker's
license. Right.
And that even applies
to this infamous
co GP model. Right?
There's so many
sponsors out there
that are
that are aggregating,
getting, getting together

(08:31):
with multiple
GP's, the GP model.
And inevitably
one of those people
is really there
to bring in the money.
So they bring in a GP,
they pay them
basically depending on
how much money
they can raise
into the syndication,
they'll pay them
5%, 10%, 15% of the GP.
And most of the time
that's, you know,
an illegal compensation
because it's
transaction
based, meaning
they're getting

(08:52):
compensated
based on how much
they bring in
or the fact
that they even
brought money in
in the first place.
So this is going
it's kind of a
rampant violation.
And then other people
just don't know.
They just want
to make a referral.
I'm like, hey,
I got somebody refer you,
hey, give me something.
Give me a little.
You know,
even if it's not cash,
it might be a little
a little,
you know, something
something.
Because it happens
all the time
in other industries,
right.
Even real estate agents,
you can refer people

(09:12):
and get commissions.
And it's it's
not uncommon a.
Lot of other,
but I don't you need a
I think you need
a real estate license
to, to get a commission.
You do.
But but that's
another one that
that a lot of people
break the rules.
Hope not to get caught.
And so it
is pretty common in real
with real estate agents.
And getting a real estate
agent license
is much different
than a broker
dealer license.
I want to say that
I just found out today,

(09:32):
by the way, cost
about a million bucks
to set up
a broker dealers,
brokerage firm.
So,
but the problem is so,
so with the SEC and I
and even me,
it's like I feel bad
because I keep
telling people,
you need a license.
You need a licensing
license.
But but the reality is,
you know,
broker dealers,
they don't
get out of bed
for like, 25,
$50 million deals, right?
Like, if you're not,

(09:53):
it's very difficult
to go find a broker
that's going to raise
500 grand
or $1 million for you.
So there's like this gap
in the marketplace
where you're
too small
to really be able
to pay a broker,
but yet I can't,
you know,
I can't
do all this stuff.
And so there's
this gap that
this is what this,
this proposed rule
was meant to address.
And I was
talking about this

(10:13):
a long time ago.
Literally this
this proposed rule,
which is on the books,
is about a 40
page proposed
rule came out in 2020,
right before the
end of the Trump
administration.
Trump number one.
And so the SEC passed
his proposed rule.
And I'll go through
what what it is
so that you guys can get
an idea of what it is.
And, you
know, then then the
election happened,

(10:33):
Biden got elected,
there was a new SEC
commissioner.
They just got tabled.
And so even though
the proposed rule
was supposed
to go out to comments,
there was like a 30 day
comment period.
Presumably
they got comments back.
And then the next step
would have been
to put forward
a final rule
based on the comments
and the feedback
on the proposed rule.
And I was saying back
then, you know, it
probably takes 6
to 9 months, you know,
and then
another probably,

(10:54):
you know, 60 days for it
to be officially
on the books.
And then just
nothing happened,
nothing happened,
nothing happened.
And I finally just
stopped talking about it.
And then we found out
through some
other colleagues
who called the SEC
and they're like, yeah,
that's
just not a priority.
And so they
basically tabled it
for the last four years.
But I was,
you know,
one of my predictions
of the Trump
administration was that
this would come back,
and my thought was
that they were going

(11:14):
to basically
look at the proposed
rule,
probably tweak it
a little bit,
and then put out
a proposed rule again
for people to look at it,
make comments,
and then come up
with the final rule.
But since they
already did comments.
And all that stuff,
could they just
go based off
the previous.
One? Theoretically.
I mean, they could
they could just say, hey,
we already came up
with a proposed rule,
but remember,
it was a
different commissioner,
different staff,

(11:34):
different team.
And so
they're going to want
to look at it.
And my guess is
they'll probably
my guess
is they'll
probably put it out
to, to to comment again.
And by the way,
we're not even there yet.
Like,
so what they've done
now is
they've
put it back on
the agenda to
review it again
like it's on
their agenda now.
They're
they're getting together.
I think it's about two
and a half weeks,
maybe three weeks

(11:54):
where they're actually
talking
about reggae as well,
but they're
talking about this
final rule
and what it is
essentially.
Is
it is going to allow
people
to make introductions,
almost like it's
called the find a rule.
So it's like
you're introductions,
but you're allowed
to make introductions
of investors to sponsors
and then get paid
transaction
based compensation

(12:15):
like get a commission.
So it exempts
you from being a broker.
If you can fit into
this kind of narrow,
kind of narrow
but not super narrow,
but like
if you can fit into the
into the terms of what
I'm about to talk to you,
then you would literally
be able
to refer somebody.
I could refer
somebody to Jay and say,
Jay, I've got Bobby here.
He's looking to invest.
I'll make
the introduction,
maybe even get

(12:35):
a little bit involved.
And then if if Bobby
invests with Jay
for 100 grand,
we can agree that, hey,
you're going to pay me
a 5% commission,
for example.
That's why it's exciting.
Now, there are
some limitations.
So so let me go through
some of the limitations.
But that's the premise.
The premise is
I can start
sending referrals out,
making introductions,
and not have to have
a broker dealer
license
and still get
paid transaction

(12:55):
based compensation,
which is why
it's so exciting.
But there are
some limitations.
So let's talk
about some limitations.
The first one is.
Well,
and just to clarify.
To Marie,
so these are
the limitations
from the past
proposed rule. Right.
So that's. Correct. Yeah.
So yeah.
So before let's
even I know it's
we're going to really
this is like the mother
of all hooks era.
We're just going
to stretch it out
and not get into it.
But yeah.

(13:15):
So the proposed rule was
sent out again
five years ago in 2020.
And now they're
revisiting that rule.
Right?
So there's about a 37
page proposed rule
which is out there
for everybody to see.
And if you want
to link it to the,
to the, to the show
notes, we can
and then they're going
to be looking at that,
revisiting it
and then figuring out
what they're going
to do with it,

(13:36):
whether they're
just going to say,
hey, let's
just put it out
for comments again,
or maybe just, hey,
we already have comments.
Let's just
take the comments,
put it in a final.
There's a diff
a bazillion
different ways
you can go with it.
My gut tells me,
and I don't have
any insider info,
but my gut tells me
they'll just
probably put it out
to comment again
and there might
be some tweaks to it.
But generally speaking,
the the parameters

(13:56):
that they put last time
was that you could refer
or make introductions
to a accredited
investors only.
So that's
kind of like your first
main thing, right?
Which kind of makes sense
because if I'm making
an introduction,
the idea is like, hey,
they're sophisticated
enough.
They can kind
of understand
what's going on.
They can appreciate the,
you know, the fact that.
There's one
you can advertise
for to accredited
investors anyway. Right.

(14:17):
So like it's.
Well so let's,
so let's, let's define
a couple of
things though.
So we're talking about
the syndicator right.
The cat
the person that's
putting the deal together
that's called the issuer.
Right.
Because it's issuing
the securities.
And then there's
the finder. Right.
Who's actually making
the introductions
to the issuer.
So Jay Kyle AJ as well.
You guys are
you guys I've lost.
When you guys
raise capital.

(14:37):
You guys are kind
of the issuers
even though
your LLC is the issuer.
And so let's
for this example, call
Mauricio the finder
so you and I can
get into an
arrangement, say,
hey guys,
I know a bunch of people
or I'm
going to go out there
and I've got people
that I know
want to invest,
which is actually
probably accurate, right.
Especially on
especially CPAs
if you're a CPA.
Listen, I.
Was just about to say my
my CPA is
going to love this.

(14:58):
You guys
should be jumping up
and down because,
you know, as
maybe not just a CPA,
but if you're
a tax strategist
and you're like,
hey guys,
you guys
have got to go invest
in oil and gas,
you got to invest
in real estate.
You got to do this.
You got to do that.
There's always business
challenge
where like CPA was like,
hey, you want
to invest in oil
and gas guy?
Go talk to
Bobby over here.
Oh you want to invest
in real estate?
Go talk to Jay and AJ
and those guys have great

(15:18):
you know whatever.
And but they can't
get compensated
right now. Right.
And so there's actually
some CPAs
that try and figure out
how to get around that.
And you know you call it
a marketing fee,
you call it whatever.
But right now
those guys
are going to be able
to say, hey, man,
I got a client.
They need to put $1
million into,
real estate.
They need
the depreciation.
Now, that bonus
depreciation is back.
I'm going to make
an introduction,

(15:39):
to both of you guys.
So, you know,
maybe one's multifamily,
one self-storage.
And, hey,
if they invest
in your deal,
we have an agreement
that you'll pay me
5% commission.
Hey, here's.
My affiliate link.
Yeah,
it's like an affiliate
link. Exactly.
So you said
the first rule
is the person that they
they refer that invest
has to be accredited.
Does it matter
if it's a 506
B or 5 or 6 C

(15:59):
deal, meaning.
It has nothing
to do with that?
Yeah, that's
that's on the issuer side
that we have
nothing to do
with the issue.
I'm just saying
if I want to make
an introduction
to you guys,
the person
that I'm introducing
has to be accredited.
And I don't have
to verify.
I just have to
have a reasonable belief
that they're accredited.
I'm not going
to start pulling
and looking at
their tax returns.
But if I believe
and have a
reasonable belief
and maybe best practice
for me
to get a questionnaire

(16:20):
from them, who knows?
But if I have a
reasonable belief
that my person
is accredited,
then I can make
that introduction
to you guys.
Okay, that's
step number one.
Step number two
is I cannot go
and start advertising
to go find
a bunch of investors
to refer to you. Right.
Like they have
to be already.
It's almost like
you have to have a
I as defined
or have to have
a relationship already
with the people I'm
going to be referring to.
Otherwise everybody's

(16:40):
going to go,
yeah, everybody's
going to go on
social media
and try and find LPs,
and then they're
going to make.
That's not the point,
right?
The point is,
I already have
people in my world,
whether they're clients
or their family members,
and I already know them
and they're accredited.
And I can be like, hey,
I know you're looking
to put some money
to work.
Let me make
an introduction
to my buddies.
I know them well,
and I
make the
introduction right.
So that's the other thing
that that's
really important.
There has to be

(17:00):
a written agreement
between me and you guys.
So between the finder
and the issuer,
there has to be
a written agreement
that says, here's
what I'm going
to be doing,
and this is how much
we're going to get paid,
and kind of what
kind of the scope
of what our agreement.
Because technically,
this is an
important point.
I think
technically I am,
I am,
I'm affiliated
with you guys. Right?
I'm kind of working on
behalf of the syndicator.

(17:21):
Right. I'm the finder.
I'm working
on your behalf,
and I'm going to.
I'm going out there
and I'm, you know, I'm
finding people
to bring to you.
So we have an agreement
that, hey,
if if I find somebody,
if I bring somebody
to you,
you're going to pay me
x percent, right?
So that's kind of what
that's, that's
kind of the
the big parameters.
There's obviously
a disclosure requirement
which makes sense. Right.
So if I have again
I'm going to use this
fictional or what's.

(17:41):
So my mom
I'm going to refer you
my mom right.
So my mom
I'm going to refer you
to my mom.
And not necessary because
your mom and I are close.
So my mom's accredited.
Obviously, I know my mom,
so I didn't advertise it.
So I have to disclose to
my mom
prior
to making
the introduction
that, hey, I'm
going to introduce you
to these guys.

(18:01):
And we have an agreement
and I'm going to
if you invest
with these guys, I'm
going to get a cut.
I'm going
to get a percentage
of whatever,
whatever the arrangement
that you and I have.
I got to disclose
that to the person I'm
going to be referring you
to ahead of time,
which kind
of makes sense.
What's interesting
in this, in this,
in this thing is
there are
actually certain
things I can do
is the finder
that goes
a little bit beyond
just making

(18:22):
the introduction.
Right.
Because finders
usually just make
an introduction
and get paid for
in the introduction.
But according
to the proposed
rule, anyway,
there's a few things
I can do.
And I wrote them down
because I didn't want to
miss it.
Number one is I can,
obviously I can identify
and screen the investors,
so I can
I can send them question.
I can go to my list
and say, hey,
here's a question here.
I want to make sure
you're accredited.
And then I can find out,
you know,
what kind of deals

(18:42):
you're looking for?
Are you looking for
cash flow
or are you looking for
appreciation,
or are you looking for
tax benefits?
Like what is it
that you need so I can go
maybe connect you
with some people I know.
So that's
something I can do.
I can actually distribute
the PM
and the
disclosure documents,
so I can actually have
a copy of the materials
and I can email it
to them,
and say, hey, by the way,
J and Kyle and RJ,

(19:03):
they have this
great deal.
I just don't
have a great deal.
But they have a deal.
And here's
the information
if you want to
take a look at it.
And so I can send
that information to them.
I can discuss
the information
about you guys.
So, you know,
when you're
raising money,
you obviously
give the investors
kind of your bios
and your information
about you guys.
I can discuss
that information
with the person
I'm referring to.
Hey, this AJ
has been doing this thing

(19:23):
for a lot of years.
He's experienced.
Kyle's been doing this,
AJ is the king
of self-storage,
blah blah, blah.
I can do all that stuff
and I can even
arrange meetings
between the finder
and you guys
and I can
actually participate.
I can actually
be on the call
so I can schedule
a zoom call,
and I actually
can be on the call
right now.
I'm not saying
I'm there to say
anything substantial,
but I can be there.
I can make
the introduction,
but I can

(19:44):
physically be
on the call,
which I thought was
was pretty interesting.
What I cannot do is stuff
that's typical
for broker stuff, right?
So I cannot
provide advice
on whether this is
a good investment or not.
You know, whether you
they should invest
what the valuation
of this thing.
So I got to stay away
from giving you
my opinion
as to
whether this
is a good deal or not
or whether
you should invest in it,
because that's
broker activity.
So stay away from that.

(20:05):
Let me ask you a question
before you go on.
And I don't
mean to interrupt,
but I'm going
to interrupt.
Let's say I'm
I want to make
an introduction.
I invest with, with AJ,
and I obviously love AJ.
I love his deals.
And my brother
comes to visit me
from out of town.
He's like,
I'm looking for something
to invest in.
I want to invest with AJ
or I want I'm sorry,
I want to invest
for somebody.

(20:25):
Do you know anybody?
And I'm like, okay,
let me introduce you to
to my friend AJ.
I'm getting ready
to invest in this deal.
He's like,
I don't even know
how to to evaluate deals.
Can you walk me
through the deal,
tell me if
it's a good deal,
etc., etc.?
That's a
definitely no no.
Even if it's my brother,
you're not.
You can't be.
You're not an investor
representative.
You're not a
broker dealer.
You're not there
to comment

(20:46):
about the quality
of the deal.
You're literally
thinking of it as you're
making the introduction.
Your job is to make
the introduction
got it right.
So you want to
stay away from
you know,
you shouldn't
even be going through
the people
you can send them.
The PM is like,
hey, I'm in.
Like you
said, I'm
investing in a deal.
I've got the BPM here.
Let me forwarded you
the business plan,
the PM take a look at it.
And then you can
tell us something

(21:06):
about AJ.
Hey, look,
I've known AJ
for ten years
and he's considered
one of the top
self-storage guys.
And he's got a huge team
and he's done.
I've been, like,
all that stuff.
You can talk about AJ,
but you don't
want to be talking about
anything specific
about the deal.
That's super interesting.
To me
because it's
kind of like one
or the other, right?
Like you either
have to be like
super involved
in the deal
and know
everything about it

(21:27):
and be part of the group
in order to raise money,
or you kind of
have to be not involved
at all.
It's one or the other.
Yeah.
And, and I
and I remember
writing about this
when it came out,
I'm not even sure the
I mean, I don't know
if you could be
a coach, a real cop
and do that.
I think if you're it,
I think
the way it would work

(21:47):
for the cop
is that people
who are now
improperly being a cop
should just not be a cop
and just be the finder,
like,
not be part of the thing,
because the other thing
you can't do is
you can't be involved
in helping structure
the deal, right?
So you can't be like,
hey, you know,
AJ's got this.
Well, actually,
in Syndications,
they don't
really structure
the deal much.
There's no negotiation.
But theoretically
you couldn't
be like, hey,

(22:07):
let's talk to AJ.
You know,
I know
you want to put
in a lot of money.
Maybe we can negotiate
better terms.
And if you put
in half a million,
you can't do any of that
because again,
that's broker
dealer stuff.
You can't handle
any funds,
which I think
makes sense.
But you can't beat
this is the key,
which I think
was what I remember
last time,
five years ago
on the Cop model is
you cannot be involved
in the preparation
of the materials,
right, of the GM

(22:28):
and the
marketing materials.
And so that's where
the cop is like,
okay, well,
if you're part
of the cop,
you're you're,
you know,
you're part
of the sponsor, you're
kind of involved.
That's
a little bit of
a gray zone.
Like arguably
you are involved
in the preparation of the
even though you're
not the
individual, maybe,
but the company
as a whole,
the GPC team
is the one that's
putting together
all the
marketing materials
and the

(22:49):
disclosure documents.
So you being involved
in that may or may not.
That's a little bit
of a vague thing for me.
So my my whole point is I
the reality is
let's be honest. Right.
The reality is
there's a lot of co
GP's in there
that are primarily
there to raise the money
and they're,
they're trying to
manufacture duties
for them
so that they can fit
into this exemption.
So if this were to pass

(23:10):
and again
I probably should have
started with this.
This is not law.
This is not a final rule.
There's not even
a proposed rule
because the proposal
is sitting there
and they're
revisiting it.
But this is nowhere
we're not.
We're at least
6 to 12 months away
from this
actually happening.
But so it's not don't
go out there
and start doing this.
Right.
So just let's make sure
maybe we should
start with that.
But let's reedit this.
So that's at

(23:30):
the beginning of
this presentation.
But but if you're one
of those co GP's
that are basically
forcing yourself
to be a co GP
so you can fit
into this exemption
even though it's
not a clean, clean fit.
What I think I would
be recommending
if this ever passes is
I would say
forget about the code,
you be don't be a co
GP, don't
come in and raise
money, primarily

(23:50):
raise money
and get 10% of the co GP.
Just act as a finder
and make the
introductions to the team
and if they invest, you
just get your percentage
of whatever
you've negotiated.
Maybe it's a GP share,
maybe it's a class
B share or whatever,
but you're not actually
part of the Cogs
making decisions
or actually
being involved,
because I think
that might violate,
you know,
one of these provisions

(24:10):
of not not being,
participating in the,
in the marketing.
So, so what
I'm hearing is,
the role of the finder
has to be arm's
length on both sides.
You have to be
arm's length
from the person
you're referring.
You can't basically
be an advisor to them.
You can't, like, sit down
and walk them
through the deal and
and help them with it.
And on the other side,
you have to be
arm's length

(24:30):
from the GP's
and the syndicators
and the issuer.
By not participating
in creating
the documents,
by not working
on the deal, etc., etc..
Is that kind of fairness?
I would I would.
Say so, except again,
I think
I mentioned earlier,
an important point
though, is
that you are considered
an agent for the issuer.
So you're an agent of the
GP team or the GP team.

(24:51):
Again, this is proposed.
We don't have anything,
but I would almost
stay away from like
because if you look,
if you're a
you're either
a legitimate cog
or you're not, right.
So if you're a
legitimate co
GP doing real work,
then we don't need this.
It's like you're you're
there, you're doing
the work and you're
bringing in
as part of your thing.
You know, part of it
is you bring the cap
and no problem,
if you're not a
legitimate piece,

(25:12):
then I would say,
get out of there, right.
Just become a finder
and just make sure
you're abiding
by all the limitations,
all the regulations,
and just get paid
transaction based comp
based on the arrangement
you've had with,
with the thing.
I guess
that's why, like, I'm
when I'm
thinking about this,
I don't know how much.
This will
necessarily change
things just because.

(25:32):
The reason that people.
Become GP's
to raise money
is because like.
When at.
The beginning you
don't really
have the money
to pay them, right?
Like that
money has to come
from somewhere.
You'd have to take it
out of the deal
in order to pay
somebody to do that,
because there are
ways legally right now

(25:53):
to kind of
since this
has been going on since,
you know, only 2015
or whenever,
where people
have been trying
to raise money for deals
without actually
setting up the deal
or doing due
diligence and stuff
like that,
there are ways now with,
you know,
the fund of funds model
where basically
you can raise a fund
and, and the way

(26:13):
you could set up
in the syndication
that you
they can get extra shares
and that can be
their compensation
and stuff like that.
There's legal ways.
There's that tribe vest.
I know that
we talked to you
before AJ, where you can
set up like a
little mini,
fund to funds
without having,
like, all the costs
because the fund of funds
can get expensive.
So there are ways
for people
to actually
just get cash.

(26:35):
You know, I have I,
I've been on record
with a lot of issues
with the fund
of funds model,
but the only
reason people
are doing
the fund to fund
model is to get around
the fact
that they're acting
as unlicensed brokers.
But if this rule passes,
there's no need for you
to put together
a fund
of funds to go raise
half a million bucks
or a million bucks.
You can just
make the introduction
and get paid.
At the same time, though.
Like I've.
Found in this.

(26:55):
Space,
people can get
very protective
of their investors.
And it's it's
one of those things
where like,
hey, like
you're going
to have to have
some sort of agreement
that like,
hey, if I pass
this investor to you,
I get 5% of what
they invest this time
and every
subsequent deal.
And then you kind of
have to just
trust that person

(27:16):
that they're,
you know, keeping it
tight knit
and keep
and treating
your investor
well and doing stuff
like that.
Versus
I find that people,
you know,
if you partner
with people
and stuff like that, like
they are very protective
in their investors.
They don't want
anyone else
talking to
their investors.
They don't like
they want to kind of
keep it close knit.
And so like in
the instances with these
like fund of
funds things,

(27:36):
someone with a fund
of funds,
like I know
the one guy who like
you can't even send,
updates to
their investors.
The has to
update has to go to them.
And then they tell
their investors
and they do everything.
On the
on the fund's model.
Right? Yeah.
That makes sense. Yeah.
Because the investor is
the court.
The investor is the fund
that you manage.

(27:57):
So yeah that
would make sense
if the the update goes
to the investor,
which is the fund
which you manage.
And then you would
then pass
that along to
your investors.
So I get that. But like.
They don't even.
Want you talking
to their
individual investors.
So like I don't know.
I it's.
I thought,
I thought it was more.
Interesting
when I thought
you could kind of
just give up now
because that's the. Yeah.

(28:17):
And I think
you still can.
It's just again,
you know,
we've talked about this
before.
There's the
vernacular of GP.
But remember on the GP
there's the management
side, the manager
and then there's
the carried
interest part,
the class B
for most of you.
So I just like
there's
a lot of CPAs out there
that are just
on the carried
interest part.
Like they don't
want to be
they're not
on the market.
A lot of KPI's aren't
even on the frickin thing
anywhere.
They're just

(28:37):
they just own
a piece of the
carried interest,
the 20% of the 30%.
So I could see
a situation like that
where like I say,
hey guys,
I'm going to
I'm going
to refer
a bunch of people to you.
I don't want to get cash.
So in exchange for me
referring these
5 or 6 people,
I just want,
you know,
2% of
the carried interest,
like of the class
B, I don't want anything
to do
with the management.
I'm not part
of the meetings.
I'm not involved at all.

(28:59):
My compensation
is going to be
2% of the class B,
you know, 2% of the 20%
or 2% or 30%. Right?
I can see
that arrangement
being made.
Yeah.
For me,
this is a game changer
in somebody
that raises the capital
for us.
I have a lot of investors
that I'm positive
know other people
who might be willing
to invest.

(29:21):
It's just getting them
to feel like it's
worth their effort
to go out and talk
to those people.
And and so, like,
I had somebody
come to me today
and say, hey,
I have a, he's a doctor.
I have a doctor friend
who's looking to invest.
And I've been trying
to get them to, to
to reach out to you.
I know he's been busy,
and, I would have loved
to have been able
to say, that's great.
And if.

(29:41):
Yeah,
if he does
happen to invest,
I will give you 5%
of whatever.
Invest just as a as a
thank you referral
fee, commission
finder's fee, whatever.
Or maybe a discount,
maybe a discount
to their investment.
Like and instead of 50
K it's 40 K or whatever.
I don't know. Right.
Could let me
ask you a question.
Could I say
to that investor
I'll put you in
a different class
A shares
like something that gives

(30:02):
more profit
or a better split,
or is that not fair
to other investors.
Or not in writing?
Well, I'm not writing.
But again, compensation.
Compensation, right.
Everybody gets
caught up in this idea.
The compensation is cash.
But compensation
can be shares.
And whether they're co
GP shares,
whether they're preferred
shares, whatever
it is, again,
as long as it's disclosed
to all
the other investors
and saying hey
part of our

(30:23):
you know,
when we do
Syndications now
some some clients do
use broker dealers
and they pay commissions
and that's just as close.
Hey, some
percentage of our raise
is going to go towards
paying these commissions
to these broker dealers.
It'll be the same thing
as like
part of our
raise is going to go
to giving shares
in this preferred thing
which will,
you know, dilute
everybody else.
And but you know,
in the long run
it's still
it's still better.

(30:44):
But as long as
it's disclosed,
you should be
I don't think
that's going to
be an issue.
I mean,
I could
literally see people
making a career
out of being a finder.
No, I mean,
trust me, I
thought of that.
I know again,
CPAs probably,
but even me, it's like,
you know, people
ask me all the time, hey,
do you know anyone?
And I tend to stay away.
You can't advertise
though, right?

(31:04):
So, like,
you'd have to
basically set up
a side business
that is
maybe an
educational business.
Well that's interesting.
So,
so when we talk
about advertising,
let's say
I wanted to be a finder
for AJ.
I have a big
mailing list.
I have a big investor
list.
Could I reach
out to that list
and say, hey,

(31:26):
I know of this
this self-storage deal.
If anybody is looking
to invest
in self-storage,
if somebody is looking
for like a five year old
ground up
self-storage deal,
come talk to me.
I'll be
happy to make
an introduction.
Could I just send
something out to a list,
or is that marketing
public like.
Yeah.
So so
so the first thing
I would say is
you want to cut that.
Listen to
who on the list.

(31:47):
I would use
the preexisting
relationship
kind of thing.
Like how many
on that list
who do you really know?
Right.
Who do you really have
a relationship with?
So let's cut it down to
your 10,000.
Down to two. Right.
So cut
everybody that you know.
And then from there
you still don't want to
you can't
generally solicit.
So there's an argument
to be made
that if you email blast
10,000 people,
even if you say you

(32:08):
that could be considered
general solicitation.
So I think
this has meant that
I think
the gist of it or the,
the intent
is really for this
to be more one on one,
one on one warfare.
So, okay, coaching.
Program,
I think this
would be great
for someone
who's got a
coaching program
like even you, Mauricio,
like you have
a coaching program
for syndicators
Like you could just float

(32:28):
deals to people
who are in your coaching.
Program, right?
Yeah.
Like if
I was on a coaching call
and somebody said to me,
hey, I've got a fund
and I'm
kind of looking
for stuff.
If anybody knows
anything about blah.
And then I could
reach out to them
individually
and say, hey,
you know what?
Just in calling
AJ, these guys have
a deal.
You know,
this is my understanding
of the deal.
Here's the deal.
Would you like
I'd be happy
to make an introduction

(32:49):
and I can do
all the steps,
and then I can make a
one on one introduction,
I think.
I think
blasting it out to
your list
is probably problematic.
But your example
you gave Jay,
I think is perfect.
Like you have
an investor,
you know,
they have
a bunch of people
or you just met
one person
and they're
looking to invest
and you want
to give them to AJ,
but you've got to have
that agreement
in place
ahead of time, right?

(33:09):
You've got to have
that arrangement,
that contract with AJ,
that written agreement
that says AJ, anything
I bring to you AJ
if they invest,
you're going to give me
X percent of the deal.
And as long as it's
disclosed to the investor
they acknowledge
that you gave him
all those disclosures.
Again
it's all proposed, right?
We're all kind of like
we don't know what
the final rule is.
I'm I'm sure you're going

(33:29):
to keep us
abridged of it.
You kind of
have your finger
on the pulse.
And but for the record,
there are, as I said,
there are ways that we
could go out and,
you know,
with fund of funds,
models, this tribe vest,
that I brought up,
there's other options
for legally people
going out
and getting

(33:49):
people together
to all invest
in one deal.
So AJ,
any final thoughts?
I agree with everything
Mauricio says.
AJ has
been just
sitting there
making a spent
the last half hour
making a list
of all the people
he knows
who can can
bring him investors.
I've just like messaged
a million people
my team is on.

(34:09):
And he's get
he's scheduled.
The, is scheduled
for the messages
to go out one year
from now in 12 months.
Then this message.
Got to be on
top of these things.
Guys. Yeah. Exactly.
Yeah.
I think, you know,
I still think CPAs
are probably
one of the best.
And I'm sure
there are
other industries
that are
really beneficial.
I think even for
folks like me,
I mean, I'll get
I'll get questions
all the time about, hey,

(34:30):
do you have anybody?
But then there's
a potential
conflict, right?
So there's all
these things
have to be disclosed
in the agreements
and in the,
you know,
all the conflicts,
potential conflicts
of interest.
You want to be
disclosing those.
But do I think CPAs man,
the well,
strategists,
all all of our
CPA friends
that are already making
those strategic
recommendations
to invest
in specific deals
now they can have
like a laundry
list of options

(34:51):
for them to go,
hey, you need
to go invest in oil
and gas.
Here are five
people that I
that I know
well I respect.
Here's the background
information for them.
Let me make
the introduction
or let's let's schedule
a zoom call.
Let me make
an introduction.
Let's get
let's all get together
and do a call.
I can
then make
the introduction
the call, step away
and then let
you guys connect
and you know easy.

(35:12):
To keep track of it
if you're the CPA too.
Right.
You see all the money
coming in and out.
Yeah that's a good point.
Yeah. Awesome.
I think,
coaching programs do.
I think that
might be a thing?
Anyway,
we got to move on.
We got to talk about the,
our Bebe.
Bebe. Bebe. Bebe.
No.
The big, beautiful bill.
I do want to preface.
This, though.
I'll give everyone

(35:32):
if they want.
In the. Beginning.
If you want to talk about
the bill in general,
if you want
to talk about,
like, any issues
you have with the bill,
get it out of your system
in the beginning.
Because then
I want to just shift
on only talking
about real estate stuff.
So obviously there's
a lot of critics
of the bill,
mainly about the fact
that they're
not even hiding
that this bill is adding

(35:54):
to the deficit,
at least back in the day.
They used to hide
it, right?
They used to say, oh,
this is,
we're going to pay
for these,
these tax cuts
by it's going to increase
business activity here.
And the
increase in tax revenues
there is going
to pay for it
over the next ten years
that like,
you know, kept them
being able
to keep on a brave face
and saying
this isn't going

(36:14):
to increase the deficit.
Now, they're
not even trying.
This is just a
deficit bill,
but we need to
get something done.
And it is
beneficial for real
estate investors. So,
Jay, I'll let
you you know,
I'm sure
you got some issues
with it to start,
but everyone
kind of gets there.
One thing to say.
And then we're going
to just talk
about real estate.
I don't have my issues.
I mean, the bill is,

(36:35):
I it's no better or worse
than any of the,
the crap the,
the Democrats passed
the last four years
and overspent and,
and put in their pork
and their pet projects.
I mean,
my biggest problem
is, is just like on
the other side
is, is the,
excuse me, the hypocrisy.
We talk about
we've got to

(36:56):
cut the deficit,
and we listened
for six months
about how Doge
was going
to save the country,
because if we didn't
get the debt down,
we're going to implode.
And, now
we're adding 3 trillion.
And we talked about,
how we need to get rid
of all of these big bills
and we need to have
single issue bills
because it's too easy
to hide stuff in there.
And now we have
the one big,
beautiful bill.

(37:16):
There are big bills
in there,
beautiful bills there.
There are no big,
beautiful bills.
And then.
It's.
Impossible for like,
these senators and.
Congressmen.
And I get it.
It was the
it was literally
the only way
to pass the bill,
because of the
reconciliation process
and getting the debt
limit increased.
It had to be this way
or it had to be,

(37:37):
180 degrees different.
And then the.
Taylor Green
that like six days
after she voted
yes for it,
she came back and be.
Like,
I didn't realize that
this was in the bill
that I voted. For.
I mean,
it was the Nancy Pelosi.
You got to pass it
before it,
before you,
before you can find.
Out,
you can actually
upload it,
you can upload it
to ChatGPT
and then ask it
real fast, like,
hey, what's
in this thing? Yep.

(37:57):
And then the last
piece is just,
I hate the Medicaid cuts.
They're they're
I mean,
we talk in this country
about how it
how important it is
to protect kids
and protect people
that can't
protect themselves.
And I
there are
plenty of people
that that
that suck off the tide of
the government
and are collecting,
entitlements
that they don't deserve.

(38:18):
And people
that could be working,
that aren't working.
But there are also
plenty of
people out there
that that really
can't protect themselves.
Kids, old people,
disabled people and
cutting Medicaid
and even Medicare.
A lot of people
don't realize this bill
cut Medicare,
not within the bill.
But based on
the reconciliation
process, it's
going to be required
to cut
about 400 billion

(38:38):
in Medicare,
just to get
the numbers to work.
And so I don't like that.
But again,
I don't blame
Republicans
any more than
than Democrats,
who did the
exact same thing
for four years before.
Pisses me off
on both sides equally.
Yeah.
I guess when you talk.
About hypocrisy,
I like my problem
with the Medicaid
and the Snap
and all that stuff is

(38:59):
what they did is
they added a shit
ton of red tape, right?
Like they
yeah, there's actually
no cuts to Medicaid
or Medicare. None.
Well, so.
But de facto they
they're not. Dumb. Right.
If you add red
tape and more steps
and you know
go to monthly
reporting go to
to instead of quarterly,
you go
you make
all these changes.
They know the data

(39:20):
by by default.
When you make
those changes,
less people
are going to use it
because it is
harder to use.
And I know Republicans
know that
because when it comes
to cutting red tape
for small businesses,
the exact.
Same senators and.
Exact same Congress
people.

(39:41):
Will scream
at the top
of their lungs about.
How we have to cut down
the red tape.
We have to cut down
all the procedures
that have to be done
for these
small businesses,
because these
small businesses
are hurting.
But when it comes to
people on Medicaid,
when it comes to people
who need the Snap
programs,
they're doing the
exact opposite
where they're adding more
red tape.
And I would argue
the people

(40:01):
who are
the least likely
to be able to,
like, upload
a PDF,
that sounds very easy
for us to do.
Oh, all you have to do
is upload a PDF,
and all
you have to do is,
you know,
there's just a few steps
you have to do online.
But for low income people
who maybe
don't have internet
access,
they go to a
local library
to do this
and stuff like it's
it's it's a huge hurdle

(40:22):
for them to cross.
So the what
new steps were added?
Well more. Reporting.
First of all,
you have to check in
every month
instead of, quarterly.
As far as.
What do you have
to check in for?
So I know there's more
verification of
the current rules.
So you have to abide by
current rules,
which there were
no recourse for prior.

(40:43):
But but the was.
Just, as you said,
the verification.
There's
so many more steps
to get things verified
and there's so
many stories.
Verification
is every single other
government entity
now where it
didn't before.
So I actually built
a whole thing out of this
because I was shocked
when I heard
about all the Medicaid
and Medicare cuts.
I'm like, what the heck?
But there's actually
no other government,

(41:06):
at all.
Not one that we have
that allows
for the government
to not
to disperse benefits
without having
those things.
So if you look
at everything from child
tax credit,
earned income
tax credit,
stimulus checks, mortgage
deductions, student
loan forgiveness,
Medicare enrollment,

(41:26):
VA health care, ACA
subsidies, Cobra
coverage, retirement
benefits, SSDI, SSI
for a s, a section
eight housing snap.
The new Medicare rules
abides those
all of those
you cannot get
if you do not do it.
But Medicaid did.
So now you have to follow
the same rules

(41:47):
that we had to
for everything else.
And I mean. But like in.
General, though,
there's expanded
work report
reporting requirements.
People have to work
more like they have.
They have to work longer
so they don't have to.
Verify the work hours.
But the requirements for
they now,
I think, what is it,
eight, 80,

(42:07):
80 hours a month now
they upped the age.
So now it goes up to 65.
It was 60. It was 55.
They have to
what else was there?
I don't know,
I think I'm not going to
I wasn't prepared to
to have to list
all of these.
But I do remember
looking through it all
and just saying,
this is a lot more
red tape.
This is a lot
more frequent.

(42:28):
And for people
who are on the low
end of the
on the poverty scale,
a lot of these people
aren't very good
at this stuff
anyway, and
it's just going to
they know that creating.
More.
Reporting requirements,
more red
tape is going to lead
to a lot of people
not being able to do it,
because, as I said,
they argue that exact

(42:48):
same thing
when it comes to
when it comes
to small businesses,
small businesses,
when they come
up for cuts
and then and, and for,
more reporting
requirements for
things like that.
They all scream
at the top of their lungs
that they
we need to cut the,
regulations.
We got to cut red tape.
We got to cut
reporting requirements,
we got to cut
all these things.
It's it's too cumbersome

(43:09):
for these
small businesses.
They're getting
overburdened.
But at the same point,
they're saying
this is a good idea.
So I guess
that's my problem.
And I want
I want to get
to the real issue stuff.
But I do want to say one
because I want my one.
Cut it.
The non
real estate stuff.
But like this
I think highlights
like all these let's
just take Medicaid
like everybody
is talking about.
Let's just even assume
there's
some sort of cuts.

(43:30):
What pisses me off
and this is just
this is not
just this bill,
but it's just
throughout history.
Right.
And so you start
looking at the pork
barrel, right?
That's crap
that the
federal government
that our taxpayer dollars
are going towards,
every dollar
that's going towards
one of these pork
barrels is a dollar
that could have
gone to Medicaid,
it could have gone to
the homeless.
It could have gone
to whatever your causes.

(43:50):
It could have gone
to that,
the one that
stands out the most.
And there's probably
and I'm not prepared
to talk about it.
There's like
100 of them is
like we're spending
think about this.
And I know it sounds like
not a lot of money,
but $85 million
to transport
the space shuttle
from the Smithsonian
to some other museum
in Texas, like
in Houston, Texas.

(44:11):
The the government
is spending money,
not private,
not charity
like the government
spending PBS and the,
you know,
the public
broadcast system.
Like I don't know
even know why
we have a public
I understand
why we needed it,
you know, 50 years ago,
a hundred years ago.
But in today's
day and age,
why are we spending
$500 million
to go towards
public
broadcasting systems?
And the thing

(44:32):
we're not going to
go to Medicaid.
So every dollar
that's going to
these pork barrels
that are going to
the Alaska fishermen
so they can have me like,
it's so specific
that if you just add
every dollar that goes
that is taken away
from Medicaid
and everything else
that you feel
is important.
That's what
drives me crazy
about all this stuff.
It's like it's
not necessarily
everything else,
but it's like,
I feel like
we should be
starting the budget

(44:52):
with $0
and start building
from zero versus starting
from where
it was last year
and figuring out,
we got to cut this.
We got to add this like,
no, no, we
we start from zero
and we've got
$3 million of
or $3 trillion of revenue
coming in from taxes.
We got to figure out
where we are,
where are we going
to spend that 6 trillion?
Let's start
with the basics.
Social Security,

(45:13):
Medicaid,
national defense,
whatever interest
on the debt,
that's there's
certain things
we just can't mess around
and start that way.
Because
why am I paying any
why am I
paying any
amount of money
to transfer
the shuttle from
one museum
to another is beyond me.
Fair enough
to want to get into the.
The real estate, though,
because.
I mean.
Yeah,
I'd like to give

(45:33):
my criticism first,
and I might talk.
All right, go ahead, sir.
So,
first of all,
the criticism
is it's a monstrosity
of a bill
that kills the economy.
It destroys our ability
to lower interest rates.
Not only did they
not go far enough
on the cuts,
they didn't do anything.
They added to it.
It's,
not only hypocrisy,

(45:55):
it's disgusting.
And I get the argument
where they're like, we.
It wouldn't have changed
no matter what.
So we got to
get our stuff
that we wanted
because of how
it's set up.
But it's like,
you didn't even try.
You didn't try.
They they just wanted it.
It's disgusting.
And it kills the economy.
It's like literally
putting a weight,
like 1,000 pound

(46:15):
weight on the economy
and telling it to swim.
It destroys our ability
to do financing.
It kills any long term
economic gains.
There's a
direct correlation
with output and debt
over the economy.
You slow the economy down
and you kill its ability
to recover.

(46:36):
It's horrible.
It's the single thing
that the worst thing
the government could do.
I hate
almost everything
about it.
But I do actually
to Medicaid America.
That thing shocked me
because I thought
that Medicaid
and Medicare
was getting cut
because everybody said
it was.
There is no changes
in qualification
whatsoever for Medicare.

(46:57):
None.
The qualifications
didn't change.
And also for the, for it,
the only thing
that abides
is the already
previous qualifications
have to be done
and they have to be done
in the, certain way.
And so I've been having

(47:17):
this thought exercise
where it goes,
they state, well,
this means
that less people
will be taking out okay,
but if qualified
people can get it,
but they have to go
through the same routine.
And this is where
I started
to look at
government agencies.
And we're all
we all have to do it
from everything
from taxes to.
So if you don't go
through the
qualifications,

(47:37):
you don't get government
disbursements.
If you don't get
if you want
a refund on your taxes,
but you don't
do it in the right
time, in the right way,
get it certified on
and on. You don't get it.
So I, I think that's
the most ridiculous thing
in the world
that we hold it
it to,
but especially
that's presented
as we're cutting it.
Eligibility was not cut.
They've estimated
$84 billion
a year in fraud

(47:58):
in these programs.
84 billion simply.
Yeah, that's
that's 84 billion.
Is it like 84
billion is a far
shy of the 1.0 trillion
in Medicare
spending that
they're projecting
to go down.
So like
obviously what
they're cutting
isn't just fraud.
They're not
cutting anything.
So that and
I think
that's my
big thing with this.

(48:18):
There are no benefits I.
Don't know how to like.
I guess I can only refer
to all the
independent studies
that have done
that saying,
like how much like in
they literally say that.
I know that's
that's the crazy
thing about it.
So they say it.
But when you look at
there's no cuts
none the qualifications.
If you
just got to
upload the bill
to ChatGPT and ask it,
where does it say,
I mean.

(48:38):
I can't
I don't like everything
I read.
The word cut might be.
Might be the
this distinction. Here.
But they
but they are going to
their changes
are projecting $1
trillion less
in spending
towards Medicaid.
So you can call it

(48:59):
something different
than a cut,
but they're going to be
spending $1 trillion
less on Medicaid.
Not so unqualified person
is not eligible
for for it.
It's not the eligibility.
And I,
I'm, I'm trying
not to I'm trying not to
I know
I already spoke
my piece, but,
the issue,
the issue is that
the way Medicaid works

(49:20):
is that some of it's paid
by the government,
the federal government,
and some of it's
paid by the states.
And what the federal
government did in
this bill is it
said, is we're going to
we're going to reduce
the amount
of federal subsidy
to all of the states,
or I don't know
if it's all the states,
but at least,
many of the states,
not Alaska.
We're going
to reduce the amount

(49:40):
of subsidy
to many states,
and we're going to
allow the states
or we're going
to encourage the states
to increase
their spending
to ensure that there's
the same amount
of spending before,
but it's
not going to come
from the
federal government.
And then on the
Medicare side,
the bill says
absolutely nothing
about Medicare,
but there's a
whole separate
set of laws called PayGo
or pay as you go,

(50:00):
which basically requires,
that over the life
of a spending bill,
that it is budget neutral
and in this case, the
spending bill
over ten years.
By whatever
heuristic they use,
is over
by about 500 billion.
And so that's required
to, to be
cut from the bill.
That'll get cut
from Medicare.
So the bill,

(50:21):
the legislation itself
doesn't touch Medicare.
But in order to,
to, basically
put the bill into law,
Medicare is going to get
cut 500 million because,
500 billion
over ten years,
because of the pay
as you go laws.
But there's also rules
that anyone
that is qualified,
it cannot be cut.
So no qualified person

(50:41):
can have the benefits cut
at all.
So there's no
they don't
get a reduction
in benefits
and the qualifications
of the people
that get them.
Do
they increased
the verification laws
which they've
estimated by
people doing.
We have groups of people
that they believe are
aren't going to do it.
Now.
The thing

(51:02):
is, though, to
first of all,
like Kyle said,
everything you read
says cuts.
There are no cuts.
It doesn't exist.
I thought there was.
So I only
learned about this
like two days ago.
And I started
just diving into this
in the last 48 hours.
And I'm like,
I because I thought
they literally cut
not one qualification
though
from a person, but.

(51:22):
It will lead.
To cuts
and it will lead to less
funding.
And also
it doesn't lead to cuts.
It can't legally
it can't.
So you cannot cut
a qualified person.
J just
explain how
it will lead to cuts.
They're not doing it.
They're not
the ones doing it.
But other people
will have to do it
because of this bill.
It'll be it'll result in
I think what
you're saying is was
which
it was a
good distinction.
It will result in less

(51:43):
funding.
It will result.
And they believe so
how it's stated here.
And it is
they're saying
that approximately
seven people
will or 7 million people
in next ten years,
or roughly
655 billion in cuts
of provider
reimbursements
will take place.

(52:04):
Now, the reason
for that, though,
is that the,
verification of the laws,
which are already
qualifications
put into place.
But I think
a lot of people are like,
oh, you're just cutting
our benefits.
And qualified
people are like,
I'm going
to lose my benefits.
You're not.
That's not at all
happening,
that it's not even law.

(52:25):
You can't do that.
And they don't do it.
And it doesn't state
that in the bill.
So my only thing
that I had a problem
with, I think what this
bill, bill,
which I had
beyond issues
that it's
a grotesque thing,
but it's like
they're making it seem
like they're actually
cutting Medicare,
Medicaid.
And if you are
a qualified person
and you go
through the AP.

(52:45):
And you
and you have stable
internet.
Access,
you know how to upload
a PDF, you.
You also have other means
where you don't
have to do that.
You can also do it
through social workers.
You can go to
the local office.
So every month
if you miss one month,
all of a sudden you're
you're not going
to be able to.
So before you didn't
have to report
your qualified hours,
they estimated over

(53:07):
3 million people
didn't qualify
and were using it
on simply alone,
not reporting.
Anyway.
I did want to start
this by saying.
Some of the
shitty stuff
about the bill.
I wanted to talk
shit on this bill
because I didn't
want to seem inhumane.
When we talk about

(53:27):
how great this can be
for real estate
investors because,
it is going to
hurt a lot of
people,
but real estate investors
shouldn't be one of them.
So if you look
at the bill summary,
especially for
commercial real estate,
there's there's.
Some benefits
as well for.
Just for
residential real estate
and different things.
But if we're focusing.

(53:48):
Mainly on.
We we
are commercial
real estate investors.
We got
bonus depreciation.
We got qualified
business income.
We have,
opportunity zones.
We have a lot of things
that are now
like the one thing
that surprised me,
I thought this was
just going to be
like a 2029 thing.
These are now
things that are like

(54:08):
in law, right?
Like they're. They're.
Going, going forward.
So,
so AJ, why don't you,
why don't you
take us away explaining
how this bill is
going to help us with,
with as real estate
investors.
There's a few benefits
that we can take
advantage of.
Lots of them were
they're just

(54:28):
either being set in stone
or they're rolling back.
So we get them again.
And there's a few that
like,
I guess with every bill,
there's stuff
that are good
and no brainers there.
Of course, our house
there, it's
not all a steaming pile.
Just 99 999.
But this
when we look at this,

(54:48):
there's a few things
that got rid
of stupid stuff
that they would argue
about every year
and would put investment
into question,
which then they just it's
same with like, the debt.
They just argue
it and end up doing it
anyways.
So it's like,
why are we
playing this game?
Because it
creates uncertainty.
There's
a few of the biggest
values

(55:08):
I'd say to investors
they should know about
is taxes,
the permanent
extension of the Trump
era tax cuts, the hundred
percent depreciation
being restored
on qualified assets.
Now this is in place
for this year,
which of course,
guess when they did it.
This kind of crap
just drives
me nuts
about politicians.

(55:29):
Guess what?
January 20th.
January fricking 20th.
Why?
Because he didn't
want to give one day
credit to buy them.
Oh, I thought you
were going to say
that you had a deal.
January 18th or.
Something.
It didn't apply.
No,
he didn't want to give
one day credit to Biden,
so he put it in there.
That's so stupid.
But it's politics.
But I'll take it.

(55:50):
You know, it was.
What, 40?
And it was going
down to 20. You?
No, 100. Back.
Yeah. Of course.
Absolutely.
I just thought
that was stupid.
But you're
absolutely right.
This is great.
It needed to happen.
This,
I am a huge believer
in the depreciation laws.
And the reason I'm
a huge
depreciate, believer
in the depreciation laws
is because I've been to
and lived

(56:10):
in other countries,
and you see what happens
to real estate
and real estate investors
when they don't
have tax incentives.
Things fall apart.
It absolutely
needs to happen. Plus.
Well,
wait wait wait wait wait
wait wait
wait wait wait
wait wait wait.
There's a difference.
Read the depreciation.
Which makes sense
from a tax
and a bonus depreciation

(56:31):
where you artificially
put it all in year one.
Right.
That's
the huge difference. Yes.
And we get it. Yeah.
So they're
essentially like
why is it from
other countries.
Yeah. Yeah.
Like I
it's a critical
I, I agree with you
like to be able
to take bonus
I'm sorry
to be able to take
depreciation is huge
I mean and necessary
to incentivize people

(56:53):
to buy real estate
and to keep real estate,
you know,
in a good condition.
But
but bonus depreciation
to me. Sounds.
And look I love it,
don't get me wrong.
But it sounds
pretty artificial.
Like to be able
to front load,
you know,
instead of 27.5 years
or 35 years,
it just gets
all done in year one,
which is
the huge benefit.
Well,
the whole idea
is it's fake.

(57:13):
Yeah.
The whole idea is
it's a it's
a manufactured
depreciation. Right?
Yeah.
It's supposed to be meant
as a way
to consolidate
depreciation.
You're not going to get.
So
essentially
you're not going
to hold it for that long.
So you should get it.
Which also doesn't make
much sense.
It's manufactured
because you're
going to sell it.

(57:34):
But that is a boon
to real estate.
And theoretically I could
I could go out
and buy a property.
I could do a cost seg,
I could depreciate
everything year one
and then two years later
I could turn around
and sell it.
Having made
no improvements,
like just just
done nothing
to the property.
So nothing like.
Nothing broke,

(57:54):
nothing was fixed,
nothing whatever.
And then the next person.
Can come in
and do the exact same
thing.
You'd have to repay it.
Yeah, for sure
you'd have to recapture.
But I guess my point is,
is that if you.
Want to point out how.
How it's a fake expense.
If I don't do anything,
nothing actually
got depreciated,
I'll go and sell it
for more in two years.
But then

(58:14):
you have to pay it back.
So you didn't actually
save it? Sort of.
There's there's
two things
to keep in mind here.
One. Yeah.
There is a recapture
which means
you have to pay it back.
But think about it.
Let's say
I can get
$2 million
in depreciation
that I can use
to offset income.
My tax bracket.
I'm in the 3,030%
tax bracket.
Let's say
that's $600,000.

(58:36):
And let's say
I hold the property
for three years.
That's $600,000
that I get to keep
for three years.
I can invest
for three years.
Let's say
I make 10% a year.
I've just made
nearly $200,000
by not paying taxes
for three years,
so I've made money there.
The other thing
is, let's say I'm
my effective
tax rate's 30%
on that $2 million in,
in, in bonus

(58:57):
depreciation.
I'm only recapturing it
at a maximum of 25%.
So bonus up,
bonus depreciation.
Actually.
Could be negative
because he could be
switching from. 2020.
I know it's
maximum of right.
But I guess my point was
if it was if you
if you're in a
certain bracket
and whatever,
you could have
only had to pay 20 on it.

(59:17):
But but I guess
I thought the point
that you were going to
make is okay.
You all of a sudden
you had that 600
and you got to
pay recapture.
What do you do?
You're
assuming that someone's
buying one property
and just stopping you.
Just do it again.
You just buy
another one again.
Take 100% depreciation.
Write it off.
Like if
they didn't do this,
nobody would
invest in real estate.

(59:38):
I mean, the
amount of taxes
real estate taxes
we pay
is so astronomical.
If I had to pay normal
income on that,
I would never
touch real estate
because the math
would never work.
It just wouldn't
make sense at all
because you're paying
taxes upon taxes.
Upon taxes.
I mean,
the amount of income
you would make
is just
nothing as far

(59:58):
as real income goes.
Right?
And that's
the whole point, though.
We don't have
like a flat tax
where the purpose
of the tax code
is not to generate
revenue, it's
incentivize people to do
what the government
wants you to do.
And one of the things
they want you to
there's two major things
that government
wants you to do.
One is to provide housing
because they're
not good at that.
So they want you
to provide housing
or self-storage

(01:00:19):
or whatever.
And number two,
they want you create jobs
because they don't
create jobs.
That private
enterprise creates jobs.
So how do you
incentivize people to go
build
and create new housing
for the ever
increasing population?
You give people
tax breaks
so that
encourages them to
to allocate capital
instead of
allocated capital to,
I don't know,
buying a freaking
worthless ranch.

(01:00:39):
You know, Ferrari,
you go buy
investment property
so that you can build
housing for
people to live in
because
the government wants
they need that
for their population
and they're not
going to do it.
So they need
to incentivize
people to do it.
So it is.
Essentially two and I
and this is a
like so we're selling
a 100 million
worth of real estate
right now.
And to tell you
that it's a trap,

(01:00:59):
it is really
kind of a trap.
It is not really
that good
when you think about it,
that because
that capture,
if we don't want to pay,
we can 1031 exchange it.
Right.
But you have to 1031
exchange the total amount
with debt to not pay it.
So your ability
then to take
the money out
is like gone.
And your 1031 exchanging.
You got to keep keep
upgrading

(01:01:19):
basically getting.
Bigger and bigger
and you're upgrading
at a higher
interest rate.
So your returns
actually go down.
So now let's say
we wanted to keep
some of that money
that we now
have to reinvest.
We want to keep it.
So we're going to 1031
exchange part of it.
So we got 50 million net.
We're going
to 1031 exchange
out of that
50 million, that

(01:01:40):
30 million of it
with debt
to try to put it.
That leaves us
with 20 million.
We have a $12 million
tax bill
because what
you're getting
is on the increase.
It has nothing
to do with debt.
You pay taxes
on the 400 million.
They don't care
what your debt is.

(01:02:00):
So all of a sudden
it's as
if you made
the entire gain
and you didn't have debt,
and you have to pay
taxes.
While the debt control
phase two though, right?
So like if you do the.
Math on it, that's
why bonus depreciation
so awesome
for real
estate investors.
So let's just for easy
math, let's say
you're buying a $12
million property right.

(01:02:20):
And you put
70% debt on it.
So you're. Only.
So what's that.
Let's do 75.
Even put 75% debt in it.
So you got
3 million right.
You have to bring
to the table.
Well in general 30%.
Of most buildings
like if you do a cost
seg like think on average
it's like 30% of it

(01:02:42):
is can be depreciated.
Yeah.
But you have to pay
for that
in debt payments.
That's not a free
give me.
You have to pay for that
in debt payments.
And and you have to also
pay taxes
on the full amount.
So it's awesome
when we get to
invest in it
take advantage of it.
But what I'm
saying is it's
not just this
like free thing

(01:03:03):
that we get.
There's
a huge tax burden.
To the point that I was.
Getting to though, is
you can
that's
how you get to like
100% depreciation.
You get to
get the
entire depreciation
benefit of the property.
Even though you only.
Paid the down payment,
you only paid
for through
the equity portion.

(01:03:23):
So that's how you can get
like basically
your tax write off
will be very close
to the same
amount of the.
Money that you put in. So
that's why you get these.
Situations where
there's a lot of people
at the end of the year
who are coming
and be like.
It's very easy
when there's a 100%.

(01:03:43):
Bonus depreciation
to raise money
if you have a deal
that's closing
in November.
Yeah,
because everybody
wants to get offset.
Right.
Because someone will.
Have done
just exactly
what you said.
And they will.
Say, shit,
I have a $900,000 tax
that I have to do.
So what they do

(01:04:04):
is they take $1 million
and they invest it in
someone's deal,
and then all of a sudden
they write it off
and they just
do it again.
So it's.
Only a problem.
If you,
if you,
if you stop doing it.
Or there are so something
like that, you.
Know, it's a good segue
into something
else in there.
So there are things like
opportunity zones.

(01:04:25):
Where
all of a sudden, if.
You if you're trying
to get off this rabbit
wheel, rabbit
wheel, hamster wheel.
If you're trying
to get off
this hamster wheel,
then there are.
Offshoots
where it's like,
you know,
you put it
in a qualified
opportunity zone.
And that really,
you know, reduces
the amount of tax
that you can put in.
Or there's
always these
disaster relief

(01:04:45):
special opportunities
that you can invest
in that,
that, you know,
reduce your tax benefits.
So and
this comes back down
to what Mauricio
is talking about.
All it is, is making
you keep your money in.
That's why
I said it's like a trap.
So that
government puts
huge incentives
to get the money in
and then huge
penalties to get it out,

(01:05:06):
which is great.
That's why it works.
That's why
buildings are updated.
That's why
we have new buildings.
Right?
Because people
are putting
their money in
to get the tax benefit
to offset their
income tax.
Then they get it in
and then they got
to keep doing it.
They got to roll it over.
And then the government
says, hey,
you want some more
benefits?
You need to go
in this area.
That's this
downtrodden area,

(01:05:27):
and you have to put
all these improvements
to lift up that area,
and then we'll give
you tax benefits.
So that's essentially
what the tax code is.
It's a
incentive based system.
And they and once
you get it in zone
the side effect is also
has is it
makes the rich get richer
because all you do

(01:05:47):
is keep
turning the capital over.
So the rich aren't
pulling their
capital out.
They're just
reinvesting it
over and over
and over again. Right.
And because you
you can't
you literally
the tax burden is so high
it's insane
to try to pull it out.
Like,
I have two firms
trying to help us
figure out
how we can even get
some money out of this,
because it's so big,

(01:06:08):
but it's what
made us wealthy.
But to your point,
it it also helps folks
that have you're right,
it helps certain
amount of people.
Like if you
have an extra 100 grand
sitting around,
for example,
you can put that $100,000
even into a syndication
like that
or a property
or whatever.
But you put that in
and you
man with bonus
appreciation.
There are situations
where you would put in

(01:06:28):
100 grand
and instead of giving it
to Uncle Sam,
you get to deduct
that entire year
100% of that from you.
Now, most of the time
it's 7,080%.
But in
especially
in multifamily,
you can literally
at the end of the year,
instead of giving
a running
a hundred thousand check,
$100,000 check
to the government,
you can write
a hundred thousand check
to Jay Scott
and deduct
that 100%

(01:06:48):
from your taxes.
I mean, that's.
And that's a real return.
You get like
you get that money.
So like you
don't even need to make
a return.
Like you
literally got your money.
So even if
like it went bad,
well then you would write
the light off,
the loss off to
and you'd make
another 100 grand.
Lost 100% of your money.
If you were giving it
to the government,

(01:07:09):
it would have been gone.
I mean, it would have
been like you.
I mean, it's a loss
no matter what.
Well, no,
it would have paid
for the
the bombs in Iran.
And it was.
That's true.
But but but
from your perspective,
it would have been gone
into the abyss versus
if I gave it to Jay.
And even if he lost it
all, it's still going.
It's gone.
Like, either
way, it's gone.
Yeah, exactly.

(01:07:29):
And so that's the great
thing about having.
And that's why
I too, though,
it's so important
like it.
It's really,
really important
for the economy
and for how our
system works for it.
I think it's great.
I think they did
a great job with it.
Small business
and other deductions.
They bumped up from
1.25 to 2.5,

(01:07:50):
million,
for the,
empowering small business
and startups
to invest more
in equipment up front.
It expanded
how much of
the deductions
they can take
for buying
and investing
in equipment.
Upfront out of the gate.
I think, once again,
I think
that's a great thing.

(01:08:11):
There's the
worker incentives
for income and overtime
for deductions and,
disposable all tax.
There's the they have
some specific
infrastructure
investments.
A lot of these are like
you can look at like
oil and gas, right.

(01:08:31):
And you get
huge deductions
and you can
write that off,
which
I've done that
quite a bit
because at the end
of the day
it may be speculative.
So if you are
investing in discovery
you get to write off
like 100% of it.
Well, I'm like, well,
why pay the government?
I'll give it
to a boil, man.
And if he strikes
oil, great.
If not,

(01:08:52):
I was going to lose it
anyways.
I wasn't going to get it.
So,
they're incentivizing you
to obviously
go for oil, get energy.
That's all.
It's like.
It's a
good way
to think of it, right?
Like, either they can go.
And raise taxes
on common people,
or they can basically
tell you, hey,
put your tax
dollars to work,

(01:09:13):
put the rich people's
tax dollars to work.
Other places. Exactly.
And that's the thing
that I think
most people
don't understand.
If you tax them
and take it out,
you're not taking it
out of their pocket.
You're taking it
out of the system.
That money's gone right.
And that has
huge conflict.

(01:09:34):
And that's why
when you look at where
allocation of capital
goes in
the United States,
it is very different
than lots of
other countries.
And it is
obviously predicated
on the things
that we want and need
that the government
wants us to do.
So it's like
either you do it,
if we have to do it,
I have to tax
you and take it from
you to do it.
And it's better

(01:09:54):
that the private sector
does it
because they do
a great job.
I mean,
they've done
a awesome job
in Brazil
with their real estate
and their government
handling housing.
Favelas are just
oh, chef's kiss.
But God,
you know,
you're just biased
because you
lived in Brazil
for five years.
I am,
and I just love
those favelas
and those
stacked on houses.

(01:10:15):
They're falling over.
It's amazing.
So, you know, there's,
the, these, these
incentive laws
in the bill,
once again,
most of them are,
depreciation.
They're expanding
how much you
can write off,
what are the other ones
passed through.
It was retained,
which is obviously great

(01:10:35):
for small business.
Yep, yep. Pass through.
Unless you're
a professional
corporation.
What was the,
the cap rate one.
So if you like, if you,
the dollar saved expense.
So saving dollars.
I don't quite understand
this one.
Well, well,

(01:10:55):
you figure that one out,
but the one that
let's talk about,
the one that didn't
make the bill,
which is huge.
The one that didn't make
the bill
was the carried
interest loophole. Right.
There were talking.
1030.
One Trump
they were talking.
About those two.
Yeah. Trump wanted to.
So the carried interest
loophole.
It means if you're
getting a syndicate
syndicators are great.
But it's meant for hedge
fund and venture capital.

(01:11:15):
But if you have like the
you know, you own
20% of a syndication,
right.
That gets taxed
at capital gains rate,
they usually
should be taxed
as ordinary income.
And so that was
a loophole
because a
lot of the hedge fund,
the Jamie Diamonds,
whatever
they're getting off
Trump wanted it gone.
There were some debate.
There were some a lot
a lot of rumors
that it would get gone.
A lot of debate,

(01:11:36):
not a lot of debate,
but there was some debate
on the floor
getting rid of it.
And it ended up not,
trust me,
the private equity
firms, the venture
capital firms,
they weekend
went to town
and the lobbying.
So they kept
that in there.
So if you're a syndicator
and you're
getting that 20%,
that 20%
carried interest,
I think you do
have to hold it
for three years.
But you get that

(01:11:56):
as a capital gains
versus
the income as
as ordinary income,
which is a huge,
huge you know,
you were talking 32.
If that if that loophole
had been closed,
it would have
it would have that
negative
would have outweighed
all the benefits
to real estate investors.
Well, so question
if it still happens
under three years
to your point.

(01:12:17):
But the question
does that because we.
We haven't sold
properties in
under three years.
But I know a lot
of people who did.
So can you not offset
that is
you with other passive,
losses
if it's,
if it's taxed
at the, the.
Normal income rate.
That's a CPA.
I don't know
if this is the time
I'm putting
a disclaimer in here.
Everyone.

(01:12:37):
We,
we don't know, Jack,
about your taxes.
We don't know what
we're talking about.
So everything
that we're saying
here is about the bill,
how it applies to you
and what you're doing
has nothing to do
with what we're saying.
We are not CPAs.
We are not accountants.
Do not invest
because you heard
on drunk real estate.
I mean, come on,

(01:12:58):
what we said about taxes.
Talk to your CPA.
What I can tell you
is I'm pretty confident
that if you sell within
three years, that
that income
would be considered
ordinary income
versus capital gains.
If you have
that over there.
Now, whether
that gets offset
by other,
that's a
different question
like the
the offset
and the depreciation.
That's a discussion

(01:13:18):
need to have
with your tax.
I think it still does.
As a real
estate professor.
If you're
real fashionable
then then it should
still get offset.
The the carried interest
though
I think
one of the biggest things
with that
is it
incentivizes, frankly
rich people
to invest
other people's money
if if they didn't
have it,
they wouldn't do it.
I wouldn't
if like,
I would never

(01:13:39):
take other
people's money.
I just use my own AJ.
But that's
the whole point.
The
the fact that
you are out there
and all of the
both of you,
all three of you,
I don't do it.
The fact that you guys
are out there
raising capital
and buying
way more real estate
that you could do
on your own,
furthers the benefit
and the objectives
of the government.
The government wants you
to go buy
100 apartment units.
If you didn't

(01:13:59):
have that incentive,
you would buy two.
So the fact that you have
an incentive
is what perpetuates
your buying more
and raising capital.
And that's what
the whole tax
system is meant to be.
And you want
you want
people to have access
to investments.
Like the last thing
we want to do
is cut off investments

(01:14:20):
for people
that don't have tens
of millions of dollars.
And that's a whole thing
that I have
with their credit
nation laws.
We won't get into that.
But we do not want to
have a system that bars
regular people
and rich people,
even from investing
in all these assets.
And you only
have one class
that can do it,

(01:14:40):
that's not a good thing.
So it it
literally opens up
investment opportunities.
And I think that's
a really good thing.
And if you want to get a.
Little bit
more specialized,
I know there are
some people who do
like tech stuff.
The, the credits for that
actually got
a little bit of a bump.
So they are trying
to put in there
some more affordable
housing things.
But at the same time,

(01:15:02):
I have heard and I,
I'm having trouble
because this is still
relatively new
and it is 900 pages.
I'm having trouble
trying to figure
out on the low end.
So there are people
who do investments
with like section eight
and things like that.
And there seems like
a bit of a debate
on people who

(01:15:24):
who supply housing
to the real low
end users,
whether it's going
there's going
to be an issue or for
actually it's
going to be a good thing
for them there.
So I don't know
if you guys have
looked into the section
eight, the whole HUD,
the la, HTC stuff.
But maybe that's
for another episode.
But, I think it's, it's

(01:15:45):
kind of one
of those like,
I don't think there's any
debate for people
who are doing workforce
and higher end
and new construction
and stuff like that,
that this is
a lot of
really good things.
That TJ's point
they were in
before the previous
tax bill.
But they, you know,
they've been sunsetting
or are they,
you know,
just a little
less beneficial.
And now they're back.

(01:16:07):
But these are all
really beneficial
for those users.
But it might be a
bit of a question mark
for people
who are dealing in
the section
eight and providing.
Housing
where it comes
with section
eight and lower house
clauses as improvements.
Now the problem, though,
with section
eight like it,
it has and always has it.
If you're not,
you can't get
higher rents,

(01:16:28):
so you're capped.
So even if you had like
if I was going to be
able to accelerate
and get
better depreciation
on a section
eight housing
and I'm going to invest
$2 million into it,
that's great
to get some depreciation.
But why would
I ever do that.
It makes no sense.
So you get
the same depreciation

(01:16:48):
and you can do it just
why would you ever do it.
Because you don't
get a return of it.
So having capped rents
stops
you from getting anything
except that
one time benefit.
Whereas I can go
do that in anything else
and I can get
the one time benefit
plus all future benefits.

(01:17:08):
And that's why,
generally speaking,
even though
they still get the same
allotted advantages
that all the other
real estate does,
people don't do it.
Yeah,
I think that's
one of the.
Main arguments,
is basically like
if you do the math, like
even the Senate.
So the House version
they with these increases
to light tech
and stuff like that,
they estimated

(01:17:28):
they were going to create
500,000 new affordable
housing units.
Well, now
the Senate's versions
actually went
even further in.
They're estimating it's
going to be a million
just by
they've increased
basically
some of the tax credits
that are available,
they've actually made it
kind of easier
for them to get,
things like that.
I don't want to get
into the details.
But then at
the same point,

(01:17:49):
people are saying
it might be
a lot tougher
for that
demographic
that you're targeting
for people to
to use these tax credits
and for the
people to like
or to like,
get the vouchers
and to be able
to afford these units
that a lot of the,
these, these changes

(01:18:09):
that they won't
necessarily be able
to take advantage
of these units.
So maybe that's,
you know, somebody
who's more in it.
I don't
we have very
little section
eight stuff.
So it's like,
it's not something
really.
That's not my area
specialty at all.
Obviously,
that is that beneath
you call?
No, it's
actually section eight
could be very lucrative.

(01:18:29):
And people
who are very
good at it,
like if you focus on it,
the problem is,
is its reporting.
Requirements
and like at
once we get
getting back into it.
Red tape stuff. Right.
Like when are you dealing
with the government.
You got a lot of
a lot of stuff
that you got
to deal with.
And so it's it's
not worth it
unless you're
kind of going all in.
But if you're

(01:18:49):
going all in
and
you got a good system.
So if you don't
do the inspections
and if you're required.
So why,
why in Medicaid
did they allow it? Not.
That's weird.
I see what you did there.
AJ but but as far as,
as far as
if you are tuned
into it, like basically.
90% of that,
every rent payment

(01:19:10):
every month
is guaranteed, right?
Like it's
coming from
the government
and they're
going to pay it.
So like when
we talk about like, oh,
we were at
96% collections
this month. Yay.
Well,
like if you're
really good
at your section
eight,
you're doing
better than that
because you're
the money's
coming from
the government,
and it's basically
a golden ticket
for some of these people

(01:19:30):
to get that section
eight voucher.
And they're not going
to miss their payment.
So that's on.
That's really
good at that
because that
that world,
the people that
kill it in it,
they do good. Yeah.
Well so and that would be
that would be
a good segment
to talk about.
Hey like how is this
changing things.
Because I see
I see
a lot of chatter about it
and I've seen
headlines going

(01:19:51):
both ways,
like this
is the end of
section eight.
And then I saw.
Another headline,
a guy who all he.
Does, he's like,
this is great
for section eight.
So, so yeah,
it would be interesting
to, to,
to see how
that shakes out.
But I'm.
Disappointed, though.
I'm not going to be able
to buy any public land.
Weren't they going to
was in.
This bill supposed
to include a bunch of,
public land sell off?
I got a ton of that

(01:20:11):
around me
that I was just
hoping to jump on.
Kyle,
I will slap
you under next week.
I will slap you
into next week. Kyle.
No.
Oh, come on, you
you would have been.
One of them.
I would have
bought so much,
but I would have
been so upset about it.
I would have been
so like
I would have lost my
flipping mind,
but I would have
bought a lot.

(01:20:31):
I was going to say
I was going
the syndicate buying the,
the mountain right
next to AJ.
I would have
already had it.
This was the business
plan I tried to
get AJ to do so,
but the business plan
that I tried to get.
AJ to do
is he buys
a big swath of land
with the intention
of actually
just making it
100 preserve,
because that's the thing
you do. Right?
And then
but then you drop.

(01:20:52):
Plans to develop it.
But then
you and then you put.
A value on it.
And this is the
value of the land
under this use case.
But then you preserve it.
So you.
Designated as preserved
wild wildlife.
The blue and green
tax credits depending on
if you have water
And then

(01:21:13):
because of the value
of the land
that you could have
if you developed it.
You write off that value
and you get a tax
break on it.
Oh, only if
you donate it,
you have to donate it
back to the government.
As a conservation
easement.
I don't think
I think that's
a separate program, Jay.
I think this is a program
where if you designated
as contribution.
You can keep control
and it can keep
you keep within it,
but you can't develop it.

(01:21:34):
You can't.
You have to obey
within the guidelines
of it.
Right now
that might be going.
Away,
because they did
cut a shit
ton of the environmental,
stuff. Yeah.
And then you're going
to spend the next
ten years in litigation
with the IRS
because you can't.
I have been since 2017.
Let's, let's let's change
let's change
the subject to the it's
it's a it's a subject.

(01:21:55):
I mean, all right.
More before we move on.
Before we move on.
Breaking news.
So this isn't part
of the big bill
that we were just
talking about,
but just a
couple of hours ago, FHA,
the Federal
Housing
Finance Administration,
or whatever
that stands
for, announced
that as of now that,

(01:22:17):
rent payments
can now be used
as part
of your credit score
when qualifying
for mortgages
with Fannie and Freddie.
So basically,
when Fannie and Freddie
is looking
at your credit score,
your Experian, and.
In just one way.
Yeah.
What does that.
Get you for it?
Both ways.
You can get hurt.
And I've been
I've been late on my rent
for the last six months.

(01:22:38):
That's a problem.
Yeah.
So I don't know
the details, but,
apparently now,
rent payments are part.
I hope it's both ways,
because if we have that
all of a sudden.
Like these.
People
who know how to game.
The system,
and they
and they basically.
Know that
we're not going to spend
the $800.
To, to
finalize the eviction

(01:22:58):
when they've
already skipped.
And they haven't
trashed our place.
No count.
Nobody game systems.
Nobody uses the system.
They don't game it.
They follow the rules.
Even in Texas
the game it.
Now it's no Kyle.
They they actually
they don't underreport
their Medicaid hours.
They don't utilize that.
They by the way

(01:23:18):
by the way.
Okay I'm getting
excited for the top ten.
Let's go. All right.
Well but before
before we get into
Kyle's top ten, which I'm
sure will be
pathetic and lame
and whatever
we don't have
to take our shoes
off anymore
when we go through TSA.
I mean, I know,
I know, AJ
doesn't have to deal
with that anymore.
Is that the bill
that was.
Yeah,
they got frickin
rid of it.

(01:23:39):
They got rid.
So next time
and unless you're AJ
because you do
something different,
but the rest of us,
the common folks,
when we go to the airport
and we go through TSA,
we no longer have
to remove our shoes.
I actually,
I actually
don't like that
they change that because.
I've had TSA PreCheck,
and I always felt like
I was privileged
because I didn't have
to take my shoes. Off.

(01:23:59):
Now,
when I brought a gun
into the airport.
So I'm
really glad
that we do it,
that we
we got rid of that.
So let's be clear.
I'm not a fan of
security theater
like the TSA.
I'm not a fan
of all the crazy stuff.
But I will say this.
There's a little
piece of me
that is bothered
by the fact
that Congress
has the authority

(01:24:19):
to decide
security measures
for for things
like airports.
I'm not saying I'm
not happy
about this change,
but it makes me wonder.
It makes me wonder
what other things
they could just
arbitrarily decide
to change
that could
actually impact
arbitrarily.
Said, here's
all the new rules.
Like you have to take off
your shoes. You're right.
J should definitely
just be, Cash Patel
because he's the one who,

(01:24:40):
like you,
who he's very qualified
to be deciding
that stuff.
Yeah. An agent.
Next time you're in town,
you should consider.
Maybe you come visit
me and just helicopter.
Just.
Just drop your
helicopter right there.
You have a
perfect landing.
Helicopter it and drop.
Drop it down here.
And then we'll do
the podcast together
right here.
Okay? Kyle.

(01:25:01):
Are we
are we ready
for my top ten?
Oh, no. No horn ready.
No. So you.
Actually, I hype this up
way too much
because you guys aren't
going to find this funny,
but anyone from Philly
is going to find it
hilarious.
Nobody's from Philly.
Nobody cares
about Philly.
Nobody.
Geno's is number one.
I.
Well, it's it's
kind of along
those lines.
So

(01:25:22):
you probably
haven't heard
but Philadelphia. Is.
Getting their first
female
professional sports.
Since 2008.
And it's a.
Women's basketball team.
We definitely
have not heard that.
I didn't hear
that about that.
Yeah. No I, I didn't.
I didn't think
you guys were.
Watching the WNBA.
I do have a house
full of girls.
So like so
Caitlin Clark

(01:25:42):
is is a thing
in our household.
So like. It's it's it's.
Caitlin Clark.
So anyway.
Is she related
to Jennifer
Connelly or whatever?
John.
Okay, let's
let him get on with this.
Of course.
What what happens is
when when the WNBA
when they're when.
They're getting
a new team,
they got to pick
a name right.
And so just like.
Any other time.
When they, you know,
want to do a boat name

(01:26:04):
and they put it to a pole
and it ends up being
Boaty Mcboatface,
is the name.
Well, they put
it to a pole.
And but they did it in
an unofficial poll,
online
that's not held
to anything.
And so I'm going. To go.
Through the top
ten names.
And some of them
are serious
and some of them aren't.
I vote
for Philadelphia females.

(01:26:25):
It's so it's the
some of the you're
not far off. J.
And so you guys know,
I'm sure you don't
know a lot
about Philadelphia, but.
You know,
some things,
you know,
like Philadelphia's
Liberty Bell and,
you know,
like the names
of the other teams
and stuff.
But anyway,
one of the other things
that's big
in Philadelphia

(01:26:46):
is the mummers
and that and.
Oh, people
only knew about.
That because Jason Kelsey
dressed up this one
when he did
a Super Bowl speech.
And so it's a huge thing.
There's a mummers
parade and.
Everyone dresses up
like crazy.
So number ten, I'm.
Going up
with the Philadelphia
Bad Mummers drummers.
The next one is.
The Philadelphia.
Force, but.

(01:27:06):
Spelled with P-h.
Next one is
the Philadelphia
Phillies.
Now there is already
the Philadelphia
Phillies.
But the change to this
is they
put an F on the front
so it looks
like Philadelphia for the
Phillies, like
female horses.
So that was a fun one.
A serious.
One is the Philadelphia.
Rage.
Because way
back in the day,

(01:27:26):
that's what,
there was a WNBA team.
Philadelphia called
that Philadelphia
freedom
is actually a good one.
Al Johnson
that's my favorite
one right there. Yeah.
The next one is
Philadelphia John's.
So John
is something
that is a made up word
that is in Philadelphia
that no.
One, if you're not

(01:27:46):
from Philadelphia.
Understands
what it means.
But the Philadelphia
John spelled J.
Wentz.
And then okay
we're getting to my two
the top two.
These are my
two favorite number
two the. Philadelphia.
She Stakes.

(01:28:07):
And so what's
my number two.
And number one.
So I'm sure you know
Philadelphia is known
the major street
that goes through
the center
of Philadelphia
is called Broad Street.
When Philadelphia.
Was the dominant
in hockey
they were called
the Broad Street.
Bullies.
The Broad Street's
a big thing
in Philadelphia.
So obviously number one
would just be

(01:28:27):
the Philadelphia Broads.
So it's probably going to
be something
more serious, like the.
Philadelphia Freedom
or the Philadelphia Rage
or something like that.
But if they came out in.
I like the
Philadelphia Broad.
That's a good one.
I was pretty close
with my Philadelphia
females.
How about
how about Philadelphia?
Who gives a shit?

(01:28:48):
Oh, jeez.
That'll be all right.
We'll see where you land.
Your Mauricio is
totally anti
female sports.
I see how it is.
No of I.
Think I
deserve to have sports.
Where are you guys in
Philadelphia is really
what I want
to figure out.
He's one of those guys.
I get it, okay? I get it.
I like all
adelphia fentanyl.
That's my
show.

(01:29:09):
Well,
we do get all of our.
Fentanyl from
Canada in Philly. So.
All right.
Mauricio, you got
anything to plug?
You need?
You need some money
for your ranch
or anything? Really?
I dude,
I need a lot of money
for my remediation
of my house.
So sign up
for his coaching program.
I don't for.

(01:29:30):
My coaching, my inner
circle and coaching.
Coaching with Mauricio.
If you want to learn
how to raise
capital, Compliantly
be up to speed
with all
these new regulations
that are coming out
daily.
Actually, every minute
there's a new regulation
that comes out,
go to coaching
with Mauricio like.
Com if you
were interested
in finding out
how I can help you
raise capital legally,
like I've helped

(01:29:50):
you guys,
you guys
were all doing it
illegally when I met you.
Now you're doing it
completely.
100% true fair enough.
AJ, what do you got?
You know what
I'm raising for
my, tech fund?
So it's a diversified
of the three

(01:30:10):
software systems,
and our tech stack.
They're already
existing, running.
They're market centric.
It's the last seed
round for all of them.
And I have,
all their
remaining shares.
And I've been allowed
to allow my investors
to come into it.
I've already
invested in them.
I'm putting millions
more into them,
personally.

(01:30:30):
So we're
allowing our investors
to come a long
with us
into those three
companies.
There's never been
that before.
And storage, obviously.
They are groundbreaking,
incredible companies.
We have to have them
to run our business.
And so it's
kind of a cool thing.
Never done that.
Never had a,

(01:30:51):
tech fund before.
I've risen
for different
tech companies,
and so we've done.
But this is
an actual tech fund.
Yeah.
You have to.
Wait, wait, wait,
you have.
You have risen.
Is that what he has said?
You. I have
AJ is Jesus.
He has.
The argument, the store.
AJ or
any of the other jets
in that in that fund.

(01:31:11):
Is that part of
the benefits.
If we.
Don't we don't talk.
About depending on
how much you raise,
or how much you give me,
I'll get you
can you can go on that.
AJ, I don't know why
you have not
on a like investor
mastermind
like, you know,
like we should
we should do an episode
on one of the
on one of my planes.
I like it.

(01:31:32):
Jay,
what do you got, buddy?
So only a couple
days left, but I will,
and I will
mention it again.
This will be
the last time
I mention it for a while,
because there
is only a couple
days left.
But anybody that's
looking to invest
in a ground
up multifamily
syndication,
or ground up
multifamily development,
we are building
351 units
just outside of Dallas

(01:31:53):
class A gorgeous,
complex in a, master
plan community,
breaking ground
in a couple months
raising now.
And, yeah, anybody
that's interested
in investing,
feel free
to reach out to me
and I will say that if
and when the SEC passes
the rule to allow,

(01:32:13):
finders,
we will happily pay
you a finder's fee
for referring.
Or you could
just do a tribe vest or.
Where you can do
a tribe vest.
We should talk
about tribe vest
at some point.
I think you should do
a fund of funds
that invest in Rogaine
and gets a lot of,
you know, a lot of.
Shops looking at my hair.

(01:32:34):
As
well.
So the only problem a
fund of funds.
Is it's expensive,
right, to set up
because you have
to go through
some syndication lawyer
and these guys
like they got to
fund their their.
Rent, which is you.
Not to keep you
out of jail.
It's kind of such
an inconvenience,
you know.
But they're,
you know,
that's that's why.
Jason, they got tribe
vest is actually
another option
is kind of
a done for you.

(01:32:54):
But can we
can we talk about
we talk about,
young people
not buying houses
while we're doing this?
If we're doing
these ground up,
Designs
like these A-Class.
Designs, you
you should see
these buildings.
It's like living
in the Ritz-Carlton.
The pools.
Like all of the,
like the fitness

(01:33:14):
centers, the amenities,
like all these things
that these ground.
These brand
new A-Class things.
I'm like, I'm
looking at this like,
Jesus is nicer
than my house.
Like,
why would anybody
want to buy a house
when you could just
do that?
Have live in a brand
new unit.
Everything's taken care
for you.
And the problem is
you live in Philadelphia.
So I understand
the reference point,
but yeah,
I mean, let's

(01:33:34):
get with the times.
You actually can get
some really good advice
out of the country.
We we put up the house
back.
We we did, we did. Okay.
Where my wife's a.
Pretty good designer
when it comes
to real estate.
All right.
For my plug actually.
Now AJ mentioned tech
I will do back behind me
conference connect.
You can now get discounts

(01:33:56):
on conferences.
So if you go
on the website,
you go
there's a little request
or request
to get a discount.
A lot of conferences
now all have discounts.
So if you click on it,
you can get a discount.
I know for sure
that limitless
we got limitless
coming up.
I think Jay is
speaking at Luminesce.
Mauricio,
you might
be speaking at limitless.
My wife might be speaking
at limitless.

(01:34:18):
That's just an example
not to.
I know I did my plug,
but like, limitless.
Other than
AJ's conference,
I want to put
that disclaimer.
Limitless
is one of my
favorite conferences
of all time.
It's just a really
nice conference.
Other than AJ's,
if you
if you're into
self storage,
go check out AJ.
But otherwise
I think limitless is just
it's a pretty freaking
awesome event.

(01:34:38):
Yeah.
And if you want
if you want a discount
to go to limitless,
you're thinking
about going,
you're like,
oh, I could use,
you know,
a little,
little price off.
Go check it out.
Conference connect.
Click the button.
You'll get a discount
or any other conference
you got going on.
And they'll be,
you know,
and there'll be no
plugging bad ash today.
Just to be clear.
I that that was, she
she had a
podcast earlier.

(01:34:59):
We already did a plug.
No. No plug.
There's no plug on that.
She actually
she was
on a podcast earlier
with Steve Rosenberg
and she plugged.
Me, so.
Yeah,
but you don't
get to plug her tonight.
You don't get to
plug or sorry.
All right, get up.
So, guys,
we almost snuck
in under 9:00,
but those are the breaks.
It still looks.
Super bright out
at that West coast.
It's just,

(01:35:20):
nice and bright.
Looks sunny there.
I'm jealous.
It's almost time
to go to bed here.
All right.
It's all I got, guys.
My, My drink's gone.
I gotta go hit the head.
I will see
you next Thursday.
See you guys later. Yeah.

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102. The Big Beautiful Bill Is Law – What It Means for Investors

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}102. The Big Beautiful Bill Is Law – What It Means for Investors